Coupa Reports Best Quarter Ever – No Surprises Here Xavier Olivera and Pierre Mitchell - August 20, 2015 8:12 AM | Categories: Analysis, eProcurement / Procurement, Industry News, Technology | Tags: Coupa, General News, L1 Coupa recently announced its Q2 2015 financial report, which shows the provider is still on the path of gaining market share and had its 26th consecutive quarter of subscription revenue growth. Its customers also continue to experience positive results – as of June, the provider’s customer base had accumulated $5 billion in calculated savings. We can’t say we’re surprised by these positive Q2 financial results – Coupa has been very clever in delivering the message of “savings,” which remains the most wanted word in procurement, at least from a business requirement perspective. Yes, procurement needs to deliver value beyond cost savings, but for Coupa installed base customers who are slightly earlier in their spend management journey compared with the typical Fortune 500 firm, cost savings is usually king. Still, while it is certainly one thing to promise savings, it’s quite another entirely to deliver it both for procurement organizations and for solution providers, and Coupa is smart to align its strategy to that of its customers. Coupa CEO Rob Bernshteyn said in the company’s press release on the report: “We are committed to revolutionizing the spend management space by bringing to market solutions that employees and suppliers actually use, which is the only proven way for our enterprise customers to bring previously unmanaged spend under control and achieve millions of dollars in savings.” Note the term “spend management” and you can obviously continue to see Ariba dead square in the crosshairs. But also note the continued focus on adoption: procurement can’t claim savings unless users are spending with preferred suppliers via preferred processes supported by preferred tools. It needs guidance and it needs it in an intuitive consumerized experience. As our colleague Jason Busch wrote back in 2011, “Coupa is pushing the actual purchasing experience, especially for middle market companies, to an entirely new level, based on how they work with the application itself and visualize information.” More on the Customer Savings Number We mentioned the $5 billion customer calculated savings above – these numbers can be very abstract, and understandably viewed with suspicion. Let’s make it more real: $5 billion over 6.5 years is $1.3 billion per year, and if you apply it to, say, 250 Coupa customers (i.e., assume straight line growth from 0 to about 500 today), that’s $5.2 million in savings per year. If you assume about $250 million per year in indirect spend per a typical Coupa customer, that’s roughly 2% savings as a percentage of total indirect spend. Since we’d venture that indirect spend savings are about 4%-5% per year, this means that Coupa is allowed to take credit for helping to enable slightly less than half of that value (assuming what is actually signed off on is actually reported publicly). It seems fairly reasonable, but Coupa is welcome to refine this model publicly for us, of course. A Flurry of Acquisitions In June, Coupa announced its $80 million funding round, and what we’ve seen happen since is a lot of acquisition activity, as Coupa tries to gain interesting and unique talent while continuing the expansion of its global operations. Among the companies Coupa has acquired in recent months are TripScanner and InvoiceSmash. Our colleague Thomas Kase wondered what would come next for Coupa after the TripScanner announcement: “Perhaps an announcement to from Coupa to acquire a statement of work/service legal agreement (SOW/SLA) provider to manage complex services delivery? Judging by Coupa’s prior acquisitions, keep an eye on providers founded by Harvard Business School grads.” We agree with Thomas that services procurement will need to become a greater emphasis for Coupa given the high percentage of indirect spend that is labor based. Management Changes Coupa also made some changes to its management team during the second quarter, including bringing in a new CFO (Todd Ford) to support the company’s growth strategy and support its $80M investment strategy. Todd also has experience taking multiple private companies public. Customer Base Widens Coupa has continued to grow its customer base at a fast pace, which speaks to a strong product, strong partner program and aggressive sales force as well as the focus on rapid implementations and “savings-as-a-service.” Among the new customers Coupa brought onboard in Q2 are Aspire Public Schools, Allied Irish Bank, OANDA, Thomas