Coupa Continues to Add Customers, Reports Strong Q3

Coupa

Coupa did it again. The provider set new records in the third quarter for overall company revenue and customer subscription revenue growth, according to the latest quarterly results. As a cloud company with recurring revenues that is also adding new customers faster than any other e-procurement-centric vendor we’re aware of, perhaps this news is not a surprise. Coupa now has more than 500 customers processing more than $120 billion through its solutions.

Perhaps most curiously, Coupa’s group purchasing organization (GPO) and leveraged buying efforts appear to be gaining steam. In its announcement, Coupa notes that some of the new customers that came onboard in the third quarter of 2015 have turned to the Coupa Advantage Program — and are saving up to 34% with the leveraged contracts model Coupa reported. Coupa’s new customers come from every region of the globe and include Canadian company Quantum Murray, Bristol, England-based OVO Energy and CEVA, located in the Netherlands. However, the European market continues to be Coupa’s fastest-growing region.

Coupa has reported continuous growth in recent years. For Q2, the provider marked its 26 consecutive quarters of subscription revenue growth — something Spend Matters was not surprised to hear either. We also believe Coupa is a strong IPO candidate for 2016, an opinion backed up both by growth and bringing on a new CFO earlier in the year with a wealth of IPO and public company experience.

In its messaging, Coupa continues to beat the savings drum, playing to an evolution of the original Ariba Spend Management messaging, albeit with an updated cloud and pragmatic implementation flavor and what appears to be an increasing tone of market leadership flare.

“Companies across the globe are increasingly recognizing the value of bringing the entirety of their spend under management — and the value of doing so by deploying software that reflects the consumer-driven innovations employees have come to expect,” Rob Bernshteyn, CEO of Coupa, said in the company’s recent press release. “Our customers are achieving real business success …. preparing them for whatever conditions the market throws their way. It is those real, measurable savings we drive for our customers that will continue to propel our leadership position in the industry.”

Acquisition Activity in Q3

Coupa also acquired two firms between July and September of this year: Invoicesmash and Tripscanner. Both of these deals “bring more freedom to business travel booking, accounts payable, and e-invoicing, in turn bringing an even greater proportion of spend under management for customers,” Coupa said in its Q3 results press release. Spend Matters believes the Invoicesmash acquisition is a key puzzle piece that fits well into Coupa’s solution suite and can help Coupa build its network capability to compete against others like Ariba, Basware, Tradeshift and others.

Coupa acquired New York-based travel company TripScanner as well in Q3, a move Spend Matters thought would help Coupa round out its suite and help it compete against the SAP cloud portfolio.

“Even if travel management seems to be a niche area, it is a huge spend area,” Spend Matters analyst Thomas Kase wrote after the acquisition was announced. “All companies — regardless of size — have it, which drives lots of new users, aka solution seats, to Coupa. Travel is also fundamentally a P2P activity — the booking being the purchase order (PO) — but with a different set of terminology, which again fits Coupa perfectly.”

Additional Announcements

Other highlights from Coupa’s Q3 announcement include:

  • The provider’s move to hire Kendra Von Esh as senior strategic advisor. Kendra was formerly CIO of Veolia
  • Coupa was named among the Inc. 5000 List of America’s Fastest-Growing Private Companies for the second consecutive year
  • It’s decision to shift staff across Europe, Coupa’s leading growth region. Coupa Senior Vice President of Customer Success & Service Delivery, Ravi Thakur, moved to London to focus on the European market.

A Few Points to Chew On

Our view commenting from the press release peanut gallery is that the recent quarterly momentum will add more fuel to the IPO speculation fire for Coupa. In addition:

  • Bulking up through organic growth, but adding new technologies through small acquisitions that will be integrated into the suite, is likely to create longer-term up-sell/cross-sell dividends. It’s a smart, long-term strategy.
  • Coupa’s growth acceleration efforts have now positioned it as the provider of P2P technology to know for all medium and large enterprises around the world — it’s taken over the first podium spot in growth from Ariba in this segment. However, there are literally dozens of other providers in the procure-to-pay (P2P) market, many with solutions, including SAP, that may be a better fit for companies depending on specific needs. Customers and potential customers should always do their homework. Just because Coupa appears to be the current “winner” in the market does not necessarily make it the winning solution for customers in all cases.
  • From a product development strategy, on the surface, it is clear that Coupa is playing to 80/20 solution approach to help companies standardize on best practices to get more spend into its solution and to drive savings quickly. Coupa’s GPO venture pre-integrated with its P2P capabilities is absolutely ingenious in this regard. Overall, this approach is very much needed in the market, because so many companies spun cycles customizing earlier P2P implementations but failed to drive material volume to make a dent in their business …
  • … But in “in the box” is not right for everyone. Dig deeper, and there appears to be multiple cards up Coupa’s sleeve to deepen its solution capacities, including addressing more complex scenarios that require more flexibility. Our question is whether new experts such as Kendra Von Esch will help more rapidly build out support for complex scenarios that some businesses need both from procurement and IT perspectives (e.g., more complex inventory management/asset management integrated with P2P). And, of course, there’s the broader question on whether the Coupa architecture could theoretically support advanced scenarios that take it out of running in certain selections  today — and whether such a move would even be “on strategy” for Coupa or not. (It might not be.) The numbers suggest that any material change in strategy would likely just be a distraction, for now. If your growth strategy ain’t broke, why fix it?

We will keep following Coupa's solutions and business development activities and reporting on what we learn and offer our opinions from the spend management peanut gallery.

First Voice

  1. Dimpy Tolani:

    I want to have a brief about the website, for India location, and whether the press release, blogs, articles etc can be posted free of cost on the same?

    Please provide the information on the same, Looking forward to hear from you.

Discuss this:

Your email address will not be published. Required fields are marked *