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Coupa Software Incorporated revenue jumped on 49.7% and EBITDA Margin increased on 4.9 pp from -14.2% to -9.3%

03/16/2020 • About Coupa Software Incorporated ($COUP) • By InTwits

Coupa Software Incorporated reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
  • Coupa Software Incorporated is a fast growth stock: FY2020 revenue growth was 49.7%, 5 year revenue CAGR was 50.3% at FY2020 ROIC -8.2%
  • The company operates at negative EBITDA Margin: -9.3%
  • Coupa Software Incorporated motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2016-FY2020 was 4.7% while average EBITDA Margin was -17.4% for the sames years
  • Coupa Software Incorporated has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.3%. At the same time it's a lot of higher than industry average of 6.0%.
  • CAPEX is quite volatile: $12m in FY2020, $8m in FY2019, $4m in FY2018, $4m in FY2017, $4m in FY2016
  • The company has unprofitable business model: ROIC is -8.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability


Coupa Software Incorporated's Revenue jumped on 49.7%. Revenue growth showed small slowdown in FY20Q4 - it was 48.8% YoY. During FY2016-FY2020 Revenue growth bottomed in FY2019 at 39.4%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 8.9 pp from -0.50% to 8.4% in 2020. EBITDA Margin grew at 9.2 pp per annum in the last 5 years.

Gross Margin decreased on 3.7 pp from 67.9% to 64.3% in FY2020. During the last 5 years Gross Margin topped in FY2019 at 67.9%. SG&A as a % of Revenue decreased on 3.2 pp from 62.5% to 59.2% in FY2020. SG&A as a % of Revenue declined at -6.6 pp per annum in the last 5 years.

Net Income margin decreased slightly on 2.0 pp from -21.3% to -23.3% in FY2020. During the last 5 years Net Income margin topped in FY2019 at -21.3%.

Investments (CAPEX, working capital and M&A)


The company's CAPEX/Revenue was 3.1% in FY2020. The company's CAPEX/Revenue showed almost no change from FY2017 to FY2020. It's average CAPEX/Revenue for the last three years was 2.8%. During the last 5 years CAPEX as a % of Revenue bottomed in FY2018 at 2.4% and was growing since that time.

Return on investment


The company operates at negative ROIC (-8.2%) and ROE (-23.4%). ROIC increased on 2.3 pp from -10.5% to -8.2% in FY2020. ROE decreased on 3.4 pp from -20.1% to -23.4% in FY2020.

Leverage (Debt)


Debt level is -2.3x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA didn't change in FY2020. Debt jumped on 349% while cash jumped on 89.8%.

Coupa Software Incorporated has no short term refinancing risk: cash is higher than short term debt (137.2%).

Management team


Robert R Bernshteyn "Rob" is a the company's CEO. Robert R Bernshteyn "Rob" has spent 12 years with the company. Coupa Software Incorporated's CFO Todd R Ford has spent 5 years with the company.

Financial and operational results


FY ended 01/31/2020

Coupa Software Incorporated ($COUP) key annual financial indicators

mln. $201620172018201920202020/2019
P&L
Revenue83.7133.8186.8260.4389.749.7%
Gross Profit51.887.5126.9176.9250.541.6%
SG&A74.392.7127.3162.7230.841.9%
EBITDA-42.5-30.8-37.4-36.9-36.3
EBIT-45.3-35.4-45.0
Tax0.30.81.6
Net Income-46.2-37.6-43.8-55.5-90.8
Stock Based Compensation10.69.529.7
Balance Sheet
Cash92.3201.7412.9141.3268.089.8%
Accounts Receivable28.047.661.4
Accounts Payable1.11.21.3
Short Term Debt0.00.00.0174.6195.311.9%
Long Term Debt0.00.0163.00.0588.1
Cash flow
Capex3.94.54.57.512.059.0%
Acquisitions1.46.846.1
Ratios
Revenue growth64.6%59.9%39.6%39.4%49.7%
EBITDA growth68.2%-27.4%21.2%-1.3%-1.7%

Gross Margin61.9%65.4%67.9%67.9%64.3%-3.7%
EBITDA Margin-50.8%-23.1%-20.0%-14.2%-9.3%4.9%
EBIT Margin-54.1%-26.5%-24.1%
SG&A, % of revenue88.7%69.3%68.2%62.5%59.2%-3.2%
SBC, % of revenue12.6%7.1%15.9%
Net Income Margin-55.2%-28.1%-23.5%-21.3%-23.3%-2.0%
CAPEX, % of revenue4.6%3.4%2.4%2.9%3.1%0.2%

ROIC-23.9%-6.9%-7.1%-10.5%-8.2%2.3%
ROE-21.1%-20.1%-23.4%-3.4%
People
Insider ownership0.7%0.7%0.7%
Employees652833
Revenue/Employee, th. $205224

