Coupa Software’s Revenue Breakdown by Segment (2016-2022)

Subscription Revenues

Coupa Software offers its cloud-based business spend management platform for a subscription. This service includes procurement, invoicing, and expense management. Subscription revenues consist primarily of fees to provide the customers, access to its cloud-based platform, which includes routine customer support. These contracts typically have a term of three years with invoicing occurring in annual installments at the beginning of each year in the subscription period. The initial contract terms are typically three years, although some customers commit for longer or shorter periods. The large majority of their customers pay annually, one year in advance. However, the contracts are non-cancelable.

The revenue from subscription services makes the highest contribution to the total revenue generated by Coupa Software. During Q2 2022, as much as 87% of the total revenue came from this segment. On a QoQ basis, there was an 11.49% increase as compared to a 40% increase on a YoY basis. During the last 6 years, this segment has grown exponentially, with a 993% absolute increase.

Professional Services Revenues

Professional services revenues consist primarily of fees associated with the implementation and configuration of subscription services. The revenues allocated to the license component for sales of term-based licenses are also included in this segment.

Term-based licenses: These are sold as bundled arrangements that include the rights to a term license and post-contract customer support (PCS).

The transaction price to each performance obligation is allocated accordingly. However, the revenues related to the sum allocated to PCS are included in subscription revenue. The professional services are generally sold on a time-and-materials or fixed-fee basis and its revenue is recognized over time as the services are performed.

• For fixed-fee arrangements: revenue is recognized, based on performed hours relative to the total estimated hours to complete satisfaction of the professional service arrangement.
• For the license component: from the sales of term-based licenses, revenue is recognized at the start of the license term when delivery is complete.

The terms of typical professional services arrangements allow customers to pay within 30 days from the invoice date. On the contrary, fixed-fee service arrangements are generally invoiced in advance. Coupa Software invests significantly in this segment of business, which ensures customer success and the adoption of its platform. 

The service engagements, typically span from a few weeks to several months. For this reason, the revenues from this segment fluctuate significantly from period to period. On a QoQ basis, there was a 14% decrease in the revenue generated. However, there was more than a 60% YoY increase. During Q4 2021, the company witnessed the sharpest $13.72 million increase in the revenue generated from this segment. However, it continued to fall subsequently. 

About the company

Coupa Software is an eminent provider of Business Spend Management (BSM) solutions. They offer a comprehensive, cloud-based BSM platform that connects its customers with more than seven million suppliers globally. They have a diverse, multi-national customer base spanning various sizes and industries. This platform provides greater visibility and control over how companies spend money, optimize supply chains, and manage liquidity. Using this platform, businesses are able to achieve savings that drive their profitability.

The core of this platform consists of procurement, invoicing, expense management, and payment solutions that form the transactional engine for managing a company’s business spending. In addition, it offers specialized modules targeted at power users, to help companies manage more technical and strategic areas of BSM. This includes areas such as strategic sourcing, contract management, contingent workforce, supplier risk management, supply chain design and planning, treasury management, and spend analysis. Other products offered by Coupa Software are:

• Coupa Advantage: This product offers access to pre-negotiated discounts from different suppliers.
• Coupa Open Business Network: allows suppliers of all sizes can list their goods and services, establish pricing, and interact with buyers electronically.

Did you like Coupa Software’s Revenue Breakdown by Segment statistic?

Access more such KPI data points and segment financials on thousands of US stocks, with Business Quant.

You can get started here.