Coupa Software Reports Second Quarter Fiscal 2023 Financial Results

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Coupa Software Reports Second Quarter Fiscal 2023 Financial Results
  • Record Quarterly Subscription Revenues of $193 Million, 23% Year-Over-Year Growth
  • Record Quarterly Revenues of $211 Million, 18% Year-Over-Year Growth
  • Quarterly Subscription Calculated Billings of $217 Million, 25% Year-Over-Year Growth
  • Quarterly Operating Cash Flows and Adjusted Free Cash Flows of $29 Million and $25 Million, Respectively
  • Announces Board of Directors Authorized $100 Million Share Repurchase Program

SAN MATEO, Calif., Sept. 6, 2022 /PRNewswire/ -- Coupa Software (NASDAQ: COUP) today announced financial results for its second fiscal quarter ended July 31, 2022.

"We're proud of our results this quarter. We delivered record revenues, strong growth in our subscription calculated billings, and we continue to deliver strong cash flows and profitability on a Non-GAAP basis," said Rob Bernshteyn, chairman and chief executive officer at Coupa. "We focus everything we do on our customers. Our platform is built with them and around them. We define our success by our customers' success. As illustrated by our results, the Coupa BSM community is vibrant and powering business transformation and growth."

Second Quarter Results:

  • Total revenues were $211.1 million, an increase of 18% compared to the same period last year. Subscription revenues were $192.7 million, an increase of 23% compared to the same period last year.

  • GAAP operating loss was $63.6 million, compared to $54.3 million for the same period last year. Non-GAAP operating income was $24.0 million, compared to $26.7 million for the same period last year.

  • GAAP net loss attributable to Coupa Software Incorporated was $75.3 million, compared to $91.5 million for the same period last year. GAAP net loss per basic and diluted share attributable to Coupa Software Incorporated was $0.99, compared to $1.24 for the same period last year. Non-GAAP net income attributable to Coupa Software Incorporated was $16.5 million, compared to $20.3 million for the same period last year. Non-GAAP net income per diluted share attributable to Coupa Software Incorporated was $0.20, compared to $0.26 for the same period last year.

  • Operating cash flows and adjusted free cash flows were $29.1 million and $25.0 million, respectively.

See the section titled "Non-GAAP Financial Measures" and the reconciliation tables below for important information regarding the non-GAAP financial measures used by Coupa.

Share Repurchase Program

Coupa announced today that its Board of Directors authorized a share repurchase program of up to $100 million of the Company's common stock. Under the program, Coupa may purchase shares from time to time through open market transactions in compliance with applicable securities laws. The program is currently set to expire on September 1, 2023. The timing, manner, price and amount of any repurchases, are determined by Coupa at its discretion and depend on a variety of factors, including legal requirements, price and economic market conditions. Any repurchases will be funded by available cash and cash equivalents.

Business Outlook:

The following forward-looking statements reflect Coupa's expectations as of September 6, 2022.

Third quarter of fiscal 2023:

  • Total revenues are expected to be $211.0 to $214.0 million.

  • Subscription revenues are expected to be $194.0 to $196.0 million.

  • Professional services and other revenues are expected to be approximately $17.0 to $18.0 million.

  • Non-GAAP income from operations is expected to be $14.0 to $16.0 million.

  • Non-GAAP net income per diluted share attributable to Coupa Software Incorporated is expected to be $0.08 to $0.10 per share.

  • Diluted weighted average share count is expected to be approximately 87.5 million shares, assuming no shares are purchased in the share repurchase program.

Full year fiscal 2023:

  • Total revenues are expected to be $838.0 to $844.0 million.

  • Subscription revenues are expected to be $766.0 to $771.0 million.

  • Professional services and other revenues are expected to be approximately $72.0 to $73.0 million.

  • Non-GAAP income from operations is expected to be $62.5 to $68.5 million.

  • Non-GAAP net income per diluted share attributable to Coupa Software Incorporated is expected to be $0.37 to $0.44 per share.

