PR Newswire | Sep 7, 2021 04:03PM EDT

09/07 15:03 CDT

Coupa Software Reports Second Quarter Fiscal 2022 Financial Results- Record Quarterly Revenues of $179 Million, 42% Year-Over-Year Growth- Quarterly Calculated Billings of $195 Million, 49% Year-Over-Year Growth- Quarterly Operating Cash Flows and Adjusted Free Cash Flows of $41 Million and $37 Million, Respectively SAN MATEO, Calif., Sept. 7, 2021

SAN MATEO, Calif., Sept. 7, 2021 /PRNewswire/ -- Coupa Software (NASDAQ: COUP) today announced financial results for its second fiscal quarter ended July 31, 2021.

"We are proud to report another fantastic quarter where we delivered record revenue, strong calculated billings growth, and our third year of consecutive quarterly non-GAAP profitability," said Rob Bernshteyn, chairman and chief executive officer at Coupa. "Digitizing and optimizing back-office operations is being prioritized as a key strategic initiative for our customers, and the Coupa platform is critical for their ability to develop agility and adaptability in these rapidly changing times."

Second Quarter Results:

* Total revenues were $179.2 million, an increase of 42% compared to the same period last year. Subscription revenues were $156.2 million, an increase of 40% compared to the same period last year. * GAAP operating loss was $54.3 million, compared to $31.9 million for the same period last year. Non-GAAP operating income was $26.7 million, compared to $12.3 million for the same period last year. * GAAP net loss attributable to Coupa Software Incorporated was $91.5 million, compared to $43.1 million for the same period last year. GAAP net loss per basic and diluted share attributable to Coupa Software Incorporated was $1.24, compared to $0.64 for the same period last year. Non-GAAP net income attributable to Coupa Software Incorporated was $20.3 million, compared to $15.2 million for the same period last year. Non-GAAP net income per diluted share attributable to Coupa Software Incorporated was $0.26, compared to $0.21 for the same period last year. * Operating cash flows and adjusted free cash flows were positive $40.8 million and $36.9 million, respectively.

See the section titled "Non-GAAP Financial Measures" and the reconciliation tables below for important information regarding the non-GAAP financial measures used by Coupa.

Business Outlook:

The following forward-looking statements reflect Coupa's expectations as of September 7, 2021.

Third quarter of fiscal 2022:

* Total revenues are expected to be $177.0 to $178.0 million. * Subscription revenues are expected to be $158.0 to $159.0 million. * Professional services and other revenues are expected to be approximately $19.0 million. * Non-GAAP income from operations is expected to be $6.0 to $7.0 million. * Non-GAAP net income per diluted share attributable to Coupa Software Incorporated is expected to be $0.01 to $0.03 per share. * Diluted weighted average share count is expected to be approximately 77.0 million shares.

Full year fiscal 2--022:

* Total revenues are expected to be $706.0 to $708.0 million. * Non-GAAP income from operations is expected to be $40.0 to $41.0 million. * Non-GAAP net income per diluted share attributable to Coupa Software Incorporated is expected to be $0.27 to $0.29 per share. * Diluted weighted average share count is expected to be approximately 76.5 million shares.

Coupa has not reconciled its expectations for non-GAAP income from operations to GAAP loss from operations, or non-GAAP net income per diluted share attributable to Coupa Software Incorporated to GAAP net loss per share attributable to Coupa Software Incorporated because certain items excluded from non-GAAP income from operations and non-GAAP net income per diluted share attributable to Coupa Software Incorporated, such as charges related to stock-based compensation expenses, amortization of acquired intangible assets, amortization of debt discount and issuance costs, gain or loss on conversion of convertible senior notes, the adjustment attributable to non-controlling interests, and related tax effects, including non-recurring income tax adjustments, cannot be reasonably calculated or predicted at this time. In addition, the effect of the anti-dilutive impact of the capped call transactions entered into in connection with the company's offerings of convertible notes in 2018, 2019 and 2020, respectively, cannot be reasonably calculated or predicted at this time. The effect of these items may be significant.

