What led to Coupa Software Inc (NASDAQ: COUP) stock pressure

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Coupa Software Inc (NASDAQ: COUP) stock fell 2.8% in the pre-market session of December 3rd, 2019 (as of  7:36 am GMT-5; Source: Google finance) post third quarter performance. For the full fiscal year 2020, Coupa expects the earnings to be between 34 cents per share and 37 cents per share and revenue to be in the range of $379.8 million to $380.8 million. 2020 non-GAAP gross margin is expected to be of approximately 72%. The company expects non-GAAP operating income for the year to be between $21 million and $23 million. COUP delivered the Q3 non-GAAP gross margin of 72.1%. This included subscription non-GAAP gross margin of 80.9% and professional services and other non-GAAP gross margin of 3.3%.

Cash and investments at quarter end were generated to $842 million, up from $808 million at the end of Q2. Operating cash flows for Q3 were $26 million, and free cash flows were $22 million. Cash flows for the third quarter were favorable due to strong performance by the M&A integration team, the billings team and the collections team, which drove accelerated customer payments.

COUP in the third quarter of FY 20 has reported the adjusted earnings per share of 20 cents, while adjusted revenue growth of 51 percent to $101.8 million in the third quarter of FY 20. Subscription revenues for Q3 rose 49% to $90 million compared to Q3 of last year. Professional services and other revenues were $11.6 million, that includes the benefit of a few strategic direct services arrangements which had continued into Q3. For the trailing 12-month, the calculated billings increased to $416 million, representing a 53% year-over-year increase.

The company expects fourth-quarter of FY 20 earnings to be in the range of 3 cents and 6 cents per share on revenue expected to be between $101.5 million and $102.5 million. Subscription revenue is expected to be in the range of $9.5-$9.25million and professional services revenue is expected to be about $10 million. For calculated billings on a trailing 12-month basis, the company expects to end Q4 at a growth rate of approximately 40%. For Q4 free cash flow, the company expects to be breakeven to slightly positive. The company expect Q4 non-GAAP gross margin to be between 70% and 71% and non-GAAP operating income to be between $3 million and $4.5 million.

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