Coupa Software Reports Fourth Quarter & Full Year Fiscal 2022 Financial Results

COUPA SOFTWARE INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

Three Months Ended

January 31,

Year Ended

January 31,

2022

2021

2022

2021

Revenues:

Subscription

$     172,955

$     134,942

$     634,034

$     470,341

Professional services and other

20,343

28,602

91,255

71,302

Total revenues

193,298

163,544

725,289

541,643

Cost of revenues:

Subscription

55,097

48,039

209,799

147,374

Professional services and other

21,572

31,598

103,437

74,327

Total cost of revenues

76,669

79,637

313,236

221,701

Gross profit

116,629

83,907

412,053

319,942

Operating expenses:

Research and development

40,860

46,383

166,486

133,842

Sales and marketing

89,885

86,481

327,786

236,312

General and administrative

45,727

46,400

161,865

116,341

Total operating expenses

176,472

179,264

656,137

486,495

Loss from operations

(59,843)

(95,357)

(244,084)

(166,553)

Interest expense

(31,887)

(29,451)

(122,741)

(91,271)

Other income (expense), net

(2,137)

4,488

(4,883)

13,321

Loss before provision for (benefit from) income taxes

(93,867)

(120,320)

(371,708)

(244,503)

Provision for (benefit from) income taxes

95

(58,933)

(2,602)

(64,386)

Net loss

(93,962)

(61,387)

(369,106)

(180,117)

Net loss attributable to redeemable non-controlling interests

(273)

—

(1,063)

—

Adjustment attributable to redeemable non-controlling interests

2,323

—

10,996

—

Net loss attributable to Coupa Software Incorporated

$      (96,012)

$      (61,387)

$    (379,039)

$    (180,117)

Net loss per share, basic and diluted, attributable to Coupa Software Incorporated

$          (1.29)

$          (0.85)

$          (5.13)

$          (2.63)

Weighted-average number of shares used in computing net loss per share, basic and diluted

74,715

72,160

73,816

68,559

COUPA SOFTWARE INCORPORATED

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(unaudited)

January 31, 2022

January 31, 2021

Assets

Current assets:

Cash and cash equivalents

$     506,459

$     323,284

Marketable securities

223,032

283,036

Accounts receivable, net of allowances

226,191

196,009

Prepaid expenses and other current assets

38,270

36,381

Deferred commissions, current portion

21,096

15,541

Total current assets

1,015,048

854,251

Property and equipment, net

30,576

28,266

Deferred commissions, net of current portion

48,562

36,832

Goodwill

1,514,550

1,480,847

Intangible assets, net

510,663

632,173

Operating lease right-of-use assets

42,659

41,305

Other assets

31,121

31,491

Total assets

$  3,193,179

$  3,105,165

Liabilities, Redeemable Non-Controlling Interests, Other Temporary Equity and Stockholders' Equity

Current liabilities:

Accounts payable

$         4,610

$         4,831

Accrued expenses and other current liabilities

79,160

80,271

Deferred revenue, current portion

468,783

356,115

Current portion of convertible senior notes, net

1,639

609,068

Operating lease liabilities, current portion

12,760

11,222

Total current liabilities

566,952

1,061,507

Convertible senior notes, net

1,614,257

897,525

Deferred revenue, net of current portion

22,655

5,773

Operating lease liabilities, net of current portion

31,172

31,845

Other liabilities

52,481

67,915

Total liabilities

2,287,517

2,064,565

Redeemable non-controlling interests

12,084

—

Other temporary equity

—

369

Stockholders' equity:

Preferred stock, $0.0001 par value per share

—

—

Common stock, $0.0001 par value per share

7

7

Additional paid-in capital

1,778,840

1,556,865

Accumulated other comprehensive income

9,643

9,165

Accumulated deficit

(894,912)

(525,806)

Total stockholders' equity

893,578

1,040,231

Total liabilities, redeemable non-controlling interests, other temporary equity and stockholders' equity

$   3,193,179

$  3,105,165

COUPA SOFTWARE INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

Year Ended

January 31,

2022

2021

Cash flows from operating activities

Net loss attributable to Coupa Software Incorporated

$     (379,039)

$     (180,117)

Net loss and adjustment attributable to redeemable non-controlling interests

9,933

—

Net loss

(369,106)

(180,117)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

146,392

72,105

Amortization of premium on marketable securities, net

377

1,038

Amortization of deferred commissions

18,600

14,704

Amortization of debt discount and issuance costs

115,688

86,541

Stock-based compensation

199,895

149,423

Loss (gain) on conversion of convertible senior notes

357

(3,154)

Repayments of convertible senior notes attributable to debt discount

(1,338)

(27,409)

Other

(2,876)

3,761

Changes in operating assets and liabilities net of effects from acquisitions:

Accounts receivable

(25,752)

(36,757)

