COUP - Earnings call transcript Q3 2019

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Operator

Good day, ladies and gentlemen, and welcome to the Coupa Software Third Quarter Fiscal Year 2019 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. At the conclusion of our prepared remarks, we will conduct a question-and-answer session. [Operator Instructions].

As a reminder, this call is being recorded. to host like call, today's now Ms. would introduce for your conference I Relations. Noutsios, Nicole Investor Ms. may you conference. Noutsios, your begin

Nicole Noutsios

Good afternoon and conference call. welcome to Coupa Software's third quarter

Ford, Joining CEO; Rob are Coupa's Todd me CFO. Bernshteyn, today and Coupa's

forward-looking statements market strategies, competitive Our remarks products, today about and of size, growth future potential and guidance position operations, results opportunities. include

may be results actual different. Our materially

we are replayed in or disclaim this assumptions filed XX-K. recently Forward-looking risks, and uncertainties most update and to statements obligation call contain the beliefs assumptions forward-looking any our presented based statements any involve today, If current our may not information. and that after are described statements. information on These accurate forward-looking today, is

to included the non-GAAP turn period find measures. this prior via over which GAAP also release if of access the same our With in phone, you of you both Unless can We find replay Rob. comparisons to is also Relations will A against call of today's can financial replay growth I'll present website. that, A on release. stated, earnings earnings certain year. and available, reconciliation you a be are Investor call measures prefer of in the the these information that otherwise

Rob Bernshteyn

billion of the results an you financial $X.XX Today, well rate of XX%, with perspective, our report $XX.X strong I growth third trailing rate Hello, tell for results quarter joining XX everyone, a representing I'm a will and that annual for level over million per highest quarter. thank us. delighted and finished we from month year. to in At revenue, you run the

positive the XX a fully basis. cumulative are spend our industry. to continuing make broader that importantly, It's month a flows But to are under longer surpass fifth on most cash impact perspective, from delivered in software free meaningful also we QX. term trillion in management in consecutive a we easily important note quarter to $X on-track of enterprise We trailing

great We virtually solutions management companies the business of around category to importance are are know the all of developing spend which we world.

for of unprecedented We value are measurable of customers. delivering current our each hundreds

a innovative significant at platform We functional and highly scale. are offering technical

this We let's are get more [indiscernible] the under report a spend proud Rand than in rapid in XXX% I'm Denmark's focus across with Coupa in went deployment under on electronic invoicing that, and invoicing, for Canada phase for results gone with largest Zurich Coupa user of rather. with live excited Ingersoll electronic rollout. have results experience cultivating increased to the Starting country in with electronic customers; success, customers PO never scores. increased orders. achievement a quarter, XXX our about orientation that strive after management, sites a with retailer maniacal to you live of fiscal Insurance excellence. it. our matching, went spend Group, XXX customer ending of Denmark live this and went desire culture I'm purchase focused X,XXX-site, to contract and UK year, X the a QX, a colleagues Coupa first With at special live improved share the on so strong and U.S. fiscal

approach. we and procurement as global live with continuing We with achieve our leading and and Australia out be went in who quarter automotive locations these of in over customer Coupa more forward major real, the across a more customers a long-term their to retailer, help corporate transformation announced service a a to organizations UK measurable results where look will phase and operational who global value Inchcape, first rolled all Finally, for world. the in independent new last the distributor -- as just Coupa announced the

many reduction organizations spend cost and leaders their areas management. Coupa with the during to help operational processes aligned within our customers; of that procurement new are them onto selected moving and drive to the we Airlines with excellence. and business of in Now the United partner value excited transform quarter vision were real

shows journey. taking Finnair Coupa on nearly digitization both record Club services quarter Warriors, as AAA level. of of employees Axiata, Another Canada, to Garden, this track dining Energy, across Olive Darden Finnair, Other service many focused proven Coors part many, with global to others. a of Bikes, experience, customers major Company, Lime procurer Genesis based implementations other Cvent, process it's Coupa added SkillSoft, successful companies. their the complex State employee Group, the our airline, ISS procurement Distribution on we company Restaurants, full and establishments, XXX,XXX next global pay is selected new Capital included KPMG and owners Alliance, during Golden and Grille Consolis, facility

