Coupa Software Incorporated

Q2 subscription revenue was $193 million, up 23% year over year (24% constant currency). Total revenue was $211 million, up 18% year over year (19% constant currency). Subscription calculated billings were $217 million, up 25% year over year (27% constant currency). Non-GAAP gross margin was 74.5%, including subscription gross margin of 80%; non-GAAP operating income was $24 million, or 11% of revenue; and non-GAAP net income was $16 million, or $0.20 per share. Cash at quarter end was $809 million, operating cash flow was $29 million, and adjusted free cash flow was $25 million. For Q3, management guided to subscription revenue of $194 million to $196 million, total revenue of $211 million to $214 million, non-GAAP gross margin of approximately 73%, non-GAAP EPS of $0.08 to $0.10, and adjusted free cash flow of about $20 million. For FY23, guidance was raised to subscription revenue of $766 million to $771 million and total revenue of $838 million to $844 million, with non-GAAP operating income of $62.5 million to $68.5 million and non-GAAP EPS of $0.37 to $0.44.

Rob Bernshteyn emphasized that Coupa is executing through uncertainty by balancing growth investment with profitability depending on macro conditions. He highlighted strong North America enterprise demand, the largest pipeline ever, and improving ramp from newly hired sales reps, while saying Europe remained softer with longer sales cycles due to uncertainty. His strategic message centered on Coupa’s three-wave strategy: capture all spend, optimize every dollar through suite synergy, and amplify community value through AI and data.

Tony Tiscornia said the quarter showed strong top-line growth, margins and cash flow, pointing to $193 million of subscription revenue, $211 million of total revenue, 74.5% non-GAAP gross margin, $24 million of non-GAAP operating income, and $25 million of adjusted free cash flow. He noted cash of $809 million and said renewal and retention remained in historical ranges. On guidance, he said the company baked in softer Europe demand and incremental macro caution, guided Q3 subscription revenue to $194 million to $196 million, and raised full-year subscription revenue by $4 million at the midpoint versus last quarter. He also announced a 10b-18 open-market share repurchase program of up to $100 million.

Analysts focused heavily on Europe, asking whether weakness was worsening or spreading to the U.S.; management said Europe was roughly unchanged from last quarter, with longer sales cycles and more uncertainty, but no major industry-specific weakness in the U.S. They also asked about pipeline quality and close rates; Rob said pipeline remained healthy, with strong activity in North America, mid-market and developing regions, but management is closely watching time-to-close. On Coupa Pay, Rob said customer acquisition is strong, total payment volume has increased by 50% in six months, and enterprise digital payments should reach early adopters in two to three quarters.