Prepaid expenses and other current assets

(1,447)

2,954

Other assets

23,266

6,786

Deferred commissions

(35,906)

(24,157)

Accounts payable

(326)

(851)

Accrued expenses and other liabilities

(28,569)

(65,995)

Deferred revenue

128,835

79,330

Net cash provided by operating activities

168,090

78,202

Cash flows from investing activities

Purchases of marketable securities

(176,716)

(1,017,751)

Maturities of marketable securities

140,300

396,595

Sale of marketable securities

94,916

835,123

Acquisitions, net of cash acquired

(47,312)

(863,597)

Purchases of other investments

(10,000)

—

Purchases of property and equipment

(13,853)

(11,492)

Net cash used in investing activities

(12,665)

(661,122)

Cash flows from financing activities

Investment from redeemable non-controlling interests

2,223

—

Proceeds from issuance of convertible senior notes, net of issuance costs

—

1,355,066

Purchase of capped calls

—

(192,786)

Repayments of convertible senior notes

(5,751)

(555,352)

Proceeds from the exercise of common stock options

9,446

19,232

Proceeds from issuance of common stock for employee stock purchase plan

21,626

15,631

Net cash provided by financing activities

27,544

641,791

Effects of foreign currency exchange rates on cash, cash equivalents, and restricted cash

(219)

438

Net increase in cash, cash equivalents, and restricted cash

182,750

59,309

Cash, cash equivalents, and restricted cash at beginning of year

327,589

268,280

Cash, cash equivalents, and restricted cash at end of period

$       510,339

$       327,589

Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets

Cash and cash equivalents

$       506,459

$       323,284

Restricted cash included in other assets

3,880

4,305

Total cash, cash equivalents, and restricted cash

$       510,339

$       327,589

COUPA SOFTWARE INCORPORATED

Reconciliation of GAAP to Non-GAAP Financial Measures

Three Months Ended January 31, 2022

(in thousands, except percentages and per share amounts)

(unaudited)

GAAP

Stock-Based

Compensation

Expenses

Amortization of

Acquired

Intangible Assets⁽²⁾

Amortization of

Debt Discount 

and

Issuance Costs

Other ⁽³⁾

Non-GAAP

Costs and expenses:

Costs of subscription

$         55,097

$          (3,857)

$       (18,050)

$                 —

$              —

$         33,190

Costs of professional services and other

21,572

(4,007)

(2,135)

—

—

15,430

Gross profit

60.3%

4.1%

10.4%

0.0%

0.0%

74.8%

Research and development

40,860

(11,044)

—

—

—

29,816

Sales and marketing

89,885

(15,441)

(12,781)

—

—

61,663

General and administrative

45,727

(20,295)

—

—

—

25,432

Income (loss) from operations

(59,843)

54,644

32,966

—

—

27,767

Operating margin

28.3%

17.1%

0.0%

0.0%

14.4%

Interest expense

(31,887)

—

—

29,972

—

(1,915)

Other income (expense), net

(2,137)

—

—

—

—

(2,137)

Income (loss) before provision for income taxes

(93,867)

54,644

32,966

29,972

—

23,715

Provision for income taxes

95

433

8,963

—

106

9,597

Net income (loss)

(93,962)

54,211

24,003

29,972

(106)

14,118

Net loss attributable to non-controlling interests

(273)

—

—

—

—

(273)

Adjustment attributable to non-controlling interests

2,323

—

—

—

2,323

—

Net income (loss) attributable to Coupa Software Incorporated

(96,012)

54,211

24,003

29,972

2,217

14,391

Net income (loss) per share, basic, attributable to Coupa Software Incorporated ⁽¹⁾

$            (1.29)

$              0.19

Net income (loss) per share, diluted, attributable to Coupa Software Incorporated ⁽¹⁾

$            (1.29)

$              0.19

(1)

GAAP net loss per share attributable to Coupa Software Incorporated is calculated based upon 74,715 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share attributable to Coupa Software Incorporated is calculated based upon 74,715 basic and 76,564 diluted weighted-average shares of common stock. The company uses the treasury stock method to calculate the non-GAAP diluted shares related to the convertible notes which reflects any anti-dilutive impact of the capped call transactions entered into in connection with the convertible notes.

(2)

During the fourth quarter of fiscal 2022, the Company identified that it had incorrectly calculated its quarterly non-GAAP income tax adjustment associated with the amortization of acquired intangible assets. The Company corrected the $4.9 million cumulative impact of such errors from prior periods as an out-of-period adjustment in the quarter ended January 31, 2022, of which $2.3 million relates to the previous financial year.

(3)

Other consists of the removal of a one-time income tax benefit associated with the remeasurement of foreign deferred tax assets and an adjustment attributable to non-controlling interests to its redemption amount.