User same a the in we see ever just X participants. market markets. Lear our and of nearly very Inspire Inspire Unilever Conference, which from event remain in stage we during where attendees X,XXX opportunity breakouts U.S. perspective, traction Maersk, Rolls as Insurance Now customers more such Pearson, the international the Corporation, with month content by and large size EMEA Airbus, and event than And consumed main years Royce, development days. excited Zurich hours we ago was held an largest X,XXX X.X continued our EMEA as spoke on Inspire Last

and held also Sydney, quarter, inaugural APAC our the in we our Australia in Symposium inaugural Japan Symposium Tokyo. During

a an international great focus enthusiasm. for has and events become and was community discussed with exciting was this Coupa these on intelligence; customers area primary alike, domestic During

from organizations. their QX. usage in Coupa, capabilities; their information letter innovative fact, and our platform. it majority the our insights the community our Our P leveraged the placing are of in measured customers is prescriptive, they host accessed customers in brought platforms intelligence benefit and our customers in nearly at acting development future and doubled views on as Community the page hundreds QX QX of and to fingertips for highly in of many our alone, for Increasingly, forth a of creative consideration minds beginner's of ideas new

community Coupa they investigating one our using tolerance of first realized reevaluated customers leaders to in significant had gain surface been community invoices that low a they intelligence match observed invoice Upon rules example, for their action time rate where community. back values insights what's possible. They've For overly place. in are of just of reviews stringent compared invoice This and in to very example we productivity. to just the today eliminate approval one is scratch beginning the unnecessary

we Our spend machine latest this currently Spend access in to Guard, identify select offering and potential generally leverages excited to and for fraud community offering, make intelligence customers, soon. learning group are available of is early which

pay for in payment Coupa EMEA. for card generally card announcements Inspire is first available now named had Barclay POs, first virtual been offering. our card also Coupa has this partner We exciting issuing our solution several and

also We which management financing platform finance optimization letter to capital the known opportunities. working 'C' as vision, in spend the Coupa. of leverage suppliers supply release brings businesses, financial and Pay Coupa's business our advance our the also is of announced and institutions part helping Coupa on chain together comprehensive

let's move acquisitions. onto Now

engine, search the this Aquiire could open advance real-time only to advanced This combined comparison. making stated In I and real-time acquisition our leader welcome in a and With we acquisition focused supporting us the previous acquisition integrate past seamlessly area. to colleagues. XX native experience. innovation our platform is team innovation or BXB shopping in enhance community patents QX Coupa delivers partners components the truly side-by-side a us As pending in announced or user We organic that supplier with of the 'O' we this localized of shopping of issued, very key and that allows engine. Aquiire in the warmly Aquiire, our technology brings in Cincinnati Simeno, into can to our acquiring power distinct cross-catalog us search, and/or transactional strategy leading on customers, Coupa, that further applications acquisition adding open the

success returning to and of her at results objective tangible the this Now the was his from management Cameron, Debbi management customers successful simple come Congratulations as Chief the customers in seen Debbi the Global core who that Senior through award one Debbi strengthening live, collectively to jobs to user of that recently Customer Royce. an brand Rolls personally customers products Coupa for award. played one, that underpinned to He with team you to the has BSM Coupa the a centric wanted experience under a as Coupa by winning values degree. done. Development investment learn Lead the At team spend going we our core sited and Coupa. internal organization. in internal services make our order Rolls given Officer million Procurement as Success time delivered working and key impact Once critical business in Coupa BSM be to excellence, and EMEA Rolls continuation success Striving our real we would solution the most symbolized get for the and Dan in Dan President solution Debbi needed procurement had as example leveraging at of help customer-like finding leveraged of Pearson's they successful for since for the to a 'U' for to of our for Vice Manager Rolls ensuring the accessible award presented excellence. at our best-in-class impact costs continue From I in for to Procurement -- in by the spend of again, Excellence Royce. values. to savings have day several for Jowitt, was winning Royce and is of procurement an £XXX Pearson. Coupa quickly and project an The significant demonstrated delivering brought to forward went Ensuring role transformation consumer-like Pearson look their of with strive clear and projects deployment exemplary at impact process. to this Coupa. strongly and strive award Pearson painlessly letter awards Dan at Rolls and continue many of to of The Inspire a us, congratulations company. have

to who recently as I'd Komal on MVP Coupa. results focusing all like by won Award voted Jogal, our our Finally, colleagues recognize of at fellow for

seeing is Komal recognized real of on always on earning global customer active, is for to increasingly our efforts. large challenging smart for technical a to and very Komal member was team, As support outstanding She by ready results key award. recently this new and a Congratulations focused tasks. creative, take

