A Healthy Quarter Expected From Coupa Software's First Earnings As Public Company

Coupa Software Inc (NASDAQ: COUP) is scheduled to report its Q3 results on December 5.

Although results are likely to be healthy, the company is facing tough billings comp in the current quarter, Barclays’ Raimo Lenschow said in a report. He maintained an Equal-Weight rating on Coupa Software, with a price target of $28.

“We believe the overall story remains compelling, as the company is poised to be the next-gen spend management solution in a market that is large but fragmented, which leaves room to take market share,” Lenschow wrote.

Q3 Preview

Coupa Software may report an 11 percent sequential decline in billings, versus its historical average of 18 percent growth, Lenschow mentioned. He pointed out, however, that the company is facing “particularly tough comps from both a stronger-than-usual Q3 last year and early renewals of some large deals in Q2 this year.”

The analyst estimated billings for the quarter at ~$32 million, adding that management’s tone may be slightly conservative, given that this would be the first public quarter.

Lenschow expects growth rates to remain healthy, with the TAM [total available market] opportunity in spend management estimated at ~$16 billion and the “only real competitor” being Ariba Inc (NASDAQ: ARBA), a first generation solution that was acquired by SAP SE (ADR) (NYSE: SAP) and therefore having “some limits to its potential reach.”