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Edited Transcript of COUP earnings conference call or presentation 16-Mar-20 9:00pm GMT

Q4 2020 Coupa Software Inc Earnings Call

SAN MATEO Apr 7, 2020 (Thomson StreetEvents) -- Edited Transcript of Coupa Software Inc earnings conference call or presentation Monday, March 16, 2020 at 9:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Robert Bernshteyn

Coupa Software Incorporated - Chairman of the Board & CEO

* Steven Horwitz

Coupa Software Incorporated - VP of IR

* Todd R. Ford

Coupa Software Incorporated - CFO

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Conference Call Participants

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* Aleksandr J. Zukin

RBC Capital Markets, Research Division - MD of Software Equity Research & Analyst

* Bradley Hartwell Sills

BofA Merrill Lynch, Research Division - VP

* Brent Alan Bracelin

Piper Sandler & Co., Research Division - MD & Senior Research Analyst

* Brian Christopher Peterson

Raymond James & Associates, Inc., Research Division - Senior Research Associate

* Christopher David Merwin

Goldman Sachs Group Inc., Research Division - Research Analyst

* Daniel William Jester

Citigroup Inc, Research Division - VP

* Joseph Dean Foresi

Cantor Fitzgerald & Co., Research Division - Analyst

* Koji Ikeda

Oppenheimer & Co. Inc., Research Division - Director & Senior Analyst

* Mark Ronald Murphy

JP Morgan Chase & Co, Research Division - MD

* Michael James Turrin

Wells Fargo Securities, LLC, Research Division - Senior Analyst

* Patrick D. Walravens

JMP Securities LLC, Research Division - MD, Director of Technology Research and Senior Research Analyst

* Peter Marc Levine

Evercore ISI Institutional Equities, Research Division - Analyst

* Raimo Lenschow

Barclays Bank PLC, Research Division - MD & Analyst

* Robert Paul Napoli

William Blair & Company L.L.C., Research Division - Partner and Co-Group Head of Financial Services & Technology

* Ryan Michael MacDonald

Needham & Company, LLC, Research Division - Senior Analyst

* Sitikantha Panigrahi

Mizuho Securities USA LLC, Research Division - MD

* Stan Zlotsky

Morgan Stanley, Research Division - VP

* Steven Richard Koenig

Wedbush Securities Inc., Research Division - MD

* Terrell Frederick Tillman

SunTrust Robinson Humphrey, Inc., Research Division - Research Analyst

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to Coupa Software Fourth Quarter Fiscal Year 2020 Earnings Release Conference Call. (Operator Instructions) As a reminder, this call is being recorded.

I would now like to introduce your host for today's conference call, Mr. Steven Horwitz, VP of Investor Relations. Mr. Horwitz, you may begin your conference.

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Steven Horwitz, Coupa Software Incorporated - VP of IR [2]

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Thank you. Good afternoon, and welcome to Coupa Software's fourth quarter conference call. Joining me today are Rob Bernshteyn, Coupa's CEO; and Todd Ford, Coupa's CFO.

Our remarks today include forward-looking statements about guidance and future results of operations, strategies, market size, products, competitive position and potential growth opportunities. Our actual results may be materially different. Forward-looking statements involve risks and uncertainties and assumptions that are described in our most recently filed 10-Q. These forward-looking statements are based on our beliefs and assumptions today, and we disclaim any obligation to update any forward-looking statements. If this call is replayed after today, the information presented may not contain current or accurate information.

We also present both GAAP and non-GAAP financial measures. A reconciliation of certain of these measures is included in today's earnings release, which you can find on our Investor Relations website. A replay of this call will also be available. And if you prefer to access a replay via phone, you can find that information in the earnings release. Unless otherwise stated, growth comparisons are against the same period of the prior year.

With that, I will turn the call over to Rob. Rob?

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Robert Bernshteyn, Coupa Software Incorporated - Chairman of the Board & CEO [3]

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Thank you, Steven. Hello everyone, and thank you so much for joining us. Before we begin, let's acknowledge the topic of the coronavirus. Our thoughts and prayers are with anyone and everyone affected globally. At Coupa, our top priority has been and will continue to be ensuring the health and safety of all our colleagues, customers and partners around the globe. We're meeting daily and taking guidance from trusted health organizations such as the CDC and the World Health Organization for everyone's health and safety and implementing safeguards accordingly. As one global community, let's hope for the return to normalcy as soon as possible.

As far as our business, we have and will continue to execute assertively despite any and all obstacles in our path. We're back in California after another busy year and well into a new one. Reflecting on the year and on behalf of all my Coupa colleagues and myself, I'm proud to share that for our full fiscal year, we delivered a revenue growth rate of 50% and we're once again non-GAAP profitable. It is my strong sense that these annual results demonstrate the value that Business Spend Management is able to offer companies around the world and support the strength of our undisputed leadership position in this rapidly evolving space, which is still in its early stages of maturity.

Speaking of our business, we here at Coupa have been successfully delivering Value as a Service to our customers in virtually every vertical around the world for over a decade. This fiscal year marks the first time that we had customer go-lives on virtually every single continent. Let me now highlight one exciting Q4 example for each.

It's only appropriate that the first one I mention be a company that has been deeply impacted by recent events. In North America, United Airlines, one of the world's largest and best known airlines, has recently gone live with Coupa BSM. With Coupa, United is providing its employees an efficient, intuitive user experience that gives them more time to serve their customers while delivering control and visibility of third-party spend. Within the first 3 months, United was 2.5x -- has 2.5x the amount of spend going through Coupa compared to the previous 12 months with their legacy system. They now have spend visibility, spend agility and spend control.

In Asia, GOJEK, a leading on-demand multi-service platform and digital payment technology company, also Coupa's first customer in Indonesia, has gone live with Coupa BSM. Using Coupa as their single platform to manage spend across the region, GOJEK is increasing spend under management and PO-backed invoices over their first year as they streamline and standardize processes to support their international expansion across Asia.

In Europe, Telia Company, a new-generation telco, is providing communication services to help millions of people be connected, communicate, do business and be entertained. Telia recently replaced 7 systems and fragmented manual processes with Coupa. In addition to enhancing value from suppliers, improving costs and optimizing cash flow, Coupa is helping Telia work towards its sustainability goals of achieving 0 CO2 and 0 waste within its operations and across its entire supply chain by 2030.