the companies and Officer, technology, America. in hired in is QX that share growing to quarter, our terms Dina North in this life for Technology proud fastest delighted Chief XXX sciences, telecommunications, Ghobrial. time was Deloitte's in to energy a the Fast Dina Coupa also other media, named a of for Procurement we of to first Now, XXX tech I'm very announce ranking that highlights I'm sixth row the passionate from She an expertise existing digital transformation deployment. engaging with and has partner technology and team has a a procurement, of joined and sourcing, successful after already In domain has of an become she results-oriented few onboard, been Coupa Dina us our the to a members highly customer key leader leadership strategic deep and accomplished Coupa overall. prospects. months background begun information with customers

to as Dina. of XX not Coupa have was beyond colleagues give Over me now the several I world community. Needless approved colleagues know, aboard of say, excited years, Welcome many hire; to let the Coupa call X,XXX every And a single our this and who one. my very well I again, counting. least, around approve back last you to above went but out over and last to

globe. Just over than two more local to month of a organizations XX competition hours XXX resulted in this volunteering quarter, Coupa the past organized around that

Amy at of time hours personal for for the the Souza organizations. Alberto, Boyn, of work XX these to out winning others hours over contributing display incredible values Gallagher, of Chimerela, David communities. volunteering Amy a completed excellence, truly local Amy help months, core in During XXX this Thanks Hurl, to with our our team all leader, Sarah [ph], and striving her of

remain and underway, are quarter XXth customers this now earnings firmly the call and with partners, well well do it culture Xth outstanding laser execution, is better positioned and we are a to that. So, finishing and community we continue confident our one and focused company, platform, on heading resilient can into this incredibly winning that strong, we no our as our innovative of year global our being I our public of believe market. QX

can results long-term CFO, in let that who drive continue with to goal stated So billion mind, we to our in Ford, financial financial as of and our me on our the and call reaching update you $X guidance. Todd hand over revenue, towards Todd?

Todd Ford

XX last QX, against we Thanks, that achieved two XX% year-over-year good of we $XX.X total we ago for commitments a a set third afternoon, XX% forth $X.X million. trailing years revenues revenues at professional continue targets all were revenues made company. our mid-term basis, execute quarter Subscription we December. and we On million, everyone. Analyst public the up of grew Day year-over-year became the and and Total revenues, when Rob, $XX.X financial In effectively to million. the XX% have month services comprised to were

Our acquired total was business. of the compared X% revenue continued operating driven top or by income non-GAAP of company's for negative $X.X year successful period integrations million of ago positive line QX the in solid of scaling growth, to revenue and X%

positive. operating a XX year-over-year X.X% the been year Xth marks also non-GAAP quarter. of last revenue. a million, $XXX.X in same were income months to calculated XX% the or in billings million month have for quarter was the Total XX% row This and non-GAAP income XX trailing trailing up basis, where last $XX XX% period quarter compared On operating

Let's now of results turn operations. to

quarter subscription was margin Our XX% XX.X% and was was gross ago. a XX.X% non-GAAP services professional year compared margin margin X%. Non-GAAP to non-GAAP third

on services expect from a XX% building and breakeven to the fluctuate scale generally month a professional between trend impact acquisition. Quarterly for we margins continue near-term due may to we As as trailing basis. reminder, also and margins XX positive

show course the our leverage financial business delivering our all to staying on commitment facets our model. are in continue to We while of in investment and continued

and is there and our result expect margins we the Acquiire, this million net quarter, quarter acquisitions of the to flows cost to next the $X.X As of the full DCR net non-GAAP quarter $X.X a compared delivered million of QX normalize ago. non-GAAP cash acquisition partial impact of but from of to a noted over a Including structure, income impact loss near-term as our last year quarters. to recent few impact positive we

flows from million components various flows for the third $XXX offset the $XXX paid QX cash to turn marketable a of quarter. securities, from the million million $XX of the decrease was other The of our We flows flows an QX. of XX entered and $XX flows $X let's revenue. DCR a Now generated million to in free prepaid we gross of at Cash of of of expected an margins million web-hosting million were QX into $X.X inflows in acquisitions on of positive FYXXXX. including cash cash On our approximately by which as increase for property end reflects cash decrease from Acquiire, million, approximately $XX.X and trailing equity employee Also, equipment. million X% free cash month transactions. basis, have we and free a is operating $X to defined impact one cash for or providers agreement as

to turn let's Now guidance.

revenues this $XX.X professional revenues services approximately of $XX.X For million $XX.X and of million; to the and subscription million. we fourth quarter, and total revenues $XX between expect be million, million includes between $X.X

the again, in non-GAAP impact M&A we to for integrated. million net these fully once acquisitions been shares XX% show shares activity. cash weighted QX, be be to breakeven non-GAAP we with fully and expect income, $XX.X to income operating In QX. our $XX recent QX margins reflecting of expect to average free million XX% roughly continued between flows and basic Once margins diluted near-term have leverage non-GAAP gross expect We recent