  • Diluted weighted average share count is expected to be approximately 87.5 million shares, assuming no shares are purchased in the share repurchase program.

Coupa has not reconciled its expectations for non-GAAP income from operations to GAAP loss from operations, or non-GAAP net income per diluted share attributable to Coupa Software Incorporated to GAAP net loss per share attributable to Coupa Software Incorporated because certain items that are excluded from non-GAAP income from operations and non-GAAP net income per diluted share attributable to Coupa Software Incorporated cannot be reasonably calculated or predicted at this time. Such exclusions consist of charges related to stock-based compensation, amortization of acquired intangible assets, amortization of debt issuance costs, gain or loss on conversion of convertible senior notes, gain or loss on non-marketable investments, the adjustment attributable to redeemable non-controlling interests, non-recurring income tax adjustments, and income tax effects. The effect of these items may be significant.

Recent Business Highlights:

  • Welcomed many new customers into the Coupa community in Q2, including the following: Aditum Bio Management Company, LLC, AEye, Inc., Air Force Association (Western Australian Division) Inc., Anduril Industries, Inc., BELLUS Health, Cellares Corporation, ClickUp, Cockroach Labs, Collectors Universe, Inc., Corius Deutschland GmbH, Deutsche Glasfaser, Dock Tech, Ellipse Projects, Fairlife, Flock Safety, HealthEdge, IGEFA SE & Co. KG, L & O Immobilien GmbH, Locanabio, Inc., ML Holding GmbH & Co. KG, National Injury Insurance Scheme, Nürnberger Lebensversicherung AG, Oasis Marina LLC, Planet Labs PBC, Royston LLC, Skyline Exhibits, Tatcha LLC, Tes Global Holdings Direct Ltd., TO Holding GmbH & Co. KG, University of East London, Veho Tech, Inc., Venues NSW, Veterinary Emergency Group, VPLS, W.A.G. payment solutions, a.s., and ZOLAR GmbH
  • Grew footprint in Latin America with three new offices in Mexico City, São Paulo and Bogotá
  • Recognized by Fast Company as a Best Workplace for Innovators
  • Achieved global Great Place to Work certification in the US, UK, Ireland, Germany, and India
  • Launched global Executive Summit series, bringing the BSM community together for learning, networking, and industry insights, with the inaugural Executive Summit in Singapore
  • Welcomed Kanika Soni, Tripadvisor Chief Commercial Officer, to our Board of Directors
  • Welcomed resource exchange platform Rheaply to Coupa Ventures' portfolio of investments
  • Published second annual Environmental, Social, and Governance (ESG) Report, debuting a new company mission and vision
  • Achieved ISO 27701 and APEC PRP certification for data privacy program

Conference Call Information:

Coupa will host a conference call and live webcast for analysts and investors at 4:30 p.m. Eastern time today.

The live webcast will be accessible on Coupa's investor relations website at http://investors.coupa.com. A replay will be available through the same link.

Non-GAAP Financial Measures:

In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and the accompanying tables contain certain non-GAAP financial measures, including non-GAAP operating income, non-GAAP net income attributable to Coupa Software Incorporated, non-GAAP net income per basic and diluted share attributable to Coupa Software Incorporated, adjusted free cash flows and adjusted free cash flows margin. Coupa believes these non-GAAP measures are useful in evaluating its operating performance and Coupa's management regularly reviews and uses these measures for business planning and other purposes.

Non-GAAP operating income and non-GAAP net income attributable to Coupa Software Incorporated exclude certain items from the corresponding GAAP measures, including: stock-based compensation, amortization of acquired intangible assets, amortization of debt issuance costs, gain or loss on conversion of convertible senior notes, gain or loss on non-marketable investments, the adjustment attributable to redeemable non-controlling interests, non-recurring income tax adjustments, and income tax effects, and prior to the adoption of ASU 2020-06 on February 1, 2022, amortization of debt discount costs. In addition, the weighted average diluted shares figure used to calculate non-GAAP net income per share attributable to Coupa Software Incorporated reflects the anti-dilutive impact of the if-converted method related to the convertible notes, if any.

