Coupa Software Reports Third Quarter Fiscal 2022 Financial Results

- Record Quarterly Revenues of $186 Million, 40% Year-Over-Year Growth
Published: Dec. 6, 2021 at 3:03 PM CST

SAN MATEO, Calif., Dec. 6, 2021 /PRNewswire/ -- Coupa Software (NASDAQ: COUP) today announced financial results for its third fiscal quarter ended October 31, 2021.

Coupa Software (PRNewsfoto/Coupa Software)
Coupa Software (PRNewsfoto/Coupa Software)

"We delivered another strong quarter with record revenue and profitability," said Rob Bernshteyn, chairman and chief executive officer at Coupa. "As demonstrated by our third quarter results, we are seeing strong adoption of the Coupa platform as our customers continue to prioritize Business Spend Management as a fundamental aspect of their go-forward strategy. With the fourth quarter well under way, we continue to leverage our Value-as-a-Service approach to add strategic customers across many industries and of all sizes."

Third Quarter Results:

  • Total revenues were $185.8 million, an increase of 40% compared to the same period last year. Subscription revenues were $164.7 million, an increase of 40% compared to the same period last year.
  • GAAP operating loss was $56.1 million, compared to $33.6 million for the same period last year. Non-GAAP operating income was $27.9 million, compared to $14.3 million for the same period last year.
  • GAAP net loss attributable to Coupa Software Incorporated was $91.2 million, compared to $60.8 million for the same period last year. GAAP net loss per basic and diluted share attributable to Coupa Software Incorporated was $1.23, compared to $0.88 for the same period last year. Non-GAAP net income attributable to Coupa Software Incorporated was $23.5 million, compared to $13.0 million for the same period last year. Non-GAAP net income per diluted share attributable to Coupa Software Incorporated was $0.31, compared to $0.18 for the same period last year.
  • Operating cash flows and adjusted free cash flows were positive $31.0 million and $28.2 million, respectively.

See the section titled "Non-GAAP Financial Measures" and the reconciliation tables below for important information regarding the non-GAAP financial measures used by Coupa.

Business Outlook:

The following forward-looking statements reflect Coupa's expectations as of December 6, 2021.

Fourth quarter of fiscal 2022:

  • Total revenues are expected to be $185.0 to $186.0 million.
  • Subscription revenues are expected to be $166.0 to $167.0 million.
  • Professional services and other revenues are expected to be approximately $19.0 million.
  • Non-GAAP income from operations is expected to be $8.0 to $10.0 million.
  • Non-GAAP net income per diluted share attributable to Coupa Software Incorporated is expected to be $0.03 to $0.05 per share.
  • Diluted weighted average share count is expected to be approximately 77.0 million shares.

Full year fiscal 2022:

  • Total revenues are expected to be $717.0 to $718.0 million.
  • Non-GAAP income from operations is expected to be $70.0 to $72.0 million.
  • Non-GAAP net income per diluted share attributable to Coupa Software Incorporated is expected to be $0.66 to $0.69 per share.
  • Diluted weighted average share count is expected to be approximately 76.5 million shares.

Coupa has not reconciled its expectations for non-GAAP income from operations to GAAP loss from operations, or non-GAAP net income per diluted share attributable to Coupa Software Incorporated to GAAP net loss per share attributable to Coupa Software Incorporated because certain items excluded from non-GAAP income from operations and non-GAAP net income per diluted share attributable to Coupa Software Incorporated, such as charges related to stock-based compensation expenses, amortization of acquired intangible assets, amortization of debt discount and issuance costs, gain or loss on conversion of convertible senior notes, the adjustment attributable to redeemable non-controlling interests, and related tax effects, including non-recurring income tax adjustments, cannot be reasonably calculated or predicted at this time. In addition, the effect of the anti-dilutive impact of the capped call transactions entered into in connection with the company's offerings of convertible notes in 2018, 2019 and 2020, respectively, cannot be reasonably calculated or predicted at this time. The effect of these items may be significant.

