Uncertainty levels remain high, but customers are embracing increased spend, says Coupa CEO Rob Bernshteyn

Profile picture for user slauchlan By Stuart Lauchlan September 8, 2021 Audio mode
Summary:
A strong Q2 for Coupa as Business Spend Management remains a compelling imperative for organizations across multiple sectors.

Coupa CEO

It's clear that we are still very much living through a time when companies are operating with a heightened level of uncertainty. What we're witnessing is the companies are doing their best to adapt to this uncertainty.

That’s the summation from Rob Bernshteyn, CEO of Business Spend Management specialist Coupa, as he looks at the current commercial landscape in the Vaccine Economy. He points to the firm’s own quarterly Business Spend Index (BSI) as evidence, which found that organizations in manufacturing, retail and health & life sciences have all increased their spend, while financial services and tech businesses have remained stable. Only business services reported a decline. Bernshteyn comments:

While the BSI data shows that global order per customer activity has returned to pre-pandemic levels, the increased supplier to buyer ratio illustrates how companies are diversifying their supply base to de-risk supply chain disruptions. The BSI data also shows an increasing lack of correlation between COVID case spikes and order patterns, which would imply that companies have taken the need to become more adept regarding continuity of operations.

He cites an example to make his point:

Our distribution-heavy customers are running into unprecedented bottlenecks with transportation. In many cases, trucking companies haven't been able to increase their personnel quickly enough to meet increasing demand. This forces them to figure out not only how to source the transportation, but also how to do so without paying exorbitant fees.

Our Supply Chain Design & Planning solutions are helping identify where these shortages will impact the customer ahead of time, at which point, the dynamic sourcing event can be kicked off to engage multiple suppliers, while maintaining fair prices and high quality of service. This is just one example of how continuous design and redesign is leading to significant improvements in agility by enabling our customers to create rapid digital twins of their supply chain. We're taking technology that's already revolutionized healthcare and the auto industry and bringing it to all BSM customers, allowing them to thrive in this time of uncertainty. 

App expansion

Another weapon in the arsenal here is the recent launch of the Coupa Application Marketplace, he says:

With our marketplace, we're enabling quick access to solutions such as supply chain insights, supply risk analysis, IT management and much more. Many of the solutions included are ready to use right off the virtual shelf. This is also the very first marketplace in the business spend and management space that empowers users to customize their experience, making it a more powerful tool to share information, automate workflows and conduct key tasks. We proudly have more than 70 applications onboarded already with over 20 more in the pipeline. The more customers participate, more powerful our platform will become in helping them comprehensively address their spend.

He adds:

The main purpose of the marketplace is to foster and grow the partner ecosystem around us. This Business Spend Management opportunity is really sizeable. We've defined market at tens of billions of dollars globally in mid-market and enterprise and across the board internationally. So, the reality that we're going to able to hit every component and every type of use case that a customer would ever expect, is not likely in the near-term. So we want to build an ecosystem around this.

The fact that so many great emerging companies and developed companies are building on our marketplace is going to make it so much easier for our customer community to begin to subscribe to these applications and have them pre-integrated with the core Coupa platform.

Overall, there is, it seems, pent-up demand that’s coming through now, even if sales cycles are still longer than they were pre-pandemic. Bernshteyn points to some ‘big ticket’ successes in recent months:

We had more seven-figure enterprise deals certainly than last quarter. We had our first ever seven-figure deal in the mid-market this quarter, which was very interesting. When you look at the texture of these transactions, they're not sort of just pent-up demand unlocked; they are transformational deployments of our Business Spend Management platform that is going to help these folks recognize incredible operational efficiency, the agility, they simply don't have without these types of applications fully deployed. 

My take

Coupa Travel remains impacted by the COVID crisis inevitably, but everything else that emerged from yesterday’s analyst conference call with Bernshteyn points to an improving macro-economic environment. For its part, Coupa outstripped Wall Street expectations yet again with a set of better-than-expected Q2 numbers. Total revenues were $179.2 million, up 42% year-on-year while subscription revenues were $156.2 million, up 40% with a net loss of $91.5 million. Uncertainty may remain a certainty for some time yet, but Coupa remains well-placed to meet a business need that has endured throughout the pandemic and will be critical to address in the Vaccine Economy that lies ahead.