As we move into the Southern Hemisphere, first in South America, let me highlight Braskem, the largest producer of thermoplastic resins in the Americas and of polypropylene in the United States, who recently went live with Coupa BSM for both direct and indirect purchases. With Coupa, Braskem has seen rapid user adoption, and within the first 4 months, they've successfully completed more than 8,000 sourcing events covering services, raw materials and maintenance.

Moving on to Africa. Sibanye-Stillwater, an international precious metals mining company, is now live on Coupa BSM in South Africa. With Coupa, Sibanye-Stillwater is focusing on enhancing contract coverage, standardizing spend processes and improving the overall effectiveness of their business spend environment.

Let's finish up in the land down under, Australia. Volkswagen Group Australia, known as VGA, is the sole importer and distributor of Volkswagen passenger and commercial vehicles in Australia, which also includes top brands such as Škoda. VGA recently went live with the comprehensive Coupa platform and then are gaining deeper visibility into their spend while maintaining sustainable controls around budgets and delivering a great user experience. VGA is leveraging Coupa to maximize preapproved contract-backed spend and to electronically exchange POs and invoices with their consolidated supplier base. VGA is also using Coupa to achieve automation and efficiencies with invoicing, contract life cycle management and supplier management while using analytics to report on all these areas within Coupa.

These go-lives that I've highlighted are indicative of the broad application of our comprehensive platform, also known as the letter C in Coupa. The more our customers utilize the platform, the more return they're able to yield back to their stakeholders in visibility, control, compliance, automation, not to mention savings.

In addition to these go-lives, we finished the year strong, welcoming some wonderful new customers into our rapidly growing and expanding community that is now more than 1,300 customers strong. Q4 wins include American Signature, AstraZeneca, Blue Sphere Singapore, BMW Group, Brex, Fox Corporation, Grupo Planeta, John Lewis Partnership, Lucid Energy Group, Orangetheory Fitness, Quilter, Shinsei Bank, Skyservice Business Aviation, The University of Texas System and Wintershall Dea. In Q4, we are excited to welcome these and dozens of other new customers to our community.

Now let's talk about what I believe is one of the most exciting innovations in enterprise software, Community Intelligence. Within Coupa, over 30% of our customers visited their prescriptive insights page, the P in Coupa, on average approximately once a week during the fourth quarter, and the number of views and prescriptive actions are growing. All these prescriptions are, of course, powered and driven by Community Intelligence.

Let me give you a real-world example of how these insights can help drive and sometimes influence a company's spend strategy for the better. Co-op is one of the world's largest customer cooperative, driving value for millions of members and employing 70,000 people. Co-op supplies food, insurance, legal services and even funeral services to local communities through more than 2,500 stores in the U.K. In 2018, Co-op launched Fuel For Growth, a strategic initiative to reduce costs in order to fund an ambitious growth agenda called Stronger Co-op, Stronger Communities. The success of this initiative hinged on creating a leaner and more agile operating model. For this, they turned to Coupa to identify what would drive the greatest process improvements across its BSM activities.

Initially, their focus was to reduce approval cycle times for requisitions and invoices while also introducing greater spend control. Coupa Community Intelligence insights illustrated that their approval cycle times are actually in line with community standards, but there was a sizable opportunity to increase savings by driving a higher percentage of spend through prenegotiated contracts. Community Intelligence showed Co-op that best-in-class peers had on-contract spend percentages that were 28x higher than theirs and also prescribed which specific items they could move to catalog. These prescriptions were based on what Co-op's buyers were searching for and best practices from our expansive Coupa community. Based on these insights, Co-op is increasing usage of preferred suppliers and taking advantage of prenegotiated savings. As a result, Co-op is better able to meet its Fuel for Growth goals and serve its members and communities more effectively.

As I said in the past, we are in the early innings of the value creation that Community Intelligence can provide to our customers, now powered by nearly $1.7 trillion in cumulative spend under management with over $1.5 trillion in the past year alone. We will continue to expand upon the power of our technology and our community in this area to bring our customers more and more of the value that no other company in the world could provide.

Let's move on to Coupa Pay. Though we are still quite early on with Pay, we have seen strong momentum in the addition of new customers and in early deployments. And we're excited about what Pay will bring to Coupa customers as a core transactional module in our BSM platform. Today, I want to highlight one new Coupa Pay customer from the enterprise world and one from mid-market.

The enterprise company I'd like to highlight is aptly named Enterprise Holdings. Enterprise leads the transportation services industry with a world-class portfolio of brands like Enterprise, National, Alamo Rent A Car and others. Their 100,000 team members operate in 100 countries with a fleet of over 2 million vehicles. Enterprise is currently implementing Coupa's comprehensive platform to drive global BSM transformation. Coupa Pay will connect Enterprise's supply base to readily available working capital. Also, Coupa Pay Virtual Card optimization will improve credit card control, visibility and reconciliation.

In the mid-market, Redfin is also a Coupa Pay customer that we are excited to be working with. Redfin is a brokerage that redesigns real estate with map-based technology and a different set of values that put customers first. Since their launch in 2006, they have helped customers buy or sell more than 235,000 homes worth more than $115 billion. Similar to what we are experiencing with many Coupa customers, Redfin originally looked to us to improve their overall BSM process and also decided to include Coupa Pay. Last month, Redfin went live with Coupa Pay, using both our Virtual Card and Invoice Payments solutions. They're now -- they've now begun the digital transformation of their payment process for 3,500 active suppliers across 8 subsidiaries and expect to increase their credit card rebates, reduce invoice processing costs and increase P2P process efficiency.

No other payments offering in the market is able to leverage Coupa's core competencies in BSM and AP automation, combined with widespread adoption within our customers' ecosystem. Using Coupa Pay, customers can take advantage of every payment rail within a single interface. We also uniquely allow customers to leverage their existing bank relationships in one fully integrated platform. Our rich partner ecosystem allows us to provide our customers with a truly open platform, the letter A in Coupa. We will continue to provide more updates as the Coupa Pay story evolves.

Now let's move on to the Coupa Business Spend Index, or BSI, a leading indicator of economic growth based on analyzing hundreds of billions of dollars in aggregated and anonymized business spend. Today, we published the Q1 2020 Coupa BSI. Before getting into the results, I'd like to once again reiterate that the BSI data is not indicative of the trends we're seeing in Coupa's business.

Our Q1 BSI suggests that similar to the previous quarter that unsurprisingly, U.S. businesses continue to remain cautious about the economy. At an industry level, spend sentiment in the retail sector remained above trend but declined compared as -- to recent quarters. At the same time, spend sentiment in the manufacturing sector continued to be low trend and declined compared to recent quarters.