Recent Business Highlights:

  • Welcomed many new customers into the Coupa community in Q3, including the following: Angi, Aptim Holdings, Atr, Capsida Biotherapeutics, Compass Minerals International, Covetrus, DEVK Versicherungen, EDEKA Handelsgesellschaft Nord, Endeavor Group Limited, Orbia Advance Corporation, Softbank, and Yazaki North America.
  • Named a Gartner® Magic Quadrant™ Leader for P2P Suites for the sixth consecutive time1
  • Named a leader in ten Spend Matters SolutionMaps, covering every area of Source-to-Pay2
  • Named a Best Led Workplace in 2021 by Inc3
  • Became a Globally Certified Great Place to Work across the US, UK, India, Germany, and Ireland for 2021-20224
  • Named to Fortune's 2021 Future 50 list5
  • Awarded a Silver medal sustainability rating from EcoVadis
  • Debuted its campaign, "Behold the Power of Spend" at the World Series, F-1, Premier League, and Bundesliga events
  • Opened registration for its 2022 global Business Spend Management (BSM) community conference Inspire in North America and EMEA
  • Hosted its annual Global Volunteer Day with well over 500 employees participating across 35 offices
  • Hosted a virtual panel "Women of Impact: Own Your Career" put on by Coupa Empower
  • Hosted a Supply Chain Symposium in London bringing together supply chain leaders from across the UK
  • Welcomed supply chain risk management and operational resilience company Interos to its portfolio of Coupa Ventures investments

Conference Call Information:

Coupa will host a conference call and live webcast for analysts and investors at 4:30 p.m. Eastern time today.

The live webcast will be accessible on Coupa's investor relations website at http://investors.coupa.com. A replay will be available through the same link.

Non-GAAP Financial Measures:

In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and the accompanying tables contain certain non-GAAP financial measures, including non-GAAP operating (loss) income, non-GAAP net (loss) income attributable to Coupa Software Incorporated, non-GAAP net (loss) income per basic and diluted share attributable to Coupa Software Incorporated, and adjusted free cash flows. Coupa believes these non-GAAP measures are useful in evaluating its operating performance and Coupa's management regularly reviews and uses these measures for business planning and other purposes.

Non-GAAP operating (loss) income and non-GAAP net (loss) income attributable to Coupa Software Incorporated exclude certain items from the corresponding GAAP measures, including: stock-based compensation expenses; amortization of acquired intangible assets; the change in fair value of contingent consideration related to an acquisition; amortization of debt discount and issuance costs; gain or loss on conversion of convertible senior notes; the adjustment attributable to redeemable non-controlling interests; and related tax effects, including non-recurring income tax adjustments. In addition, the weighted average diluted shares figure used to calculate non-GAAP net income per share attributable to Coupa Software Incorporated reflects the anti-dilutive impact of the capped call transactions entered into in connection with the company's offerings of convertible notes.

Adjusted free cash flows is defined as net cash provided by operating activities, less purchases of property and equipment, plus repayments of convertible senior notes attributable to debt discount, plus one-time payout of legacy unvested equity awards accelerated in conjunction with a business combination. Coupa has the ability to settle obligations related to its senior notes through the use of cash, shares of its common stock, or a combination of both, at its election.

Coupa believes these non-GAAP measures are useful to investors and other users of its financial information because they provide a way to measure and evaluate Coupa's underlying operating performance and the strength of its core business consistently across the periods presented. Coupa believes these non-GAAP measures are also useful for comparing its operating performance to that of other companies in its industry, because they eliminate the effects of certain items that may vary between companies for reasons unrelated to their operating performance. Coupa believes that adjusted free cash flows also provides a useful measure of the company's capital strength and liquidity, although it is not intended to represent and should not be viewed as the amount of residual cash flow available for discretionary expenditures.

Coupa uses these non-GAAP measures in conjunction with GAAP measures as part of its overall assessment of its performance and liquidity, including the preparation of its annual operating budget and quarterly forecasts, to evaluate the effectiveness of its business strategies, and to communicate with its board of directors concerning its financial performance and liquidity. Coupa's definitions of its non-GAAP measures may differ from those used by other companies for similarly-titled measures, and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Thus, Coupa's non-GAAP measures should be considered in addition to, not as substitutes for, or in isolation from, the company's GAAP results.