Recent Business Highlights:

* Welcomed many new customers into the Coupa community in Q2, including the following: Adastria Co., AR Holdings, Asklepios BioPharmaceutical, Cuprum, DiCE Molecules, Fairlead Integrated, FIFA, Foghorn Therapeutics, Garrett Motion, Greenstone Financial Services, Groupe Lapointe Dentaire, Imago BioSciences, JG Summit Holdings, JGC Holdings, Jubin Frres, mobilezone, Novelis, PACT Group, Progress Rail Services, ProSciento, Sasol, SCG Packaging, Schwan's Company, Sumitomo Dainippon Pharma, Suzano, Unilab, Walker & Dunlop, WestJet Airlines, and Workato. * Launched Coupa App Marketplace, connecting businesses with certified, pre-built solutions to tap into a global ecosystem. * Reached a milestone of more than 100 issued and pending U.S. patents. * Welcomed accounting workflow automation provider FloQast to its portfolio of Coupa Ventures investments. * Released its inaugural Environmental, Social, and Governance (ESG) report. * Hosted a Smarter Together virtual event, showcasing the resilience, agility, and adaptability of the Business Spend Management community. * Named to Fortune's Best Places to Work for Millennials and Best Medium Workplaces lists1. * Recognized by Spend Matters in its ESG vendor profile report, highlighting how Source-to-Pay (S2P) suites address sustainability efforts2. * Awarded $75,000 to 15 students in North America through its Coupa Cares scholarship and mentorship program.

Conference Call Information:

Coupa will host a conference call and live webcast for analysts and investors at 4:30 p.m. Eastern time today.

The live webcast will be accessible on Coupa's investor relations website at http://investors.coupa.com. A replay will be available through the same link.

Non-GAAP Financial Measures:

In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and the accompanying tables contain certain non-GAAP financial measures, including non-GAAP operating (loss) income, non-GAAP net (loss) income attributable to Coupa Software Incorporated, non-GAAP net (loss) income per basic and diluted share attributable to Coupa Software Incorporated, and adjusted free cash flows. Coupa believes these non-GAAP measures are useful in evaluating its operating performance and Coupa's management regularly reviews and uses these measures for business planning and other purposes.

Non-GAAP operating (loss) income and non-GAAP net (loss) income attributable to Coupa Software Incorporated exclude certain items from the corresponding GAAP measures, including: stock-based compensation expenses; amortization of acquired intangible assets; the change in fair value of contingent consideration related to an acquisition; amortization of debt discount and issuance costs; gain or loss on conversion of convertible senior notes; the adjustment attributable to non-controlling interests; and related tax effects, including non-recurring income tax adjustments. In addition, the weighted average diluted shares figure used to calculate non-GAAP net income per share attributable to Coupa Software Incorporated reflects the anti-dilutive impact of the capped call transactions entered into in connection with the company's offerings of convertible notes.

Adjusted free cash flows is defined as net cash provided by operating activities, less purchases of property and equipment, plus repayments of convertible senior notes attributable to debt discount, plus one-time payout of legacy unvested equity awards accelerated in conjunction with a business combination. Coupa has the ability to settle obligations related to its senior notes through the use of cash, shares of its common stock, or a combination of both, at its election.

Coupa believes these non-GAAP measures are useful to investors and other users of its financial information because they provide a way to measure and evaluate Coupa's underlying operating performance and the strength of its core business consistently across the periods presented. Coupa believes these non-GAAP measures are also useful for comparing its operating performance to that of other companies in its industry, because they eliminate the effects of certain items that may vary between companies for reasons unrelated to their operating performance. Coupa believes that adjusted free cash flows also provides a useful measure of the company's capital strength and liquidity, although it is not intended to represent and should not be viewed as the amount of residual cash flow available for discretionary expenditures.

Coupa uses these non-GAAP measures in conjunction with GAAP measures as part of its overall assessment of its performance and liquidity, including the preparation of its annual operating budget and quarterly forecasts, to evaluate the effectiveness of its business strategies, and to communicate with its board of directors concerning its financial performance and liquidity. Coupa's definitions of its non-GAAP measures may differ from those used by other companies for similarly-titled measures, and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Thus, Coupa's non-GAAP measures should be considered in addition to, not as substitutes for, or in isolation from, the company's GAAP results.

