Coupa Announces Stellar Results and Acquires DCR Workforce

On Tuesday, business spend management solution provider Coupa Software announced very impressive quarterly financial results, showing revenue growth year on year of some 38%, well ahead of analysts’ expectations.

But perhaps more important from a strategic perspective was the announcement of another acquisition for the firm. Coupa has bought DCR Workforce, a Boca Raton, Florida-based vendor management system (VMS) provider. To be precise, Coupa is buying the technology assets of DCR – it also runs a managed services business which Coupa is not acquiring. It looks like DCR is mid-sized, maybe revenues of around $10M, and Coupa is initially paying some $25M plus further earnout potential.

Coupa has been expanding into the services area in recent years, reflecting how services spend is of ever-increasing importance to most organisations. In many cases, it is much larger and frankly more “strategic” than goods or “direct” spend (and what exactly is “direct” spend anyway for a bank, most government departments or a huge consulting firm?).

Contingent labour, as a key element within services spend, covers many different skills now, as we said when we wrote our reviews here and here in conjunction with managed services provider Comensura back in 2016. The category covers everything from blue-collar workers, to skilled engineers and tech staff, to super-talented freelance creative types employed by WPP and the like. It’s a broad and growing spend category.

But if you want to know more about the detail of the acquisition and about DCR, the best advice we can give is that you read this excellent analysis by Jason Busch and Andrew Karpie from Spend Matters US, and Andrew’s previous analysis of the firm. Andrew is the number one guru of contingent labour tech and services firms, and it is interesting to see how positive he has been about DCR. The firm is not huge compared to Fieldglass (acquired by SAP four years ago) or Beeline, but it sounds like a very sensible fit for Coupa – a good product with considerate capability and flexibility.

Coupa will continue with their current “Services Maestro” offering for smaller customers who need a more “foundational” offering in the contingent space. But the DCR product will become Coupa Contingent Workforce, enabling clients to manage “advanced services at scale”, as they put it. That will include the end-to-end range of capabilities through identification, approval, engagement, management, payment and reporting on the contingent workforce.

We talked to a couple of our contacts at Coupa yesterday who told us that DCR have a pretty international client base, covering 50 countries no less. That is important because the legislation around contingent labour employment can be a minefield, as it differs considerably from country to country. That needs to be understood – indeed, that DCR capability and knowledge was one of the reasons Coupa decided to “buy rather than build” a solution in this area, we were told.

The Coupa share price jumped around 10% on the news of the acquisition and the results; the stock now trades at four times its flotation price of just two years ago. It really is a very impressive success story in our industry – and just remind me why we didn’t buy any shares back in 2016? (Conflict of interest, of course. Rats!)

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