COUPA SOFTWARE INCORPORATED

Reconciliation of GAAP to Non-GAAP Financial Measures

Three Months Ended January 31, 2021

(in thousands, except percentages and per share amounts)

(unaudited)

GAAP

Stock-Based

Compensation

Expenses

Amortization of

Acquired

Intangible Assets

Amortization of

Debt Discount and

Issuance Costs

Loss on

Conversion of

Convertible

Senior Notes

Other Expenses ⁽²⁾

Non-GAAP

Costs and expenses:

Costs of subscription

$          48,039

$           (3,797)

$        (13,191)

$                  —

$                 —

$                  —

$          31,051

Costs of professional services and other

31,598

(7,260)

(6,452)

—

—

—

17,886

Gross profit

51.3%

6.8%

12.0%

0.0%

0.0%

0.0%

70.1%

Research and development

46,383

(16,554)

—

—

—

—

29,829

Sales and marketing

86,481

(21,856)

(12,916)

—

—

—

51,709

General and administrative

46,400

(24,532)

—

—

—

—

21,868

Income (loss) from operations

(95,357)

73,999

32,559

—

—

—

11,201

Operating margin

(58.3)%

45.2%

19.9%

0.0%

0.0%

0.0%

6.8%

Interest expense

(29,451)

—

—

27,814

—

—

(1,637)

Other income (expense)

4,488

—

—

—

12

—

4,500

Income (loss) before provision for (benefit from) income taxes

(120,320)

73,999

32,559

27,814

12

—

14,064

Provision for (benefit from) income taxes

(58,933)

1,763

747

7,103

—

50,378

1,058

Net income (loss)

(61,387)

72,236

31,812

20,711

12

(50,378)

13,006

Net income (loss) per share, basic, attributable to Coupa Software Incorporated ⁽¹⁾

$             (0.85)

$              0.18

Net income (loss) per share, diluted, attributable to Coupa Software Incorporated ⁽¹⁾

$             (0.85)

$              0.17

(1)

GAAP net loss per share attributable to Coupa Software Incorporated is calculated based upon 72,160 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share attributable to Coupa Software Incorporated is calculated based upon 72,160 basic and 77,013 diluted weighted-average shares of common stock. The company uses the treasury stock method to calculate the non-GAAP diluted shares related to the convertible notes which reflects any anti-dilutive impact of the capped call transactions entered into in connection with the convertible notes.

(2)

Other Expenses consists of the release of valuation allowances against deferred tax assets.

COUPA SOFTWARE INCORPORATED

Reconciliation of GAAP to Non-GAAP Financial Measures

Year Ended January 31, 2022

(in thousands, except percentages and per share amounts)

(unaudited)

GAAP

Stock-Based

Compensation

Expenses

Amortization of

Acquired

Intangible Assets⁽²⁾

Amortization of

Debt Discount 

and

Issuance Costs

Loss on

Conversion of

Convertible

Senior Notes

Other ⁽³⁾

Non-GAAP

Costs and expenses:

Costs of subscription

$ 209,799

$  (14,920)

$      (63,197)

$                 —

$            —

$           —

$ 131,682

Costs of professional services and other

103,437

(16,991)

(18,151)

—

—

—

68,295

Gross profit

56.8%

4.4%

11.2%

0.0%

0.0%

0.0%

72.4%

Research and development

166,486

(44,119)

—

—

—

—

122,367

Sales and marketing

327,786

(52,109)

(52,194)

—

—

—

223,483

General and administrative

161,865

(71,756)

—

—

—

—

90,109

Income (loss) from operations

(244,084)

199,895

133,542

—

—

—

89,353

Operating margin

(33.7)%

27.6%

18.4%

0.0%

0.0%

0.0%

12.3%

Interest expense

(122,741)

—

—

115,688

—

—

(7,053)

Other income (expense)

(4,883)

—

—

—

357

—

(4,526)

Income (loss) before provision for (benefit from) income taxes

(371,708)

199,895

133,542

115,688

357

—

77,774

Provision for (benefit from) income taxes

(2,602)

2,983

14,410

—

—

852

15,643

Net income (loss)

(369,106)

196,912

119,132

115,688

357

(852)

62,131

Net loss attributable to non-controlling interests

(1,063)

—

—

—

—

—

(1,063)

Adjustment attributable to non-controlling interests

10,996

—

—

—

—

10,996

—

Net income (loss) attributable to Coupa Software Incorporated

(379,039)

196,912

119,132

115,688

357

10,144

63,194

Net income (loss) per share, basic, attributable to Coupa Software Incorporated ⁽¹⁾

$      (5.13)

$        0.86

Net income (loss) per share, diluted, attributable to Coupa Software Incorporated ⁽¹⁾

$      (5.13)

$        0.83

(1)

GAAP net loss per share attributable to Coupa Software Incorporated is calculated based upon 73,816 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share attributable to Coupa Software Incorporated is calculated based upon 73,816 basic and 76,297 diluted weighted-average shares of common stock. The company uses the treasury stock method to calculate the non-GAAP diluted shares related to the convertible notes which reflects any anti-dilutive impact of the capped call transactions entered into in connection with the convertible notes.

