7 Coupa Software analysts react to Q1 earnings pace: ‘A lot of noise around billing’

Coupa Software Inc. CUT Shares traded up 1.8% on Tuesday after the company reported strong results and record first-quarter subscription revenue.

On Monday, Coupa reported first-quarter adjusted EPS of 8 cents on revenue of $196.3 million. Both figures exceeded consensus analyst estimates of 5 cents and $190.6 million, respectively. Revenue increased by 17.6% compared to a year ago.

Coupa posted record quarterly subscription revenue of $178 million, up 27% year-over-year. Calculated quarterly billings of $188 million increased 26%.

Looking ahead, Coupa forecast second-quarter revenue of $202 million to $205 million, missing Wall Street expectations of $205.2 million. For the full fiscal year 2023, Coupa had revenue of between $838 million and $843 million, compared to analyst estimates of $841.6 million.

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Loud numbers: RBC Capital Markets Analyst Rishi Jaluria said there was still “a lot of noise around billings” for Coupa.

“To reduce the noise of de-emphasizing service revenue and Llamasoft term license migrations, management will now report and guide subscription billings going forward (which we would appreciate a reconciliation/bridge on)”, Jaluria wrote.

Raymond James Analyst Brian Peterson said Coupa performs well in a noisy and jerky macro environment.

“We realize quarters can be tough to call, but we believe the company’s high return on investment, expanding product portfolio and increasing go-to-market movement should enable a growth profile. sustainable by ~20% (with potential for more in a more stable macro),” Peterson wrote.

European weakness: JMP Analyst Patrick Walravens said Coupa’s outlook was mixed and the company’s European business was showing signs of weakness.

“On the plus side, Coupa is a supply chain leader and offers a number of exciting cross-selling opportunities, including Coupa Pay, supply chain planning and design, and T&E, but On the cautious side, we think the company has struggled with some of its acquisitions and cross-selling, there’s been some slowdown in Europe, and investors will be wondering if that’s going to expand to other regions over time. the year,” Walravens wrote.

KeyBanc Analyst Josh Beck said the war in Ukraine and inflationary pressures are weighing on Coupa’s European business.

“That said, the company guided the exercise (albeit below pace while factoring in a 2-3% headwind on FX billings) and reiterated its continued interest in BSM projects (some something we picked up on at a recent user event) and a sense of heightened awareness that back-office systems are lagging front-office capabilities as a result of the pandemic,” Beck wrote. .

Analyst Piper Sandler Brent Bracelin said macroeconomic uncertainty remains an overhang for Coupa.

“Comments that the company saw some trade slippage in Europe late in the quarter increase execution risks and limit confidence in the sustainability of subscription revenue growth which may be moderate below 20 % at 2H,” Bracelin wrote.

Mixed guidance: Needham Analyst Scott Berg said Coupa’s forex headwinds are only temporary, and its pipeline and free cash flow generation are impressive.

“Consistent with our outlook, some of the quarter’s numbers are a bit spongy due to monetary and macro issues, but overall we believe investors should focus on management’s comments regarding the pipeline and its reiteration of ~20% growth targets for subscription billings and revenue,” Berg wrote.

Wells Fargo Analyst Michael Tourrin said the company’s forecast for second-quarter billing growth of 17% and revenue growth of 20% is likely conservative.

“We continue to expect Coupa shares to remain volatile until more consistent signs of recovery emerge, which should take some time given the current environment,” Turrin wrote.

Ratings and Price Targets:

  • RBC Capital Markets has an industry performance rating and a target of $65.
  • JPM has a Market Perform rating.
  • Raymond James has an outperform rating and a target of $90.
  • KeyBanc has an overweight rating and a $100 goal.
  • Needham has a buy rating and a target of $90.
  • Piper Sandler has neutral odds and a target of $85.
  • Wells Fargo has an even weight rating and an $80 target.