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Coupa shares plummet as forecasts fall short, despite Q4 profits

Coupa shares fell 30% as its forecasts failed to meet expectations.

Business spend management software firm Coupa’s shares fell more than 30% at one point as its financial forecasts for the coming year failed to meet analysts’ expectations, despite beating profit predictions for Q4.

Coupa shares fell by more than 30% in pre-market trading, but were at $71.41 at time of press, down 20% from $89.82 yesterday, as analysts worried about its exposure to European markets. This marks a dramatic change of fortune for Coupa, which counts Amazon, BMW and Nike among its customers, and which just over a year ago was trading at a high of $346.

Coupa shares down, non-GAAP profits up

Despite the drama around Coupa's shares, the firm saw annual revenue of $725m in 2021-2, up 34% over 2020-1. Its non-GAAP income was $89.4m, up from $52.7m the year before, while its GAAP operating los was $244.1m, up from $166.6m the year before. It forecast Q1 revenue of $171m-173m, while analysts had been expecting revenue of $196m.

Away from the figures, Coupa said it now has a customer base of 2,500, including P&G, Unilever and Walmart. In October 2021 Gartner classed the firm as a Leader in its Magic Quadrant for Procure-to-Pay Suites, ahead of firms such as SAP, Oracle, Jaggaer and Ivalua.

In its Magic Quadrant report, Gartner said of Coupa: “Its operations are geographically diversified, and its clients range from large enterprises to midmarket organisations.

“Although Coupa’s clients span diverse industries, its top three industries are financial services, technology and manufacturing. Near-term areas of investment for Coupa include universal platform search, P2P process insights backed by AI and community intelligence, and advanced supplier collaboration on demand forecasts and POs.”

See also: Clock ticks on radical plans to overhaul, digitalise £290 billion in UK public procurement

CEO Rob Bernshteyn was bullish on the company’s addressable market and prospects for growth despite Coupa shares' volatility, saying in the company’s earnings call: “We frequently see business leaders who have used Coupa and then bring Coupa to their new employers when they change companies.

“Even with incredible organisations, such as Amazon, BMW, Procter & Gamble, Unilever, and Walmart, already among our community of customers, our core penetration into the Global 2000 is still below 20%.”

Gartner was also positive on the sector’s outlook in its MQ report: “Interest in P2P suites is high and increasing because of the pandemic. P2P is the second highest inquiry volume topic within sourcing and procurement applications and has seen approximately a 20% increase in volume YTD over 2020.

“As implementations over the last year have moved to remote, customers are seeing a quicker time to value despite P2P being a significant investment for an organization. Gartner estimates that the P2P technology market will experience a 17% CAGR through 2025, representing approximately $7.4 billion.”

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