Given the global emergence of the coronavirus, we also analyzed the purchase patterns on potentially impacted categories over the last several weeks. Our results predictably showed a more than 30% year-over-year increase in office sanitizing equipment. Similarly, we saw a more than 75% year-over-year increase on personal protective equipment, such as masks and gloves. At the same time, we saw a 45% year-over-year decrease in business travel spend and a 21% year-over-year decrease in purchases from the category representing durable goods. We will continue to closely monitor these trends, both at an overall BSI level as well as at a category level, and make the data available on www.spendindex.com over the coming months.

Let's move on to M&A. During Q4, we acquired travel optimization leader, Yapta. Yapta is now Coupa Travel Saver. Let me illustrate how Coupa Travel Saver works with a simple real-life example. You've booked your flight and a hotel for a business trip. Prices subsequently dropped, however, rarely would an employee check to see if prices have dropped and look to get rebooked. The idea that employees would waste their time like this is a complete and total hoax. This is where Coupa Travel Saver comes in. The solution uses technology to dynamically monitor airfare and hotel prices and takes the action of rebooking -- debooking and rebooking virtually identical reservations when prices drop to a point where there will be worthwhile net savings for the customer. This all happens on the back end without any distraction, effort or work by the employee themselves. Savings are automatically delivered to the customer with a percentage going to Coupa as revenue.

Most of you have probably heard me say many times that the best UI is no UI. To that end, Coupa Travel Saver is the epitome of our user-centric vision, the letter U in Coupa. Historically, on average, Coupa Travel Saver has saved companies 2% to 4% of their corporate travel budgets, resulting in hundreds of millions of dollars of savings for customers. Furthermore, with our customers having the ability to turn on Travel Saver functionality immediately, that's about as accelerated as you can get, a real representation of the letter A in Coupa.

As you'd likely expect, this acquisition fits very well into our overall M&A strategy. As I noted before, anytime we look at a potential acquisition, we focus on adding technology components that maximize and enhance the value of our organic, transactional core engine and/or augmenting this engine with key advanced power applications to maximize the value of these transactions. This acquisition accomplishes both goals. Most importantly, the acquired company's culture and values are in close alignment with ours and we are already well into working as one.

Now speaking of culture and values, let me share a conversation I had at a recent prospect meeting. When discussing their interest in Coupa, one said to me, "You guys are known for getting the job done," and I thought for a moment about what a wonderful complement this was, "Coupa is known for getting the job done." I was filled with a sense of pride and appreciation regarding all my fellow Coupa colleagues around the world who pour their hearts into delivering meaningful, measurable value to our customers every day through the embodiment of our core values in their work. So in that spirit, let me take a moment to recognize a few of them today for their outstanding accomplishments.

Let me start with Felipe Lemos Carvalhedo who has recently been recognized by his peers for embodying our #1 core value of ensuring customer success. He's always willing to help a colleague or customer at the drop of a dime and is committed to making others successful.

Next, I'd like to call out Jerome Josserand who was recently recognized for focusing on results. Jerome takes real ownership for delivering the most meaningful results to our customers. Day in and day out, he exemplifies what strong leadership is all about.

And when we talk about striving for excellence, our third core value, Rebecca Morris from our Analyst Relations team was recognized. She manages some very complex relationships with integrity. She's always collaborating, educating and transparently showcasing Coupa to the analyst community.

It is these kinds of characteristics that have helped cement us as the undisputed leader in our space. Congratulations and thank you, Felipe, Jerome and Rebecca.

Now last quarter we talked about a few instances in which industry analysts have publicly recognized Coupa's platform. Since this is the end of the fiscal year, I want to highlight that Coupa participated in 19 analyst reports in calendar 2019 and was named the leader all 19 times, with the reports covering every area of Business Spend Management. Adding to the many accolades that we received during the year, the Forrester Wave for e-procurement named Coupa the leader in Q4 for the third consecutive time, stating Coupa continues to set the bar for customer success for the entire business applications industry. We could not be more proud.

Now in closing, let me say this: there are thousands of organizations out there who don't have spend visibility, spend compliance, spend control and automation, and many of them don't even realize that they need it. Coupa has been solving that problem for well over a decade regardless of economic conditions. Now more than ever, we believe this value proposition should be an even higher priority for all companies globally.

With that, let me now hand the call over to our Chief Financial Officer, Todd Ford. Todd?

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Todd R. Ford, Coupa Software Incorporated - CFO [4]

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Thanks, Rob, and good afternoon, everyone. We finished the year strong as we continue to deliver on the commitments we've made to our stakeholders, and our strong execution is reflected in our key metrics and financial results in fiscal 2020.

Total revenue for Q4 was $111 million, up 49% year-over-year. And for the year, total revenue was $390 million, up 50% year-over-year. Subscription revenue was up 46% year-over-year for Q4 and up 48% for the full year. Professional services and other revenue for Q4 was $13 million, which includes the benefit of a few strategic direct services arrangements that continued into Q4 and are now nearing completion. For fiscal year 2020, full year calculated billings were up 49% over the prior year. In Q4, calculated billings were $181 million, by far, our largest ever quarter. The strong result was delivered despite a difficult year-over-year compare due to the $6 million of acquired deferred revenue from the Hiperos acquisition at the end of Q4 of fiscal 2019.

Let's now turn to margins and results of operations. Our Q4 non-GAAP gross margin was 73%. This was comprised of subscription non-GAAP gross margins of 81.2% and professional services and other non-GAAP gross margins of 10.4%. For the year, non-GAAP gross margin was 72.6%. In Q4, we delivered non-GAAP operating income of $13.3 million or 12% of revenue, and non-GAAP net income was $15 million or $0.21 per share on 72.2 million diluted shares. For the year, non-GAAP operating income was $31.9 million or 8% of revenue and non-GAAP net income was $36.6 million or $0.52 per share on 69.9 million diluted shares.

Cash and investments at year-end were $767 million, which included approximately $100 million paid in Q4 for Yapta. Operating cash flows in Q4 were $22 million and free cash flows were $20 million, making this our second consecutive quarter over $20 million in operating and free cash flows. For the fiscal year, operating cash flows were $68 million or 17% of total revenue and free cash flows were $56 million or 14% of total revenue. Our Q4 cash flow results significantly exceed our original expectations. This was driven by great execution across the board. In particular, I'd like to call out Rick, Elaine, Rachel, Kathy, Ariel, Andrew and Sal for their contributions to the strong Q4 cash flow results.