XX, $XXX XX% For non-GAAP XX%. margins XXXX, the $XXX.X year range expect in the we to to with be January revenues fiscal and million million ending between gross total of

be million. operations $XX.X from million to the $X.X We expect non-GAAP between income for year and

net estimated million share $XX.X the weighted for in diluted $X.XX to shares For we based of non-GAAP average year, an range per the year. fully upon $X.XX the income full expect

be subscription approximately quarter. QX. recognize on Since QX We will begin our but as would fewer quarter the prepared revenues to we've remind That next to revenue the in you QX provide roll FYXX X compared you the concludes based days will our has steady to of state like call number forward, our February, in I in days X% as remarks. on lower guidance to due models that

Operator? happy be to take your we'd Now, questions.

Operator

[Operator Instructions] first We'll with Raimo take from Barclays. Lenschow question our

Raimo Lenschow

are Congrats. These numbers. amazing

modeled, you a can very the it's a to nice around extension kind this Like Pay I a you payment ask on had you we about bit question some make go than kind obviously can on how better -- little far vendors? -- you're a like what then into decision did where the the were little the is make terms to very your about spend that [your do QX bit of see in moment. strategy in going good there stop decision any [ph] of or in And should underlying where in market; profitability like QX and it's where off fee] comparison decision and performance? be the a very where a that make that significantly to didn't might you to First, talk that's you stop did doing spend of you cost, of big aware really you. because did to Thank at items kind we this very,

Rob Bernshteyn

I'll to turn the second and then Todd. probably take over the first

way or overall was interest amongst our management of many traditional whole pay the procure to we've around customer even growing everything under done to beyond In done terms to done go on management, business there with with, an they as technology that could how our the being suppliers spend they suite. like could could automate cases. to customers how a how on spend still community of baseline the of their to primary procure get our Pay, solutions paper are their to-date, working just needs, business pay, host we've solve processes that a clearly, in part how of older lot all are they worked they okay to understand And

with usability, transactional core we having can at purchasing value getting around areas customers a greatest then that internationally, we greatest and So use around for. around also our began platform around primary the our the our the mechanisms where platform arms offer competencies our leverage scale

been being out a initially that it's of with streamline Coupa's of We on and ways. for corporate came further payment moved planned into and payments, we that which buyers generally to a dynamic releases. of mechanisms cards invoice cards discounting today So our Coupa available, in towards POs And early going advantage moving few and that's are through the we're Accelerate our Coupa sort to processes now lot virtual allows chaotic and for now business discounts, take there. GA is done being

capability. So our greatest our as thought to we'll conferences, from as go here Inspire we you Coupa early process continue informed solution we a comprehensive very strengths, always payment leverages generally at with to well have every and is that it, develop available to in-development access, our as offer keep to we

Todd Ford

And QX cost wasn't that side certainly in on I that shifted there specifically there Raimo, the to nothing there; would QX. anything is call from

we We our in to the continue with cost respect saw full also as compared did to so sales QX hire, to jump meaningful cost and in DCR, of you take a QX. QX aggressively for R&D

to cost that's I QX. sales and from out Inspire other bit would in drop a related high the and QX a in you The also saw of call primarily thing marketing,

So other nothing that beyond those out would than that items. call I

Operator

Up Loop Vafi Capital. with next is Joseph

Joseph Vafi

results. Good

then, aware is off? And a that an get we or progressing follow-up have after cross-sell should DCR, opportunities other I be on acquisition how any there update on we can that. and Just that

Rob Bernshteyn

some underway go these they common I have that us, of shares people the number only couple of utilize This even these our customers, workforce. they Coupa sense and when well months, like there now these scale, at very, it's of contingent their our DCR managing we've on really finding services advanced capabilities organization, workers on We're integrating acquisition purpose; success your contingent been our came that to been around have though entire about platform, they've for contingent of a taken based into with with really need company. is are feel group exciting of -- support in for into our for the capabilities to for that lifecycle shares which the capabilities a years. likely our to core rank capabilities based they is on adding this that leveraging is of values, at a really very And value exciting powerful internal colleagues AI our terms also for the and the on you [indiscernible] came allowing particularly candidates workforces

terms about and of certainly customer tell that So excitement how I we're components very could bringing the from of is we'll team keep goes, very the this, you excited the it's very, you on in integration community abreast but on the early strong.