Beginning in the three months ended April 30, 2022, we utilize a fixed long-term projected tax rate in our computation of the non-GAAP income tax provision to provide better consistency across the reporting periods. In projecting this long-term non-GAAP tax rate, we utilize a three-year financial projection that excludes the direct impact of stock-based compensation, amortization of acquired intangible assets, and amortization of debt issuance costs. The projected rate considers other factors such as our current operating structure, and existing tax positions in various jurisdictions. Additionally, due to historic profitability on a non-GAAP basis, there are no valuation allowances recorded against the non-GAAP deferred tax assets globally. We will periodically reevaluate the projected long-term tax rate, as necessary, for significant events, based on our ongoing analysis of relevant tax law changes, material changes in the forecasted geographic earnings mix, and any significant acquisitions.

Adjusted free cash flows is defined as net cash provided by operating activities, less purchases of property and equipment, and prior to the adoption of ASU 2020-06 on February 1, 2022, plus repayments of convertible senior notes attributable to debt discount, plus one-time payout of legacy unvested equity awards accelerated in conjunction with a business combination. Coupa has the ability to settle conversions related to its senior notes through the use of cash, shares of its common stock, or a combination of both, at its election. Adjusted free cash flow margin is defined as adjusted free cash flows divided by total revenues.

Coupa believes these non-GAAP measures are useful to investors and other users of its financial information because they provide a way to measure and evaluate Coupa's underlying operating performance and the strength of its core business consistently across the periods presented. Coupa believes these non-GAAP measures are also useful for comparing its operating performance to that of other companies in its industry, because they eliminate the effects of certain items that may vary between companies for reasons unrelated to their operating performance. Coupa believes that adjusted free cash flows also provides a useful measure of the company's capital strength and liquidity, although it is not intended to represent and should not be viewed as the amount of residual cash flow available for discretionary expenditures.

Coupa uses these non-GAAP measures in conjunction with GAAP measures as part of its overall assessment of its performance and liquidity, including the preparation of its annual operating budget and quarterly forecasts, to evaluate the effectiveness of its business strategies, and to communicate with its board of directors concerning its financial performance and liquidity. Coupa's definitions of its non-GAAP measures may differ from those used by other companies for similarly-titled measures, and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Thus, Coupa's non-GAAP measures should be considered in addition to, not as substitutes for, or in isolation from, the company's GAAP results.

Coupa encourages investors and others to review its financial information in its entirety, not to rely on any single financial measure, and to view its non-GAAP measures in conjunction with GAAP financial measures. In addition, Coupa compensates for the limitations of its non-GAAP financial measures by providing a reconciliation of each non-GAAP measure to the most directly comparable GAAP financial measure. These reconciliations are included in the tables attached to this release.

Forward-Looking Statements:

This release includes forward-looking statements. All statements other than statements of historical facts, including the statements of management and statements in "Business Outlook," are forward-looking statements. These forward-looking statements are based on Coupa's current expectations and projections about future events and trends that Coupa believes may affect its financial condition, results of operations, strategy, short- and long-term business operations and objectives, cash flows, liquidity and financial needs.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, without limitation: Coupa is subject to macroeconomic uncertainties driven by inflation, rising interest rates, the Russia-Ukraine conflict, and the COVID-19 pandemic; Coupa has a limited operating history at its current scale, which makes it difficult to predict its future operating results; Coupa may not be able to manage its recent rapid growth effectively; risks related to past and future business acquisitions, including their integration with Coupa's existing business model, operations and culture; if Coupa is unable to attract new customers, the growth of its revenues will be adversely affected; because its platform is sold to large enterprises with complex operating environments, Coupa encounters long and unpredictable sales cycles; the markets in which Coupa participates are intensely competitive; Coupa's business depends in part on its customers renewing their subscriptions and purchasing additional subscriptions; Coupa may not be successful in expanding its sales efforts or developing widespread brand awareness in a cost-effective manner; risks and liabilities related to breach of its security measures or unauthorized access to customer data; the impact of foreign currency exchange rates and global economic conditions; risks relating to servicing our debt; and the price, amount and timing of any share repurchases.