Before moving on to guidance, let me touch on Coupa Pay. As Rob noted in his remarks, we are still early on the Coupa Pay journey with Invoice Payments having been made generally available just a few quarters ago. We have a strong pipeline of prospects and current customers progressing through sales cycles. We added many new customers in Q4 in both enterprise and mid-market and Coupa Pay has become a more valued component of the core BSM platform. This is evidenced by the fact that in fiscal 2020, on average, annual subscription fee for new business deals that included Coupa Pay were more than 20% higher versus deals that did not include Coupa Pay. Now that early Coupa Pay customers are going live, transaction volumes are beginning to occur. While it's still too early to draw inferences from the transactional data, as Coupa Pay continues to evolve, we will share additional metrics as they become relevant and statistically significant.

Now let's turn to guidance. As you consider Q1 guidance, we'd like to remind you that we recognize revenue based on the number of days in a quarter, and since there are fewer days in Q1 due to February, steady state subscription revenues are seasonally lower by several million dollars in Q1 compared to Q4.

For the first quarter, we expect total revenue of between $111.5 million and $112.5 million. This includes subscription revenue of between $101.5 million and $102.5 million, taking into account the fewer number of days in February, and professional services revenue of approximately $10 million. Our Q1 guidance contemplates $1 million to $2 million from Coupa Travel Saver, formerly known as Yapta. As Rob discussed, Travel Saver identifies savings opportunities for customers by dynamically rebooking travel and taking a share of the realized savings as revenues. While it's uncertain at this time, we expect that the coronavirus outbreak could negatively impact Travel Saver's revenue due to a reduction in global travel activity, and that was factored into our guidance.

We expect Q1 non-GAAP gross margins of 70% to 71%, non-GAAP operating income of $4 million to $5.5 million and non-GAAP net income of $0.06 to $0.08 per share on 72.5 million weighted average diluted shares for the quarter. Furthermore, after generating in excess of $20 million in free cash flow in each of the past 2 quarters, we expect Q1 cash flows to be breakeven or slightly better. For calculated billings, we expect to exit Q1 with a trailing 12-month growth rate of 45%. This includes an approximate 5% pull-forward from Q2 due to timing of renewals and contracted billings. As you roll your models forward for the year, please also remember that Q2 will be a difficult compare due to the Exari acquisition we completed in Q2 last year.

We'd now like to share our initial expectations for the fiscal year ending January 31, 2021. From a revenue visibility perspective going into the year, remaining performance obligations, or RPO, at the fiscal -- at the end of fiscal '20 was $725 million, up from $499 million at the end of fiscal '19, representing a year-over-year increase of 45%. As a reminder, our RPO excludes customer contracts with a duration of 1 year or less and will not incorporate any contribution from Travel Saver as revenues are typically recognized as billed.

For the full year, we expect total revenue of $488 million to $490 million. This range assumes that professional services will be flat to slightly up year-over-year with lower contribution from direct services engagements compared to the prior year. We expect non-GAAP gross margins of 70% to 71% and non-GAAP operating income of $21 million to $23 million. As a reminder, our sales and marketing expenses spiked in Q2 by approximately $3 million to $4 million due to our annual INSPIRE User Conference. For the full year, we expect non-GAAP net income of $0.30 to $0.33 per share on 73.5 million weighted average diluted shares. Although, our customer collections at the end of fiscal '20 significantly exceeded our expectations, we still expect operating and free cash flows to be up year-over-year on an absolute dollar basis.

That concludes our prepared remarks. (Operator Instructions) Now we would be happy to begin fielding your questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question comes from the line of Chris Merwin.

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Christopher David Merwin, Goldman Sachs Group Inc., Research Division - Research Analyst [2]

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Congrats on another great quarter. Rob, I just wanted to ask about the nature of discussions with customers at the moment. Obviously, we're in a pretty unique time here, and I think you and Coupa have a pretty also unique vantage point into business spend, particularly for IT. So maybe can you just comment at a high level about those discussions and then in particular, how it relates to Coupa as it relate to sales cycles and everything else.

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Robert Bernshteyn, Coupa Software Incorporated - Chairman of the Board & CEO [3]

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Well, those conversations continue, as you would expect. Our value proposition is our value proposition, and in many ways, there's a greater focus in on controlling spend, having the agility and the controls you need at this difficult time. Unfortunately, many of them are being done over phones and video conferences, but that's proving to be fairly effective for everyone at the moment. Our demos are being done the same way, and all of our correspondence is being done the same way. But I'm feeling pretty good about that and as the weeks and quarter continues, we'll see if how that evolves.

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Operator [4]

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The next question comes from the line of Michael Turrin.

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Michael James Turrin, Wells Fargo Securities, LLC, Research Division - Senior Analyst [5]

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Todd, any change in terms of capital allocation framework given the recent downturn in the markets? Does M&A remain a core piece of the strategy with valuations coming in here? Or is there any more focus on just keeping the war chest stocked here for now?

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Todd R. Ford, Coupa Software Incorporated - CFO [6]

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Nothing has changed from that perspective, it's business as usual. Obviously, valuations may be going down. But our M&A strategy has always been, first and foremost, is it a cultural fit, time to market, buy versus build, significant input from our engineering team and clearly value is part of that component as well. But right now, I would say, our strategy there has remained the same.

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Operator [7]

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The next question comes from the line of Stan Zlotsky.

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Stan Zlotsky, Morgan Stanley, Research Division - VP [8]

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Just going back to Coupa Pay for a second, what do you guys have baked in as far as contribution from Coupa Pay in your fiscal '21 guidance?

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Todd R. Ford, Coupa Software Incorporated - CFO [9]

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Dan, this is Todd. So our guidance is very much consistent with how we've done things in the past. We look at pipeline, we look at adoption of our Business Spend Management platform. And as we noted on the call, the deals with Coupa Pay have had a significant increase in the average deal sizes. And so when we look at our pipeline and we kind of roll that into our guidance for the year, we look at it as one bucket, and it's not something that we're going to break out separately.

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Operator [10]

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The next question comes from the line of Alex Zukin.

