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Coupa CEO sees ‘steadily improving business environment’

09/09/2021 By

In an earnings call this week, Coupa Chairman and CEO Rob Bernshteyn laid out quarterly findings for the provider of business spend management, but he also discussed trends seen from its $2.8 trillion in cumulative spend under management that indicate “a steadily improving business environment.”

“We’re seeing sales cycles continue to move toward normalizing even if there is still a bit longer than they were before the pandemic,” he said, in a transcript of the call. “We’re seeing enterprise companies become more engaged, as evidenced by the increased number of seven-figure deals we closed this quarter. We’re seeing global scale and improved predictability in our mid-market business.”

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Bernshteyn also said a lot of companies have made commitments to strategies for ESG (environmental, social and governance issues) but they need help to fulfill those pledges.

“It’s not as simple as freeing your mind and the rest will follow. We believe we have a role to play by helping companies shorten the distance between intention and impact,” he said, focusing on Coupa’s Community.AI capability that “highlights suppliers that meet sustainability and diversity benchmarks and does so at the point of potential transaction.” (See Spend Matters’ recent ESG technology series, which included Coupa: ESG vendor profiles of Coupa, GEP, Ivalua, Jaggaer, SAP Ariba: How S2P suite solutions address sustainability efforts)

In the edited parts of the call that follow, financial analysts asked about a range of issues, like the new Coupa App Marketplace, digital transformation and last year’s LLamasoft acquisition.

Bob Napoli, an analyst with William Blair, asks Coupa’s CEO:

“How do you expect the Coupa App Marketplace to affect your business over the medium to long-term?”

Rob Bernshteyn:

“The main purpose of the marketplace is to foster and grow the partner ecosystem around us. This business spend management opportunity is really sizable. We’ve defined a market at tens of billions of dollars globally in mid-market and enterprise and across the board internationally. So, the reality that we’re going to be able to hit every component and every type of use case that a customer would ever expect is not likely in the near-term. So we want to build an ecosystem around this.

“And the fact that so many great emerging companies and developed companies are building on our marketplace is going to make it so much easier for our customer community to begin to subscribe to these applications and have them pre-integrated with the core Coupa platform.”

Bradley Sills, a Bank of America analyst, asks:

“We’ve seen a number of back-office application providers see some uptick this quarter. You’re certainly seeing it. What are you hearing from CFOs and CIOs with regards to plans for a kind of refresh, and is this kind of a catch-up and some pent-up demand here in the pipeline, or is it just a function of more digital transformation accelerating as we’re getting into reopening?”

Rob Bernshteyn:

“My sense for it is that it is digital transformation taking hold and finally really beginning to take hold in the areas where we operate, largely in the back office. … Just in this quarter we had more seven-figure enterprise deals certainly than last quarter. We had our first seven-figure deal in the mid-market this quarter, which was very interesting. And when you look at the texture of these transactions, they’re not sort of just pent-up demand unlocked. They are transformational deployments of business spend management.”

Hannah Rudoff, a Piper Sandler analyst, asks:

“How sustainable are you thinking the impressive operating margin gains during Q2 were, which really surprised to the upside, even with the ongoing LLamasoft acquisition (from late 2020)?”

Rob Bernshteyn:

“We had a very, very strong top-line beat, first of all in the quarter. There are a few factors there, just the magnitude of new business for the quarter and also the linearity of, therefore, bleeding into revenue.

“We had faster-than-expected synergies from the Supply Chain Design & Planning, or the LLamasoft acquisition. And as we go forward, we want to leave ourselves degrees of freedom and flexibility to invest to capture the growing market. So there’s a number of factors at play. I think that our results this quarter did have some component of us wrapping up some pieces of the LLamasoft acquisition.”

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