Coupa Software
Annual Report 2019

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10-K (Mark One)☒☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended January 31, 2019OR☐☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to Commission File Number 001-37901 COUPA SOFTWARE INCORPORATED(Exact name of Registrant as specified in its charter) Delaware20-4429448(State or other jurisdiction ofincorporation or organization)(I.R.S. EmployerIdentification No.) 1855 S. Grant StreetSan Mateo, CA94402(Address of principal executive offices)(Zip Code) Registrant’s telephone number, including area code: (650) 931-3200 Securities registered pursuant to Section 12(b) of the Act: Title of each class-Name of each exchange on which registered Common Stock, par value $0.0001 per share-The Nasdaq Stock Market LLC (Nasdaq Global Select Market) Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☒ NO ☐Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES ☐ NO ☒Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 ofthis chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). YES ☒ NO ☐Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to thebest of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. Seethe definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 13(a) of the Ex-change Act. ☐Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ☐ NO ☒Based on the closing price of the Registrant’s Common Stock on the last business day of the Registrant’s most recently completed second fiscal quarter, which was July 31, 2018, theaggregate market value of its shares (based on a closing price of $61.31 per share) held by non-affiliates was approximately $3.5 billion. Shares of common stock held by eachexecutive officer, director, and their affiliated holders have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily aconclusive determination for other purposes.The number of shares of Registrant’s common stock outstanding as of March 22, 2019 was 61,043,546.DOCUMENTS INCORPORATED BY REFERENCEPortions of the Registrant’s Proxy Statement relating to the 2019 Annual Meeting of Stockholders, scheduled to be filed with the Securities and Exchange Commission within 120 daysafter the end of the Registrant’s fiscal year ended January 31, 2019, are incorporated by reference into Part III of this Annual Report on Form 10-K. COUPA SOFTWARE INCORPORATEDForm 10-K for the Fiscal Year Ended January 31, 2019Table of Contents PagePART I Item 1.Business1Item 1A.Risk Factors12Item 1B.Unresolved Staff Comments38Item 2.Properties38Item 3.Legal Proceedings38Item 4.Mine Safety Disclosures38 PART II Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities39Item 6.Selected Financial Data41Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations44Item 7A.Quantitative and Qualitative Disclosures About Market Risk61Item 8.Financial Statements and Supplementary Data61Item 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure61Item 9A.Controls and Procedures61Item 9B.Other Information62 PART III Item 10.Directors, Executive Officers and Corporate Governance63Item 11.Executive Compensation63Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters63Item 13.Certain Relationships and Related Transactions, and Director Independence63Item 14.Principal Accountant Fees and Services63 PART IV Item 15.Exhibits, Financial Statement Schedules64Item 16.Form 10-K Summary67 iNOTE ABOUT FORWARD-LOOKING STATEMENTSThis Annual Report on Form 10-K contains forward-looking statements. All statements other than statements of historical facts contained in thisreport, including statements regarding our future results of operations and financial position, customer lifetime value, strategy and plans, market size andopportunity, competitive position, industry environment, potential growth opportunities product capabilities, expectations for future operations and ourconvertible notes, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “design,” “intend,” “expect,”“could,” “plan,” “potential,” “predict,” “seek,” “should,” “would” or the negative version of these words and similar expressions are intended to identifyforward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events and trends thatwe believe may affect our financial condition, results of operations, strategy, short- and long-term business operations and objectives, and financial needs.The forward-looking statements are contained principally in “Management’s Discussion and Analysis of Financial Condition and Result of Operations” and“Risk Factors.”These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors” andelsewhere in this Annual Report on Form 10-K. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from timeto time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor,or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of theserisks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Annual Report on Form 10-K may not occur and actualresults could differ materially and adversely from those anticipated or implied in the forward-looking statements.You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in theforward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected inthe forward-looking statements will be achieved or occur. Moreover, except as required by law, neither we nor any other person assumes responsibility for theaccuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reasonafter the date of this Annual Report on Form 10-K to conform these statements to actual results or to changes in our expectations. iiPART IItem 1. Business.OverviewWe are a leading provider of business spend management (“BSM”) solutions. We offer a comprehensive, cloud-based BSM platform that hasconnected hundreds of organizations with more than four million suppliers globally. Our platform provides greater visibility into and control over howcompanies spend money. Using our platform, businesses are able to achieve real, measurable value and savings that drive their profitability.Our cloud-based BSM platform has been designed for the modern global workforce that is mobile and expects real-time results, flexibility and agilityfrom software solutions. We empower employees to acquire the goods and services they need to do their jobs by applying a distinctive user-centric approachthat provides a consumer Internet-like experience, drives widespread adoption of our platform and, therefore, significantly