Coupa Software Earnings Preview: COUP stock soars 13% after 21st consecutive beat

UPDATED: Coupa Software stock spiked 13.6% to $63.40 afterhours on Tuesday after the spend management platform provider offered up yet another beat – its 21st consecutive quarterly beat. The firm reported $0.20 in adjusted EPS in fiscal Q2 compared with analyst consensus of $0.09. Coupa also lost $-0.99 in GAAP EPS, which was far better than the $-1.20 expected by Wall Street. Revenue of $211 million also outstripped consenus of $204 million. Management also impressed investors by raising full-year 2023 non-GAAP EPS from a range of $0.21 and $0.27 to a new range of $0.37 to $0.44.

Coupa Software (COUP) heads into its 21st earnings call with a record to uphold. The producer of corporate spending and purchasing management software has beaten Wall Street consensus in each of its last 20 quarters – a solid five years of beats. 

Despite that record, shares have lost about 78% over the past year as growth has slowed.

Coupa Software earnings preview

Analyst consensus has forecasted adjusted earnings per share (EPS) of $0.09 on revenue of $204 million for the fiscal second quarter. That revenue figure would amount to just 14% YoY growth though. In the fiscal second quarter of last year Coupa grew at an annual rate of 42%, so growth has really begun to melt away.

Investors will be interested to find out more about how Coupa Treasury is panning out. The just released software offering allows CFOs to observe and manage their company's cash position in real time.

In a press release two weeks ago, Coupa called the product "the only comprehensive solution that provides treasurers with a complete view of company spend and cash – across treasury, finance, procurement and supply chain."

Management said at the time that Coupa Treasury will become more necessary as companies focus on liquidity alongside the Fed's monetary tightening strategy and the possibility of a recession in 2023.

RBC Capital's Rishi Jaluria cut the bank's price target on COUP stock from $65 to $55 in late August. Due to the expectation of leaner times, Jaluria said companies would be more likely to stick to Coupa's main competitor, SAP Ariba. Jaluria also moved the stock from Sector Perform to Underperform.

At the end of the most recent quarter, Coupa had $786 million in cash but $2.2 billion in revenue. Despite turning a profit on an adjusted basis, the firm continues to run large net income losses. Coupa has lost $4.84 per share on a GAAP basis over the past four quarters, and analysts predict it will lose another $1.20 per share (GAAP) in this quarter. Expect management to address Coupa's cash position as the current burn rate will have it running on fumes within two years.

At least Coupa trades for a bit above five times revenue, so it is rather down to earth as investors are not expecting it to change the world.

Coupa Software stock forecast

Coupa Software stock remains in a downtrend. The stock had difficulty breaking through resistance at $80 in early August. Now with the market's latest pullback, it seems likely that COUP will track back to mid-June support at $50.67.

In the case of a likely beat, do not expect COUP to rebound all that much. The 50 and 100-day moving averages at $65 and $70, respectively, should hold any major excitement from getting out of hand. The Moving Average Convergence Divergence (MACD) also shows a downtrend.

COUP 1-day chart