Coupa encourages investors and others to review its financial information in its entirety, not to rely on any single financial measure, and to view its non-GAAP measures in conjunction with GAAP financial measures. In addition, Coupa compensates for the limitations of its non-GAAP financial measures by providing a reconciliation of each non-GAAP measure to the most directly comparable GAAP financial measure. These reconciliations are included in the tables attached to this release.

Forward-Looking Statements:

This release includes forward-looking statements. All statements other than statements of historical facts, including the statements of management and statements in "Business Outlook," are forward-looking statements. These forward-looking statements are based on Coupa's current expectations and projections about future events and trends that Coupa believes may affect its financial condition, results of operations, strategy, short- and long-term business operations and objectives, cash flows, liquidity and financial needs.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, without limitation: the uncertain impact of the COVID-19 pandemic, including new variants such as the Delta variant; Coupa has a limited operating history at its current scale, which makes it difficult to predict its future operating results; Coupa may not be able to manage its recent rapid growth effectively; risks related to past and future business acquisitions, including their integration with Coupa's existing business model, operations and culture; if Coupa is unable to attract new customers, the growth of its revenues will be adversely affected; because its platform is sold to large enterprises with complex operating environments, Coupa encounters long and unpredictable sales cycles; the markets in which Coupa participates are intensely competitive; Coupa's business depends in part on its customers renewing their subscriptions and purchasing additional subscriptions; Coupa may not be successful in expanding its sales efforts or developing widespread brand awareness in a cost-effective manner; risks and liabilities related to breach of its security measures or unauthorized access to customer data; the impact of foreign currency exchange rates and global economic conditions; and risks relating to analyst coverage of its stock.

These and other risks and uncertainties that could affect Coupa's future results are included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in Coupa's quarterly report on Form 10-Q filed with the Securities and Exchange Commission (SEC) on June 8, 2021, which is available at investors.coupa.com and on the SEC's website at www.sec.gov. Further information on potential risks that could affect actual results will be included in other periodic filings Coupa makes with the SEC.

The forward-looking statements in this release reflect Coupa's expectations as of September 7, 2021. Coupa undertakes no obligation to update publicly any forward-looking statements for any reason after the date of this release to conform these statements to actual results or to changes in its expectations.

About Coupa Software

Coupa empowers companies around the world with the visibility and control they need to spend smarter and safer. To learn more about how Coupa can help you spend smarter, visit www.coupa.com. Read more on the Coupa Blog or follow @Coupa on Twitter.

1 "Fortune Best Workplaces for Millennials(tm) 2021", and "Fortune Best Small & Medium Workplaces(tm) 2021"2 Spend Matters,"ESG Vendor Profiles", August 4, 2021

COUPA SOFTWARE INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

Three Months Ended Six Months Ended

July 31, July 31,

2021 2020 2021 2020

Revenues:

Subscription $ 156,230 $ 111,581 $ 296,334 $ 217,316

Professional services and other 23,016 14,340 49,841 27,819

Total revenues 179,246 125,921 346,175 245,135

Cost of revenues:

Subscription 51,398 33,805 102,423 62,807

Professional services and other 27,822 14,634 56,524 28,470

Total cost of revenues 79,220 48,439 158,947 91,277

Gross profit 100,026 77,482 187,228 153,858

Operating expenses:

Research and development 41,799 30,212 85,636 56,931

Sales and marketing 76,279 50,488 154,122 96,627

General and administrative 36,248 28,705 75,625 37,849

Total operating expenses 154,326 109,405 315,383 191,407

Loss from operations (54,300) (31,923) (128,155) (37,549)

Interest expense (30,621) (20,223) (59,724) (32,512)

Other income (expense), net (1,983) 4,759 (1,448) 8,087

Loss before benefit from income taxes (86,904) (47,387) (189,327) (61,974)

Benefit from income taxes (155) (4,271) (2,221) (4,042)

Net loss (86,749) (43,116) (187,106) (57,932)