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Aleksandr J. Zukin, RBC Capital Markets, Research Division - MD of Software Equity Research & Analyst [11]

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So I guess, Rob, maybe first, if you think about holistically, I remember having a conversation where you've talked about basically prioritizing new logo acquisition over installed base selling over the last few years. I'm wondering if you're -- given the market conditions, does that start to change? And then, Todd, maybe just help us, how do you think about the dollar-based net written expansion as you scale and continue to sell Coupa Pay into customer base?

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Robert Bernshteyn, Coupa Software Incorporated - Chairman of the Board & CEO [12]

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Thanks very much for the questions, Alex. I would say that to wait and see on that. We'll see if we shift our strategy there. At the moment, it's business as usual. We haven't -- we don't have any statistically significant signs in front of us that suggest we can't continue exactly the way we've been doing with logo acquisition as well as organic expansion into the core. In fact, I think this is not a bad time to tell you that in terms of the core, and frankly, given the situation that's out there now, we're looking at ways to help folks, particularly suppliers that don't have a great deal of cash flow, may need cash flow. So what we're offering now to our customers is the ability to use Coupa digital checks at no charge through April 20. So we think these small supply cash flows could be an issue. We have -- speed of payment may be critical at this time. And as you know, with millions of suppliers that our customers interface with, we believe it's our responsibility to try to make an impact there. So we've actually made that public at coupa.com/payments.

So that's just an example of really the power of having over 1,300 customers transacting with millions of suppliers around the world, managing their business spending and our opportunity to get into that environment and drive more and more value, whether it's free in this case to support a cause or whether it's needed for us to continue to grow our business via an alternate strategy if that presents itself.

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Todd R. Ford, Coupa Software Incorporated - CFO [13]

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And Alex on the dollar-based expansion and renewal rates, dollar-based expansion has continued to go up as people are adopting more and more of the platform. With respect to payments and the impact, we do believe, over time, when you look at what take rate there's been of our current product and the ability to sell into the installed base, as we noted before, that we think over time, we can get that closer to 120%. In Q4, I will say it was meaningfully above the historical range. But just given the strength of Q4, I'm not, at this point, ready to call a new range, but the trend is definitely up.

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Operator [14]

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The next question comes from the line of Peter Levine.

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Peter Marc Levine, Evercore ISI Institutional Equities, Research Division - Analyst [15]

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Great. Congrats on the quarter. So just one on the partner channel. I mean, obviously, they play a big role in the success that you've seen upmarket. So any difference in the conversation or conversations you're having with your customers versus kind of what you're hearing from your partner channel. And then just any impact, I guess, for Q1 from partners or anything that they're seeing over the past couple of days would be great.

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Robert Bernshteyn, Coupa Software Incorporated - Chairman of the Board & CEO [16]

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Well, I can't really comment on anything meaningful from the last couple of days. But broadly speaking, our customers continue to see us as the standard in the space. They're building very meaningful services revenue businesses around Coupa. We see more and more deals where we're being recommended as a preferred provider by multiple systems integrators and even some of the management consulting firms. That continues to be very, very healthy for us. And it's encouraging given how many referenceable customers we now have in virtually every industry and the renewal rate that we're able to deliver. So very, very encouraging, continued growth in our partnership community and the impact of that growth on the future.

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Operator [17]

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Your next question comes from the line of Brad Sills.

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Bradley Hartwell Sills, BofA Merrill Lynch, Research Division - VP [18]

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Just wanted to ask on Coupa Pay. It sounds like you're seeing some good early success here with the [ASP] uplift that you're describing. Is there any color you could provide on just cases of transaction types that you're seeing going through Coupa at this point or even verticals?

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Robert Bernshteyn, Coupa Software Incorporated - Chairman of the Board & CEO [19]

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Yes, sure. No, thank you for the question. We're really seeing 3 types of transaction types, and they really map pretty well to our ordering of launch of products. So the first is virtual credit card usage. We came out with that first. We're seeing good uplift in that area. It's just a no-brainer type of approach to get rid of physical cards and maintain control and minimize the need back-office reconciliation, just an obvious no-brainer that leverages our core competencies and our customers are adopting that swiftly. The second area is in dynamic discounting effectively. So the collaboration between a buyer and supplier around when payment is made and if made earlier, perhaps made at a lower amount such that the supplier can have the cash flow needs they need. And so we're seeing good uplift there.

And then most recently, with Invoice Payments, and I shared just one example here with Redfin, but leveraging Coupa for the entire process of procure to pay. The request, the order, the receipt, the invoice and then ultimately the payment done in batch for invoice payments across virtually any rail. So all 3 are seeing good adoption and their adoption waves are coming effectively sequenced the same way in which we launched the product.

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Operator [20]

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The next question comes from the line of Raimo Lenschow.

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Raimo Lenschow, Barclays Bank PLC, Research Division - MD & Analyst [21]

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Rob, can you talk a little bit -- everyone is obviously focusing on Pay, but you kind of extended the product portfolio quite a bit into contract life cycle management, et cetera, and that's always obviously driving the strength in the -- can you talk a little bit about like how these expansion of the portfolio have been integrated and what you see in terms of cross-selling, upselling there?

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Robert Bernshteyn, Coupa Software Incorporated - Chairman of the Board & CEO [22]

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Yes, absolutely. Let me take that from 2 perspectives, both the business side as well as the technology side, which I think what you're asking, Raimo. On the technology side, we are well underway with technical integration, the user interface is common, the business logic layer has been streamlined, the hosting environments are common, the interfaces between the power user application that is CLMA, what we call contract life cycle management advanced, and our transactional engine has been enabled. And our sales team has been empowered with integrated demos, integrated production instances that showcase how the completion of a contract leads to transactional purchasing activity. And that is playing out as well in our business. We are seeing more and more deals where the customer is understanding and locking arms with us around the vision of Business Spend Management, purchasing more modules upfront and setting in place a deployment path that hits the areas that are most opportune for them first and then deploys outward from there. So very, very healthy despite any challenges that anyone would anticipate in taking on M&A and we hope to continue that path.

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Todd R. Ford, Coupa Software Incorporated - CFO [23]

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And Raimo, the other thing I would say is when you look at it holistically, the other element of that is our average deal sizes continue to go up more meaningfully as more and more people are adopting the platform, as our competitive leadership position extends, we saw some of our largest transactions in Q4 as well. So it's all coming together nicely.

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Operator [24]

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The next question comes from the line of Terry Tillman.

