Coupa Software Incorporated

Ladies and gentlemen, and welcome to the KUPA software fourth quarter fiscal year 2021 earnings release conference call. At this time, all participants are in listen-only mode. At the conclusion of our prepared remarks, we will conduct a question and answer session. If you would like to ask a question, you may press star 1 on your touch-tone pad at any time. If anyone should require assistance during the conference, please press the star 0 on your touch-tone pad at any time. As a reminder, this call is being recorded. I'd now like to introduce your host for today's conference call, Mr. Stephen Horwitz, VP of Investor Relations. Mr. Horwitz, you may begin your conference.

Thank you. Good afternoon and welcome to Coupa Software's fourth quarter conference call. Joining me today are Rob Bernstein, Coupa CEO, and Todd Ford, Coupa CFO. Our remarks today include forward-looking statements about guidance and future results of operations strategies, market size, products, competitive position, and potential growth opportunities. Our actual results may be materially different. Forward-looking statements involve risks and uncertainties and assumptions that are described in our most recently filed 10-Q. These forward-looking statements are based on our beliefs and assumptions today, and we disclaim any obligation to update any forward-looking statements. If this call is replayed after today, the information presented may not contain current or accurate information. We also present both GAAP and non-GAAP financial measures. A reconciliation of certain of these measures is included in today's earnings release, which you can find on our investor relations website. A replay of this call will also be available. Unless otherwise stated, growth comparisons are against the same period of the prior year. One final note before we get started is that we will be conducting an analyst day on July 15th, and we'll be doing so in a virtual setting. With that, I will now turn the call over to Rob. Rob.

All right. Thanks, Stephen. Hello, everyone, and thank you for joining us. It's amazing to think about where the world was a year ago. Last year on this exact date, we held our year-end earnings call for fiscal 2020. That same morning, our home state of California announced was announcing emergency shelter and placeholders in response to the COVID pandemic. It's likely that none of us realized at that moment how much our world was about to change. With employee safety as a top priority, companies would be shuttering their offices and bracing for impact. And this uncertain time called on all of us to do things differently, with many of our customers needing to take swift actions to survive. Through it all, I'm proud to say that my Coupa colleagues and I stood side by side with our customers. We sought ways to help them in any way possible, and thankfully, our expertise in business fund management proved useful. In an adverse, uncertain situation, companies can often make the most important impact by controlling their spend, and we helped many do so. As the leader in business fund management solutions, we were there to ensure our customers had the resiliency and the agility to endure the difficult times and to prevail despite them. We ourselves also took to heart the state of mind and wisdom we impacted to our customers as we planned our own growth strategy in the face of this wide-scale global pandemic. Looking back on the past year, we carefully and thoughtfully scaled the organization by efficiently onboarding more than 1,300 employees across all areas, including sales, marketing, products, development, and services. Simultaneously, we expanded the world's most comprehensive BSM platform by adding supply chain design and planning, treasury, and by enhancing our supplier diversity and travel and expense offerings. We added many new customers to our growing community, from mid-market to large enterprise, including dozens of Fortune 500 companies. And we successfully shifted our software implementations to fully virtual, while reducing deployment times by about a month. Once live, these customers contributed to our cumulative spend under management, which now exceeds $2.3 trillion. Inspired by the big lights of BSM, there's nothing we can do when we rally together around our core values, leveraging the breadth and depth of our core competencies and domain expertise and our focus on execution. As a result of this work, and despite the tremendously difficult market environment, I'm delighted to share that we delivered on our model of 30-plus percent annual revenue growth, continued thoughtful sales and marketing efficiency, and cash flow leverage. I'm proud to share some of the successes we have achieved, both in terms of business accomplishments and financial results. Moving forward, we remain maniacally focused on delivering the world's preeminent value as a service platform for all of our customers. Now, as you know, a key component of value as a service is helping customers accrue more value more quickly. At Coupa, we call it accelerated time to value, which is what the A in Coupa stands for. The accelerated vision area was keenly on display in many of our Go Lives this quarter. Here are several examples from around the world. BMW recently went live on Coupa BSM. They needed to migrate nearly 1 million items and more than 5,000 contracts to our platform. I'm happy to report that 100% of their content was available on day one of their Coupa launch, which enabled them to maximize savings opportunities right away. Spotless, the largest integrated facility services provider throughout New Zealand and Australia, also recently went live with Coupa. Working closely with our partners and customer success teams, Spotless implemented the Coupa platform in just 13 weeks and