(2)

During the fourth quarter of fiscal 2022, the Company identified that it had incorrectly calculated its quarterly non-GAAP income tax adjustment associated with the amortization of acquired intangible assets. In the consolidated financial statements ended January 31, 2022, the Company corrected the $2.3 million cumulative impact of such prior-period error as an out-of-period adjustment.

(3)

Other consists of the removal of a one-time income tax benefit associated with the remeasurement of foreign deferred tax assets and an adjustment attributable to non-controlling interests to its redemption amount.

COUPA SOFTWARE INCORPORATED

Reconciliation of GAAP to Non-GAAP Financial Measures

Year Ended January 31, 2021

(in thousands, except percentages and per share amounts)

(unaudited)

GAAP

Stock-Based

Compensation

Expenses

Amortization of

Acquired

Intangible Assets

Change in Fair

Value of

Contingent

Consideration

Liability

Amortization of

Debt Discount and

Issuance Costs

Gain on

Conversion of

Convertible

Senior Notes

Other Expenses⁽²⁾

Non-GAAP

Costs and expenses:

Costs of subscription

$ 147,374

$  (11,438)

$      (35,561)

$            —

$           —

$           —

$           —

$ 100,375

Costs of professional services and other

74,327

(15,563)

(7,052)

—

—

—

—

51,712

Gross profit

59.1%

5.0%

7.9%

0.0%

0.0%

0.0%

0.0%

71.9%

Research and development

133,842

(37,685)

—

—

—

—

—

96,157

Sales and marketing

236,312

(48,414)

(20,284)

—

—

—

—

167,614

General and administrative

116,341

(55,750)

—

12,500

—

—

—

73,091

Income (loss) from operations

(166,553)

168,850

62,897

(12,500)

—

—

—

52,694

Operating margin

(30.7)%

31.2%

11.6%

(2.3)%

0.0%

0.0%

0.0%

9.7%

Interest expense

(91,271)

—

—

—

86,541

—

—

(4,730)

Other income (expense)

13,321

—

—

—

—

(3,154)

—

10,167

Income (loss) before provision for (benefit from) income taxes

(244,503)

168,850

62,897

(12,500)

86,541

(3,154)

—

58,131

Provision for (benefit from) income taxes

(64,386)

6,084

432

—

9,588

—

50,688

2,406

Net income (loss)

(180,117)

162,766

62,465

(12,500)

76,953

(3,154)

(50,688)

55,725

Net income (loss) per share, basic, attributable to Coupa Software Incorporated ⁽¹⁾

$      (2.63)

$        0.81

Net income (loss) per share, diluted, attributable to Coupa Software Incorporated ⁽¹⁾

$      (2.63)

$        0.77

(1)

GAAP net loss per share attributable to Coupa Software Incorporated is calculated based upon 68,559 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share attributable to Coupa Software Incorporated is calculated based upon 68,559 basic and 72,692 diluted weighted-average shares of common stock. The company uses the treasury stock method to calculate the non-GAAP diluted shares related to the convertible notes which reflects any anti-dilutive impact of the capped call transactions entered into in connection with the convertible notes.

(2)

Other Expenses consists of the release of valuation allowances against deferred tax assets.

COUPA SOFTWARE INCORPORATED

Reconciliation of GAAP Cash Flows from Operations to Adjusted Free Cash Flows and Adjusted Free Cash Flows Margin

(A Non-GAAP Financial Measure)

(in thousands, except percentages)

(unaudited)

Three Months Ended January 31,

Year Ended January 31,

2022

2021

2022

2021

Net cash provided by operating activities

$           64,182

$           20,404

$         168,090

$           78,202

Less: purchases of property and equipment

(3,597)

(1,933)

(13,853)

(11,492)

Add: repayments of convertible senior notes attributable to debt discount

—

201

1,338

27,409

Add: one-time payout of legacy unvested equity awards accelerated in conjunction with a business combination

—

19,428

—

19,428

Adjusted free cash flows

$           60,585

$           38,100

$         155,575

$         113,547

Trailing Twelve
Months Ended January 31,

2022

2021

Net cash provided by operating activities

$      168,090

$        78,202

Less: purchases of property and equipment

(13,853)

(11,492)

Add: repayments of convertible senior notes attributable to debt discount

1,338

27,409

Add: one-time payout of legacy unvested equity awards accelerated in conjunction with a business combination

—

19,428

Adjusted free cash flows

155,575

113,547

Divided by: total revenues

$      725,289

$      541,643

Adjusted free cash flows margin

21.5 %

21.0 %