How High Can Coupa Go?

There are a few B2B FinTech firms looking to float in the coming weeks, but Coupa beat them to the punch with its debut late last week. Reports on Thursday (Oct. 6) said the company, which priced its shares at $18, saw its value spike in the first day of trading.

At its peak, Coupa shares reached more than $41, closing at an impressive $33.28. Its market cap was placed at $1.66 billion, reports said.

Following its float, reports by Fortune examined how Coupa managed to fulfill its goal of a billion-dollar company, despite acknowledging that it has yet to turn a profit — and may not anytime soon. The publication also noted that Coupa’s business model depends on faith that companies understand: You have to spend money to make money.

In an interview with the publication, Coupa CEO Rob Bernshteyn said that many of its clients are familiar with services, like Salesforce, to drive revenue through sales.

“We’re on the other side of that equation,” he said. “We’re helping them spend more efficiently.”

“The CFO understands that this is not a matter of spend management but rather a matter of managing one of the biggest line items on the corporate P&L,” noted Jonathan Ebinger, BlueRun Ventures general partner, in another interview. BlueRun was one of Coupa’s first investors, reports said.

According to Bernshteyn, Coupa initially sought an IPO in an effort to increase visibility amid a trove of big-name competitors, like SAP and Oracle. And while Coupa has yet to turn a profit, the CEO told reporters at TechCrunch that he’s not worried.

“For every dollar we burned, we created well over a dollar in recurring revenue,” he said, adding that he’ll be looking to “build this business for the long term.”

Coupa confirmed months-long rumors of IPO plans with its filing last month. Since, analysts have theorized that Coupa is ready to go on an M&A spree after the float to build up its market value and integrate other firms’ solutions into its platform.