2016 IPO Prospects: Coupa Manages Expenses Expertly

| About: Coupa Software (CSOFT)

Summary

According to a TechNavio report, the Global SaaS-based Expense Management market is estimated to grow 19.2% annually over the period 2013 through 2018.

San Mateo-based Coupa was founded in 2006 by Noah Eisner and Dave Stephens who were instrumental in the setting up of Oracle's iProcure product line.

Coupa operates on a subscription-based model, charging its customers based on the number of users needed by the organization.

Two years ago, SAP (NYSE:SAP) completed the $8.3 billion acquisition of Concur Technologies, clearly highlighting the importance of SaaS-based solutions within the expense management space. According to a TechNavio report, the Global SaaS-based Expense Management market is estimated to grow 19.2% annually over the period 2013 through 2018. The market is dominated by bigger vendors including the likes of Ariba, SAP through its Concur acquisition, IBM (NYSE:IBM), and Oracle (NASDAQ:ORCL). Now, some startups like Coupa are also making their presence felt.

Coupa's Offerings

San Mateo-based Coupa (Private:CSOFT) was founded in 2006 by Noah Eisner and Dave Stephens who were instrumental in the setting up of Oracle's iProcure product line. Through their experiences at Oracle, the founders were debating the question, "Why should the way we buy at work be any different than the way we buy at home?" They soon realized that there was no need for the difference to exist and set up Coupa Procurement. The resulting solution is a service that simplifies the purchase process as if corporates were shopping at Amazon.

Coupa did not stop at procurement and diversified to other expense lines of the business including employee expense management. It built a unified platform that delivers a user-centric approach to all the ways companies spend money, including procurement and employee expense sheets, thus giving the organization a 360-degree view on all company spending. Today, its unified solutions span multiple functions including procurement, invoicing, expense management, sourcing, inventory, contract management, budgeting, and analytics. Through simplification and integration of these processes, Coupa has allowed organizations to save money and time normally spent on these activities. The company prides itself on being able to deliver savings to organizations and even calls itself a "savings-as-a-service" business.

Last year, Coupa acquired New York-based travel company TripScanner to expand its expertise within the travel expense management category. It also added Australian InvoiceSmash, a cloud-based provider for accounts payable and e-invoicing solutions to help strengthen Coupa's Invoicing Solution. Through the acquisition, Coupa will be able to instantly convert emailed invoices from suppliers into a digital format to simplify and speed up the buyer's accounts payable process. Terms of both the deals were not disclosed.

Coupa's Financials

Coupa operates on a subscription-based model, charging its customers based on the number of users needed by the organization. The company does not disclose pricing or detailed financials, but has revealed that it had record revenues in Q3 2015. It claims to have processed more than $120 billion in expenses through its solution, which has resulted in savings of over $5 billion for its customers.

Coupa is venture funded so far with $169 million raised from investors including T. Rowe Price, Meritech Capital Ventures, Crosslink Capital, Mohr Davidow Ventures, El Dorado Ventures, Battery Ventures, Iconiq Capital, Northgate Capital, PremjiInvest, and BlueRun Ventures. Its last funding round was held in June 2015 when it raised $80 million in a round led by T.Rowe Price that valued it at over $1 billion.

Analysts expect the company to go public soon given that it had hired Todd Ford, former CFO of MobileIron (NASDAQ:MOBL) as its CFO. Todd has helped his former employers MobileIron and Rackable Systems go public under his guidance.

Coupa's biggest advantage lies in its ability to successfully integrate with multiple ERP suites including SAP, Oracle, NetSuite, and GreatPlains. A traditional ERP is focused on the back-end processes and does not necessarily extend to the business as a whole. Coupa therefore provides applications that are able to provide spend management functions within the ERP itself. It can integrate to one or many ERPs through its open API and connectors within a short time and allows enterprise users to feed data directly into the system from their mobile phones.