Coupa encourages investors and others to review its financial information in its entirety, not to rely on any single financial measure, and to view its non-GAAP measures in conjunction with GAAP financial measures. In addition, Coupa compensates for the limitations of its non-GAAP financial measures by providing a reconciliation of each non-GAAP measure to the most directly comparable GAAP financial measure. These reconciliations are included in the tables attached to this release.

Forward-Looking Statements:

This release includes forward-looking statements. All statements other than statements of historical facts, including the statements of management and statements in "Business Outlook," are forward-looking statements. These forward-looking statements are based on Coupa's current expectations and projections about future events and trends that Coupa believes may affect its financial condition, results of operations, strategy, short- and long-term business operations and objectives, cash flows, liquidity and financial needs.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, without limitation: the uncertain impact of the COVID-19 pandemic, including new variants such as the Delta and Omicron variants; Coupa has a limited operating history at its current scale, which makes it difficult to predict its future operating results; Coupa may not be able to manage its recent rapid growth effectively; risks related to past and future business acquisitions, including their integration with Coupa's existing business model, operations and culture; if Coupa is unable to attract new customers, the growth of its revenues will be adversely affected; because its platform is sold to large enterprises with complex operating environments, Coupa encounters long and unpredictable sales cycles; the markets in which Coupa participates are intensely competitive; Coupa's business depends in part on its customers renewing their subscriptions and purchasing additional subscriptions; Coupa may not be successful in expanding its sales efforts or developing widespread brand awareness in a cost-effective manner; risks and liabilities related to breach of its security measures or unauthorized access to customer data; the impact of foreign currency exchange rates and global economic conditions; and risks relating to analyst coverage of its stock.

These and other risks and uncertainties that could affect Coupa's future results are included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in Coupa's quarterly report on Form 10-Q filed with the Securities and Exchange Commission (SEC) on September 8, 2021, which is available at investors.coupa.com and on the SEC's website at www.sec.gov. Further information on potential risks that could affect actual results will be included in other periodic filings Coupa makes with the SEC.

The forward-looking statements in this release reflect Coupa's expectations as of December 6, 2021. Coupa undertakes no obligation to update publicly any forward-looking statements for any reason after the date of this release to conform these statements to actual results or to changes in its expectations.

1Gartner, "2021 Magic Quadrant™ for Procure-to-Pay Suites", October 27, 2021
2Spend Matters, "Spend Matters Almanac", October 8, 2021
3Inc, "Introducing the Best Workplaces of 2021", November 30, 2021
4Great Place to Work, "Certified™ Companies - Best Companies to Work for 2021", July 2021
5Fortune, "The Future 50: Growth stocks to bet on in an unpredictable world", December 2, 2021

About Coupa Software

Coupa empowers companies around the world with the visibility and control they need to spend smarter and safer. To learn more about how Coupa can help you spend smarter, visit www.coupa.com. Read more on the Coupa Blog or follow @Coupa on Twitter.

COUPA SOFTWARE INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)



Three Months Ended

October 31,


Nine Months Ended

October 31,




2021


2020


2021


2020

Revenues:








Subscription

$

164,745



$

118,083



$

461,079



$

335,399


Professional services and other

21,071



14,881



70,912



42,700


Total revenues

185,816



132,964



531,991



378,099


Cost of revenues:








Subscription

52,279



36,528



154,701



99,335


Professional services and other

25,341



14,259



81,865



42,729


Total cost of revenues

77,620



50,787



236,566



142,064


Gross profit

108,196



82,177



295,425



236,035


Operating expenses:








Research and development

39,990



30,528



125,625



87,459


Sales and marketing

83,779



53,204



237,902



149,831


General and administrative

40,513



32,092



116,139



69,941


Total operating expenses

164,282



115,824



479,666



307,231


Loss from operations

(56,086)



(33,647)



(184,241)



(71,196)


Interest expense

(31,130)



(29,308)



(90,854)



(61,820)


Other income (expense), net

(1,298)



