Is Coupa Software a buy?

It’s time to breakdown another technology name. Here is the breakdown on $COUP, otherwise known as Coupa Software.

Current Price: $352.65

52/Wk High: $369.12

52/Wk Low: $99.01

Market Cap: $25.5 Billion

Read below for the breakdown!

Coupa Software ($COUP) is a major software and IT name that provides business service management software solutions through their cloud-based BSM platform.

Coupa’s platform allows customers to minimize spend, increase savings, and most importantly reach profitability goals. In general, the company streamlines company spends and decreases unnecessary spending.

Given the massive digital shift throughout the business world, Coupa Software has seen an increase in growth along with a major jump in stock price. In fact, Coupa Software stock has increased 123% in just the last year.

In recent news, Coupa Software acquired LLamasoft, a major AI-powered supply chain design, and planning company for $1.5 billion, strengthening Coupa’s offerings and platform.

Digging into the most recent quarter Coupa Software reported a Q3 2021 beat with an EPS of $0.18, better than the analyst’s EPS consensus estimate of $0.03. On a year over year basis, EPS declined -10% on a year over year basis.

Furthermore, Coupa reported solid revenues of $133 million for Q3, representing a 31% gain on a year over year basis.

Not only that but the company reported calculated billings of $140 million as well, representing a 33% gain on a year over year basis.

Coupa management also reported solid cash flows, with an operating cash flow of $19 million and adjusted free cash flows totaling $17 million.

On the downside, Coupa Software reported a GAAP operating loss of $33.6 million, a much larger loss than the 2020 same time operating loss of $16.9 million.

Rounding out the negatives of the Q3 report, Coupa continued to run a net loss as well, reported a GAAP net loss of $60.8 million, much worse than the same time 2020 GAAP net loss of $26.3 million.

On a final earnings note, Coupa reported a GAAP net income of $13 million for Q3 2021, less than the Q3 2020 net income level of $14.2 million.

As for guidance, Coupa expects the following for Q4 of 2021.

Revenue: $145 Million to $146 Million

Subscription Revnues: $124.5 Million to $125.5 million

Other Revenues: $20.5 Million

As for net loss, management expects a Q4 non-GAAP loss from operations level of $6.0 million to $8.0 million.

On a final guidance note, Coupa management expects FY 2021 revenues to land between $523.0 million and $524.0 million along with a non-GAAP income from operations of $34 million to $36 million.

Shifting into the balance sheet the numbers are not bad.

Total Debt: $1.480 Billion

Total Liabilities: $1.886 Billion

Total Assets: $2.298 Billion

Cash & Short Term Inv: $1.354 Billion

As for valuation, Coupa trades at a significant premium.

Price to Sales: 53.02x

Price to Book: 60.73x

On the flip side, management has some work to do and could be more effective.

Return on Equity: -32.74%

Return on Assets: -7.50%

Return on Invested Capital: -11.81%

Given the numbers the analysts are neutral with a mean price target of $356.59/share, representing a 1.12% gain.

It is also important to note that the high price target is $413.00/share, representing a 17.11% gain, while the low price target is $295.00/share, representing a -16.35% loss.

The big money is also quite involved with 98.79% of Coupa Software being owned by institutions. Top holders include Morgan Stanley Investment Management, The Vanguard Group, and T. Rowe Price Associates.

On a technical basis, Coupa Software maintains its bullishness. Taking a look at the six-month charts the MACD is moving to the upside within a range of 3.76 down to -0.17.

The six-month charts are also indicating an RSI of 59.73 and CCI of 120.37, both of which are on the high end.

In short, Coupa Software is a solid software name with a strong platform and growing revenues but management does have work to do when it comes to net loss and financial efficiency.

EAT - SLEEP - PROFIT

Disclaimer: This is not direct financial advice, simply an opinion based on independent research.