Coupa Software Reports Third Quarter Fiscal 2022 Financial Results

COUPA SOFTWARE INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

Three Months Ended

October 31,

Nine Months Ended

October 31,

2021

2020

2021

2020

Revenues:

Subscription

$

164,745

$

118,083

$

461,079

$

335,399

Professional services and other

21,071

14,881

70,912

42,700

Total revenues

185,816

132,964

531,991

378,099

Cost of revenues:

Subscription

52,279

36,528

154,701

99,335

Professional services and other

25,341

14,259

81,865

42,729

Total cost of revenues

77,620

50,787

236,566

142,064

Gross profit

108,196

82,177

295,425

236,035

Operating expenses:

Research and development

39,990

30,528

125,625

87,459

Sales and marketing

83,779

53,204

237,902

149,831

General and administrative

40,513

32,092

116,139

69,941

Total operating expenses

164,282

115,824

479,666

307,231

Loss from operations

(56,086)

(33,647)

(184,241)

(71,196)

Interest expense

(31,130)

(29,308)

(90,854)

(61,820)

Other income (expense), net

(1,298)

746

(2,746)

8,833

Loss before benefit from income taxes

(88,514)

(62,209)

(277,841)

(124,183)

Benefit from income taxes

(476)

(1,411)

(2,697)

(5,453)

Net loss

(88,038)

(60,798)

(275,144)

(118,730)

Net loss attributable to redeemable non-controlling interests

(273)

—

(790)

—

Adjustment attributable to redeemable non-controlling interests

3,438

—

8,673

—

Net loss attributable to Coupa Software Incorporated

$

(91,203)

$

(60,798)

$

(283,027)

$

(118,730)

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

$

(1.23)

$

(0.88)

$

(3.85)

$

(1.76)

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

74,133

68,941

73,514

67,349

COUPA SOFTWARE INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(unaudited)

October 31, 2021

January 31, 2021

Assets

Current assets:

Cash and cash equivalents

$

458,195

$

323,284

Marketable securities

209,660

283,036

Accounts receivable, net of allowances

179,278

196,009

Prepaid expenses and other current assets

32,283

36,381

Deferred commissions, current portion

18,848

15,541

Total current assets

898,264

854,251

Property and equipment, net

30,161

28,266

Deferred commissions, net of current portion

42,623

36,832

Goodwill

1,515,141

1,480,847

Intangible assets, net

543,628

632,173

Operating lease right-of-use assets

38,183

41,305

Other assets

35,853

31,491

Total assets

$

3,103,853

$

3,105,165

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

Current liabilities:

Accounts payable

$

5,279

$

4,831

Accrued expenses and other current liabilities

96,716

80,271

Deferred revenue, current portion

352,198

356,115

Current portion of convertible senior notes, net

633,641

609,068

Operating lease liabilities, current portion

12,401

11,222

Total current liabilities

1,100,235

1,061,507

Convertible senior notes, net

952,285

897,525

Deferred revenue, net of current portion

14,058

5,773

Operating lease liabilities, net of current portion

27,174

31,845

Other liabilities

68,210

67,915

Total liabilities

2,161,962

2,064,565

Redeemable non-controlling interests

10,044

—

Other temporary equity

—

369

Stockholders' equity:

Preferred stock, $0.0001 par value per share

—

—

Common stock, $0.0001 par value per share

7

7

Additional paid-in capital

1,724,042

1,556,865

Accumulated other comprehensive income

8,748

9,165

Accumulated deficit

(800,950)

(525,806)

Total stockholders' equity

931,847

1,040,231

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

$

3,103,853

$

3,105,165

COUPA SOFTWARE INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

Nine Months Ended

October 31,

2021

2020

Cash flows from operating activities

Net loss attributable to Coupa Software Incorporated

$

(283,027)

$

(118,730)

Net loss and adjustment attributable to redeemable non-controlling interests

7,883

—

Net loss

(275,144)

(118,730)

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

Depreciation and amortization

109,900

36,529

Amortization of premium on marketable securities, net

625

869

Amortization of deferred commissions

13,335

10,102

Amortization of debt discount and issuance costs

85,716

58,727

Stock-based compensation

145,251

94,851

Loss (gain) on conversion of convertible senior notes

357

(3,166)

Repayments of convertible senior notes attributable to debt discount

(1,338)

(27,208)

Other

(3,204)

3,923

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

Accounts receivable

21,433

22,519

Prepaid expenses and other current assets

4,529

1,591

Other assets

13,968

(2,730)

Deferred commissions

(22,445)

(11,355)

Accounts payable

500

(1,435)

Accrued expenses and other liabilities

6,795

4,941

Deferred revenue

3,630

(11,630)

Net cash provided by operating activities

103,908

57,798

Cash flows from investing activities

Purchases of marketable securities

(116,583)

