A strong end to 2018 for Coupa as the business spend management specialist turns in better-than-expected Q3 numbers, weeks after clocking up its sixth listing on Deloitte’s annual Technology Fast 500 ranking of the fastest growing tech firms around the world.
For Q3, Coupa turned in revenues of $67.5 million, up 42% year-on-year, with subscription revenues making up $60.6 million of that, also up 42%. GAAP net loss was $9.6 million, down from $11.2 million at this time last year.
Those numbers were enough for CEO Rob Bernshteyn to declare:
It's important to note that we are fully on-track to easily surpass $1 trillion in cumulative spend under management in Q4. But most importantly, from a longer term perspective, we are continuing to make a meaningful impact in the broader enterprise software industry.
From a customer perspective, new logos during Q3 included Golden State Warriors; Coors Distribution Company; Darden Restaurants Group, owners of the Olive Garden; Cvent; AAA Club Alliance; Lime Bikes; Axiata; Genesis Energy; SkillSoft; Consolis, KPMG Canada and two big name airlines:
United Airlines selected Coupa to help transform their procurement processes and drive real value in the areas of cost reduction and operational excellence. Another major airline, Finnair, chose Coupa as part of its procurement digitization journey. Finnair is focused on taking their procure-to-pay process and employee experience both to the next level. ISS Group, a global facility services company with nearly 500,000 employees selected Coupa based on our proven track record of successful implementations across complex global companies.
Meanwhile Bernshteyn says that north of 100 customers went live over the past 3 months:
Ingersoll Rand went live in the U.S. and Canada in a rapid deployment focused on increased electronic invoicing, improved spend under management and achieved -- and the achievement of 100% electronic purchase orders. Zurich Insurance went live with Coupa in the UK, with a special focus on increased PO matching, electronic invoicing, spend under contract and user experience scores.
Salling Group, Denmark's largest retailer, went live with Coupa at 600 sites across Denmark in the first phase of a 1,200-site four-country rollout. Finally, Inchcape, a leading independent global automotive distributor and retailer, who we announced as a new customer just last quarter, went live with Coupa in the UK and Australia in the first phase of a major global procurement transformation where Coupa will be rolled out in all operational and corporate locations across the world.
Looking at underlying customer trends, Bernshteyn detects some widening of focus, particularly around pay:
In terms of pay, just like everything we've done to date, we've worked with our customers to how to solve it, their primary business need. How could they get their spend under management, how could they understand the suppliers that they're working with, how could they automate a lot of baseline processes that are still being done and a whole host of older technology solutions or even done on paper, in many cases. There was clearly an interest among our growing customer community to go beyond the traditional Procure-to-OK-to-Pay, all the way to Procure-to-Pay as part of our overall business spend management suite.
So we began with the areas where we can offer the greatest value and then also leverage our greatest core competencies around usability, around having a transactional platform at scale internationally, around getting our arms around the primary purchasing mechanisms that our customers use our platform for. So we came out initially with Coupa's virtual cards for POs which is now generally available, and it's going to streamline a lot of processes that are being done today on corporate business cards. And in chaotic sort of ways, we moved into dynamic discounting [with] Coupa Accelerate that allows our buyers to take advantage of early payment discounts…we're moving further toward Coupa invoice payments, and the mechanism is being planned there.
Another trend looks likely to be connected to macro-economic factors:
We've actually seen, particularly over the last quarter, some relatively significant statistics such as spend requests from request time to approval are actually taking a bit longer in certain industries. We're looking at this obviously as an aggregated insight over hundreds of billions of dollars in spend.
Also rejection approval time. Rejection amounts have actually increased quite a bit, and we think that from a hypothesis-driven perspective, that may be an indication that companies are becoming a bit more frugal, given the economic uncertainty that they might be experiencing.
What's special for us in that situation is that we have this platform that allows all of our customers to see what's going on at an aggregate level, at an industry-by-industry level through various periods of time, so they could fine-tune how they are reacting to the changing economic times.
It wouldn’t be the first economic ‘bump’ that Coupa has had to deal with since its founding in 2006, adds Bernshteyn:
We have a bit of experience in this. In turbulent economic times, the one thing that you can control is your spend. Revenue can be harder and harder to come by. Market dynamics can put you in a difficult situation, but spend is something you can control. The ability to control spend drives bottom-line results, which virtually every company in the world cares about or certainly should care about.
So we think we're at a place where we have the gravitas in the marketplace, we have the legitimacy in the marketplace, we have the proven track record in the marketplace, both internationally and domestically in mid-market and enterprise, to help companies of virtually all sizes in all industries weather the storm.
And we can not only provide them the opportunity to control that spend, we can now give them really valuable insight based on our AI-powered Community Intelligence so they can get smarter and smarter about how they spend. So just regardless of where things take us from a macro-economic perspective, we're pushing on it full throttle to be a partner to this developing community of customers.
As noted at the start, a strong end to calendar 2018 for Coupa, with a good forecast for 2019, including break-even on an adjusted basis next quarter. Whatever happens in the macro-economic world, the space in which Coupa operates is one with a clear business rationale for companies of all sizes.