Net loss attributable to non-controlling interests (517) - (517) -

Adjustment attributable to non-controlling interests 5,235 - 5,235 -

Net loss attributable to Coupa Software Incorporated $ (91,467) $ (43,116) $ (191,824) $ (57,932)

Net loss per share, basic and diluted, attributable to $ (1.24) $ (0.64) $ (2.62) $ (0.87)Coupa Software Incorporated

Weighted-average number of shares used in computing net 73,526 67,597 73,200 66,545loss per share, basic and diluted

COUPA SOFTWARE INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(unaudited)

July 31, January 31, 2021 2021

Assets

Current assets:

Cash and cash equivalents $ 432,009 $ 323,284

Marketable securities 201,555 283,036

Accounts receivable, net of allowances 170,171 196,009

Prepaid expenses and other current assets 35,422 36,381

Deferred commissions, current portion 17,428 15,541

Total current assets 856,585 854,251

Property and equipment, net 29,578 28,266

Deferred commissions, net of current portion 39,783 36,832

Goodwill 1,515,477 1,480,847

Intangible assets, net 577,146 632,173

Operating lease right-of-use assets 38,296 41,305

Other assets 34,980 31,491

Total assets $ 3,091,845 $ 3,105,165

Liabilities, Redeemable Non-Controlling Interests, Other Temporary Equity andStockholders' Equity

Current liabilities:

Accounts payable $ 4,621 $ 4,831

Accrued expenses and other current liabilities 94,209 80,271

Deferred revenue, current portion 351,933 356,115

Current portion of convertible senior notes, net 626,819 609,068

Operating lease liabilities, current portion 12,362 11,222

Total current liabilities 1,089,944 1,061,507

Convertible senior notes, net 933,439 897,525

Deferred revenue, net of current portion 7,308 5,773

Operating lease liabilities, net of current portion 27,717 31,845

Other liabilities 67,819 67,915

Total liabilities 2,126,227 2,064,565

Redeemable non-controlling interests 6,952 -

Other temporary equity 9 369

Stockholders' equity:

Preferred stock, $0.0001 par value per share - -

Common stock, $0.0001 par value per share 7 7

Additional paid-in capital 1,662,804 1,556,865

Accumulated other comprehensive income 8,758 9,165

Accumulated deficit (712,912) (525,806)

Total stockholders' equity 958,657 1,040,231

Total liabilities, redeemable non-controlling interests, other temporary $ 3,091,845 $ 3,105,165equity and stockholders' equity

COUPA SOFTWARE INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

Six Months Ended

July 31,

2021 2020

Cash flows from operating activities

Net loss attributable to Coupa Software Incorporated $ (191,824) $ (57,932)

Net loss and adjustment attributable to redeemable non-controlling interests 4,718 -

Net loss (187,106) (57,932)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization 73,146 22,920

Amortization of premium on marketable securities, net 755 1,099

Amortization of deferred commissions 8,554 6,437

Amortization of debt discount and issuance costs 56,262 31,357

Stock-based compensation 94,792 58,040

Loss (gain) on conversion of convertible senior notes 129 (3,202)

Repayments of convertible senior notes attributable to debt discount (517) (26,336)

Other (3,176) 3,300

Changes in operating assets and liabilities net of effects from acquisitions:

Accounts receivable 30,444 19,583

Prepaid expenses and other current assets 1,396 7,053

Other assets 9,585 901

Deferred commissions (13,394) (6,051)

Accounts payable (248) (1,741)

Accrued expenses and other liabilities 5,703 1,289

Deferred revenue (3,432) (17,920)

Net cash provided by operating activities 72,893 38,797

Cash flows from investing activities

Purchases of marketable securities (72,392) (246,586)

Maturities of marketable securities 69,523 284,090

Sales of marketable securities 83,630 25,013

Acquisitions, net of cash acquired (45,766) (87,338)

Purchases of other investments (7,500) -

Purchases of property and equipment (6,662) (7,028)

Net cash provided by (used in) investing activities 20,833 (31,849)

Cash flows from financing activities

Investment from redeemable non-controlling interests 2,223 -

Proceeds from issuance of convertible senior notes, net of issuance costs - 1,355,367