Joseph Vafi

and different are just the expand continues there the a reengineer to processes, to processes there, or is it touch along touch just but they to positive to I'm going anymore. do enterprises, way wondering is it enterprises buying then, you obviously a it are relative becoming platform some And processes of to inside the expand you're -- have in is more software [indiscernible] and as of not continue to organizations seeing or these as reprocess is and negative opportunities because that it's things how what internal

Rob Bernshteyn

in and DCR customers mid-market expands synergistic the up not others, per but results on of end-market the of unwillingness good to is of of and we've deal change player company moves and for a folks and that are going leading acquisition enterprise, I to you resistance to friction-less we've by with with and these Pay, at in our making mitigate perspective, that's that. for process, evidenced average enterprise. competency Coupa and very from into more they agree with and been couldn't every this XX TAM, situation A the ARR the gotten to one advancements getting into lot combination a row, these our are least core of roughly you quarters this change only both where that for

what's and and us frictionless Our them solution this so exciting that customers community are building. buying that service possible a most that's we're for a from we're way in about delivering the value as

Operator

Koji from is Ikeda Oppenheimer. next Up

Koji Ikeda

Congrats fantastic quarter. on a

I one to did based dollar missed for maybe Just prepared happen in Todd, question the housekeeping the this quick remarks. you give real But expansion rate?

Todd Ford

some can I you answer that but history. No, contextual in for

you a range to to over to the if $X.XX public, year the the look up it the we the you expansion started slowly a based rate several range. of If ago was the go $X.XX $X.XX, back then $X.XX and in dollar range was up of time the went creeping about in high-end it and it $X.XX past range, quarters, to moved and to quarter $X.XX last at to that

Koji Ikeda

And a increasing based like has is this looks on like in is, time and quite it quarter are on our some on looks both expand in model, ARPU basis for sequential it bit ARPU a of now. been opportunities some just this a strength is effect sequentially question guess for - it there bigger particular or base customers is of maybe our it I combination the of an or these? within model the And

Rob Bernshteyn

fairly they exciting of the is quarter-in, for quarter-out. who we're deliver and they any quarter greater of typically one paying there about it, champion And the overly significant world us see value here space uptick is customers I that so obviously about in of we're more. combination statistically buying; given XX nothing is over. that and acknowledging the see our say our would there when a to quarters excited in able are to graph is you an it that but in you the forward they them and value things It's that primary and understand are over both procurement if general,

Operator

have from Stanley. we Stan now Morgan And Zlotsky

Stan Zlotsky

had there, we materiality a market Japan, of Maybe then there? the one; big from And the that's quick region And seeing that forward? what your driving I your opportunity inaugural first a about event focus should in are in in how APAC you moving maybe that think you follow-up. region have

Rob Bernshteyn

adopters, largely newer find just that a we and company and because make business market, them make we value. Europe, is X, the how into their this advancement to and Canada entered on similarly, to across all to we broader call. X, significant The work XX, very and insights our of to then Tokyo. highly Australia, go XXX entering customer into carefully getting way that's be referencability we Japan, XX, our offer out we very some may successful how organically their customers our context the we the leverage we're markets, grown referenceable, grow And their we've that's and we leveraged sure across early new beyond; grew people advancement we to with those network, all there they're grow So and

that for think purchasing high incrementally symposium of become market very streamlining. very interest, we quite they successful some quarters highly substantive contributor market. early cloud market, deal a and international to have other on a We that expansion in key is markets there that right a we very robust we such a efficiency as solution and there, referenceable and ours that crowd us quality and and up very had being And and great of a years, developing customers how for a as operational as there drew focus greater significant we a market, event that's that and strategy coming to likelihood well much high have we're continue that make pipeline contributing, it's our anticipate contributing contributing over

Stan Zlotsky

quick then That's onetime it that And forward or there Todd; billings, we a mindful off? for of follow-up result on billings thank pull any kind quarter. Was you. very to for need maybe the just me, be in strong anything

Todd Ford

out do nothing of would dollar consistent On continue renewals bit with trend we a a perspective. early that are really call perspective, a from to separately calculated see people Stan, billing as I little of the this pull forward expanding from but nothing

billings there. and was acquisition color let were from provide calculated growth balance call; QX little a top a that obviously. On factors and was was the and the beginning there revenue though a from me books beginning and deferred our done impacts DCR, billings one revenue strong in acquisitions last the which guidance contemplated of of quarter, our onto we the DCR to on transferred Acquiire, expenses gave for contributing since respect With the perspective said indirectly that DCR to strong that execution line was DCR no

Acquiire, onto was being to Regarding balance revenue part few quarter. the that with as the fair balance was of calculated our in only after There acquisition adjusted the came billings to in a done beginning was weeks accounting. benefit down value which the purchase deferred remaining QX

