Last year, San Mateo-based Coupa (Nasdaq: COUP), a provider of cloud-based spend management firm, listed on the stock exchange. The market was pleased with the listing and it sent the stock soaring. But things haven’t looked so rosy since as investors begin to lose patience with its continued losses.

Photo Credit: Caryl Lyons/Flickr.com 

Coupa’s Financials

Last week, Coupa announced its fourth quarter results. Revenues improved 44% to $38 million. It ended the quarter with a net loss of $6.6 million or $0.13 per share, significantly better than previous year’s net loss of $11.5 million or $2.18 per share. But the market wasn’t impressed.

By segment, revenues from subscriptions services grew 45% to $33.8 million and professional services revenues grew 36% to $4.18 million.

Revenues for the year grew 60% to $133.8 million and losses reduced from $46.2 million or $9.81 per share a year ago to $37.6 million or $1.88 per share.

For the current quarter, Coupa forecast revenues of at least $38 million. It forecast revenues between $167-$170 million for the full year. The projections were ahead of the Street’s forecast. Coupa expects a loss of $0.12-$0.17 per share for the quarter and a loss of $0.53-$0.58 per share for the year. The Street had forecast a loss of $0.25 for the quarter and a loss of $0.81 for the year.

Coupa’s Market Expansion

Spend management solutions is a segment of the worldwide procurement software market which is estimated to grow 2% annually to $5.4 billion in 2020. SAP, with its Ariba offering, was the leader in the segment with 22% market share  in 2015. Coupa came a distant 7th with nearly 1% share. Clearly, Coupa has a long way ahead.

During the quarter, Coupa completed the acquisition of UK-based Spend360 International for an undisclosed amount. Spend360 is another renowned player in the spend analytics space. It set up show in 2011 and since then has processed spend data worth more than $1 trillion. It is known for its machine learning-based solution to classify and normalize data in a format that can be used by finance and procurement departments of organizations. By removing human dependency, Spend360’s offering helps reduce costs and improves operational efficiency. Besides its impressive technology, Coupa plans to leverage the acquisition for market expansion. By integrating Spend360’s analytics solution into its platform, it will be able to offer an enhanced spend management platform.

Besides acquisitions, Coupa is also looking at partnerships. Last quarter, it entered into an agreement with the Netherlands-based Solmate to make inroads into the Benelux region. The Solmate partnership will help it offer its value-as-a-service offering to mid-market customers in the region.

Prior to listing, Coupa had raised $169 million from investors including T. Rowe Price, Meritech Capital Ventures, Crosslink Capital, Mohr Davidow Ventures, El Dorado Ventures, Battery Ventures, Iconiq Capital, Northgate Capital, PremjiInvest, and BlueRun Ventures. Its last funding round was held in June 2015 when it raised $80 million in a round led by T.Rowe Price that valued it at over $1 billion.

Its stock is trading at $23.7 with a market capitalization of $1.19 billion. Last year, it had listed on the Nasdaq at $18 a share and had soon peaked to $41.61 during its first day of trading. Since then, the stock has tumbled. Earlier this week, it was trading at its lowest level of $23.20. It is still barely keeping its Unicorn valuation alive as the market struggles to deal with its losses.

My read is that the current market dynamics are more in favor of profits, less on growth at all costs. Too many companies have delivered unprofitable growth for too long, and investors don’t necessarily like that dynamic anymore.