increases an organization’s spendunder management. We refer to the process companies use to purchase goods and services as business spend management and to the money that they managewith this process as spend under management. Increased user adoption and spend under management drive better visibility and control of a company’s spend,resulting in greater savings and increased compliance.Economic conditions, intense competition and the global regulatory environment are forcing businesses to find new ways to drive operationalefficiencies, track processes, reduce costs, fund business growth and innovation, and enhance profitability and cash flow. Therefore, managing business spendhas increasingly become a major strategic imperative to help businesses achieve cost savings. Indirect spend, which refers to goods and services that supporta company’s operations as opposed to direct spend that flows into the products a company manufactures, is particularly difficult to manage due to inefficientemployee spending behavior and disparate systems that obstruct spend visibility.We offer a comprehensive cloud-based BSM platform that delivers a broad range of capabilities that would typically require the purchase and use ofmultiple disparate point applications. The core of our platform consists of procurement, invoicing, expense management and payments modules that form thetransactional engine for managing a company’s business spend. In addition, our platform offers supporting modules to help companies further manage theirspend, including strategic sourcing, spend analysis, contract management, supplier management, and contingent workforce management. Our CoupaCommunity Intelligence solutions provide benchmarking and insights on our BSM platform. Additionally, we provide a purchasing program, CoupaAdvantage, that leverages the collective buying power of Coupa customers to provide advantageous, pre-negotiated discounts from varioussuppliers. Moreover, through our Coupa Open Business Network, suppliers of all sizes can easily interact with buyers electronically, thus significantlyreducing paper, improving operating efficiencies and reducing costs.Our company culture and our interactions with customers are driven by three guiding principles (which we refer to as our core values): (1) ensuringcustomer success, (2) focusing on results and (3) striving for excellence. In particular, this strong focus on customer success, which includes deliveringquantifiable business value to our customers by helping them maximize their spend under management, serves as the foundation for the successful executionof our strategy, and, as a result, is critical to our growth. With a rapid time-to-deployment, typically ranging from a few weeks to several months, and an easy-to-use interface that shields users from unnecessary complexity, our customers can achieve widespread user adoption quickly and generate value within ashort timeframe, thus benefitting from a rapid return on investment.We benefit from powerful network effects. As more businesses subscribe to our BSM platform, the collective spend under management on ourplatform grows. Greater aggregate spend under management on our platform attracts more suppliers, which in turn attracts more businesses that want to takeadvantage of the goods and services available through our platform. In addition, as more businesses and employees use our platform, the amount of spendunder management continues to increase. This leads to increasingly more powerful prescriptive spend management and risk management recommendationsfrom our Coupa Community Intelligence solutions, helping to create more value for customers and improving our ability to attract more businesses. Theresulting increase in sales1enables us to further invest in our platform and to improve our functionality and user interface to continue to attract more businesses and suppliers to ourplatform, which enhances the network effects that benefit all parties.We have developed a rich partner ecosystem of systems integrators, implementation partners, resellers and technology partners. We work closely withseveral global systems integrators, including Accenture, Deloitte, KPMG and others that help us scale our business, extend our global reach and driveincreased market penetration. We expect the number of our partner-led implementations and sales referrals from our partners to continue to increase over time.We have achieved rapid growth in customer adoption, cumulative spend under management and transactions conducted through our platform whichis currently subscribed to by nearly 1,000 customers. Our cumulative spend under management is highlighted below: As of January 31, 2019, 2018, and 2017, our cumulative spend under management was $1,079 billion, $680 billion and $365 billion, respectively.Cumulative spend under management does not directly correlate to our revenue or results of operations because we do not generally charge our customersbased on actual usage of our BSM platform. However, we believe that cumulative spend under management illustrates the adoption, scale and value of ourplatform, which we believe enhances our ability to maintain existing customers and attract new customers. For our fiscal years ended January 31, 2019, 2018, and 2017, our revenues were $260.4 million, $186.8 million and $133.8 million, respectively, andour net losses were $55.5 million, $43.8 million and $37.6 million, respectively, as we focused on growing our business.2The Coupa BSM PlatformWe offer a comprehensive cloud-based BSM platform that delivers a broad range of capabilities that would otherwise require the purchase and use ofmultiple disparate point applications. The core of our platform consists of procurement, invoicing, expense management and payments modules that form ourtransactional engine and capture a company’s business spend. In addition, our platform offers supporting modules to help companies further manage theirspend, including strategic sourcing, spend analysis, contract management, supplier management, and contingent workforce management.Our comprehensive BSM platform provides businesses with real-time visibility and control of spending. The platform’s modern, user-centric interfaceenables businesses to drive adoption of the platform and capture, analyze and control this spend, achieve real measurable value and savings, and