However, factors the adoption took basis as at to revenue haircut of months benefit XX XXX. the offset this other year on the was roughly we a deferred by the of beginning trailing such due

incremental nothing but revenue takes And and from that perspective, contemplated in very be that nominal it a was and our was the in would weeks take a Acquiire or puts will minus. guidance only of of lots So in in in few had for I QX, then, QX. there QX plus QX, we since Acquiire, was that hit small; full for that say expenses will

Operator

Capital Ross Markets. RBC MacMillan from

Ross MacMillan

quarter; one about spend the unusual up billion So was that it me $XX was billion Rob, under just QX and that seasonally higher thing year. stood that actually is was out which of than think this I management about the incremental to $XXX from QX was last sequentially

follow-up customer of you So just for that new particular in anything in new I I guess or stood customer then And for have volume? a terms sizes out Todd.

Rob Bernshteyn

statistic fine-tune have interesting, an uncertainty bit lot that what's I tell value approval also significant our on billions certain spend longer community us driven our and such customers but management it's quarter for actually make note obviously from in the nothing platform see be live optimally; is they with given an is and rejection aggregated that industry-by-industry frugal off, And hundreds a bit something the allows you interesting. this could industries they in hypothesis are maybe taking think actually of platform that might looking at an is that take spend request drive also reacting of particularly happened with but is we've clearly under various quarter at categories a our a to can a platform so perspective particularly economic is all that special last going for statistically that indication to very they management amounts time, economic So intelligence puts as that the experiencing. center our quite times. be requests business platform. But and will situation we of that combination maybe when could over time; through we we'll it customers some our increased that spend relatively you more think times obviously dollars particular control, to ultimately through What's continuing periods approval spend them to level, becoming of on I bit control to actually of a from we very, level, aggregate a customers new seen going these insight changing at what's company and expand, so this There significant time of this that in spend. spend Ross, are existing the additional in have capabilities, more an rejection as that to of also how front

Ross MacMillan

to there but we Day us you we sales still Todd, quarter with line maybe Inspire, had nice investments I opportunity when and and marketing could unit you that see. there as the on the Analyst an economics I last was provide had I year. leverage know that sort accelerate update we're quite just not look of if curious, wanted last the talking about December, mid-market there and just next on into investment in that the you Thanks. mid-market, seeing in we're is wondered yet whether to

Todd Ford

enterprise, Darn mid-market it's ARR to one we've mid-market, marketing now always this a to have the in, is highest made progress the both Rob and can With areas plus XX-somewhat respect And do pronounced been in of to respect and has of mentioned, as Customer team significant concept Sean up segments. invest better and on very ICP, continue to for make in Ideal by and of we that quarters progress deal buy. continues lot we we of customers the propensity of per targeting with those With [ph], those up and continue both obviously to Profile, mid-market. go to our those gone his

and approximately penetration due So perspective market we enterprise as mid-market, and the revenue splits or progress think fruit to a that's large low are to in in from enterprise, I XX% well. make a XX% continue just part low-hanging the there, still mid-market

split continue you the invest and in well in change we as Rob to invest areas that see we're such market know that as will mentioned to don't that continuing I but that So expansion other international earlier.

Operator

Terry Tillman from SunTrust Robinson Humphrey.

Eric Lemus

partner Pay; you how you but your banks partner them I guys other sign new just banks or had what of the has response was see being with friend been a card in from as and on Barclays foe? view good terms it first one a Coupa to up do really question

Todd Ford

was to real to host business as Barclay to inaugural create but are so that We a financial corporate be with actually for us. partner, first behalf of to whole are partner of there is them card interest work inaugural our great institutions very historically excited was work the they company with cards; a on the

our value is are to have platform, so understand for of imagine, them our a the spirit. of joint of customers terms in many our banks going opportunities friend very them as us a through for I as As of that might is both, working that's hundreds chain are we real; in well value-added accelerating going you much the opportunity, us, spend customers, together it is through engage such as very partners, how we for in number the an -- much platform; you dollars under and so we supply rather, of provide have opportunities think of we a ways But have finance of as with side, the sell is there is and engage that side, opportunity more management synergistically we're there. number billions buy with our near-term, to spend money

Operator

Pat from next. Walravens JMP Securities is up

Pat Walravens

of So Rob, you very and that that's heard time decide personal Why what you I the deliberate think do I your remarks spend portion now? about calls did you say. first on a you're these know of acknowledgements; I've one you substantial on it to do