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Terrell Frederick Tillman, SunTrust Robinson Humphrey, Inc., Research Division - Research Analyst [25]

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Tremendous ending to the year, so nice job on that. Maybe the question for you, Rob, is just to me, as I look back over all the years we've been covering the story is this concept of Community Intelligence being kind of a secret sauce to all this as that transaction volume builds. Could you help us and investors just understand Community Intelligence going forward? And you talked about like the prescriptive nature of it, people looking at the prescription, is it going to be something that just over time is part of that secret sauce and creates stickiness around the rest of all the workflow and software modules? And/or do you see it actually becoming a revenue engine on its own?

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Robert Bernshteyn, Coupa Software Incorporated - Chairman of the Board & CEO [26]

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Sure, Terry. Thank you for the question. So absolutely it's already beginning impact -- to impact our revenue as well because people understand the power of it. Our customers understand the power of it, and our community is galvanizing around it. If you're a customer, why would you go to any other information technology provider when we're able to tell you what are the best practices of doing any business process related to spending in real time and prescribe for you, right there on the screen, ways that you can improve. Why would you go to any other supplier when we can showcase for you areas where you have supplier risk and allow you to seamlessly hot swap from one supplier to another to avoid it, particularly in these turbulent times. Why would you think about working with anybody else when you can work with us and understand your commodity areas, understand all your supply hotspots, areas where you need to improve and areas that you can optimize and save and remove risk.

So with every area of our enterprise application, Community Intelligence is being showcased through prescriptions that appear right there for users to improve the way that they do their business spending. It's not only a huge moat on our business, but it creates a value proposition that is very, very difficult to replicate. We've been designed to build it this way from the start. We've contracted with our customers to do it in this way, and we're driving a lot of value for them already. So we will continue to see this both from a defensive moat perspective as well as a meaningful continued growth and value perspective that will play out in our revenue for the quarters and years to come.

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Operator [27]

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The next question comes from the line of Siti Panigrahi.

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Sitikantha Panigrahi, Mizuho Securities USA LLC, Research Division - MD [28]

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Rob, I mean, this is an unprecedented time. I mean, every day, every hour, situation changes. I'm wondering what -- how your go-to-market strategy will change in this environment. You talked about business as usual. And also, some of the customer also except critical employees, they are working from home. How does it impact your deal closing or even implementation in this environment?

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Robert Bernshteyn, Coupa Software Incorporated - Chairman of the Board & CEO [29]

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Well, let me first say very clearly, sales is very important, but #1 is our employees' safety. That's our #1 priority. Let me be clear on that. As far back as March 9, we encouraged everybody to work from home. Last Thursday, March 12, we made it mandatory for everybody to work from home. But I'll tell you, we're, first of all, 100% cloud. The only physical things we need are windows into the Internet, whether they are on phones or PCs or other access points, we are a very tech-savvy company. And I've been on many, many Zoom Meetings over the last 7 to 8 days, just 2 today, some with individuals in the sales team, thinking about how to manage a sales account; some with our Safety Committee, talking about how to manage some of the decisions that we're making there; some with members of our -- of the management team to think through other initiatives.

So this is not the way it was maybe 5, 6, 7, 8 years ago where it's very hard to manage through this type of process. We think we're very, very well equipped, we're very agile and we're committed to the cause. So whether it's raining outside or sleeting, there's no rain delay here. We're going to battle each and every day to build this business.

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Operator [30]

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The next question comes from the line of Ryan MacDonald.

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Ryan Michael MacDonald, Needham & Company, LLC, Research Division - Senior Analyst [31]

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Rob, can you talk about sort of the mix you're seeing between enterprise and the mid-market and particularly as you've been refocusing again in terms of packaging and the go-to-market strategy for the mid-market? And as we move into fiscal '21 here, do you expect any shifts in the mix, mid-market versus enterprise, given that mid-market tends to be a little bit more low touch?

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Robert Bernshteyn, Coupa Software Incorporated - Chairman of the Board & CEO [32]

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Sure. No, thank you very much for that question. There are 2 very encouraging patterns that we've seen historically. Taking the enterprise first, we continue to see larger deals, and more importantly, from a qualitative perspective, we're seeing greater vision lock with prospects around the comprehensive Business Spend Management footprint and the fact that we have the vast majority of that footprint already functionally well integrated and aligned with their strategy for both rollout and many years to come. That's a really, really promising part of the enterprise value proposition that we're seeing unfold. As well in the mid-market, about 4 -- no, I would say now about 4 to 6 quarters ago, I believe, we had started seeing this really nice mapping of cost of customer acquisition and the speed of that acquisition as well as the lifetime value of those customers with a really measured and nice renewal rate where we thought that we could really begin to press into that business and scale it, both cost effectively but also in a way that would be mindful of our long-term growth aspirations. That is happening.

And the number of logos we're seeing in the market -- in the mid-market continues to increase and the quality of those logos continues to increase, and the stickiness of those deployments continues to be really, really strong. So we feel really good about both the portfolio effect of having those businesses as well as the potential of both of those businesses in coming quarters and years.

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Operator [33]

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The next question comes from the line of Bob Napoli.

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Robert Paul Napoli, William Blair & Company L.L.C., Research Division - Partner and Co-Group Head of Financial Services & Technology [34]

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So Bob Napoli from William Blair. Question on just supply chains and what you're seeing day-to-day in supply chains and where, if any, that you are seeing concerns in U.S. supply chains. And if I could, on -- just on business mix, a few years ago, procurement was 80% of your business. Today, I think it's only about 1/3. What do you think that mix will look like 5 years from now with procurement and invoice, Pay, et cetera?

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Robert Bernshteyn, Coupa Software Incorporated - Chairman of the Board & CEO [35]

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Sure. So let me take the second question first. So procurement actually now represents 25% of the business, the recurring business in the last quarter. So as we continue, we're seeing it -- this fan out more and more widely as more and more modules and capabilities are offered to our customers. I can't necessarily predict to you what that number will be a few years out. But I would absolutely anticipate with customers buying the broader suite that the numbers of procurement and every incremental module as a percentage will decrease, but the overall pie will obviously get larger and larger and larger.

From a supply chain perspective, they are very early data, and it's probably not material enough to get into on this call. But -- helped a number of our customers most recently source and procure safety equipment, protective equipment, sanitation equipment, face masks and other needs very, very quickly, so they could address their obvious concerns. So our platform allows for that, and our community can now come together with Source Together activities to get these things sourced and at their doorstep very, very quickly.

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Operator [36]

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The next question comes from the line of Daniel Jester.