directlyimprove their profitability: •Drive Adoption. Our platform applies a distinctive user-centric approach that shields users from complexity and provides a mobile-enabledconsumer Internet-like experience, thus enabling widespread adoption of our platform by users across the entire organization, and across thecustomer’s supplier base, as well. •Capture. At the core of our platform is our transactional engine that is comprised of our procurement, invoicing, expense management andpayment management modules, which comprehensively help capture and manage spend within an organization. Given purchase orders,invoices, expense reports and payments flow through our platform and the data is stored centrally in a clean and organized fashion,businesses are able to observe their spending activities in real time. •Analyze. Our spending analytics capabilities provide intuitive spend analysis dashboards and reports that deliver real-time analyticalinsights that help businesses identify problems and make better spending decisions. Real-time analytical and prescriptive insights are criticalto helping identify savings opportunities and risks, isolating problem areas in the spending process, and providing recommendations totarget improvement efforts. •Control. We help our customers control and streamline their spending activity, realize efficiencies that result in real savings, and reducesupplier risk. Our platform has extensive functionality that enables managers to prevent excessive spend, reduce spend through efficienciesand cost savings associated with strategic sourcing and contract compliance, and identify and manage risky suppliers across numerous levelsof the supply base. •Value. Within a short timeframe, we help our customers realize measurable value by taking advantage of pre-negotiated supplier discounts,achieving contract compliance, improving process efficiencies and reducing redundant and wasteful spending, as well as enable strategicsourcing via reverse auctions in which suppliers bid down prices at which they are willing to sell their goods and services to businesses.3Our BSM Platform’s CapabilitiesOur comprehensive, cloud-based BSM platform includes the following capabilities: Coupa’s Transactional EngineThe core of our platform is our transactional engine, which is comprised of the following modules: •Procure: Our procurement module enables customers to strategically establish spend policies and approval rules to govern companyspending. The application provides a consumerized e-commerce shopping experience so that employees can easily and quickly find thegoods and services they need to do their jobs. For example, employees searching for goods can see inventory on-hand balances in the searchresults, which eliminates redundant spending. Our procurement module streamlines purchasing requisition and purchase order processes,allowing businesses to track and manage purchases in real time, thus reducing time and cost. Upon approval of an employee request,purchase orders are automatically sent to suppliers for fulfillment and invoicing. Benchmark data allows customers to spot processinefficiencies, while configuration ease enables businesses to effortlessly adjust business processes to meet continually changing businessrequirements. •Invoice: Our invoicing module enables customers to improve cash management through the effective management of supplier invoices viaembedded dashboards and work queues that prioritize invoices with early payment discount opportunities. Customers may quickly configureinvoice approval and matching rules so invoices can be routed without accounts payable team member effort and cost. Easy, no-cost meansfor suppliers to create electronic invoices that comply with government regulations allow businesses to eliminate paper and further reducetheir invoice processing costs, all while reducing invoice payment fraud risk. •Expense: Our expense management module enables customers to gain control of the expenses incurred by employees. Innovative mobilecapabilities such as GPS and geo-location make it easy for travelers to4 create expense reports on-the-go so businesses gain real-time expense visibility. Frugal meter capabilities automatically assess theappropriateness of employee charges based on the customer’s configured business processes. Seamless connectivity to credit card providersfeed charges into our expense management module for added visibility and reporting ease. •Pay: We recently introduced a new component of our Coupa transactional engine that we call Coupa Pay. This new component represents aset of solutions that will help customers consolidate and optimize their business-to-business payment processing. For example, with CoupaPay, customers can take advantage of early payment discounts and pay authorized suppliers with one-time-use credit cards, known as virtualcards. With payments management as a core capability within a unified BSM platform, payment transactions can be directly tied to backingdocumentation for better visibility and control of business spend.Supporting ModulesOur platform offers the following supporting modules that help companies further manage their spend:Strategic Sourcing. Our strategic sourcing module enables customers to find the best suppliers for the goods or services they need to run theirbusinesses. It also offers advanced capabilities for the sourcing of complex sourcing categories such as direct raw materials and logistics. Customers easilycreate sourcing events containing the specifics of their business needs and invite suppliers to participate. Suppliers are able to review and bid effortlessly andwithout any fees to participate. Collaboration capabilities enable employees to review bids and provide feedback that is automatically compiled and scored.For the sourcing of complex categories, Coupa applies advanced mathematical optimization techniques, allowing customers to analyze price and non-priceelements to find the combination of suppliers and goods and services that meet the constraints they specify.Contract Management. Our contracts module enables customers to operationalize contracts and make them easily available for purchasing byemployees across the organization. Contract compliance increases savings as employees make purchases using negotiated rates. Real-time contractenforcement and spend visibility is provided through embedded