These and other risks and uncertainties that could affect Coupa's future results are included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in Coupa's quarterly report on Form 10-Q filed with the Securities and Exchange Commission (SEC) on June 6, 2022, which is available at investors.coupa.com and on the SEC's website at www.sec.gov. Further information on potential risks that could affect actual results will be included in other periodic filings Coupa makes with the SEC.

The forward-looking statements in this release reflect Coupa's expectations as of September 6, 2022. Coupa undertakes no obligation to update publicly any forward-looking statements for any reason after the date of this release to conform these statements to actual results or to changes in its expectations.

About Coupa Software

Coupa empowers companies around the world with the visibility and control they need to spend smarter and safer. To learn more about how Coupa can help you spend smarter, visit www.coupa.com. Read more on the Coupa Blog or follow @Coupa on Twitter.

 

COUPA SOFTWARE INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)



Three Months Ended

July 31,


Six Months Ended

July 31,




2022


2021


2022


2021

Revenues:








Subscription

$         192,670


$         156,230


$     371,140


$     296,334

Professional services and other

18,433


23,016


36,334


49,841

Total revenues

211,103


179,246


407,474


346,175

Cost of revenues:








Subscription

60,808


51,398


118,937


102,423

Professional services and other

22,501


27,822


45,200


56,524

Total cost of revenues

83,309


79,220


164,137


158,947

Gross profit

127,794


100,026


243,337


187,228

Operating expenses:








Research and development

46,266


41,799


89,976


85,636

Sales and marketing

103,215


76,279


204,168


154,122

General and administrative

41,942


36,248


84,080


75,625

Total operating expenses

191,423


154,326


378,224


315,383

Loss from operations

(63,629)


(54,300)


(134,887)


(128,155)

Interest expense

(3,619)


(30,621)


(7,095)


(59,724)

Other expense, net

(709)


(1,983)


(4,425)


(1,448)

Loss before provision for (benefit from) income taxes

(67,957)


(86,904)


(146,407)


(189,327)

Provision for (benefit from) income taxes

2,641


(155)


5,392


(2,221)

Net loss

(70,598)


(86,749)


(151,799)


(187,106)

Net loss attributable to redeemable non-controlling interests

(462)


(517)


(666)


(517)

Adjustment attributable to redeemable non-controlling interests

5,133


5,235


5,609


5,235

Net loss attributable to Coupa Software Incorporated

$          (75,269)


$          (91,467)


$   (156,742)


$   (191,824)

Net loss per share, basic and diluted, attributable to Coupa Software Incorporated

$              (0.99)


$              (1.24)


$          (2.08)


$          (2.62)

Weighted-average number of shares used in computing net loss per share, basic and diluted

75,669


73,526


75,429


73,200

 

COUPA SOFTWARE INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(unaudited)



July 31, 2022


January 31, 2022

Assets




Current assets:




Cash and cash equivalents

$         527,963


$         506,459

Marketable securities

281,370


223,032

Accounts receivable, net of allowances

219,522


226,191

Prepaid expenses and other current assets

35,975


38,270

Deferred commissions, current portion

22,801


21,096

Total current assets

1,087,631


1,015,048

Property and equipment, net

31,989


30,576

Deferred commissions, net of current portion

49,166


48,562

Goodwill

1,514,550


1,514,550

Intangible assets, net

446,123


510,663

Operating lease right-of-use assets

37,341


42,659

Other assets

29,077


31,121

Total assets

$      3,195,877


$      3,193,179

Liabilities, Redeemable Non-Controlling Interests, and Stockholders' Equity




Current liabilities:




Accounts payable

$              8,433


$              4,610

Accrued expenses and other current liabilities

98,374


79,160

Deferred revenue, current portion

477,423


468,783

Current portion of convertible senior notes, net

1,747


1,639

Operating lease liabilities, current portion

13,084


12,760

Total current liabilities

599,061


566,952

Convertible senior notes, net

2,159,683


1,614,257

Deferred revenue, net of current portion

29,646


22,655

Operating lease liabilities, net of current portion

24,857


31,172

Other liabilities

46,544


52,481

Total liabilities

2,859,791


2,287,517

Redeemable non-controlling interests

18,775


12,084

Stockholders' equity:




Preferred stock, $0.0001 par value per share


Common stock, $0.0001 par value per share

8


7

Additional paid-in capital

1,154,891


1,778,840

Accumulated other comprehensive income

7,333


9,643

Accumulated deficit

(844,921)


(894,912)

Total stockholders' equity

317,311


893,578

Total liabilities, redeemable non-controlling interests, and stockholders' equity

$      3,195,877


$      3,193,179

 

COUPA SOFTWARE INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)



Six Months Ended

July 31,



2022


2021

Cash flows from operating activities




Net loss attributable to Coupa Software Incorporated

$          (156,742)


$          (191,824)

Net loss and adjustment attributable to redeemable non-controlling interests

4,943


4,718

Net loss

(151,799)


(187,106)

Adjustments to reconcile net loss to net cash provided by operating activities:




Depreciation and amortization

71,804


73,146

Amortization (accretion) of premium (discount) on marketable securities, net

(721)


755

Amortization of deferred commissions

11,413


8,554

Amortization of debt discount and issuance costs

3,596


56,262

Stock-based compensation

108,224


94,792

Loss on conversion of convertible senior notes


129

Repayments of convertible senior notes attributable to debt discount


(517)

Other

(1,581)


(3,176)

Changes in operating assets and liabilities net of effects from acquisitions:




Accounts receivable

6,414


30,444

Prepaid expenses and other current assets

2,917


1,396

Other assets

10,438


9,585

Deferred commissions

(13,804)


(13,394)

Accounts payable

4,146


(248)

Accrued expenses and other liabilities

11,801


5,703

Deferred revenue

15,988


(3,432)

Net cash provided by operating activities

78,836


72,893

Cash flows from investing activities




Purchases of marketable securities

(152,349)


(72,392)

Maturities of marketable securities

88,586


69,523

Sales of marketable securities

4,597


83,630

Acquisitions, net of cash acquired


(45,766)

Purchases of other investments

(2,000)


(7,500)

Purchases of property and equipment

(8,241)


(6,662)

Net cash (used in) provided by investing activities

(69,407)


20,833

Cash flows from financing activities




Investment from redeemable non-controlling interests

2,111


2,223

Repayments of convertible senior notes


(2,446)

Proceeds from the exercise of common stock options

959


4,727

Proceeds from issuance of common stock for employee stock purchase plan

9,973


10,477

Net cash provided by financing activities

13,043


14,981

Effects of foreign currency exchange rates on cash, cash equivalents, and restricted cash

(1,075)


(41)

Net increase in cash, cash equivalents, and restricted cash

21,397


108,666

Cash, cash equivalents, and restricted cash at beginning of year

510,339


327,589

Cash, cash equivalents, and restricted cash at end of period

$           531,736


$           436,255

Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets




Cash and cash equivalents

$           527,963


$           432,009

Restricted cash included in other assets

3,773


4,246

Total cash, cash equivalents, and restricted cash

$           531,736


$           436,255

 

COUPA SOFTWARE INCORPORATED

Reconciliation of GAAP to Non-GAAP Financial Measures

Three Months Ended July 31, 2022

(in thousands, except percentages and per share amounts)

(unaudited)



GAAP


Stock-Based

Compensation

Expenses


Amortization of

Acquired

Intangible Assets


Amortization 
of Debt
Issuance Costs


Other (2)


Income Tax
Effects and
Adjustments (3)


Non-GAAP

Costs and expenses:














Costs of subscription

$     60,808


$    (4,819)


$      (17,731)


$           —


$        —


$            —


$    38,258

Costs of professional services and other

22,501


(5,375)