Purchase of capped calls - (192,786)

Repayments of convertible senior notes (2,446) (549,278)

Proceeds from the exercise of common stock options 4,727 9,609

Proceeds from issuance of common stock for employee stock purchase plan 10,477 7,391

Net cash provided by financing activities 14,981 630,303

Effects of foreign currency exchange rates on cash, cash equivalents, and (41) 241restricted cash

Net increase in cash, cash equivalents, and restricted cash 108,666 637,492

Cash, cash equivalents, and restricted cash at beginning of year 327,589 268,280

Cash, cash equivalents, and restricted cash at end of period $ 436,255 $ 905,772

Reconciliation of cash, cash equivalents, and restricted cash to the condensedconsolidated balance sheets

Cash and cash equivalents $ 432,009 $ 905,612

Restricted cash included in other assets 4,246 160

Total cash, cash equivalents, and restricted cash $ 436,255 $ 905,772

COUPA SOFTWARE INCORPORATED

Reconciliation of GAAP to Non-GAAP Financial Measures

Three Months Ended July 31, 2021

(in thousands, except percentages and per share amounts)

(unaudited)

Stock-Based Amortization of Amortization of Other^ GAAP Compensation Acquired Debt Discount and (2) Non-GAAP

Expenses Intangible Assets Issuance Costs

Costs and expenses:

Costs of subscription $ 51,398 $ (3,596) $ (14,525) $ - $ - $ 33,277

Costs of professional services and other 27,822 (4,357) (5,852) - - 17,613

Gross profit 55.8 % 4.4 % 11.4 % 0.0 % 0.0 % 71.6 %

Research and development 41,799 (11,055) - - - 30,744

Sales and marketing 76,279 (12,230) (13,141) - - 50,908

General and administrative 36,248 (16,262) - - - 19,986

Income (loss) from operations (54,300) 47,500 33,518 - - 26,718

Operating margin (30.3) % 26.5 % 18.7 % 0.0 % 0.0 % 14.9 %

Interest expense (30,621) - - 28,872 - (1,749)

Other income (expense), net (1,983) - - - - (1,983)

Income (loss) before provision for (benefit from) (86,904) 47,500 33,518 28,872 - 22,986income taxes

Provision for (benefit from) income taxes (155) 769 1,889 - 746 3,249

Net income (loss) (86,749) 46,731 31,629 28,872 (746) 19,737

Net loss attributable to non-controlling interests (517) - - - - (517)

Adjustment attributable to non-controlling interests 5,235 - - - 5,235 -

Net income (loss) attributable to Coupa Software (91,467) 46,731 31,629 28,872 4,489 20,254Incorporated

Net income (loss) per share, basic, attributable to $ (1.24) $ 0.28Coupa Software Incorporated^ ^(1)

Net income (loss) per share, diluted, attributable $ (1.24) $ 0.26to Coupa Software Incorporated ^(1)

GAAP net loss per share attributable to Coupa Software Incorporated is calculated based upon 73,526 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share attributable to Coupa Software(1) Incorporated is calculated based upon 73,526 basic and 76,561 diluted weighted-average shares of common stock. The company uses the treasury stock method to calculate the non-GAAP diluted shares related to the convertible notes which reflects any anti-dilutive impact of the capped call transactions entered into in connection with the convertible notes.

Other consists of the removal of a one-time income tax benefit associated(2) with the remeasurement of foreign deferred tax assets and an adjustment attributable to non-controlling interests to its redemption amount.

