Analyst Note| Julie Bhusal Sharma |
Narrow-moat Coupa reported strong second-quarter results that came in well ahead of management’s and our revenue and non-GAAP EPS expectations, and raised its full-year fiscal 2022 outlook. We are raising our fair value estimate for Coupa to $232 from $225 per share due to accelerating enterprise-level customer engagement and the increasing relevance of Coupa solutions arising from pandemic-induced operational uncertainty. On the latter point, Coupa’s Supply Chain Design and Planning solution, formerly Llamasoft, combined with AI and digital twin technology, has proven instrumental in allowing for this operational agility. We view the quarter’s launch of Coupa App Marketplace, which enables a greater capture of the sizeable addressable market through a self-reinforcing partner ecosystem, as highly value-accretive to the overall business spend management, or BSM, platform, and expect the increasingly comprehensive BSM solution to continue to expand in use-case applicability. With shares trading around $279 in the aftermarket, we view Coupa as overvalued.