was able to issue 2,500 purchase orders on the first day they were live. We also support Westpac, Australia's oldest bank. Their CPO posted on LinkedIn, amazing that someone can use a procurement business application and purchase the product they are looking for within 15 seconds. I love that quote because it gives you a sense of the user centricity or the you in Coupa that no one expects in the world of procurement, at least before meeting us. The accelerated value that these customers have achieved is indicative of what our new customers are also striving to accomplish as they begin their implementations. To that end, I'm pleased to share that our broader sales environment continues to improve. We've seen increased activity and closure rates with some of our larger sales opportunities. Let me take a moment to welcome some of the many organizations who joined our vast, global, ever-growing Coupa community last quarter. They include Aspen Pharmacare, Ball Corporation, Bank of New Zealand, Carvana, Checkout, Cloudera, Heathrow Airport, Highspot, Honda Research Institute, Synchrony Financial, Tyson Foods, Waystar, and dozens of others. These new customers join the Coupa community to leverage our incomparable business by management platform, knowing there is no alternative of this kind of offering. As we extend our leadership position, we believe it's incumbent upon us to protect our flank, To that end, we've built clear barriers to entry in BSM, including a robust portfolio of patents to protect our innovations. Our truly innovative patent filings have had a success rate of over 95%. We now have 100 patents issued or pending, and we expect to file over a dozen more this year. Now, one of the many areas where we have deep patent coverage is in strategic sourcing optimizations. This offering, which provides an e-sourcing platform for companies to run online negotiations and optimize results, has been frequently added this year by customers seeking quick ROI opportunities. There is no better example of the value that can be extracted from our platform than the following. One of the world's largest medical device, pharmaceutical, and consumer packaged goods companies, using Coupa BSM, recently saved over $300 million in a single sourcing event. Coupa's platform processed over 2 million data points derived from more than 400 rules set by the customer for 6,000 items and over 300 suppliers to elegantly produce the award scenario that generated these massive savings. There truly is no market equivalent for our sourcing solution, which amplifies the open platform, the O in Coupa, to maximize the number of suppliers bidding on a sourcing event. Now, another way that our customers tap into community sourcing is through Coup Advantage, where they instantly gain access to pre-negotiated contracts with trusted suppliers. That portion of the offering is now called Instant Advantage and has grown to incorporate more than 70 suppliers, providing tens of millions of dollars in savings to hundreds of customers. We have also expanded the Coup Advantage to incorporate sourcing events, Dubbed Sourcing Advantage, the Coupa community can collaborate via group sourcing events to maximize savings by rationalizing service levels and items purchased across all participants. There are already over 40 events planned for 2021 with an expected average savings of approximately 20% per customer. We added this new functionality to build on the already comprehensive approach we have to accelerating ROI for our customers. Likewise, the industry has no equivalently comprehensive platform to see in Coupa. Because of the breadth of our offering, we added a major customer in the federal sector for the second quarter in a row. While we are restricted from publicly sharing the name of this new federal customer, I can say that it is a very prominent and well-known centralized federal agency that is also contractually committed to be our FedRAMP agency sponsor. We're making good progress in this sector and are encouraged by the robust federal pipeline that we have developed. Let me now discuss the continuously growing power of community intelligence. Grupo Herdez, a Mexican food company with over 10,000 employees across 14 plants and 25 distribution centers, utilized community intelligence to dramatically reduce approval cycle times. Their average approval cycle time for purchase orders was previously over 30 days, and approximately 19 days for invoice approvals. Community intelligence showed that best-in-class consumer packaged goods companies how they were approving POs and invoices in significantly less time. Groups were heard as then followed real-time transactionally contextual prescriptions, also known as the PN-CUPA, that were automatically shared with them on ways they can improve. In doing so, they were able to drive PO approval cycle times down to less than three days and despite a 600% increase in volume. They're also able to reduce invoice approval cycle times to less than four days, despite the number of invoices growing by 20 times. This is an example of a key value proposition that no other company in our industry can provide, the use of a platform with real-time prescriptions based on anonymized transaction-level data, which makes our customers smarter together. Another industry-unique capability we delivered for our customers is Coupa Pay. We are truly the only game in town when it comes to sitting at the intersection of buyers, suppliers, and banks, and now have nearly 200 pay customers. This quarter, I want to share with you a story about an enterprise company that has achieved early success with Coupa Pay. Ionis Pharmaceuticals is the leader in RNA-targeted therapy, pioneering new markets and changing standards of care with their novel technologies. Six months ago, IONIS digitized its