Cook, Tideworks Technology, Saba Software and Wacom Technology. Also, the Coupa users in the Europe, Middle East and Africa region grew 249% since Q2 2014, enabling 162% growth in total spend managed under the Coupa platform. The interesting group buying program called Coupa Advantage – even if still is in its initial phase – has continued to grow as well, adding the 2 new categories of document management and IT asset management. It is also increasing the number of suppliers and more than 30 new customers have signed up for Coupa Advantage. Consulting Services Growing Coupa continues to grow its consulting partners ecosystem – first with IBM, Accenture and KPMG, and now Deloitte will also be supporting Coupa with procurement transformation projects. Another inclusion to this ecosystem is Hayes Management Consulting as an implementation partner for the healthcare vertical. In all, Coupa reported adding 130 partners globally in the second quarter from Australia, Latin America and the Asia Pacific region. Does this rapid execution in partners, acquisitions and new products mean some dropped balls in the process? Absolutely, but it’s a problem a lot of other providers would like to have! Speaking of products, Coupa also updated its solution during Q2, extending its capabilities in enterprise mobility, expense management and touchless processing of e-invoices. Other additions include: Coupa Apple Watch for fast requisition, invoice and expense report approvals on-the-go. Yes, this is literally e-procurement bling, but you need sizzle as well as the steak. SmarterTrip for Coupa Expense Management to monitor traveler behavior, predict expensing habits and pre-populate expense reports. The bottom line: Coupa is continuing to execute amazingly well in its rapid growth phase. It has clearly crossed the chasm and the question is where will the e-procurement unicorn decide to fly next? Related ArticlesCoupa on Second Generation P2P, Group Buying and Further European GrowthCoupa Buys TripScanner – Extending Open Procurement Model To TravelCatching Up With Coupa in London – Exploring UK and European P2P Adoption and Customer TrendsUpdate: Spend Matters 50/50 Coupa -- A Provider to Know in 2015Down the Procurement Pub with Coupa, the Sunshine Act, the Budget & Saint RaymondTail Spend Management - Coupa Offers a Transactional Cost Reduction OptionCoupa Today: Are We Inspired? A Candid, Unfiltered Critical View Voices (2) Pierre Mitchell: 20.08.2015 at 5:38 pm No problem Rob, congratulations on the continued success. As you know, it’s often tricky to assess how much of that $4M is because of the technology and related supported services versus the management focus, change management, people investment, process redesign, data cleansing, and so forth. Regardless though, Procurement delivers a ridiculously high ROI to the business, so any solid technology that is associated with enabling that gets a bit of a halo effect – even though the CPOs may be reluctant to give the tech provider X amount of credit – especially during the renewal process! 😉 Keep up the hard work. Reply Rob Bernshteyn: 20.08.2015 at 5:23 pm On behalf of all of us at Coupa, we love that Spend Matters has highlighted our recent strong quarter and our overall growth trajectory. Among other things, you talk about the savings delivered by Coupa to its customers. So, let’s revisit the numbers. Coupa has delivered $5 Billion (and counting) savings to our customers. Most of those have been delivered over the last 5 years, leading to an impact averaging over $1 Billion savings per year. Let’s apply it to 250 Coupa customers, as you did. So, that means average delivered savings of over $4,000,000 per customer per year. In a world where most of the benefits of enterprise technology can’t be easily captured or quantified, that’s $4 Million of hard savings that flow to the bottom line and improve profitability and earnings per share. That’s why we call it as Savings-as-a-Service. On average, our annual subscription prices are lower, and of course, we have not even yet mentioned all the obvious reasons beyond hard savings for which Coupa is chosen (like compliance, visibility, process automation, integrated organic suite, and so much more). Feels like a no-brainer. So, for anyone who is genuinely interested in partnering with us around delivering real measurable savings for their companies, we welcome you to contact us via http://www.coupa.com. Reply Discuss this: Cancel reply Your email address will not be published. Required fields are marked *Comment Name * Email * Website Notify me of follow-up comments by email. Notify me of new posts by email.