Coupa Software Incorporated

Good day, ladies and gentlemen, and welcome to the Coupa Software first quarter fiscal year 2021 earnings release conference call. At this time, all participants are in the 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 touchtone pad at any time. If anyone should require assistance during the conference, please press star 0 on your touchtone pad at any time. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference call, Mr. Stephen Horowitz, VP of Investor Relations. Mr. Horowitz, you may begin your conference.

Thank you. Good afternoon and welcome to Coupa Software's second quarter conference call. Joining me today are Rob Bernstein, Coupa CEO, and Tony Toscornia, Chief Financial Officer. 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. With that, I will now turn the call over to Rob.

Rob. Thanks, Steve. I hope everyone had an enjoyable and safe Labor Day weekend. Let me start with a few highlights from this quarter, our 50th quarter of execution as a business. 49% growth in calculated billings, $179 million in revenue, now more than three years of consecutive quarterly non-gap profitability, and roughly $2.8 trillion in cumulative spend under management. This strong financial performance is highlighted by the following indicators of a steadily improving business environment. We're seeing sales cycles continue to move towards normalizing, even if they're still a bit longer than they were before the pandemic. We're seeing enterprise companies become more engaged, as evidenced by the increased number of seven-figure deals we closed this quarter. We're seeing global scale and improved predictability in our mid-market business. We continue to welcome new Coupa Pay customers, with another quarter of achieving 30% plus attach rates on new deals. We're rapidly deploying our supply chain design and planning solutions and helping customers save millions in sourcing, production, raw materials, and transportation costs. We're realizing early dividends from our Japanese joint venture in the form of both pipeline and early wins. And these are just some of the recent highlights. But with all this encouraging news about Coupa and our business, it's clear that we are still very much living through a time when companies are operating with a heightened level of uncertainty. What we're witnessing is that companies are doing their best to adapt to this uncertainty. Now, our Coupa Business Spend Index report that was released last week illustrates that our customers are doing just that. They're adapting to this uncertainty. While the BSI data shows that global order per customer activity has returned to pre-pandemic levels, the increased supplier-to-buyer ratio illustrates how companies are diversifying their supply base to de-risk supply chain disruptions. The BSI data also shows an increasing lack of correlation between COVID case spikes and order patterns, which would imply that companies have taken the need to become more adept regarding continuity of operations. As the leader in our industry, we see our customers approaching this need for agility head-on, and proudly, the Coupa platform is a critical element of their strategy. Let me share an example. Our distribution-heavy customers are running into unprecedented bottlenecks with transportation. In many cases, trucking companies haven't been able to increase their personnel quickly enough to meet increasing demand. This forces them to figure out not only how to source the transportation, but also how to do so without paying exorbitant fees. Our supply chain design and planning solutions are helping identify where these shortages will impact the customer ahead of time, at which point a dynamic sourcing event can be kicked off to engage multiple suppliers while maintaining fair prices and high quality of service. This is just one example of how continuous design and redesign is leading to significant improvements in agility. By enabling our customers to create rapid digital twins of their supply chain, we're taking technology that's already revolutionized healthcare and the auto industry and bringing it to all BSM customers, allowing them to thrive in this time of uncertainty. In my view, this is the future of modern back office operations. And at Coupa, the future has arrived. And speaking of future, this quarter also marked the launch of the Coupa Application Marketplace, the Coupa App Marketplace. The Coupa App Marketplace gives customers an easier and smarter way to extend the power of our platform. With the App Marketplace, we're enabling quick access to solutions such as supply chain insights, supplier risk analysis, IT management, and much more. Many of the solutions included are ready to use right off the virtual shelf. This is also the very first marketplace in the business management space that empowers users to customize their experience, making it a more powerful tool to share information, automate workflows, and conduct key tasks. We proudly have more than 70 applications onboarded already, with over 20 more in the pipeline. The more customers participate, the more powerful our platform will become in helping them comprehensively address their spend. Now, as you've heard me say, the third wave of our strategy is powered by community.ai. As you'll recall, the first wave is focused on capturing all spend comprehensively. The second is focused on optimizing every dollar spent with sweet synergy. And the third is amplifying community value with our platform. For those of you new to this wave of our strategy, let me illustrate a few examples of how this third wave is already delivering for our customers. The most straightforward is via Coupa Advantage. With Coupa Advantage, we pool customer