(1,505)





15,621

Gross profit

60.5 %


4.8 %


9.1 %


0.0 %


0.0 %


0.0 %


74.5 %















Research and development

46,266


(14,054)






32,212

Sales and marketing

103,215


(17,356)


(12,596)





73,263

General and administrative

41,942


(14,228)






27,714

Income (loss) from operations

(63,629)


55,832


31,832





24,035

Operating margin

(30.1) %


26.4 %


15.1 %


0.0 %


0.0 %


0.0 %


11.4 %















Interest expense

(3,619)




1,831




(1,788)

Other expense, net

(709)







(709)

Income (loss) before provision for (benefit from) income taxes

(67,957)


55,832


31,832


1,831




21,538

Provision for (benefit from) income taxes

2,641






2,875


5,516

Net income (loss)

(70,598)


55,832


31,832


1,831



(2,875)


16,022

Net loss attributable to non-controlling interests

(462)







(462)

Adjustment attributable to non-controlling interests

5,133





5,133



Net income (loss) attributable to Coupa Software Incorporated

(75,269)


55,832


31,832


1,831


5,133


(2,875)


16,484















Net income (loss) per share, basic, attributable to Coupa Software Incorporated (1)

$        (0.99)












$         0.22

Net income (loss) per share, diluted, attributable to Coupa Software Incorporated (1)

$        (0.99)












$         0.20

 

(1)

GAAP net loss per share attributable to Coupa Software Incorporated is calculated based upon 75,669 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share attributable to Coupa Software Incorporated is calculated based upon 75,669 basic and 86,793 diluted weighted-average shares of common stock. As a result of our adoption of ASU 2020-06 on February 1, 2022, the company uses the if-converted method to calculate the non-GAAP net income per diluted share attributable to Coupa Software Incorporated related to the convertible notes. Approximately 9,738 shares related to the convertible notes were therefore included in the non-GAAP diluted share number, while the numerator used to compute this measure was increased by $1.2 million for after-tax interest expense savings related to our convertible notes.

(2)

Other consists of an adjustment attributable to redeemable non-controlling interests to its redemption amount.

(3)

During the three months ended July 31, 2022, the company utilized a long-term projected tax rate in the computation of the non-GAAP provision for income taxes to provide better consistency across the interim reporting periods.

 

COUPA SOFTWARE INCORPORATED

Reconciliation of GAAP to Non-GAAP Financial Measures

Three Months Ended July 31, 2021

(in thousands, except percentages and per share amounts)

(unaudited)



GAAP


Stock-Based

Compensation

Expenses


Amortization of

Acquired

Intangible Assets


Amortization of

Debt Discount and

Issuance Costs


Other (2)


Non-GAAP

Costs and expenses:












Costs of subscription

$         51,398


$          (3,596)


$        (14,525)


$                 —


$                —


$         33,277

Costs of professional services and other

27,822


(4,357)


(5,852)




17,613

Gross profit

55.8 %


4.4 %


11.4 %


0.0 %


0.0 %


71.6 %













Research and development

41,799


(11,055)





30,744

Sales and marketing

76,279


(12,230)


(13,141)




50,908

General and administrative

36,248


(16,262)





19,986

Income (loss) from operations

(54,300)


47,500


33,518




26,718

Operating margin

(30.3) %


26.5 %


18.7 %


0.0 %


0.0 %


14.9 %













Interest expense

(30,621)




28,872



(1,749)

Other expense, net

(1,983)






(1,983)

Income (loss) before provision for (benefit from) income taxes

(86,904)


47,500


33,518


28,872



22,986

Provision for (benefit from) income taxes

(155)


769


1,889



746


3,249

Net income (loss)

(86,749)


46,731


31,629


28,872


(746)


19,737

Net loss attributable to non-controlling interests

(517)






(517)

Adjustment attributable to non-controlling interests

5,235





5,235


Net income (loss) attributable to Coupa Software Incorporated

(91,467)


