Will the recent negative trend continue leading up to its next earnings release, or is Coupa Software due for a breakout? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Coupa Beats Q2 Earnings Estimates on Record Revenues
Coupa Software reported solid second-quarter fiscal 2023 results with record revenues and healthy momentum in the subscription business. Both the bottom line and top line beat respective estimates. The healthy results were backed by Coupa, providing companies with visibility and control over their business spending, resiliency in back-office operations and aiding in making strategic and data-driven decisions to yield positive outcomes for their business.
GAAP net loss in the quarter was $75.3 million or a loss of 99 cents per share compared with a net loss of $91.5 million or a loss of $1.24 per share in the prior-year quarter. Non-GAAP net income during the quarter was $16.5 million or 20 cents per share compared with $20.3 million or 26 cents per share in the prior-year quarter, beating the Zacks Consensus Estimate by 11 cents.
Revenues were record high at $211.1 million compared with $179.2 million in the prior-year quarter, beating the Zacks Consensus Estimate of $203 million. The growth was backed by the strong performance in the North America enterprise market, with more customers preferring its ROI-driven business spend management platform to optimize their spend.
Subscription revenues were record high at $192.7 million compared with $156.2 million, backed by the strengthening of the U.S. dollar against the euro. Professional services revenues during the quarter were $18.4 million compared with $23 million in the year-earlier quarter.
Gross profit during the quarter was reported at $127.8 million compared with $100 million in the prior-year quarter. GAAP operating loss was $63.6 million compared with an operating loss of $54.3 million in the prior-year quarter. Non-GAAP operating income in the quarter was $24 million compared with $26.7 million in the year-earlier quarter for respective margins of 11.4% and 14.9%.
Cash Flow & Liquidity
In the first six months of fiscal 2023, the company generated operating cash flows of $78.8 million compared with $72.9 million in the prior-year period. As of Jul 31, 2022, the company had $528 million of cash and cash equivalents with net convertible senior notes of $2,159.7 million. The company initiated a stock repurchase program to buy back $100 million shares within Sep 1, 2023.
For fiscal 2023, the company has updated its revenue guidance from $838-$848 million to $838-$844 million. Subscription revenues are expected to be in the range of $766-$771 million. Professional services and other revenues are expected to be $72-$73 million. Non-GAAP earnings are likely to be in the range of 37-44 cents per share, up from earlier expectations of 21-27 cents.
For third-quarter fiscal 2023, total revenues are expected to be in the range of $211-$214 million. Subscription revenues are expected to be within $194-$196 million and professional services and other revenues are expected to be $17-$18 million. Non-GAAP net income is likely to be in the range of 8-10 cents per share.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 7.06% due to these changes.
At this time, Coupa Software has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren’t focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Coupa Software has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Coupa Software belongs to the Zacks Internet – Software industry. Another stock from the same industry, HashiCorp, Inc. (HCP – Free Report) , has gained 11.4% over the past month. More than a month has passed since the company reported results for the quarter ended July 2022.
HashiCorp, Inc. reported revenues of $113.86 million in the last reported quarter, representing a year-over-year change of