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Daniel William Jester, Citigroup Inc, Research Division - VP [37]

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So it sounds like from the sales perspective, you've done a lot on the virtualization to keep the business going. I'm just wondering, it might be a little bit early, but given your success in managing this disruption, does that change you view sort of the opportunity sort of for business travel management? Is this as good an opportunity today as it was maybe 6 months ago? And just is there anything else you can do to sort of help your customers from that perspective through this time?

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Robert Bernshteyn, Coupa Software Incorporated - Chairman of the Board & CEO [38]

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Well, I'm not sure I fully understand the question. Are you referring to the Yapta acquisition and travel? Or are you referring more broadly to Business Spend Management?

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Daniel William Jester, Citigroup Inc, Research Division - VP [39]

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I think for travel specifically, given that you've done a pretty good job yourselves so far managing through this, if travel restrictions become more substantial or companies notice that they can get through this through more virtualization and travel less, do you see it as good of an opportunity here in the future?

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Robert Bernshteyn, Coupa Software Incorporated - Chairman of the Board & CEO [40]

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Yes, absolutely. I'm not sure the opportunity changes that much for the longer term. I mean, as you know, our story here at Coupa has been playing the long game for, as I mentioned, well over a decade, and that's what we're playing. If they're going to be -- if there's going to be less travel in a given quarter or if there's going to be a lot more in a given quarter, we'll be there to help our customers manage that, have agility in changing that, recognize savings and replanning their travel as need be. But it's the longer opportunity that we're focused on, regardless of travel gyrations on a given quarter or even given the current context.

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Operator [41]

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The next question comes from the line of Koji Ikeda.

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Koji Ikeda, Oppenheimer & Co. Inc., Research Division - Director & Senior Analyst [42]

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A question for you, Rob, sorry to date you here, but you joined the company over a decade ago in 2009 during the thick of the Great Recession. I'm curious to hear your thoughts on how Coupa fared back in those days. I mean I totally gather the business was much smaller, selling to more of the mid-market versus enterprise that we see today. But spend management, really cost savings as an initiative, must have been top of mind of all organizations back then. So I guess what I'm getting at is, is from a high level, any thoughts there would be helpful to better understand the end-market mindset for tools like Coupa in volatile times that we're seeing right now.

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Robert Bernshteyn, Coupa Software Incorporated - Chairman of the Board & CEO [43]

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Sure. No, thank you for the question. I would say that the priority of business spend agility and spend control tends to get elevated on the list of digital transformation initiatives, even though they weren't called that back in 2009, but IT initiatives, let's say, in times like these. Having said that, of course, for every technology provider, there is some wind in the face of technology providers in addressing those with customers. But we're in a very different position than we were 10 years ago. We're the undisputed industry leader in this area, we have a proven set of reference customers all over the world across every major industry. And we believe that as the priority of some of the things we're focused on is raised on the list of initiatives, we should be able to gain ground from that, especially with the massive moat we have in Community Intelligence and the spirit and culture that we've built here over the last decade plus.

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Operator [44]

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The next question comes from the line of Mark Murphy.

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Mark Ronald Murphy, JP Morgan Chase & Co, Research Division - MD [45]

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Rob, the spend categories that you mentioned relating to coronavirus, very helpful and appreciate it. The ones that are increasing sound like very small categories. I think you mentioned sanitizing equipment, rubber gloves. The ones that are decreasing sound like enormous categories where you -- I think you called out business travel and durable goods. I'm just trying to understand what was the inference there? Or how is that netting out in terms of the growth of your spend under management?

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Robert Bernshteyn, Coupa Software Incorporated - Chairman of the Board & CEO [46]

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Well, I'm not sure yet how it's going to net out on growth in spend under management because the data I shared there is really just 4 weeks of data, right, the February data around the protective -- personal protective equipment, sanitizing equipment and things of that nature. But you are right, it is concerning. If you look at something -- I'll give you another statistic. If you look at something like property building and engineering services, these are the types of things that are more long-term type investments. And if you look at this February, year-over-year, we saw a 62.1% decrease in spend in that area. So it is concerning. And when we get to next quarter, we'll have another quarter of spend data, and we'll have a better sense for it, and we'll report it on spendindex.com, but I think you raised a very important point, Mark.

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Operator [47]

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The next question comes from the line Steve Koenig.

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Steven Richard Koenig, Wedbush Securities Inc., Research Division - MD [48]

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Good timing, just kind of a follow-up from the prior question. So I get asked by investors sometimes about how is Coupa sensitive or not sensitive to business spend trends. And so you have your index and you've been indicating what you're seeing there recently. But can you just -- I know you don't have transactional fees for suppliers like Ariba does, but what is your sensitivity to business spend trends? And how would you characterize any linkage there or lack thereof?

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Robert Bernshteyn, Coupa Software Incorporated - Chairman of the Board & CEO [49]

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Sure. Well, I think part of that actually ties into pricing strategy. Our theory for the entire time has been to sit on -- try to sit on the exact same side of the table with our customers. We don't charge a transactional fee for the amount of spend that they're running through the system. Sometimes, we've been criticized for that. But at the same rate, the value proposition is much more than a percentage of spend. It's the ability to control that spend. It's the ability to route that spend to preferential suppliers. It's the ability to wrap that spend to nonrisky suppliers. Is the ability to stop that spend from happening on a mobile phone by clicking reject with the click of a button. So we think that a cloud-based platform like ours that is offered in a Value as a Service subscription approach for customers is a very, very thoughtful way for them to get this visibility, control and agility that many of them didn't even know they needed until they're faced with times where they realize that they don't have it. And because of that, it's our belief that given uncertain times, these areas become a greater priority.

And as per the prior question, we've experienced that a decade ago, but we experienced it in a very, very different position of size, growth and proven leadership. And we think that in this environment, we're better positioned to deliver for our customers in the environment.

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Operator [50]

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The next question comes from the line of Brent Bracelin.

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Brent Alan Bracelin, Piper Sandler & Co., Research Division - MD & Senior Research Analyst [51]

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One for Rob and one for Todd, if I could. Rob, as you just think about the changing environment, completely appreciate the long gating approach you have, completely appreciate the business as usual approach. But if I look at what part of the business could be at risk, the one thing that stands out to me is implementation time. This is a BSM software platform that can be implemented over a 6- to 8-month time frame. Is that the right way to quantify the risk in the short run is potentially the risk of longer implementations? Is that the right way to frame it? And then one quick follow-up for Todd.

