It has been about a month since the last earnings report for Coupa Software (COUP). Shares have lost about 13.9% in that time frame, underperforming the S&P 500.
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 Software Beats Q1 Earnings & Revenue Estimates
Coupa Software reported healthy first-quarter fiscal 2023 results, beating both the top-line and bottom-line estimates. The 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.
Quarter Details
GAAP net loss reported during the quarter, attributable to Coupa Software Incorporated, was $81.5 million or $1.08 per share compared with $100.4 million or $1.38 per share in the prior-year quarter. Non-GAAP net income during the quarter was $5.5 million or 8 cents per share compared with $5 million or 7 cents per share in the prior-year quarter, beating the Zacks Consensus Estimate by 3 cents.
Revenues during the reported quarter were $196.4 million compared with $166.9 million in the prior-year quarter, reflecting year-over-year growth of 17.6% and beating the Zacks Consensus Estimate of $196 million. The growth was backed by the success of the Antares app, which provides customers with the flexibility to access supplier risk at the time of sourcing, monitoring third-party data and providing instant visibility to supplier risk scores.
Subscription revenues reported during the quarter were $178.5 million compared with $140.1 million, reflecting growth of 27.4% from the prior-year quarter. The growth was backed by the strengthening of the U.S. dollar against the euro. Professional services revenues during the quarter were $17.9 million compared with $26.8 million, reflecting a decrease of 33.2%.
Operating Details
Gross profit during the quarter was reported at $115.5 million compared with $87.2 million in the prior-year quarter, reflecting growth of 32.4%. GAAP operating loss during the quarter was $71.3 million compared with $73.9 million in the prior-year quarter. Non-GAAP operating income in the quarter was $13.8 million compared with $7 million in the year-earlier quarter.
Cash Flow & Liquidity
During the fiscal first quarter, the company generated operating cash flows of $49.7 million compared with $32.1 million in the prior-year quarter. As of Apr 30, 2022, the company had $493.9 million of cash and cash equivalents with net convertible senior notes of $2,157.9 million.
Guidance
For fiscal 2023, the company has raised its guidance for revenues from $836-$840 million to $838-$848 million. Subscription revenues are expected to be in the range of $762-$767 million. Professional services and other revenues are expected to be approximately $76 million. Non-GAAP earnings is likely to be in the range of 21-27 cents per share.
For second-quarter fiscal 2023, total revenues are expected to be in the range of $202-$205 million. Subscription revenues are expected to be within $185-$188 million and professional services and other revenues are expected to be approximately $17 million. Non-GAAP net income is likely to be in the range of 7-10 cents per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted -6.17% due to these changes.
VGM Scores
At this time, Coupa Software has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the fifth 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.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Coupa Software has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Coupa Software is part of the Zacks Internet – Software industry. Over the past month, Veeva Systems (VEEV), a stock from the same industry, has gained 7.9%. The company reported its results for the quarter ended April 2022 more than a month ago.
Veeva reported revenues of $505.1 million in the last reported quarter, representing a year-over-year change of +16.5%. EPS of $0.99 for the same period compares with $0.91 a year ago.
Veeva is expected to post earnings of $1.01 per share for the current quarter, representing a year-over-year change of +7.5%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Veeva. Also, the stock has a VGM Score of C.
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