746



(2,746)



8,833


Loss before benefit from income taxes

(88,514)



(62,209)



(277,841)



(124,183)


Benefit from income taxes

(476)



(1,411)



(2,697)



(5,453)


Net loss

(88,038)



(60,798)



(275,144)



(118,730)


Net loss attributable to redeemable non-controlling interests

(273)





(790)




Adjustment attributable to redeemable non-controlling interests

3,438





8,673




Net loss attributable to Coupa Software Incorporated

$

(91,203)



$

(60,798)



$

(283,027)



$

(118,730)


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

$

(1.23)



$

(0.88)



$

(3.85)



$

(1.76)


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

74,133



68,941



73,514



67,349


COUPA SOFTWARE INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(unaudited)



October 31, 2021


January 31, 2021

Assets




Current assets:




Cash and cash equivalents

$

458,195



$

323,284


Marketable securities

209,660



283,036


Accounts receivable, net of allowances

179,278



196,009


Prepaid expenses and other current assets

32,283



36,381


Deferred commissions, current portion

18,848



15,541


Total current assets

898,264



854,251


Property and equipment, net

30,161



28,266


Deferred commissions, net of current portion

42,623



36,832


Goodwill

1,515,141



1,480,847


Intangible assets, net

543,628



632,173


Operating lease right-of-use assets

38,183



41,305


Other assets

35,853



31,491


Total assets

$

3,103,853



$

3,105,165


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




Current liabilities:




Accounts payable

$

5,279



$

4,831


Accrued expenses and other current liabilities

96,716



80,271


Deferred revenue, current portion

352,198



356,115


Current portion of convertible senior notes, net

633,641



609,068


Operating lease liabilities, current portion

12,401



11,222


Total current liabilities

1,100,235



1,061,507


Convertible senior notes, net

952,285



897,525


Deferred revenue, net of current portion

14,058



5,773


Operating lease liabilities, net of current portion

27,174



31,845


Other liabilities

68,210



67,915


Total liabilities

2,161,962



2,064,565


Redeemable non-controlling interests

10,044




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

1,724,042



1,556,865


Accumulated other comprehensive income

8,748



9,165


Accumulated deficit

(800,950)



(525,806)


Total stockholders' equity

931,847



1,040,231


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

$

3,103,853



$

3,105,165


COUPA SOFTWARE INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)



Nine Months Ended

October 31,



2021


2020

Cash flows from operating activities




Net loss attributable to Coupa Software Incorporated

$

(283,027)



$

(118,730)


Net loss and adjustment attributable to redeemable non-controlling interests

7,883




Net loss

(275,144)



(118,730)


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




Depreciation and amortization

109,900



36,529


Amortization of premium on marketable securities, net

625



869


Amortization of deferred commissions

13,335



10,102


Amortization of debt discount and issuance costs

85,716



58,727


Stock-based compensation

145,251



94,851


Loss (gain) on conversion of convertible senior notes

357



(3,166)


Repayments of convertible senior notes attributable to debt discount

(1,338)



(27,208)


Other

(3,204)



3,923


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




Accounts receivable

21,433



22,519


Prepaid expenses and other current assets

4,529



1,591


Other assets

13,968



(2,730)


Deferred commissions

(22,445)



(11,355)


Accounts payable

500



(1,435)


Accrued expenses and other liabilities

6,795



4,941


Deferred revenue

3,630



(11,630)


Net cash provided by operating activities

103,908



57,798


Cash flows from investing activities




Purchases of marketable securities

(116,583)



(788,047)


Maturities of marketable securities

94,142



351,973


Sales of marketable securities

94,916



830,125


Acquisitions, net of cash acquired

(46,719)



(94,121)


Purchases of other investments

(10,000)




Purchases of property and equipment

(10,256)



(9,559)


Net cash provided by (used in) investing activities

5,500



290,371


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

(5,748)



(554,244)


Proceeds from the exercise of common stock options

7,444



14,425


Proceeds from issuance of common stock for employee stock purchase plan

21,626



15,631


Net cash provided by financing activities

25,545



638,092


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

(178)



