Coupa Software (COUP) Q3 2022 Earnings: What to Expect

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Cloud stocks have been under heavy pressure so far in 2022. However, Coupa Software (COUP), a provider of a cloud-based corporate spend management software, has seen its stock surge almost 50% over the past thirty days, besting the 5% rise in the S&P 500 index, while rising 50% off its Q3 low.

Despite the recent spike, the shares on a year-to-date basis have lost more than 60% of its value, while the S&P 500 has declined just 17%. Is now a good time to buy the stock? The company is set to report third quarter fiscal 2022 earnings results after Monday’s closing bell. The reason for the recent 30% surge which occurred on Nov. 23, a Bloomberg report noted that private equity firm Vista Equity was said to be exploring a possible purchase and had held talks with the company.

Meanwhile, with the stock currently trading at $62, Coupa shareholders have argued that the company should command a takeover price of at least $95 per share, implying additional premiums of more than 50%. Private credit firms are reportedly working on a debt package to help finance a takeover, estimated at $3 billion.

With its total addressable market measured at $56 billion and growing, Coupa’s platform helps customers with actionable insights that can lead to improved inventory management, smarter purchasing decisions, while lowering expenditures. But now appears suitors believe the company is drastically undervalued. The company on Tuesday can affirm that narrative by delivering a top- and bottom line beat, along with confident guidance.

In the three months that ended November, the San Mateo, CA-based company is expected to earn 10 cents per share on revenue of $213.33 million. This compares to the year-ago quarter when it earned 31 cents per share on revenue of $185.82 million. For the full year, ending January, earnings are expected to be 44 cents per share, down from earnings of 83 cents per share a year ago, while full-year revenue of the $841.9 million would rise 16.1% year over year.

Aiming to become a Business Spend Management leader, Coupa makes money by analyzing large quantities of corporate transactional expense data, looking for spending patterns and areas of inefficiency. Wall Street has become more optimistic about the company’s near-term potential. Over the last 3 months, analysts have raised the consensus EPS estimate 25 times, while lowering zero times. Meanwhile, the revenue estimate has been raised six times, although it has been lowered nineteen times.

Boasting 100,000-plus potential global customers, the company’s three core business segments are aimed at controlling how companies spend money, optimize supply chains, and manage finances. Coupa’s platform helps businesses assess expenditures from things such as sourcing, invoicing as well as travel/expense management. However, Coupa has been dragged down by the recent punishment in software stocks on fears of rising interest rates and inflation. Concerns about slower growth and Coupa’s valuation has kept new investors away.

In the second quarter, the company beat on both the top and bottom lines, with Q2 revenue coming in at $211.10, rising 18% year over year, beating estimate by more than $7 million. The company reported adjusted EPS of 20 cents per share, which was 11 cents above consensus. Just as impressive, the management slightly raised the top-end of its revenue forecast, calling for a range of between $838 to $844 million, above an earlier forecast of $838 to $843 million.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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By admin