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Coupa CEO Rob Bernshteyn on supply chain, enterprise enthusiasm and some rather big numbers

Stuart Lauchlan Profile picture for user slauchlan December 7, 2021
Healthy revenue growth for Q3 as enterprises rediscover their enthusiasm for transformation programs.

Rob Bernshteyn
Rob Bernshteyn

We have now surpassed $3 trillion in cumulative spend under management, with $1 trillion coming in the last year. This equates to over $80 billion per month, more than $2.7 billion per day, and well over $100 million during this earnings call alone.

There were some big numbers being bandied around by Coupa CEO Rob Bernshteyn yesterday as the Business Spend Management specialist turned in its latest quarterly numbers. Total Q3 revenue was up 40% year-on-year to $185.8 million with subscription revenue also growing 40% to $164.7 million and net loss of $91.2 million.

For the fiscal year-to-date, new business, including new customers and add-on business, is up nearly 90% while the number of customers with annualized subscription revenue above $100,000 is more than 1,300 compared to 1,000 this time last year. Bernshteyn cited a few customer examples from that total:

One example is Jabil, a Global Fortune 500 company focused on manufacturing solutions with more than $29 billion in revenue, 260,000 employees and 100 plus plants across 30+ countries and a particular concentration in Asia. Jabil needed one platform to integrate with their many ERPs. They migrated from an older legacy platform to Coupa and have now processed billions of dollars of spend through our platform over the past three years, including 96% of their 1.4 plus million POs issued to over 27,000 active suppliers. Most importantly, they now have visibility into and control over their business spending.

There was also the use case of an unnamed beauty and personal care provider that manufactures cosmetics in 14 nations across South and Central America and generates more than $1 billion in annual revenue. Bernshteyn said:

They’re using Coupa Supply Chain Design and Planning to optimize their inventory, improve service to their customers and save money. Their supply chain is very complex with factories in four countries, 250 plus new products being introduced every year in a rapidly changing demand environment.

To properly forecast, they need to understand how much inventory to build, the trade-offs between service levels and inventory holding costs, and which factories should produce which new products. Using the Coupa supply chain design and planning solution, this organization improved their overall service levels while driving a 25% reduction of total inventory, 35% reduction of their safety stock and saved millions of dollars in the process.

Finally, there was another anonymised user, this time a “multi-billion dollar frozen food delivery company”, he said:

[It] is among the first Coupa community members to take advantage of the synergistic integration between our supply chain design and strategic sourcing capabilities. First, the customer used Coupa supply chain design capabilities to evaluate and optimize multi stop routes for their more than $100 million of annual logistics spend across almost 300  different carriers. Then the design simulations were put into action.

The simulations were driven downstream to strategic sourcing, capturing one way direct lane, full truckload costs and per mile costs for a subset of dedicated carriers. This resulted in lower costs and increased asset utilization. This is a great example of maximizing value through the combined capabilities of our supply chain design and our strategic sourcing solutions.

As to the wider global supply chain crisis, Bernshteyn offered his own ‘big picture’ worldview on its impact on organizational needs:

It's very similar to when COVID first hit. What happened was that the world was really, as we all recall, in this acute kind of situation. That meant, by the way, deal sizes stopped, deal closures significantly halted. People were just trying to figure out how to begin to work from home and do what they need to do.

What we're seeing today, interestingly, is that we're seeing the downstream implications of COVID on global supply chain issues and those global supply chain issues today are acute, very similar to the way COVID was acute for us in March of last year.

So what we're doing in this market, in this environment, is that we're helping our customers, we're helping prospects, address near-term acute supply chain issues with some of the tools that we have in the marketplace.  But we're at the same time locking arms with them and anticipating broader and deeper supply chain design and planning transformations will take hold once this kind of acute phase begins to settle.

To market

Q3 also saw the launch of the Coupa App Marketplace, which now boasts over 100 apps that are enabled or in the process of being enabled, said Bernshteyn:

Within these apps, there are two ways our customers are extracting value. The first is through pre built integrations that make our customers’ investments and other enterprise software more valuable. The second is where they have gained access to new functionality, such as tax engines, supplier collaborations, ESG and corporate responsibility, and many more.

As a case in point, he pointed to a integrated tax engine app focusing on customer taxes for supplier transactions:

In this ever changing environment, it's obviously imperative that our customers understand if they're being charged the correct sales tax. The vertex-built integration supports tax calculation on invoice validation, empowering our customers with more control and oversight by pairing tax automation with Coupa’s procurement transformation. 


In terms of the wider economic situation, Bernshteyn has detected a pick-up in enterprise enthusiasm for transformation programmes:

When COVID hit, obviously we saw large enterprise customers either slow down their broader transformation initiatives or take a more modularized approach. We're actually seeing the opposite dynamic happening now, which is the willingness to engage back to the kind of more meaningful sales cycles we were in the heart of before COVID hit, which is, broad based, full-scale Business Spend Management transformation.

And what's really compelling…from our value proposition is, very often the thinking, particularly in working with our systems integrators on these digital transformation initiatives for their clients, is that the savings and value that could be generated from a relatively fast time-to-value deployment of Coupa, could actually be reinvested in the broader digital transformation they're doing across all areas of CRM, HCM, data storage and manipulation, collaboration, all the other key areas, many of the other key areas they're thinking about.

And in a sign of post-pandemic confidence, the firm plans to reinstate its Inspire in-person conference in April next year, he announced:

We think that getting back to a more in-person interaction ought to present the tailwind for our business. Physically being able to sit across the table from a senior executive and lock arms around a broad base digital transformation project is something we simply haven't had the opportunity to do for nearly two years now. So that of in itself, we believe ought to be a tailwind.

And Inspire undoubtedly is not just a prospect building sort of conference, but it's an energy building conference and we have thousands of customers [who are] highly successful with deployments of Coupa, that are delivering measurable value for them. Obviously, those people in the same in physical environment with prospects and partners, even our own colleagues, is incredibly energy creating. And that energy leads very often to faster deal cycles, fair price points of those sale cycles, quicker deployments more value being created.

My take

Increased operating expenses lay behind an increased net loss for the quarter, including a 57% increase in sales and marketing costs. That’s a necessary investment, but despite EPS and revenue coming in above Wall Street expectations, the share price took a post-results announcement dip. That’ll adjust itself. Of particular interest will be both how Coupa can meet supply chain crisis needs - never waste a good crisis! - and how quickly travel opens up again and gives that area of the business a boost.

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