payments processes with Coupa Pay. Already, over 90% of invoices and hundreds of millions of spend have been processed through Coupa Pay at IONIS. Before implementing Coupa Pay, IONIS manually processed a significant portion of its 15,000 annual payments through its ERP, including about 50% of its U.S. vendors by paper check, In addition to the complexity of onboarding up to 1,500 new suppliers annually, the payment processes across the company were disjointed and inefficient. They would be set with manual data entry, manual reconciliations, and missed payment instructions and remittance information. Ionis now pays its suppliers leveraging several payment methods or rails available through Coupa Pay, including ACH, wire, and check. They also use cross-border to process payments in four currencies across 10 entities in Europe and North America. After implementing Coupa Pay, Ionis has all but eliminated manual payment processes, including operational efficiency improvements and significantly reduced errors. Ionis credits Coupa's ease of use, holistic approach, and mindset of striving for continuous improvement to the success that has been realized. This is just an example of the type of early success we are seeing with Coupa Pay. With the objective of continually increasing the functionality and value we provide to our customers, let's now discuss acquisitions. We recently completed a small acquisition of Pana, a leading corporate travel booking company. Pana's booking engine will allow us to build upon our success in expense management and further unlock our potential with our travel saver offerings. We already have the most comprehensive business spend management solution our market has ever seen. This acquisition is all about deepening that value for our customers while broadening our set of capabilities. This deal is consistent with our M&A strategy of adding technology components that maximize and enhance the value of our organic transactional core engine and are augmenting this engine with key advanced power applications that optimize the value of these transactions. In making the decision to acquire Pana, we considered culture first. We considered buy versus build, and we considered whether it could quickly be integrated into our platform while maintaining a seamless experience for users. We are more than confident that this acquisition checks all these boxes. I am happy to welcome the Pana team to Coupa. Now let's move on to the Coupa Business Spend Index. Before getting into the Q1 outlook, I'd like to once again reiterate that the BSI is not necessarily indicative of the trends we're seeing in the Coupa business itself. These are trends we're seeing across industries. The Q1 BSI revealed that business spend sentiment is gradually improving for the third consecutive quarter following the steep decline at the onset of the pandemic. Businesses remain cautious about the global economic outlook and all industries, with the exception of high-tech companies which remains below trend year over year, nevertheless. For a closer look at the Q1 BSI, I invite you to visit spendindex.com. Now, I'd like to highlight a few of my colleagues who have made outstanding contributions in alignment to our core values. Let me start with Guillaume Casagrand, who was recently recognized by his peers for exemplifying our number one core value, ensuring customer success. Guillaume delivers value for colleagues and customers alike. He always finds the best solution when designing integration interfaces by following best practices. For our second core value of focusing on results, Julian Phillips was recognized. Julian leads by example. His ability to address difficult situations with diplomacy, yet assertiveness, deserves acknowledgement. Last but not least, Gautam Fancy was recognized for embodying our core value of striving for excellence. Gautam always takes quick actions to find resolutions for our customers. He is passionate when it comes to serving the customer and supporting our team and constantly inspires his colleagues to strive for excellence as well. These three colleagues embody our core values and reflect our culture of authenticity, community, and excellence that we are maniacally developing at Coupa. The job is about a lot more than a paycheck. It's about a sense of dignity and a sense of purpose. We seek to provide a platform for professional and personal self-expression to every employee we hire here at Coupa. So, before finishing up, I want to highlight that IDC recently published six reports covering areas of business management, and Coupa was once again the leader in every one of them. There are currently 28 analyst reports across virtually every aspect of business spend management, and we're a leader in all these reports. Proudly, no other provider can come anywhere close to matching the capabilities of our platform, nor the value and ROI we deliver for our customers. Now, we do not take these accolades for granted. They serve as just another source of inspiration as we work to lead our market for the benefit of our growing customer community. So let me close where I began. This year presented more challenges for all of us than we could have possibly imagined, but there's nothing more human than resiliency in the face of adversity. I'm convinced that we will emerge from this crisis stronger and smarter than before. As we are well into our 49th quarter of execution, our confidence has never been higher in our ability to navigate difficult conditions for our customer community, to grow at a market-setting pace, and to extend our position as a clear leader in business spend management. With that, let me now hand it over to our Chief Financial Officer, Todd Ford, who will review our Q4 financial results and provide our outlook for the first quarter and fiscal 2022. Todd?