Coupa Software’s (NASDAQ: COUP) stock has gained 79% over the past three months and 58% since the beginning of the year. The company posted a 47% growth in total revenues for the first quarter of 2021, with a 45% growth in subscription revenues.
Despite the ongoing health crisis, Coupa posted healthy
results for its first quarter but what took the limelight was its Coupa Pay offering.
Coupa Pay is a set of solutions that help customers manage their working
capital and make payments to suppliers and contractors as well as
reimbursements to employees.
Coupa Pay allows customers to make payments through various
methods termed as payment rails. These include bank transfers, virtual credit
cards that are used once, and digital checks and wallets. It helps customers manage
all their payments on a single portal while saving time and preventing errors
through automated processes.
Customers
During the quarter, the number of customers using Coupa Pay
reached approx. 100, with half of this comprising new customers and the other
half from the installed base. The company saw increased traction with virtual
cards and invoice payments. In places where paper checks were prevalent, customers
were able to move fast to digital check programs as offices shifted to a remote
work environment.
Coupa also added BNP Paribas as its partner during the
period. The company is seeing increased adoption of Coupa Pay across the board
and it is witnessing good traction across all components, namely Accelerate, which
helps customers in sorting their cash flows.
“A long-time Coupa customer who recently implemented Coupa Pay shared with me personally that they are transitioning to Coupa Pay as quickly as possible to help manage payments for their suppliers because temporary bank solutions are frustrating and archaic. Coupa’s new and innovative thinking with Pay is driving real ROI by automating and digitizing the payments process and helping control cash outflow.” – Rob Bernshteyn, Chairman and CEO
The pricing model for Coupa Pay is a combination of
subscriptions and per-transaction fees. In the first quarter, the average deal
sizes with Coupa Pay were 20% higher than the ones without the module.
In order for sales and deployments to take place and
transaction volumes to accelerate, it is important to find the right mix and Coupa
is currently working on this. The company aims to scale its customer base from
the current 100 to thousands of users in the future.
Outlook
Based on the Coupa Business Spend Index (BSI) for Q2 2020, there
has been a steep decline in the spend sentiment across most industries due to
the pandemic. The BSI measures economic growth using business spend analysis
and the data indicates that some industries like retail and manufacturing have
seen lower spend sentiment due to shelter-in-place orders and production
stoppages while sectors like health and life sciences have seen a higher
sentiment.
Coupa expects the macroeconomic environment to remain challenging in the second and third quarter with a slight pickup in the fourth quarter. The company entered the second quarter with a stronger pipeline compared to the year-ago period but since many of its customers are facing challenges due to the outbreak, it is difficult to predict the timing of deal closures.
Coupa expects revenues of $118-119 million for the second quarter of 2021 and $489-491 million for fiscal year 2021. Subscription revenues are expected to be $107-108 million in the second quarter.
Click here to read the full transcript of Coupa Software Q1 2021 earnings call