Looking at Coupa’s Business Spend Index for Q1 2020, there are some grim stats to be found - a more than 30% year-on-year increase in office sanitizing equipment, a 70%+ year year-on-year increase on personal protective equipment, and a 45% year-on-year decrease in business travel spend.
With the Coronavirus crisis escalating, the conclusions in coming quarters will be telling, but the Q1 findings are a timely reminder of the need to be on top of understanding and managing corporate spend. Or as Coupa CEO Rob Bernshteyn noted:
I would say that the priority of business spend agility and spend control tends to get elevated on the list of digital transformation initiatives…in times like these.
Of more cheer to Wall Street yesterday was a 50% year-on-year growth rate at the spend management leader. For the full year. total revenues were $389.7 million, while subscription revenues were $345.3 million, an increase of 48% year-on-year. GAAP operating loss was $73.4 million, compared to a loss of $47.4 million for the previous year. For Q4, total revenues were $111.5 million, up 49% year-on-year, while subscription revenues were $98.6 million, an increase of 46%. GAAP operating loss was $15.9 million, compared to a loss of $14.7 million for the same period last year.
The firm ended the year with north of 1300 customers worldwide. Q4 new customers included American Signature, AstraZeneca, Blue Sphere of Singapore, BMW Group, Brex, Fox Corporation, Grupo PLANETA, John Lewis Partnership, Lucid Energy Group, Orangetheory Fitness, Quilter, Shinsei Bank, Skyservice Business Aviation, The University of Texas System and Wintershall Dea.
CEO Rob Bernshteyn picked out some customer exemplars to illustrate the global nature of the spend management business case:
In North America, United Airlines, one of the world's largest and best known airlines has recently gone live with Coupa BSM. With Coupa, United is providing its employees an efficient intuitive user experience that gives them more time to serve their customers while delivering control and visibility of third-party spend. Within the first three months, United has 2.5 times the amount of spend going through Coupa compared to the previous 12 months with their legacy system. They now have spend visibility, spend agility and spend control.
In Europe, Telia Company, a new generation telco, is providing communication services to help millions of people be connected, communicate, do business and be entertained. Telia recently replaced seven systems and fragmented manual processes with Coupa. In addition to enhancing value from suppliers, improving costs and optimizing cash flow, Coupa is helping Telia work towards its sustainability goals of achieving zero CO2 and zero waste within its operations and across its entire supply chain by 2030.
In South America, let me highlight Braskem, the largest producer of thermoplastic resins in the Americas and of polypropylene in the United States. We recently went live with Coupa BSM for both direct and indirect purchases. With Coupa, Braskem has seen rapid user adoption and within the first four months, they've successfully completed more than 8,000 sourcing events covering services, raw materials and maintenance.
[In] Australia, Volkswagen Group Australia, known as VGA, is the sole importer and distributor of Volkswagen passenger and commercial vehicles in Australia, which also includes top brands such as Skoda. VGA recently went live with the comprehensive Coupa platform and they're now gaining deeper visibility into their spend, while maintaining sustainable controls around budgets and delivering a great user experience. VGA is leveraging Coupa to maximize pre-approved contract back spend and to electronically exchange POs and invoices with their consolidated supplier base. VGA is also using Coupa to achieve automation and efficiencies with invoicing, contract lifecycle management and supplier management while using analytics to report on all these areas within Coupa.
The Co-op case in point
Bernshteyn also drilled down a specific example of Coupa’s ‘wisdom of the crowds’ Community Intelligence initiative in action:
The Co-op is one of the world's largest customer co-operatives, driving value from millions of members and employing 70,000 people. The Co-op supplies food, insurance, legal services and even funeral services to local communities, through more than 2,500 stores in the UK. In 2018, The Co-op launched Fuel for Growth, a strategic initiative to reduce costs in order to fund an ambitious growth agenda called Stronger Co-Op, Stronger Community. The success of this initiative hinged on creating a leaner and more agile operating model. For this, they turned to Coupa to identify what would drive the greatest process improvements across its BSM activity.
Initially their focus was to reduce approval cycle times through acquisitions and invoices while also introducing greater spend control. Coupa Community Intelligence insights illustrated that their approval cycle times are actually in line with community standards, but there was a sizeable opportunity to increase savings by driving a higher percentage of spend to pre-negotiated contracts.
Community Intelligence showed The Co-op, the best-in-class peers had on contract spend percentages that were 28 times higher than theirs. It also prescribed which specific items they could move to catalog. These prescriptions were based on what The Co-op's buyers were searching for and best practices from our expansive Coupa community. Based on these insights, The Co-op is increasing usage of preferred suppliers and taking advantage of pre-negotiated saving. As a result, The Co-op is better able to meet its fuel for growth goals and service members and communities more effectively.
As for the more recently launched Coupa Pay offering, there are real world success stories coming through even if it is still in its early days, said Bernshteyn:
Enterprise leads the transportation services industry with a world-class portfolio of brands like Enterprise National, Alamo Rent A Car and others. Their 100,000 team members operate in 100 countries with a fleet of over 2 million vehicles. Enterprise is currently implementing Coupa's comprehensive platform to drive global BSM transformation. Coupa Pay will connect Enterprises' supply base to readily-available working capital. Also Coupa Pay virtual card optimizations will improve credit card control, visibility and reconciliation.
In the mid-market Redfin is also a Coupa Pay customer that we are excited to be working with. Redfin is a brokerage that re-designed real estate with map-based technology and a different set of values that put customers first. Since their launch in 2006, they have helped customers buy or sell more than 235,000 homes, worth more than $115 billion. Similar to what we are experiencing with many Coupa customers, Redfin originally looked to us to improve their overall BSM process and also decided to include Coupa Pay.
Last month Redfin went live with Coupa Pay using both our virtual card and invoice payment solutions. They have now begun the digital transformation of their payment process for 3,500 active suppliers, across 8 subsidiaries and expect to increase their credit card rebates, reduced inward invoice processing costs and increased P2P process efficiency.
As for that reported decline in business travel noted above, during Q4, before the current crisis kicked in, Coupa acquired travel optimization firm Yapta, which is now part of the Coupa Travel and Expenses offering. It’s a simple idea, argued Bernshteyn, but a valuable one, saving companies an average of 2% to 4% of their corporate travel budget, resulting in hundreds of millions of dollars of savings:
You've booked your flight and hotel for a business trip. Prices subsequently dropped. However rarely would an employee check to see if prices have dropped and look to get re-booked…The solution uses technology to dynamically monitor airfare and hotel prices and takes the action of de-booking and re-booking virtually identical reservations when prices drop to a point where there will be worthwhile net savings to the customer. This all happens on the back end, without any distraction effort or work by the employee themselves. Savings are automatically delivered to the customer with a percentage going to Coupa as revenue.
Given the volatile and unpredictable nature of the current macro-economic climate globally, the need for organizations to understand and tightly control spending is going to be critical over the coming months. Against that backdrop, Coupa’s offerings should be all the more relevant to everyone.