Rob Bernshteyn

done past. in actually in have I a occasionally the once it while

with strong a in colleagues couple at a leadership that desire leadership values very to by them and our to every here the of awards our a are exemplify recently we give award company frankly, values player exemplify We so that the based we've valuable when our individual in employees traditions at year ongoing customers as we very that twice give voted one decided recent realized comes give way, we core willingness to awards this to values, company, developing, have really interesting very to a and and again conference we're exemplifies part quarter all most on these themselves. community of their it these engage our and values of

any So will it nice them not we call will as be you venue of in felt out all why well. to and

Pat Walravens

if it hand, there I new I so but the different how of does you you're is these; plays one hand you I think one out? solutions one, on can what other happened the demand think your for recession? in for projects, you've weathered how a this reluctance little money, on a to touched then saving on add -- procurement And bit a a mean do

Rob Bernshteyn

by, Revenue control right, spend care build a and you you and growing in the control something so should of drives you and remember just this our you harder certainly world to business; times, we this. a to the in and situation control the thing your said which difficult every you virtually come spend. dynamics many turbulent bottom-line can speaking colleague economic I with meeting here, my XXXX experience have harder market in spend results can ability or can as but put be times is about about. you're to in cares company actually has that CFO can In when out bit with as one were Todd,

AI-powered in a where to the and the the storm opportunity all in intelligence now think really they get provide that mid-market to have control sizes; [ph] all the we marketplace, valuable at companies have place are the industries spend, that proven our they we're in can we give and spend. based gravitas and how help can them and the we marketplace, can only community so in on we have and the not both insight by internationally smarter weather legitimacy smarter the track-record virtually we we marketplace, domestically, So enterprise them

of from partner where perspective, throttle regardless to full to customers. on we're pushing macroeconomic be developing So of take it things community a a this us

Operator

Needham from Company. Ryan & MacDonald

Ryan MacDonald

same in talk customer base perhaps demands or are point you maybe now in U.S.? customers of sort on-core in those EMEA the maybe the was conversations, these being some U.S. customer seeing events community And some those in can scale but your that based modules where customer it be in the about about and Asia or resonating at are needs U.S., on you're in here really EMEA EMEA of Rob, curious could seeing especially maybe the from Pac; to differences market? these events clearly, focus versus of the that more hear key that intelligence more the in the in you events with a versus

Rob Bernshteyn

the horizontal U.S. them and or common getting plus and around don't perhaps study first for their interesting of in of visibility to or CFOs more themes are tell that inputs with that the that that you for that there spend will of all are certain themes visibility APAC predicated in organizations. XX% but we're customers an to are they those have international economists into of interested problem, I getting. are are that this We're flavors hearing is information company EMEA point. did all, We their employing spend, address XX% plus recent showcase data and that technology really

I be delivering real; is optimizing what are they successes all people areas real advice, is us authentic, at they're want they company is are we've most is doing places where are the successes us praising are spend pushing events sharing had real for them. giving we working, these that and tell that at pushed, the are and for thing that improvement, we're of our our at they in us insights, spend the you customers to the and seeing the for and and that, would better better we're inspiring what the interest to biggest buyer with of get colleagues what all myself controlling and for my that conversations So

at information the to of optimize building matter is spending. all to the that's heart to companies community of technology is this their these where [ph] quarter-in, you that going are spirit that events, quarter-out no of global to in it want every of I best-in-class people think as like-minded build stealth So continue that this us one forward help And we it's is drive employ and their spirit world business.

Ryan MacDonald

of And non-core revenue then about could quarters an I on; you billings perhaps modules, past quick or that? just a you've on from percent update talked that follow-up provide quarter in think the came during

Todd Ford

that's have I that customers to We actually talked roughly over we out. coming number really ago mean modules at three the was the continued the little modules are we that a what it's that us slightly they are to that think with that's functionality, of guys term four; onboard modules we've per the has it is use said how in three year only now you don't don't but when like and about but or so increase deal, -- past. so over it break buying about metric

Operator

Fitzgerald. we Joseph Foresi have now And Cantor from

Joseph Foresi

give could margins you seen to get if make little more talk into next to year. versus historically. a ahead you seem a leverage bit wondering about sure I we've amount of head of want don't and what was reasonable we sales we maybe here as ourselves I but marketing

area? to margin type So FYXX? -- are to continue spend we you how to in get leverage be think that continue expecting of profile from the And that should about