COUPA SOFTWARE INCORPORATED

Reconciliation of GAAP to Non-GAAP Financial Measures

Three Months Ended July 31, 2020

(in thousands, except percentages and per share amounts)

(unaudited)

Gain on Stock-Based Amortization of Amortization of Conversion of Other ^ GAAP Compensation Acquired Debt Discount and (2) Non-GAAP Convertible Expenses Intangible Assets Issuance Costs Senior Notes

Costs and expenses:

Costs of subscription $ 33,805 $ (2,647) $ (7,548) $ - $ - $ - $ 23,610

Costs of professional services and other 14,634 (2,952) (200) - - - 11,482

Gross profit 61.5 % 4.4 % 6.2 % 0.0 % 0.0 % 0.0 % 72.1 %

Research and development 30,212 (7,316) - - - - 22,896

Sales and marketing 50,488 (9,255) (2,614) - - - 38,619

General and administrative 28,705 (11,673) - - - - 17,032

Income (loss) from operations (31,923) 33,843 10,362 - - - 12,282

Operating margin (25.4) % 26.9 % 8.2 % 0.0 % 0.0 % 0.0 % 9.8 %

Interest expense (20,223) - - 19,407 - - (816)

Other income (expense), net 4,759 - - - (631) - 4,128

Income (loss) before provision for income taxes (47,387) 33,843 10,362 19,407 (631) - 15,594

Provision for income taxes (4,271) 3,444 (103) 1,109 - 182 361

Net income (loss) attributable to Coupa Software (43,116) 30,399 10,465 18,298 (631) (182) 15,233Incorporated

Net income (loss) per share, basic, attributable $ (0.64) $ 0.23to Coupa Software Incorporated ^(1)

Net income (loss) per share, diluted, attributable $ (0.64) $ 0.21to Coupa Software Incorporated ^(1)

GAAP net loss per share attributable to Coupa Software Incorporated is calculated based upon 67,597 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share attributable to Coupa Software(1) Incorporated is calculated based upon 67,597 basic and 73,019 diluted weighted-average shares of common stock. The company uses the treasury stock method to calculate the non-GAAP diluted shares related to the convertible notes which reflects any anti-dilutive impact of the capped call transactions entered into in connection with the convertible notes.

(2) Other consists of the release of valuation allowances against deferred tax assets.

COUPA SOFTWARE INCORPORATED

Reconciliation of GAAP to Non-GAAP Financial Measures

Six Months Ended July 31, 2021

(in thousands, except percentages and per share amounts)

(unaudited)

Loss on Stock-Based Amortization of Amortization of Conversion of Other^ GAAP Compensation Acquired Debt Discount and (2) Non-GAAP Convertible Expenses Intangible Assets Issuance Costs Senior Notes

Costs and expenses:

Costs of subscription $ 102,423 $ (6,901) $ (28,411) $ - $ - $ - $ 67,111

Costs of professional services and other 56,524 (8,255) (12,374) - - - 35,895

Gross profit 54.1 % 4.4 % 11.8 % 0.0 % 0.0 % 0.0 % 70.2 %

Research and development 85,636 (21,718) - - - - 63,918

Sales and marketing 154,122 (23,451) (26,273) - - - 104,398

General and administrative 75,625 (34,467) - - - - 41,158

Income (loss) from operations (128,155) 94,792 67,058 - - - 33,695

Operating margin (37.0) % 27.4 % 19.4 % 0.0 % 0.0 % 0.0 % 9.7 %

Interest expense (59,724) - - 56,262 - - (3,462)

Other income (expense), net (1,448) - - - 129 - (1,319)

Income (loss) before provision for (benefit from) (189,327) 94,792 67,058 56,262 129 - 28,914income taxes

Provision for (benefit from) income taxes (2,221) 1,817 3,818 - - 746 4,160

Net income (loss) (187,106) 92,975 63,240 56,262 129 (746) 24,754

Net loss attributable to non-controlling interests (517) - - - - - (517)

Adjustment attributable to non-controlling interests 5,235 - - - - 5,235 -

Net income (loss) attributable to Coupa Software (191,824) 92,975 63,240 56,262 129 4,489 25,271Incorporated

Net income (loss) per share, basic, attributable to $ (2.62) $ 0.35Coupa Software Incorporated ^ ^(1)

Net income (loss) per share, diluted, attributable $ (2.62) $ 0.33to Coupa Software Incorporated ^(1)

GAAP net loss per share attributable to Coupa Software Incorporated is calculated based upon 73,200 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share attributable to Coupa Software(1) Incorporated is calculated based upon 73,200 basic and 76,431 diluted weighted-average shares of common stock. The company uses the treasury stock method to calculate the non-GAAP diluted shares related to the convertible notes which reflects any anti-dilutive impact of the capped call transactions entered into in connection with the convertible notes.

