Coupa Software (COUP) Q3 earnings preview: Stock may shine on bullish outlook

After reporting positive results for the July-quarter, executives at Coupa Software (NASDAQ: COUP) had exuded confidence that the company is on track to achieve the goal of $1 billion in revenue. When it reports the third-quarter results on Monday evening, market watchers will be looking for earnings of $0.06 per share, down 25% from last year. Sales are forecast to grow 54% to $96.2 million.

Related: Accenture beats Q4 earnings estimates

The bottom-line of the San Mateo, California-based provider of business spend management solutions has remained in the negative territory in recent quarters. The stock might gather strength in the run-up to the third-quarter report, considering the market’s prediction for a turnaround and the company’s track record of beating estimates consistently.  

Growth Drivers

Revenues continue to benefit from the rapid adoption of spend management solutions by enterprises across industries, which has resulted in a strong customer base that keeps growing. This time, margins could get a boost from a further uptick in subscription revenue, which also adds to the prospects of a turnaround. Moreover, there has been a slew of partnerships and collaborations aimed at enhancing customer experience, especially in payment services.  

Catalyst

DCR Workforce and Aquiire, which joined the Coupa fold more than a year ago, have been two key growth drivers in recent quarters. It is estimated that these businesses contributed significantly to revenue growth in the third quarter.

Q2 Earnings

For the second quarter, the company reported a 54% growth in revenues to $95.1 million, aided by solid subscription growth. However, net loss widened to $20 million or $0.32 per share. On an adjusted basis, it was a profit of $0.07 per share. The results also topped the Street view.

Also see: Coupa Q1 2019 Earnings Conference Call Transcript

Last month, Coupa shares climbed to an all-time high after gaining steadily for more than a year. Though the stock lost momentum since then, it regained strength in recent weeks and is hovering near the peak once again.

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