Billion-Dollar Unicorns: Coupa Has A Successful IPO

| About: Coupa Software (COUP)

Summary

Prior to listing, Coupa had raised $169 million from investors.

It listed on the Nasdaq last week under the ticker COUP at $18 a share, at which it sold 7.4 million shares to raise $133.2 million in its IPO.

The stock reached a high of $41.61 during its first day of trading. Its shares closed at $33.28, earning it a market capitalization of $1.66 billion.

After a drought of tech IPOs early this year, 2016 is finally ending on a positive note with a string of successful IPOs. After Twilio (NYSE:TWLO), Line (NASDAQ:LN), Talend (NASDAQ:TLND) and Nutanix (NASDAQ:NTNX), cloud spend management company Coupa (NASDAQ:COUP) is the latest among Billion-Dollar Unicorns to deliver a successful IPO.

Coupa's Early Journey

San Mateo-based Coupa was founded in 2006 by former Oracle (NYSE:ORCL) executives Noah Eisner and Dave Stephens. They were instrumental in the setting up of Oracle's iProcure product line and while working on it they would wonder why the way we buy at work should be any different from the way we buy at home. This led them to set up Coupa Procurement and create a service that simplifies the purchase process as if corporates were shopping at Amazon (NASDAQ:AMZN).

Coupa went on to diversify to other expense lines of the business such as employee expense management. It built a unified platform that delivers a user-centric approach to all the ways companies spend money so organizations get 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.

Coupa's biggest advantage lies in its ability to successfully integrate with multiple ERP suites including SAP (NYSE:SAP), Oracle, NetSuite (NYSE:N) 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.

As of July 31, 2016, Coupa had more than 460 customers in a diverse set of industries, including healthcare and pharmaceuticals, retail, financial services, manufacturing and technology, among others. No individual customer represents more than 10% of revenues. Its list of customers includes names like Toyota Motor Sales, Atlassian, Box, Salesforce.com, Coca Cola Bottling Co., and TPG Capital. But Coupa will have to look out for increasing competition from SAP and even Workday (NYSE:WDAY), which recently added broader budget planning and expense management features.

Coupa's Financials

Coupa operates on a subscription-based model, charging its customers based on the number of users needed by the organization. In its fiscal-year 2016 ending January 31, 2016, it generated revenue of $83.6 million compared to $50.8 million in fiscal 2015. Net loss was $46.2 million or $9.81 per share in 2016 compared to $27.3 million or $9.10 per share in 2015. For the six months ended July 31, 2016, it recorded $60.3 million in sales and net loss decreased marginally to $24.3 million.

Prior to listing, Coupa had raised $169 million 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. Their last funding round was held in June 2015 when they raised $80 million in a round led by T.Rowe Price that valued it at over $1 billion.

It listed on the Nasdaq last week under the ticker COUP at $18 a share, at which it sold 7.4 million shares to raise $133.2 million in its IPO. The stock reached a high of $41.61 during its first day of trading. Its shares closed at $33.28, earning it a market capitalization of $1.66 billion, justifying its unicorn valuation.

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