128


Net increase in cash, cash equivalents, and restricted cash

134,775



986,389


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

327,589



268,280


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

$

462,364



$

1,254,669


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




Cash and cash equivalents

$

458,195



$

1,251,006


Restricted cash included in other assets

4,169



3,663


Total cash, cash equivalents, and restricted cash

$

462,364



$

1,254,669


COUPA SOFTWARE INCORPORATED

Reconciliation of GAAP to Non-GAAP Financial Measures

Three Months Ended October 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 (2)


Non-GAAP

Costs and expenses:














Costs of subscription

$

52,279



$

(4,162)



$

(16,736)



$



$



$



$

31,381


Costs of professional services and other

25,341



(4,729)



(3,642)









16,970


Gross profit

58.2

%


4.8

%


11.0

%


0.0

%


0.0

%


0.0

%


74.0

%















Research and development

39,990



(11,357)











28,633


Sales and marketing

83,779



(13,217)



(13,140)









57,422


General and administrative

40,513



(16,994)











23,519


Income (loss) from operations

(56,086)



50,459



33,518









27,891


Operating margin

(30.2)

%


27.2

%


18.0

%


0.0

%


0.0

%


0.0

%


15.0

%















Interest expense

(31,130)







29,454







(1,676)


Other income (expense), net

(1,298)









228





(1,070)


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

(88,514)



50,459



33,518



29,454



228





25,145


Provision for (benefit from) income taxes

(476)



733



1,629









1,886


Net income (loss)

(88,038)



49,726



31,889



29,454



228





23,259


Net loss attributable to non-controlling interests

(273)













(273)


Adjustment attributable to non-controlling interests

3,438











3,438




Net income (loss) attributable to Coupa Software Incorporated

(91,203)



49,726



31,889



29,454



228



3,438



23,532
















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

$

(1.23)













$

0.32


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

$

(1.23)













$

0.31




(1) 

GAAP net loss per share attributable to Coupa Software Incorporated is calculated based upon 74,133 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share attributable to Coupa Software Incorporated is calculated based upon 74,133 basic and 76,754 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 consists of an adjustment attributable to redeemable non-controlling interests to its redemption amount.

COUPA SOFTWARE INCORPORATED

Reconciliation of GAAP to Non-GAAP Financial Measures

Three Months Ended October 31, 2020

(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


Non-GAAP

Costs and expenses:












Costs of subscription

$

36,528



$

(2,836)



$

(8,212)



$



$



$

25,480


Costs of professional services and other

14,259



(2,939)



(200)







11,120


Gross profit

61.8

%


4.3

%


6.3

%


0.0

%


0.0

%


72.5

%













Research and development

30,528



(7,691)









22,837


Sales and marketing

53,204



(9,790)



(2,698)







40,716


General and administrative

32,092



(13,555)









18,537


Income (loss) from operations

(33,647)



36,811



11,110







14,274


Operating margin

(25.3)

%


27.7

%


8.4

%


0.0

%


0.0

%


10.7

%













Interest expense

(29,308)







27,370





(1,938)


Other income (expense), net

746









36



782


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

(62,209)



36,811



11,110



27,370



36



13,118


Provision for (benefit from) income taxes

(1,411)



290



(163)



1,376





92


Net income (loss) attributable to Coupa Software Incorporated

(60,798)



36,521



11,273



25,994



36



13,026














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

$

(0.88)











$

0.19


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

$

(0.88)











$

0.18




(1)

GAAP net loss per share attributable to Coupa Software Incorporated is calculated based upon 68,941 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share attributable to Coupa Software Incorporated is calculated based upon 68,941 basic and 73,766 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.

