7 Coupa Software Analysts React To Q1 Earnings Beat: 'Lots Of Noise Around Billings'

Coupa Software Inc COUP shares traded higher by 1.8% on Tuesday after the company reported strong earnings numbers and record subscription revenues in the first quarter.

On Monday, Coupa reported adjusted first-quarter EPS of 8 cents on revenue of $196.3 million. Both numbers topped consensus analyst estimates of 5 cents and $190.6 million, respectively. Revenue was up 17.6% from a year ago.

Coupa reported record quarterly subscription revenues of $178 million, up 27% year-over-year. Quarterly calculated billings of $188 million were up 26%.

Looking ahead, Coupa guided for second-quarter revenue of between $202 million and $205 million, missing Wall Street expectations of $205.2 million. For the full fiscal 2023, Coupa guided for revenue of between $838 million and $843 million, compared to analyst estimates of $841.6 million.

Related Link: 5 CrowdStrike Analysts React To Q1 Earnings Beat, Guidance Hike, Potential Hiring Ramp

Noisy Numbers: RBC Capital Markets analyst Rishi Jaluria said there is still "lots of noise around billings" for Coupa.

"To reduce the noise from the deemphasis on services revenue and Llamasoft term license migrations, management will now report on and guide to subscription billings going forward (which we would appreciate a reconciliation/bridge on)," Jaluria wrote.

Raymond James analyst Brian Peterson said Coupa is executing well in a noisy and choppy macroenvironment.

"We’re cognizant that quarters may be difficult to call, but we believe the company’s high ROI, expanding product portfolio and increasing go-to-market motion should allow for a durable growth profile in the mid-20% range (with potential for more in a more stable macro)," Peterson wrote.

European Weakness: JMP analyst Patrick Walravens said Coupa's guidance was mixed, and the company's European business is showing signs of weakness.

"On the positive side, Coupa is a leader in procurement and has a number of promising cross-sell opportunities including Coupa Pay, supply chain planning and design and T&E, but on the cautious side our sense is the company has struggled with some of its acquisitions and cross-sell sales motions, it is seeing some softness in Europe, and investors will wonder if that will spread to other regions as the year goes on," Walravens wrote.

KeyBanc analyst Josh Beck said the war in Ukraine and inflationary pressures are weighing on Coupa's Europe business.

"That said, the Company guided up for the FY (albeit below the beat while factoring in a 2-3% FX billings headwind) and reiterated continued interest in BSM projects (something we picked up at a recent user event) and a sense of increased awareness that back-office systems lag front-office capabilities coming out of the pandemic," Beck wrote.

Piper Sandler analyst Brent Bracelin said macroeconomic uncertainty remains an overhang for Coupa.

"Commentary that the company did see some deal slippage in Europe late in the quarter does heighten execution risks and limit confidence in the sustainability of subscription revenue growth that could moderate below 20% in the 2H," Bracelin wrote.

Mixed Guidance: Needham analyst Scott Berg said Coupa's forex headwinds are only temporary, and its pipeline and free cash flow generation are impressive.

"Consistent with our preview, some of the quarter's numbers are a bit squishy due to currency and macro issues, but overall, we believe investors should focus on management commentary around the pipeline and its reiteration of mid-20% growth targets for subscription billings and revenue," Berg wrote.

Wells Fargo analyst Michael Turrin said the company's guidance of 17% second-quarter billings growth and 20% revenue growth is likely conservative.

"We continue to expect Coupa shares will remain volatile until more consistent signs of recovery take shape, likely to take time given the current environment," Turrin wrote.

Ratings And Price Targets:

• RBC Capital Markets has a Sector Perform rating and $65 target.
• JPM has a Market Perform rating.
• Raymond James has an Outperform rating and $90 target.
• KeyBanc has an Overweight rating and $100 target.
• Needham has a Buy rating and $90 target.
• Piper Sandler has a Neutral rating and $85 target.
• Wells Fargo has an Equal Weight rating and $80 target.