(788,047)

Maturities of marketable securities

94,142

351,973

Sales of marketable securities

94,916

830,125

Acquisitions, net of cash acquired

(46,719)

(94,121)

Purchases of other investments

(10,000)

—

Purchases of property and equipment

(10,256)

(9,559)

Net cash provided by (used in) investing activities

5,500

290,371

Cash flows from financing activities

Investment from redeemable non-controlling interests

2,223

—

Proceeds from issuance of convertible senior notes, net of issuance costs

—

1,355,066

Purchase of capped calls

—

(192,786)

Repayments of convertible senior notes

(5,748)

(554,244)

Proceeds from the exercise of common stock options

7,444

14,425

Proceeds from issuance of common stock for employee stock purchase plan

21,626

15,631

Net cash provided by financing activities

25,545

638,092

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

(178)

128

Net increase in cash, cash equivalents, and restricted cash

134,775

986,389

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

327,589

268,280

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

$

462,364

$

1,254,669

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

Cash and cash equivalents

$

458,195

$

1,251,006

Restricted cash included in other assets

4,169

3,663

Total cash, cash equivalents, and restricted cash

$

462,364

$

1,254,669

COUPA SOFTWARE INCORPORATED

Reconciliation of GAAP to Non-GAAP Financial Measures

Three Months Ended October 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

$

52,279

$

(4,162)

$

(16,736)

$

—

$

—

$

—

$

31,381

Costs of professional services and other

25,341

(4,729)

(3,642)

—

—

—

16,970

Gross profit

58.2

%

4.8

%

11.0

%

0.0

%

0.0

%

0.0

%

74.0

%

Research and development

39,990

(11,357)

—

—

—

—

28,633

Sales and marketing

83,779

(13,217)

(13,140)

—

—

—

57,422

General and administrative

40,513

(16,994)

—

—

—

—

23,519

Income (loss) from operations

(56,086)

50,459

33,518

—

—

—

27,891

Operating margin

(30.2)

%

27.2

%

18.0

%

0.0

%

0.0

%

0.0

%

15.0

%

Interest expense

(31,130)

—

—

29,454

—

—

(1,676)

Other income (expense), net

(1,298)

—

—

—

228

—

(1,070)

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

(88,514)

50,459

33,518

29,454

228

—

25,145

Provision for (benefit from) income taxes

(476)

733

1,629

—

—

—

1,886

Net income (loss)

(88,038)

49,726

31,889

29,454

228

—

23,259

Net loss attributable to non-controlling interests

(273)

—

—

—

—

—

(273)

Adjustment attributable to non-controlling interests

3,438

—

—

—

—

3,438

—

Net income (loss) attributable to Coupa Software Incorporated

(91,203)

49,726

31,889

29,454

228

3,438

23,532

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

$

(1.23)

$

0.32

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

$

(1.23)

$

0.31

(1) 

GAAP net loss per share attributable to Coupa Software Incorporated is calculated based upon 74,133 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share attributable to Coupa Software Incorporated is calculated based upon 74,133 basic and 76,754 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 an adjustment attributable to redeemable non-controlling interests to its redemption amount.

COUPA SOFTWARE INCORPORATED

Reconciliation of GAAP to Non-GAAP Financial Measures

Three Months Ended October 31, 2020

(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

Non-GAAP

Costs and expenses:

Costs of subscription

$

36,528

$

(2,836)

$

(8,212)

$

—

$

—

$

25,480

Costs of professional services and other

14,259

(2,939)

(200)

—

—

11,120

Gross profit

61.8

%

4.3

%

6.3

%

0.0

%

0.0

%

72.5

%

Research and development

30,528

(7,691)

—

—

—

22,837

Sales and marketing

53,204

(9,790)

(2,698)

—

—

40,716

General and administrative

32,092

(13,555)

—

—

—

18,537

Income (loss) from operations

(33,647)

36,811

11,110

—

—

14,274

Operating margin

(25.3)

%

27.7

%

8.4

%

0.0

%

0.0

%

10.7

%

Interest expense

(29,308)

—

—

27,370

—

(1,938)

Other income (expense), net

746

—

—

—

36

782

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

(62,209)

36,811

11,110

27,370

36

13,118

Provision for (benefit from) income taxes

(1,411)

290

(163)

1,376

—

92

Net income (loss) attributable to Coupa Software Incorporated

(60,798)

36,521

11,273

25,994

36

13,026

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

$

(0.88)

$

0.19

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

$

(0.88)

$

0.18

(1)

GAAP net loss per share attributable to Coupa Software Incorporated is calculated based upon 68,941 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share attributable to Coupa Software Incorporated is calculated based upon 68,941 basic and 73,766 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.