Coupa Software Incorporated ($COUP) key quoterly financial indicators

mln. $FY20Q1FY20Q2FY20Q3FY20Q4 YoY change
P&L
Revenue8195102111 44.3%54.3%50.9%48.8%
EBITDA-12-14-7-4 ----
Net Income-20-20-26-24 ----
Balance Sheet
Cash346614587268 -19.4%117.7%157.9%89.8%
Short Term Debt183187191195 -11.1%11.5%11.9%
Long Term Debt23568579588 -86.2%---
Ratios
Gross Margin66.4%63.7%63.4%64.0% -1.4%-6.0%-4.5%-2.6%
EBITDA Margin -14.7% -14.4% -6.7% -3.7% 3.1%-0.4%4.0%9.9%
Net Income Margin -25.2% -21.0% -25.9% -21.6% 2.3%1.5%-11.6%0.5%

Peers in Application Software


Below you can find Coupa Software Incorporated benchmarking vs. other companies in Application Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
VirnetX Holding Corp ($VHC)--0.2%-95.9%34.9%355,942.4%
AudioEye, Inc. ($AEYE)-175.5%106.6%90.2%90.2%
Cloudera, Inc. ($CLDR)-57.2%42.6%28.9%65.5%
Integrated Ventures Inc ($INTV)----8.9%62.7%
Smartsheet Inc. ($SMAR)-64.3%66.1%59.7%52.4%
 
Median (92 companies)12.0%14.8%15.1%19.4%14.5%
Coupa Software Incorporated ($COUP)-59.9%39.6%39.4%49.7%


Top companies by Gross margin, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Aware, Inc. ($AWRE)90.3%94.6%92.3%89.7%92.8%
Alteryx, Inc. ($AYX)81.3%83.4%91.0%90.6%91.1%
Autodesk, Inc. ($ADSK)85.2%83.2%85.2%88.9%90.1%
Smith Micro Software, Inc. ($SMSI)73.2%77.9%83.5%90.9%89.9%
Cadence Design Systems, Inc. ($CDNS)85.9%87.8%87.9%88.6%88.6%
 
Median (89 companies)64.2%64.4%65.3%68.4%70.6%
Coupa Software Incorporated ($COUP)61.9%65.4%67.9%67.9%64.3%


Top companies by EBITDA margin, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
VirnetX Holding Corp ($VHC)-1,837.2%-1,118.0%-40,379.4%-23,127.1%52.2%
j2 Global, Inc. ($JCOM)41.7%36.5%35.7%38.6%40.5%
Intelligent Systems Corporation ($INS)-5.4%-12.8%33.6%43.6%40.4%
Adobe Inc. ($ADBE)31.2%34.2%35.3%35.8%39.7%
SS&C Technologies Holdings, Inc. ($SSNC)34.9%37.9%27.7%38.2%38.3%
 
Median (89 companies)-4.7%-3.3%-3.3%4.5%7.7%
Coupa Software Incorporated ($COUP)-50.8%-23.1%-20.0%-14.2%-9.3%


Top companies by CAPEX/Revenue, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
MicroStrategy Incorporated ($MSTR)0.5%0.8%1.4%2.1%234.8%
Integrated Ventures Inc ($INTV)--199.9%15.2%27.2%
Intelligent Systems Corporation ($INS)3.8%9.7%4.3%4.9%19.2%
LivePerson, Inc. ($LPSN)5.5%7.9%8.8%16.3%11.4%
PROS Holdings, Inc. ($PRO)4.7%0.8%0.7%2.1%11.3%
 
Median (87 companies)2.9%2.3%2.4%3.0%2.5%
Coupa Software Incorporated ($COUP)4.6%3.4%2.4%2.9%3.1%


Top companies by ROIC, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
VirnetX Holding Corp ($VHC)-210.9%-256.8%-416.3%-247.2%137.3%
Manhattan Associates, Inc. ($MANH)99.3%102.5%80.9%71.7%53.4%
Citrix Systems, Inc. ($CTXS)16.1%16.7%25.2%29.8%33.5%
Sonic Foundry, Inc. ($SOFO)-18.1%-50.6%-786.4%-31.3%
Paycom Software, Inc. ($PAYC)75.4%51.1%47.5%47.5%28.7%
 
Median (92 companies)-9.2%-11.8%-10.6%-4.2%-1.8%
Coupa Software Incorporated ($COUP)-23.9%-6.9%-7.1%-10.5%-8.2%


Top companies by Net Debt / EBITDA

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Dropbox, Inc. ($DBX)--3.8x-2.4x1,341.0x
Avaya Holdings Corp. ($AVYA)--7.4x-77.9x
Alteryx, Inc. ($AYX)--2.5x6.1x32.2x
Five9, Inc. ($FIVN)-6.7x-8.6x7.3x5.3x17.6x
Synchronoss Technologies, Inc. ($SNCR)----11.6x
 
Median (54 companies)-0.9x-0.8x-0.7x0.4x0.2x