spending to provide more value through pre-negotiated contracts, giving customers access to better pricing from trusted suppliers like UPS, National Rent-A-Car, Zoom, Staples, Home Depot, Office Depot, and many, many more. Then there's the intelligence component of Coupa, of Community.ai, where we pool customer data. When I say data, I'm not just referring to transactions, but the combination of transactions, configurations, and outcomes. This is more than just information. It's intelligence, and it helps customers in a host of ways. One of those ways is risk mitigation. To illustrate, one of our customers recently leveraged this intelligence to discover that a particular supplier had a high error rate, which led to a more in-depth investigation. And as a result, the risky supplier was removed from a clinical drug trial. The third component is collaboration, a pooling not of spend or data, but of brainpower. As I've said many times, we're not a products company, we're a value as a service company. And that value is amplified because of our growing community that is getting smarter together every single day. To that end, Coupa is quickly becoming the place for spend management professionals to share insights and best practices. And because the platform embeds these opportunities for collaboration within the process of conducting transactions, this collective wisdom is at their fingertips when they're making key decisions. For example, say you're beginning a sourcing event on the platform, one you've never tried before. A context-aware suggestion may come up referring you to other community members who opted into sharing their experiences with launching similar events at their companies. This is, of course, just the tip of the iceberg. These solutions will only continue to become more and more valuable as we develop the third wave of our strategy and our community.ai vision becomes realized. Now, let's talk about ESG. Recently, we published our inaugural Environmental, Social, and Governance Report. It talks about our focus on achieving carbon neutrality, the employee resource groups we've launched to support our diverse employee base, and the hundreds of thousands of dollars we've donated towards scholarships and charities. But we're just one company, and as proud as we are of the work we're doing, we're equally proud of how we're enabling others to do so as well. A lot of companies have made sincere commitments to ESG initiatives, but it's not as simple as freeing your mind and the rest will follow. We believe we have a role to play by helping companies shorten the distance between intention and impact. And with thousands of customers, millions of suppliers, and trillions of dollars of business spend, we're leveraging our scale and the power of our community to enable companies to do just that. A great example of this is CHEP, a Brambles company. CHEP relies upon our supply chain design and planning software to reduce waste, engage in strategic planning, save costs, and create circularity, a concept that aims to eliminate waste and minimize the consumption of resources through continual reuse. The key to supporting this has been the use of flow optimization, strategies that are there to implement and assess the most efficient and environmentally friendly transportation modes and routes. Via CUPA, CHEP is significantly reducing waste while simultaneously optimizing their logistics. Another area of ESG Impact is meeting sustainability and diversity benchmarks. This is another area where we and our community.ai focus are making a big difference for many of our customers. Coupa dynamically highlights suppliers that meet sustainability and diversity benchmarks and does so at the point of potential transaction. It provides real-time prescriptions so that our customers are more easily able to support their desire to engage with more minority-owned businesses and work with suppliers that are diverse and focused on sustainability. Now switching to our core values, my colleagues and I are proud of the impact we're making. So let me share this quarter's most valuable player awards at Coupa. Let me start with Constance Kalar, who was recognized for our first core value of ensuring customer success. Constance is adept at building positive and trusting relationships with customers. She's been particularly instrumental in helping our European customers deploy our spend analysis solutions, driving visibility and value for their organizations. Next, Sal Alswata was recognized for epitomizing our second core value, focusing on results. Sal has an incredible work ethic and cares deeply about getting the right result, no matter how large or small the task. From catching potential errors in a credit posting to keeping our business moving fast with complex order approvals. Sal is uniquely driven and diverse. He leads by example and inspires and motivates those around him. And finally, Kyle Dowling was recognized for demonstrating our third core value, striving for excellence. As one example, Kyle took the initiative to organize a cross-training series between our core source-to-contract and our contracts lifecycle management teams to strengthen the knowledge within the overall group. Recently, a customer asked if they could steal Kyle away. Thankfully, Kyle chose to stay on our continued journey together. Ultimately for us, everything comes back to executing on the strategic vision area spelled out in the letters of our company name, C-O-U-P-A, to bring the most comprehensive, open, user-centric, prescriptive, an accelerated approach to the market as we partner with our community of customers to deliver them unprecedented value as a service. With that, let me now hand the call over to our CFO, Tony Scornia.