Coupa, Others See Stocks Slide on Street’s Growth Concerns

For payments firms — the ones that have put up astronomical top-line growth through the past few years —  earnings season has offered variations on a theme.

And the theme, at least as scored by investors, is: Shoot first, ask questions later, where there are worries about growth that might be in the rearview mirror.

Time and again through the past few weeks, we’ve seen stocks sell off even when they’ve beaten earnings estimates but forward guidance winds up being comparatively tempered, at least in part on macro concerns. It should be noted, however, that many of these companies are also facing a changing, and perhaps challenging, competitive landscape.

For Coupa, which posted 18% revenue growth and billings that gained at roughly the same rate — but where forward top line growth estimates missed the Street — the reaction was swift as the stock sold off more than 20% intraday on Tuesday (March 15).

Markets Grow, But Stocks Punished 

Chief Executive Officer Rob Bernshteyn noted on the conference call that “digital and back-office transformation continue to be at the forefront as companies strive to build agility and resiliency in their businesses amid current and future uncertainty. As a result, business spend management is squarely in the spotlight.”

The company said that its core penetration within the Global 2,000 (a ranking of the world’s largest firms) is still below 20%. And against that backdrop, there is still room to grow, of course. In its latest 10-K filing with the Securities and Exchange Commission, the company makes note of competitors such as Oracle and SAP and Workday. As for that guidance, Coupa management has guided to a current fiscal year growth rate for subscriptions of about 20%, which would be a marked deceleration from the 35% to 40% seen in previous years.

We note that any number of smaller players have come into the marketplace, too, some of them spotlighted in this digital space, including Fidel API, and Medius, to name just two. A laundry list is not necessary here — but the fact remains that in markets where wholesale transformations create sizable markets, it makes sense that any number of players can and will want to jump in.

As for the perfect being the enemy of the good — at least when it comes to guidance and to the vagaries of Wall Street’s favor or disfavor — Coupa is hardly alone. Last week, DocuSign showed a similar slide in its stock price when it reported earnings last week and forward guidance came in below expectations. Investors fled the name as if we’re in the middle of a return to the old ways of doing business, namely to paper-based and manual processes.

Read also: DocuSign’s Stock Plummet Implies a Return to the Age of ‘Wet Signatures’

Many of these firms have been rewarded through the pandemic, where investors bid up their stock prices as COVID-19 took root — but then sold them off in a course correction that has been swift. Time will tell if there’s been an over-correction or not.