The return of business travel contributed to a strong Q1 for Coupa, one which saw revenues up and a reduced net loss for the quarter.
The firm turned in Q1 revenues of $196.4 million, up 18% year-on-year, with a net loss of $81.5 million, reduced from $100.4 million for the same quarter last year. Subscription revenues were up 27% year-on-year to $178 million.
Other stats of note from the quarter:
- Cumulative spend under management reached nearly $3.6 trillion during the quarter.
- Coupa Pay handled more than $10 billion cumulative pay volume in Q1.
- Nearly 70% of customers that are live on the platform have used Community Insights or Community Connections multiple times per month.
- The number of customers with ARR (Annual Recurring Revenue) greater than $100,000 was 1,441, up 27% year-on-year.
Customers are looking to Business Spend Management as a tool to help navigate the uncertainties of the current macro-environment, said CEO Rob Bernshteyn:
As we are all acutely aware, the global business environment is currently highly volatile. We have seen some early signs of potential softening in Europe, especially as the war in Ukraine and inflationary pressures appear to be weighing more on business leaders than they were before. Yet in this context, we remain agile and pragmatic in how we run our business and make investments.
And the firm is in a different place from where it was during previous periods of wider turbulence, he noted:
We did see this before. If you think about 2009, 2010, 2011, some of the wind in the sails of the value proposition we offer were there, and are here today - the focus on tightening expenditures, the focus on getting more spend on contract, the desire to have greater visibility to business spending.
But I would tell you, we were a very, very small company in 2009, '10, '11. Viability was a concern. Our platform wasn't yet scalable. We weren't able to support multi-lingual, multi-currency deployments.
Today, we're incredibly viable. We have thousands and thousands of customer references and proof points in virtually every industry. And we think that really bodes well for us as we enter these uncertain times with the value proposition that can deliver.
Business travel is on the way back, argued Bernshteyn, which is a useful enabler for growth:
When we look at our Business Spend Index and look at the data there, it's showing a pretty steady increase in travel. And, obviously, we've seen it ourselves, which is a wonderful thing to see, in our own company. We talk to agencies that we have as partners. They expect to see a return to pre-pandemic levels by 2024. Obviously, they're not fortune tellers, but that's kind of the consensus of what we're hearing out there.
For its part, Coupa is back having real world meetings with customers and prospects, he added, as evidenced by the recent Inspire events in both the US and Europe:
It's been amazing getting back in front of customers to collaborate in face-to-face, real-time sessions to help them fully understand what we're doing here at Coupa. We're giving them visibility, control and agility over their business spending, helping them build foundational resilience in their back-office operations for the long term and empowering them to make strategic, data-driven decisions that yield positive outcomes for their businesses.
As is usual on these occasions, Bernshteyn used the quarterly analyst call to highlight some use case exemplars of Coupa’s platform being used in action, citing CBRE, the world's largest commercial real estate services and investment firm:
CBRE uses Coupa in 49 countries around the world, including in Japan where the digital payments process for more than 700 supply partners were streamlined. They were quickly able to mitigate 80% of the region's spend from manual processes to digital e-invoicing. Not only did they reduce cycle times by more than 50%, they were also able to improve payment fulfillment in Japan by 85%, positively impacting cash flow. I'm appreciative of the comment they shared with us, which was, ‘Coupa has made material improvements in CBRE's cross-functional collaboration internally and with their business partners. The platform is critical to our ability to execute our business spend management strategy’.
Another case in point was that of electric vehicle producer Rivian. Bernshteyn said:
They're a testament to how businesses scale on our platform. By leveraging Coupa's ability to improve processes and drive automation, Rivian has maintained the same procurement operations team size while its overall employee base has grown 20x in the last 18 months. They’ve gone from a completely manual approach to having 93% of their purchase orders and 90% of their invoices processed electronically. With Coupa, Rivian has gained visibility into and control over their spend and has benefited greatly from the scalability of our platform.
Multi-product suite deals are on the rise, he added, citing insurance firm Ally Financial:
Ally greatly simplified its IT landscape by replacing several systems with one integrated Coupa platform. They are using Source-to-Pay, Contingent Workforce, Third-Party Risk, Supplier Diversity and T&E. By taking a comprehensive approach, Ally is able to work more strategically and collaboratively across the organization, delivering strong ROI and maintaining the agility to make changes when necessary.
And then there is Microsoft, a supply chain design and planning customer of Coupa, Bernshteyn said:
With such a wide range of products for multiple types of customers that get delivered through so many different distribution channels, they clearly have an extremely complex supply chain to manage. Microsoft emphasized that, with massive amounts of data coming in every day, digitization is incredibly important to them. The data helps drive the organization to make the correct decisions today while also considering the necessary planning as far out as 3 to 5 years. Each business decision can't just be correct for one part of Microsoft. Collectively, all the decisions need to work in concert with each other. Using Coupa's Supply Chain Design and Planning solution, Microsoft is achieving its goals of maximizing the cost-benefit equation, minimizing lead times and working towards being carbon-neutral by 2030, all with data as a driving force.
A strong start to the new fiscal year, coming off the back of two successful public events in Las Vegas and Berlin. The importance of having insight into and being able to control business spend is surely never more important than in times of wider economic turbulence - and there’s certainly not far to go to find that at present. The other upbeat note is the return of business travel, which should mean Coupa’s own travel booking solution sees an uptick that’s been denied it by the COVID crisis to date.