Cloud-based business spend management platform provider Coupa Software, Inc. (COUP) recently delivered a robust set of third-quarter numbers on the back of continued adoption of its platform by customers.
Driven by growth in the company’s Subscription revenue, revenue increased 40% during the quarter. Quarterly billings jumped 38% over the prior year and the company’s bottom-line surged 72.2% during this period.
With these positive developments in mind, let us take a look at the changes in Coupa’s key risk factors that investors should know.
Risk Factors
According to the TipRanks Risk Factors tool, Coupa’s top two risk categories are Finance & Corporate and Ability to Sell, contributing 43% and 22% to the total 58 risks identified, respectively.
In its recent quarterly report, the company has changed one key risk factor under the Ability to Sell risk category. Compared to a sector average of 14%, Coupa’s Ability to Sell risk factor is at 22%.
Coupa noted that its business hinges on the company’s ability to make its customers successful through Coupa’s platform, modules, and professional services. Coupa’s strategy is to work with partners to increase the capability and capacity for the delivery of its professional services to customers. (See Insiders’ Hot Stocks on TipRanks)
The risk remains that if customers are not satisfied with the quality of work delivered, then Coupa may have to incur additional costs, further hampering its profitability. Additionally, Coupa’s ability to retain that particular customer or expand the subscription for different modules may be affected, and it may also suffer negative publicity.
Wall Street’s Take
In a major boost for the stock, on December 13, Goldman Sachs analyst Gabriela Borges initiated coverage on Coupa with a Buy rating and a price target of $251 (upside potential of 65.1%).
Consensus on the Street is a Moderate Buy based on 12 Buys and 8 Holds for the stock. The average Coupa Software price target of $222.22 implies a potential upside of 46.2%. That’s after a 34.6% slide in share prices over the past month.
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