46,731


31,629


28,872


4,489


20,254













Net income (loss) per share, basic, attributable to Coupa Software Incorporated (1)

$            (1.24)










$              0.28

Net income (loss) per share, diluted, attributable to Coupa Software Incorporated (1)

$            (1.24)










$              0.26

 

(1)

GAAP net loss per share attributable to Coupa Software Incorporated is calculated based upon 73,526 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share attributable to Coupa Software Incorporated is calculated based upon 73,526 basic and 76,561 diluted weighted-average shares of common stock. The company uses the treasury stock method to calculate the non-GAAP diluted shares related to the convertible notes which reflects any anti-dilutive impact of the capped call transactions entered into in connection with the convertible notes.

(2)

Other consists of the removal of a one-time income tax benefit associated with the remeasurement of foreign deferred tax assets and an adjustment attributable to non-controlling interests to its redemption amount.

 

COUPA SOFTWARE INCORPORATED

Reconciliation of GAAP to Non-GAAP Financial Measures

Six Months Ended July 31, 2022

(in thousands, except percentages and per share amounts)

(unaudited)



GAAP


Stock-Based

Compensation

Expenses


Amortization of

Acquired

Intangible Assets


Amortization of

Debt Issuance
Costs


Other (2)


Income Tax
Effects and
Adjustments (3)


Non-GAAP

Costs and expenses:














Costs of subscription

$  118,937


$    (9,333)


$      (35,754)


$                 —


$            —


$             —


$  73,850

Costs of professional services and other

45,200


(10,227)


(3,443)





31,530

Gross profit

59.7 %


4.8 %


9.6 %


0.0 %


0.0 %


0.0 %


74.1 %















Research and development

89,976


(26,820)






63,156

Sales and marketing

204,168


(33,290)


(25,342)





145,536

General and administrative

84,080


(28,554)






55,526

Income (loss) from operations

(134,887)


108,224


64,539





37,876

Operating margin

(33.1) %


26.6 %


15.8 %


0.0 %


0.0 %


0.0 %


9.3 %















Interest expense

(7,095)




3,596




(3,499)

Other expense, net

(4,425)





(1,288)



(5,713)

Income (loss) before provision for (benefit from) income taxes

(146,407)


108,224


64,539


3,596


(1,288)



28,664

Provision for (benefit from) income taxes

5,392






1,949


7,341

Net income (loss)

(151,799)


108,224


64,539


3,596


(1,288)


(1,949)


21,323

Net loss attributable to non-controlling interests

(666)







(666)

Adjustment attributable to non-controlling interests

5,609





5,609



Net income (loss) attributable to Coupa Software Incorporated

(156,742)


108,224


64,539


3,596


4,321


(1,949)


21,989















Net income (loss) per share, basic, attributable to Coupa Software Incorporated (1)

$       (2.08)












$      0.29

Net income (loss) per share, diluted, attributable to Coupa Software Incorporated (1)

$       (2.08)












$      0.28

 

(1)

GAAP net loss per share attributable to Coupa Software Incorporated is calculated based upon 75,429 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share attributable to Coupa Software Incorporated is calculated based upon 75,429 basic and 86,664 diluted weighted-average shares of common stock. As a result of our adoption of ASU 2020-06 on February 1, 2022, the company uses the if-converted method to calculate the non-GAAP net income per diluted share attributable to Coupa Software Incorporated related to the convertible notes. Approximately 9,738 shares related to the convertible notes were therefore included in the non-GAAP diluted share number, while the numerator used to compute this measure was increased by $2.3 million for after-tax interest expense savings related to our convertible notes.

(2)

Other consists of a gain on non-marketable investments and an adjustment attributable to redeemable non-controlling interests to its redemption amount.

(3)

During the six months ended July 31, 2022, the company utilized a long-term projected tax rate in the computation of the non-GAAP provision for income taxes to provide better consistency across the interim reporting periods.