COUPA SOFTWARE INCORPORATED

Reconciliation of GAAP to Non-GAAP Financial Measures

Nine Months Ended October 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 (2)


Non-GAAP

Costs and expenses:














Costs of subscription

$

154,701



$

(11,063)



$

(45,146)



$



$



$



$

98,492


Costs of professional services and other

81,865



(12,984)



(16,016)









52,865


Gross profit

55.5

%


4.5

%


11.5

%


0.0

%


0.0

%


0.0

%


71.5

%















Research and development

125,625



(33,075)











92,550


Sales and marketing

237,902



(36,668)



(39,413)









161,821


General and administrative

116,139



(51,461)











64,678


Income (loss) from operations

(184,241)



145,251



100,575









61,585


Operating margin

(34.6)

%


27.3

%


18.9

%


0.0

%


0.0

%


0.0

%


11.6

%















Interest expense

(90,854)







85,716







(5,138)


Other income (expense), net

(2,746)









357





(2,389)


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

(277,841)



145,251



100,575



85,716



357





54,058


Provision for (benefit from) income taxes

(2,697)



2,550



5,448







746



6,047


Net income (loss)

(275,144)



142,701



95,127



85,716



357



(746)



48,011


Net loss attributable to non-controlling interests

(790)













(790)


Adjustment attributable to non-controlling interests

8,673











8,673




Net income (loss) attributable to Coupa Software Incorporated

(283,027)



142,701



95,127



85,716



357



7,927



48,801
















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

$

(3.85)













$

0.66


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

$

(3.85)













$

0.64




(1)

GAAP net loss per share attributable to Coupa Software Incorporated is calculated based upon 73,514 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share attributable to Coupa Software Incorporated is calculated based upon 73,514 basic and 76,295 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 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 redeemable non-controlling interests to its redemption amount.

COUPA SOFTWARE INCORPORATED

Reconciliation of GAAP to Non-GAAP Financial Measures

Nine Months Ended October 31, 2020

(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 (2)


Non-GAAP

Costs and expenses:
















Costs of subscription

$

99,335



$

(7,641)



$

(22,370)



$



$



$



$



$

69,324


Costs of professional services and other

42,729



(8,303)



(600)











33,826


Gross profit

62.4

%


4.2

%


6.1

%


0.0

%


0.0

%


0.0

%


0.0

%


72.7

%

















Research and development

87,459



(21,131)













66,328


Sales and marketing

149,831



(26,558)



(7,368)











115,905


General and administrative

69,941



(31,218)





12,500









51,223


Income (loss) from operations

(71,196)



94,851



30,338



(12,500)









41,493


Operating margin

(18.8)

%


25.1

%


8.0

%


(3.3)

%


0.0

%


0.0

%


0.0

%


11.0

%

















Interest expense

(61,820)









58,727







(3,093)


Other income (expense), net

8,833











(3,166)





5,667


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

(124,183)



94,851



30,338



(12,500)



58,727



(3,166)





44,067


Provision for (benefit from) income taxes

(5,453)



4,321



(315)





2,485





310



1,348


Net income (loss) attributable to Coupa Software Incorporated

(118,730)



90,530



30,653



(12,500)



56,242



(3,166)



(310)



42,719


















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

$

(1.76)















$

0.63


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

$

(1.76)















$

0.59




(1)

GAAP net loss per share attributable to Coupa Software Incorporated is calculated based upon 67,349 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share attributable to Coupa Software Incorporated is calculated based upon 67,349 basic and 71,854 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 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

(Non-GAAP Financial Measures)

(in thousands, except percentages)

(unaudited)



Three Months Ended October 31,


Nine Months Ended October 31,


2021


2020


2021


2020

Net cash provided by operating activities

$

31,015



$

19,001



$

103,908



$

57,798


Less: purchases of property and equipment

(3,594)



(2,531)



(10,256)



(9,559)


Add: repayments of convertible senior notes attributable to debt discount

821



872



1,338



27,208


Adjusted free cash flows

$

28,242



$

17,342



$

94,990



$

75,447





Trailing Twelve Months Ended October
31,


2021


2020

Net cash provided by operating activities

$

124,312



$

80,077


Less: purchases of property and equipment

(12,189)



(11,667)


Add: repayments of convertible senior notes attributable to debt discount

1,538



27,208


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

19,428




Adjusted free cash flows

133,089



95,618


Divided by: total revenues

$

695,535



$

489,551


Adjusted free cash flows margin

19.1

%


19.5

%

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SOURCE Coupa Software

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