What's In The Offing For Coupa (COUP) This Earnings Season?

Coupa Software Inc. (NASDAQ:COUP) is set to release third-quarter fiscal 2018 results on Dec 4. The company beat the Zacks Consensus Estimate in three of the trailing four quarters, with an average positive surprise of 37.94%.

In the preceding quarter, the company delivered a positive earnings surprise of 41.18%. Moreover, Coupa beat the Zacks Consensus Estimate for revenues in three of the last four quarters.

For third-quarter fiscal 2018, revenues are anticipated in the range of $44.8-45.3 million. Subscription revenues are forecast between $40.8 million and $41.3 million, while professional services revenues are projected at approximately $4 million.

Management projects non-GAAP gross margins between 67% and 69%. Moreover, non-GAAP loss from operations is anticipated in the range of $5.5-$6.5 million. Net loss is anticipated in the range of 10-12 cents per share.

Notably, Coupa’s shares have returned 41.7% year to date, slightly better than the 29.8% rally of the industry.

Let’s see how things are shaping up for this announcement.

Key Factors

Coupa provides unified, cloud-based spend management platform that helps enterprises keep a tab of daily expenditures. Cumulative spending over the platform since its launch has surpassed $500 billion (at the end of second-quarter fiscal 2018). This reflects growing adoption of its solutions by the likes of Amazon.com Inc (NASDAQ:AMZN) , salesforce (NYSE:CRM) , Caterpillar (NYSE:CAT), Unilever (LON:ULVR) and others.

Moreover, an expanding partner base is expected to drive top-line growth. The partnership with Software AG makes it easy for companies to integrate Coupa with most leading enterprise resource planning (ERP) systems, including those from SAP and Oracle (NYSE:ORCL). The company has expanded CoupaLink certified solutions by adding Software AG’s webMethods Connector.

In the last quarter, Coupa launched its next-generation cloud platform and added more than 70 new capabilities. We believe that the platform will help the company gain new customers rapidly, which will drive result in the soon-to-be reported quarter.

Moreover, the availability of Coupa Open Buy with Amazon Business in the United States is a growth driver.

Earnings Whisper

Nevertheless, Coupa is unlikely to deliver a positive earnings surprise in third-quarter fiscal 2018 due to an unfavorable combination of Zacks Rank #3 (Hold) and an Earnings ESP of 0.00%.

This is because, as per our model, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

We don’t recommend Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stock to Consider

Here is a stock you may consider, per our model, which has the right combination of elements to post an earnings beat this quarter.

Broadcom (NASDAQ:AVGO) has an Earnings ESP of +0.51% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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