 

COUPA SOFTWARE INCORPORATED

Reconciliation of GAAP to Non-GAAP Financial Measures

Six Months Ended July 31, 2021

(in thousands, except percentages and per share amounts)

(unaudited)



GAAP


Stock-Based

Compensation

Expenses


Amortization of

Acquired

Intangible Assets


Amortization of

Debt Discount and

Issuance Costs


Loss on Conversion

 of Convertible
Senior

 Notes


Other (2)


Non-GAAP

Costs and expenses:














Costs of subscription

$  102,423


$     (6,901)


$        (28,411)


$                 —


$                    —


$            —


$    67,111

Costs of professional services and other

56,524


(8,255)


(12,374)





35,895

Gross profit

54.1 %


4.4 %


11.8 %


0.0 %


0.0 %


0.0 %


70.2 %















Research and development

85,636


(21,718)






63,918

Sales and marketing

154,122


(23,451)


(26,273)





104,398

General and administrative

75,625


(34,467)






41,158

Income (loss) from operations

(128,155)


94,792


67,058





33,695

Operating margin

(37.0) %


27.4 %


19.4 %


0.0 %


0.0 %


0.0 %


9.7 %















Interest expense

(59,724)




56,262




(3,462)

Other expense, net

(1,448)





129



(1,319)

Income (loss) before provision for (benefit from) income taxes

(189,327)


94,792


67,058


56,262


129



28,914

Provision for (benefit from) income taxes

(2,221)


1,817


3,818




746


4,160

Net income (loss)

(187,106)


92,975


63,240


56,262


129


(746)


24,754

Net loss attributable to non-controlling interests

(517)







(517)

Adjustment attributable to non-controlling interests

5,235






5,235


Net income (loss) attributable to Coupa Software Incorporated

(191,824)


92,975


63,240


56,262


129


4,489


25,271















Net income (loss) per share, basic, attributable to Coupa Software Incorporated (1)

$       (2.62)












$        0.35

Net income (loss) per share, diluted, attributable to Coupa Software Incorporated (1)

$       (2.62)












$        0.33

 

(1)

GAAP net loss per share attributable to Coupa Software Incorporated is calculated based upon 73,200 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share attributable to Coupa Software Incorporated is calculated based upon 73,200 basic and 76,431 diluted weighted-average shares of common stock. The company uses the treasury stock method to calculate the non-GAAP diluted shares related to the convertible notes which reflects any anti-dilutive impact of the capped call transactions entered into in connection with the convertible notes.

(2)

Other consists of the removal of a one-time income tax benefit associated with the remeasurement of foreign deferred tax assets and an adjustment attributable to non-controlling interests to its redemption amount.

 

COUPA SOFTWARE INCORPORATED

Reconciliation of GAAP Cash Flows from Operations to Adjusted Free Cash Flows and Adjusted Free Cash Flows Margin

(A Non-GAAP Financial Measure)

(in thousands, except percentages)

(unaudited)



Three Months Ended July 31,


Six Months Ended July 31,


2022


2021


2022


2021

Net cash provided by operating activities

$        29,094


$        40,811


$        78,836


$        72,893

Less: purchases of property and equipment

(4,128)


(3,908)


(8,241)


(6,662)

Add: repayments of convertible senior notes attributable to debt discount




517

Adjusted free cash flows

24,966


36,903


70,595


66,748

Divided by: total revenues

$      211,103


$      179,246


$      407,474


$      346,175

Adjusted free cash flows margin

11.8 %


20.6 %


17.3 %


19.3 %

 


Trailing Twelve Months Ended July 31,


2022


2021

Net cash provided by operating activities

$      174,033


$      112,298

Less: purchases of property and equipment

(15,432)


(11,126)

Add: repayments of convertible senior notes attributable to debt discount

821


1,589

Add: one-time payout of legacy unvested equity awards accelerated in conjunction with a business combination


19,428

Adjusted free cash flows

159,422


122,189

Divided by: total revenues

$      786,588


$      642,683

Adjusted free cash flows margin

20.3 %


19.0 %

 

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SOURCE Coupa Software

Investor Relations: Ravin Bramhe, ir@coupa.com