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Robert Bernshteyn, Coupa Software Incorporated - Chairman of the Board & CEO [52]

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That's a very thoughtful question and obviously something that we're thinking about as we are with all areas of our business. I would say that the ability to do these implementations virtually is absolutely there. In fact, many of the implementations that we do across a host of our customers are done completely virtually. Having said that, people like to see people. And if there are situations where implementations are slowed down because of the customer's desire to do that, we'll manage our way through it, but I think we will be first to showcase our #1 core value, which is ensuring customer success. And if it can be done over the web and it can be done over e-mail and if it can be done over phone calls, we'll be able to do it. As I mentioned earlier, our team is very tech savvy, and we have a lot of experience in doing it that way. So while that might be a bit of a headwind, we'll work our way through that to the best of our ability.

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Brent Alan Bracelin, Piper Sandler & Co., Research Division - MD & Senior Research Analyst [53]

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Clearly makes sense. And then Todd, here, as we think about the guide, you're guiding to a 25%, 26% growth, which is what we essentially had modeled for the business prior to kind of the global outbreak of the virus here. You did talk about haircutting the Yapta Travel Saver kind of business. Did you haircut any other parts of the business on the BSM or Coupa Pay side because of the coronavirus or, at this point, the close rate assumptions that you're using are all the same that you used last quarter?

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Todd R. Ford, Coupa Software Incorporated - CFO [54]

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First, let me say, Brent, all of our guidance has been developed using the same methodologies we've used in the past and looking at all the key drivers that drive our model. And as you would expect, we're obviously monitoring developments with the coronavirus very closely as the situation continues to unfold. And if you look over the past several years from a guidance perspective, we've tended to put a mid-20s and then update that as we've continued to execute. And I guess one of the other things, too, that's maybe even more important to highlight is we have annual plans and we modulate based upon what we're seeing. And recently we've had our high -- literally, our largest new hire sales boot camp, and then we modulate on a quarterly basis. And if you look at the deferred revenue and RPO, we have very high visibility into this initial guide and the free cash flows and ability to generate free cash flow. So there's -- the ability to sustain Rule of 40% is very strong on a go-forward basis.

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Operator [55]

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The next question comes from the line of Brian Peterson.

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Brian Christopher Peterson, Raymond James & Associates, Inc., Research Division - Senior Research Associate [56]

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I'm glad to hear the team is safe and back in Cali. So Todd, just wanted to hit on the OpEx for fiscal year '21. I know there's some acquired company expenses in that, but anything you could share around investment intensity, maybe where you guys are spending there? And a follow-up, was Yapta a big factor in the net customer adds in the fourth quarter?

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Todd R. Ford, Coupa Software Incorporated - CFO [57]

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Yes. Now with respect to the customer adds, very, very minimal impact there. With respect to the operating expense, as I mentioned, we modulate that on a quarterly basis. But if you look at the investments for the upcoming year, clearly continuing to invest in our support team and professional services given the number of new customers and significant implementations that are currently going on. And we're going to continue to invest in R&D. One of our things we have done is the -- we have now 2 technology centers in India, one in Pune and one in Hyderabad. So we're still adding a lot of people, but it may not show up in the expense as much. And then clearly, of all the categories, still investing heavily in sales and marketing and G&A is starting to show some scale, but we've got more room to do there, and we'll modulate that as the year progresses as we do every year.

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Operator [58]

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The next question comes from the line of Joseph Foresi.

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Joseph Dean Foresi, Cantor Fitzgerald & Co., Research Division - Analyst [59]

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Another question for Todd. If the numbers start to show up a little bit lighter because of all the friction in the economy, what area would you be most likely to address from a spend perspective for maybe a pullback? And how do you kind of look at the numbers or think about the numbers from that perspective? I guess I'm basically asking what's the financial downside scenario that you might be implementing.

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Todd R. Ford, Coupa Software Incorporated - CFO [60]

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No, at the highest level, I mean, we're always looking at all of the key business processes, whether it's lead to cash, whether it's new product introductions, whether it's post-deal support and then some of the surrounding infrastructure around that. And literally we look at each and one of those on a quarterly basis, where to invest more, maybe pull back a little bit. But at this time, it's way premature to, one, make that call; or two, indicate what it might be because it's not something we've looked at yet.

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Robert Bernshteyn, Coupa Software Incorporated - Chairman of the Board & CEO [61]

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But in spirit, I would add that if we feel at any point that we can't make a new hire productive, we have the ability to control hires at the individual level. All hires still roll up to me, and I prove them individually. So we have controls in place for that. Equally, we have controls around all of our spending through our own MyCoupa implementation. So we feel like we have our arms squarely on the steering wheel and navigating through whatever lies in front of us.

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Operator [62]

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Our final question comes from the line of Patrick Walravens.

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Patrick D. Walravens, JMP Securities LLC, Research Division - MD, Director of Technology Research and Senior Research Analyst [63]

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So Rob, looking back in '08, I think you were still at SuccessFactors, and I pulled out one of my old notes. So the billings growth rate for SuccessFactors April of '08 was over 100%, and then it went 68%, 52%, 2%, negative 6% in Q1 of '09. I guess my question is, when do you know that things are really starting to go downhill? And then when do you know when they're getting better?

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Robert Bernshteyn, Coupa Software Incorporated - Chairman of the Board & CEO [64]

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That's an extremely, extremely difficult question, Pat, that can't be answered very, very briefly. I think it's one of the things that history typically states are some of the best CEOs or some of the more typical ones, so we take that very, very seriously and try very, very hard to see around corners as much as humanly possible. I would also tell you that the way we've built this business over the last 10 years has been very, very mindful to not run it so hot that if something presents itself in front of us, it will burn us up. We've been very, very mindful in the talent that -- in the culture, in the systems, in the customer base and the value we're delivering for them. So we think we're sitting in a good position from which to try to see around corners. And you have our commitment as a management team to do exactly that no matter what presents itself in front of us in coming months and in coming quarters.

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Operator [65]

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I will now turn it back over for closing remarks.

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Steven Horwitz, Coupa Software Incorporated - VP of IR [66]

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Thank you. Thank you for joining us here for the fourth quarter earnings call. As we said, the replay is available on the website. You can get the information for a telephonic replay in the press release, and we look forward to speaking to you next quarter. Thank you.

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Operator [67]

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This concludes the conference for today. We thank you all for joining us. You may now disconnect.