How Coupa Software Is Spending Money To Save Money

While Barclays’ Raimo Lenschow sees Coupa Software Inc (NASDAQ: COUP) as “the next large horizontal application software vendor,” valuation has kept the analyst on the sidelines.

Lenschow initiated coverage of the company with an Equal-Weight rating and price target of $28.

The Wall Street Journal reported following the company’s IPO that shares had more than doubled following their market debut, taking Coupa Software’s market capitalization to over $1.5 billion.

Spend Management

According to the Barclays report, “Built on "Ruby-on-Rails" technology, a nextgen programming language for web apps, Coupa's user-friendly platform has already enjoyed strong user adoption, exemplified by its strong revenue growth of 65 percent y/y for FY2016.”

Lenschow believes growth rates will continue to be robust, given that the TAM was estimated at around $16 billion, with only one main competitor.

The analyst also pointed out that the Software-as-a-Service solution being offered by Coupa Software “tackles one of a customer's main pain points, controlling a company's indirect spending. Coupa's solution is modern, flexible, and easy to use, which means it is enjoying high end user acceptance - a key factor for better spend management.”

The IPO quiet period for the company expired today.