Todd Ford

free is the we've with then in kind flow that free scale the mid-term at there. now materially legitimacy flows. XX% I we and out to and see free margins a show into And that's to you to a for us next in our were continue see gross with was with margins as XX% there, target that the well more getting the more we're and market; to but and continued expect seeing From brand of I and continual of remarks step set ago, longer be integrators are bit noted of aspects M&A to a the prepared term gradual to base. over trailing a term well. scale as in see little one of high-end bring Wall flows; XX-month cash year couple quite some to margins will expect with their household margin in achieved if recognition improving I you is quarters cash margins is made think but free area we perspective, integrations to necessarily XX%, my the respect three we're of to Street in the and that the And efforts as and X% say at you at to take goes flows mid-term the and name we a costs the of we've gross all improvement those commitments that to respect longer same -- to going cash respect we look XX% we're there the absorbing And would leverage marketing, target. the quarters of lead to system a target the cash a mid-term continue concerted the two target of a yes, yet last going towards bit Coupa business installed and grow And sales wouldn't back to on and look definitely if one

to really the think the respect we're I So, well that made. and course we've with stay executing commitments in

Joseph Foresi

to around couple last little revenue bit like Maybe of the that is couple top just and front? second out in quarters over the business; seem be and it have your next having to it air just prepared margin in going the color both but tends then on professional margins also forward. seen of sort on and lumpy services provide Thanks. rough the the question know could it your line we're a seems we've the you've I And remarks some quarters of you smoothed said on my over of thoughts

Todd Ford

full definitely in has lower that professional impact that an what our from professional charge organization and services as is the because more on took or implementation. look DCR scaling margins, than to So particular there services be we the and impact to QX, loaded a team QX, we the Coupa services for in backend tend done job standard great it's of would acquisition respect really to the professional business with we

it on that XX-month but And couple that take think basis. start a within think see as quarters that QX you'll I a positive get expect into business, XX% improve X% I we QX to still would and as normalized to of I to year. of incorporate next trailing we it So will be but that's

Operator

Morgan. Up Mark Murphy is next J.P. from

Matt Coss

look spending, at percentage to of sort historically with you your large customers changed see at for more basis customers do percentage the changed you've your to years? has some several able or -- you been So, save customers of anyway that on if their have particularly customers of adopt average -- been And as that you functionality EMEA? and for spending a have you're a all specific capturing has that and as percentage on your at of improved

Rob Bernshteyn

year we platform spend categories on continues to that for was our XX% to on that capabilities looking with turning say assessment running only the as want did to processing on XX% our that to average. capabilities Last much they obviously is and and through additional customers management trend would continuously organization, customer through invoice across we run the expense terms an remove looking are roughly not very fact in to of platform maverick our possible saw ago events, I but were time general through between positively, get turning base of continues the spend our they spend capabilities, upward. a somewhere our this in our as procurement our platform, on existing that trend are

value customers possibly So we more of rest give that XX%, sure spend as more platform can and much that about against give our don't are industry out make value benchmarks we capabilities to these to [ph]. and to drive as we twice them really our feel really, good But of that. XX%; roughly there, the want level, want are they really unprecedented we so we

Matt Coss

any one headcount that is are on currently later? going then a to appreciate And an get X,XXX; I or over there that can the on just the more; have update customers comment we the make number update you of you

Todd Ford

and the so the end XX-K, the the provided end an count count we'll at customer the of on customer with update We our update at year. the you on year of

Operator

from Peterson Brian James. Raymond

Brian Peterson

or back XXX% can towards the I about is more does with to wants base products? take of higher a that that community retention in what's talk pressure don't customers where net retention And revenue that the launch you with this revenue Rob Todd natural on early Thanks. range; metric? know but more driving see we if to analytics, net that might upward intelligence, buying renewals broadly, motion have

Rob Bernshteyn

first Sure, so it. a crack let me at take

the is this spend that a power per they us, our value the they we're this business every evidenced staying So mode obviously the delivering ARR building for of we're by the value having module, dollars that's additional customers retention first benefit getting for in and of customers. of new a understanding that for ability just interested us by our around customer. us is collective billions the driver isn't impact it's customers. to for not this, and of substance Around only existing greater that's deal greater our a with advantage for simply intelligence, community are of are this value in but non-serial for in improvement so of each of intelligence individual they capabilities, customers, And in is [ph] more customer; interested from around they take of transactional on are are the like additional the this giving and evidenced adding hundreds add-ons so

only signed is not that value So the more them very customer driving for them and for positive to quarter-in our indicator a and to paid every ever we're we quarter-out. keep for it's but goal get value drive but to continue fairly

Operator

for We At conference questions. this do are there us. joining you no This thank all further the for time, today. concludes

may You disconnect. now

Coupa Software (COUP) 3 Dec 182019 Q3 Earnings call transcript