Other consists of the removal of a one-time income tax benefit associated(2) with the remeasurement of foreign deferred tax assets and an adjustment attributable to non-controlling interests to its redemption amount.

COUPA SOFTWARE INCORPORATED

Reconciliation of GAAP to Non-GAAP Financial Measures

Six Months Ended July 31, 2020

(in thousands, except percentages and per share amounts)

(unaudited)

Stock-Based Amortization of Change in Fair Amortization of Gain on Value of Conversion Other^ GAAP Compensation Acquired Contingent Debt Discount and of (2) Non-GAAP Consideration Convertible Expenses Intangible Assets Liability Issuance Costs Senior Notes

Costs and expenses:

Costs of subscription $ 62,807 $ (4,805) $ (14,158) $ - $ - $ - $ - $ 43,844

Costs of professional services and other 28,470 (5,364) (400) - - - - 22,706

Gross profit 62.8 % 4.1 % 5.9 % 0.0 % 0.0 % 0.0 % 0.0 % 72.9 %

Research and development 56,931 (13,440) - - - - - 43,491

Sales and marketing 96,627 (16,768) (4,670) - - - - 75,189

General and administrative 37,849 (17,663) - 12,500 - - - 32,686

Income (loss) from operations (37,549) 58,040 19,228 (12,500) - - - 27,219

Operating margin (15.3) % 23.7 % 7.8 % (5.1) % 0.0 % 0.0 % 0.0 % 11.1 %

Interest expense (32,512) - - - 31,357 - - (1,155)

Other income (expense), net 8,087 - - - - (3,202) - 4,885

Income (loss) before provision for (61,974) 58,040 19,228 (12,500) 31,357 (3,202) - 30,949(benefit from) income taxes

Provision for (benefit from) income taxes (4,042) 4,031 (152) - 1,109 - 310 1,256

Net income (loss) attributable to Coupa (57,932) 54,009 19,380 (12,500) 30,248 (3,202) (310) 29,693Software Incorporated

Net income (loss) per share, basic,attributable to Coupa Software $ (0.87) $ 0.45Incorporated ^(1)

Net income (loss) per share, diluted,attributable to Coupa Software $ (0.87) $ 0.41Incorporated ^(1)

GAAP net loss per share attributable to Coupa Software Incorporated is calculated based upon 66,545 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share attributable to Coupa Software(1) Incorporated is calculated based upon 66,545 basic and 71,603 diluted weighted-average shares of common stock. The Company uses the treasury stock method to calculate the non-GAAP diluted shares related to the convertible notes which reflects any anti-dilutive impact of the capped call transactions entered into in connection with the convertible notes.

(2) Other consists of the release of valuation allowances against deferred tax assets.

COUPA SOFTWARE INCORPORATED

Reconciliation of GAAP Cash Flows from Operations to Adjusted Free Cash Flowsand Adjusted Free Cash Flows Margin

(Non-GAAP Financial Measures)

(in thousands, except percentages)

(unaudited)

Three Months Ended Six Months Ended July 31, July 31,

2021 2020 2021 2020

Net cash provided by operating activities $ 40,811 $ 23,389 $ 72,893 $ 38,797

Less: purchases of property and equipment (3,908) (3,429) (6,662) (7,028)

Add: repayments of convertible senior - 15,732 517 26,336notes attributable to debt discount

Adjusted free cash flows $ 36,903 $ 35,692 $ 66,748 $ 58,105

Trailing Twelve Months Ended July 31,

2021 2020

Net cash provided by operating activities $ 112,298 $ 86,908

Less: purchases of property and equipment (11,126) (12,825)

Add: repayments of convertible senior notes attributable to 1,589 26,336debt discount

Add: one-time payout of legacy unvested equity awards 19,428 -accelerated in conjunction with a business combination

Adjusted free cash flows 122,189 100,419

Divided by: total revenues $ 642,683 $ 458,371

Adjusted free cash flows margin 19.0 % 21.9 %

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SOURCE Coupa Software