COUPA SOFTWARE INCORPORATED

Reconciliation of GAAP to Non-GAAP Financial Measures

Nine Months Ended October 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

$

154,701

$

(11,063)

$

(45,146)

$

—

$

—

$

—

$

98,492

Costs of professional services and other

81,865

(12,984)

(16,016)

—

—

—

52,865

Gross profit

55.5

%

4.5

%

11.5

%

0.0

%

0.0

%

0.0

%

71.5

%

Research and development

125,625

(33,075)

—

—

—

—

92,550

Sales and marketing

237,902

(36,668)

(39,413)

—

—

—

161,821

General and administrative

116,139

(51,461)

—

—

—

—

64,678

Income (loss) from operations

(184,241)

145,251

100,575

—

—

—

61,585

Operating margin

(34.6)

%

27.3

%

18.9

%

0.0

%

0.0

%

0.0

%

11.6

%

Interest expense

(90,854)

—

—

85,716

—

—

(5,138)

Other income (expense), net

(2,746)

—

—

—

357

—

(2,389)

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

(277,841)

145,251

100,575

85,716

357

—

54,058

Provision for (benefit from) income taxes

(2,697)

2,550

5,448

—

—

746

6,047

Net income (loss)

(275,144)

142,701

95,127

85,716

357

(746)

48,011

Net loss attributable to non-controlling interests

(790)

—

—

—

—

—

(790)

Adjustment attributable to non-controlling interests

8,673

—

—

—

—

8,673

—

Net income (loss) attributable to Coupa Software Incorporated

(283,027)

142,701

95,127

85,716

357

7,927

48,801

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

$

(3.85)

$

0.66

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

$

(3.85)

$

0.64

(1)

GAAP net loss per share attributable to Coupa Software Incorporated is calculated based upon 73,514 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share attributable to Coupa Software Incorporated is calculated based upon 73,514 basic and 76,295 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 redeemable non-controlling interests to its redemption amount.

COUPA SOFTWARE INCORPORATED

Reconciliation of GAAP to Non-GAAP Financial Measures

Nine Months Ended October 31, 2020

(in thousands, except percentages and per share amounts)

(unaudited)

GAAP

Stock-Based

Compensation

Expenses

Amortization of

Acquired

Intangible Assets

Change in Fair Value of

 Contingent Consideration

Liability

Amortization of

Debt Discount and

Issuance Costs

Gain on Conversion

 of Convertible Senior

 Notes

Other (2)

Non-GAAP

Costs and expenses:

Costs of subscription

$

99,335

$

(7,641)

$

(22,370)

$

—

$

—

$

—

$

—

$

69,324

Costs of professional services and other

42,729

(8,303)

(600)

—

—

—

—

33,826

Gross profit

62.4

%

4.2

%

6.1

%

0.0

%

0.0

%

0.0

%

0.0

%

72.7

%

Research and development

87,459

(21,131)

—

—

—

—

—

66,328

Sales and marketing

149,831

(26,558)

(7,368)

—

—

—

—

115,905

General and administrative

69,941

(31,218)

—

12,500

—

—

—

51,223

Income (loss) from operations

(71,196)

94,851

30,338

(12,500)

—

—

—

41,493

Operating margin

(18.8)

%

25.1

%

8.0

%

(3.3)

%

0.0

%

0.0

%

0.0

%

11.0

%

Interest expense

(61,820)

—

—

—

58,727

—

—

(3,093)

Other income (expense), net

8,833

—

—

—

—

(3,166)

—

5,667

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

(124,183)

94,851

30,338

(12,500)

58,727

(3,166)

—

44,067

Provision for (benefit from) income taxes

(5,453)

4,321

(315)

—

2,485

—

310

1,348

Net income (loss) attributable to Coupa Software Incorporated

(118,730)

90,530

30,653

(12,500)

56,242

(3,166)

(310)

42,719

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

$

(1.76)

$

0.63

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

$

(1.76)

$

0.59

(1)

GAAP net loss per share attributable to Coupa Software Incorporated is calculated based upon 67,349 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share attributable to Coupa Software Incorporated is calculated based upon 67,349 basic and 71,854 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 release of valuation allowances against deferred tax assets.

COUPA SOFTWARE INCORPORATED

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

(Non-GAAP Financial Measures)

(in thousands, except percentages)

(unaudited)

Three Months Ended October 31,

Nine Months Ended October 31,

2021

2020

2021

2020

Net cash provided by operating activities

$

31,015

$

19,001

$

103,908

$

57,798

Less: purchases of property and equipment

(3,594)

(2,531)

(10,256)

(9,559)

Add: repayments of convertible senior notes attributable to debt discount

821

872

1,338

27,208

Adjusted free cash flows

$

28,242

$

17,342

$

94,990

$

75,447