Super Coupa, Nasdaq Launch Is Crazy

Coupa floated on the New York NASDAQ market last Thursday and we saw an amazing two days in terms of the share price. There was some surprise that the float price valued the spend management software-as-a-service firm at a little under the $1 billion that a previous fund-raising round indicated, but it looks like this may have been a deliberate strategy to ensure a successful launch.

But it was more than just "successful"  - the first day saw the share price shoot up from $18 to (at one point) $39. Anyone buying at the issue price doubled their money almost instantly. The shares then fell back, ending up at Friday market close at $29.35. So now there are some buyers sitting on a hefty loss too; the vagaries of the stock market demonstrated well.

At that short-lived peak, the firm was valued at nearer $2 billion than $1B, and is still around the $1.4B - a "unicorn" without a doubt, and perhaps just over 10 times current year's revenues. That's a great achievement for Rob Bernshteyn and his team - and it is very much a team effort. The quality and capability of Coupa's management is universally and consistently high in our experience, and that has been a big driver of their success.

The value achieved must also be making some other privately owned firms in our field think hard about their own futures. OK, not many have the growth rate that Coupa boasts, but there are some good firms with decent growth - and trading profitably, something which Coupa has not done yet (but surely will do fairly quickly). Even if your firm  "only" turns over $10M, if that could translate into a $100M valuation or fairly close, it would no doubt be very tempting to some shareholders.

Now that Coupa is firmly in the public eye, there will be a lot more scrutiny of their results, of course. There will also be speculation about potential acquisitions - up to now, the firm has bought a handful of very small businesses, as much for the people as the products. But  might they be tempted now to look at larger firms, perhaps to fill in one of the gaps in their product portfolio? On the other hand, their ability to develop new capabilities for their platform quickly has been another factor in their success, so maybe such acquisitions aren't needed.

We'll see - but many congratulations to everyone involved in building such an impressive and strong business in a few short years.

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