dashboards at both the contract and summary level. Full text search capabilities andautomatic alerts remind employees to review contracts prior to expiration or auto-renewal dates. Contingent Workforce. Our contingent workforce module enables customers to gain better visibility, control and optimization of services spend, aspart of their holistic business spend management program. Customers can easily initiate requests for temporary work or advanced SOW-based projects as wellas source and collect bids. Having better visibility to preferred suppliers helps customers optimize costs by selecting appropriate vendors with competitiverates. Onboarding and offboarding contingent workers is fast and secure, while tracking worker performance and ensuring compliance with company policiesis simplified for both customers and contingent workers.Supplier Management. Our supplier management module enables customers to collect supplier information required to manage and pay suppliersand provides data about potential risks associated with a given supplier. Customers can also this module to help ensure compliance and mitigate third-partyrisk by extensively evaluating their supplier base on critical risk domains, including information security, anti-bribery and anti-corruption and GDPRcompliance, while also staying informed on potential supplier risk by leveraging credit ratings and other searches of publicly available databases.Spend Analysis. Our spend analysis module provides managers a large set of built-in reports and dashboards that allow users to see spendingactivity, find bottlenecks in workflows, analyze granular data by commodity, supplier, location and cost center, and drill-down into the spend transactions.Customers can also leverage our artificial intelligence capabilities to automate complex business spend data classification. We have created more than onehundred out-of-the-box reports covering some of the most important business metrics, such as unified spend for purchase orders, invoices or expense reports,spend trends over time, spend by commodity, supplier and contract; however, users can also create new metrics, reports and dashboards with our intuitive userinterface, as well as include external data like corporate and travel expenses or integrate with third-party systems, to get a holistic view of their spendpatterns.5 Coupa Open Business NetworkOur Coupa Open Business Network instantly connects businesses and suppliers providing businesses with a platform that is accessible to suppliers ofall sizes—even those typically ignored by fee-based closed networks—to drive success. Suppliers have a variety of options to connect with businessesincluding: •Coupa Supplier Portal. This portal is a tool for suppliers to easily do business with our customers. The Supplier Portal lets suppliers managecontent and settings on a customer-by-customer basis, including managing company information, setting up purchase order transmissionpreferences, creating and managing online catalogs, managing procurement orders and invoices across multiple customers and gainingvisibility to the status of invoices. •Coupa Supplier Actionable Notifications. These notifications enable suppliers to receive HTML purchaser orders and convert thesepurchase orders into invoices right from the procurement order e-mail, which represents the easiest way to submit electronic invoices throughour platform. •Direct Connection via cXML and EDI. Our platform supports various communication formats such as cXML or EDI for suppliers that wantto automate their invoicing through a tighter integration with our platform. •Direct E-mail. Suppliers can choose to send PDF invoices simply through e-mail.By using our Coupa Open Business Network, companies can become compliant with government mandates, increase profitability and reduce costsby driving electronic transactions away from paper-based transactions. Our Coupa Open Business Network user interface is easy to navigate and requires littleto no training for suppliers to instantly manage transactions. Businesses are able to interact with thousands of suppliers already using our Coupa SupplierPortal, quickly onboard new suppliers, integrate directly or simply use our smart e-mail tools. Businesses can also use the Coupa Open Business Network tolayer on top of their existing technology, including third-party systems such as Oracle iProcurement, SAP SRM and others. Suppliers of all sizes benefit, asthey are able to join the networked economy without changing their technology or spending money on transaction fees.Coupa AdvantageOur Coupa Advantage program offers customers the opportunity to leverage pre-negotiated discounts from select suppliers in several businesscategories such as office supplies, branded promotional products, background checks, employee perquisites and more. The program leverages the collectivebuying power of Coupa customers to offer potential savings opportunities.Coupa Community Intelligence Our Community Intelligence capability, which extends across our BSM platform, provides information to Coupa customers by applying artificialintelligence-powered analysis to the structured, normalized data collected from the comprehensive set of business spend transactions that have occurred onthe Coupa platform. This innovative analysis provides Coupa customers with prescriptive recommendations to optimize their spend decisions and reducerisk. Participating customers are able to contribute to and benefit from Community Intelligence, with use cases spanning various areas of spend management,including Supplier Insights and Risk Aware which help companies evaluate and reduce the risk levels of suppliers, operational insights which helpsbusinesses measure their own performance on key operational metrics against other Coupa customers, and Spend Guard, which surfaces potential errors andfraud across business spend, including invoices and employee expense reports.Key Benefits to Businesses •Rapid time to value through fast deployment cycles and low cost of ownership of cloud-based model. •Opportunity to achieve significant and sustainable savings that can translate into improved profitability.6 •High employee adoption of our easy-to-use BSM platform, which enables better visibility into spend, allowing both procurement andsourcing professionals to better manage their time. •Strong supplier adoption as suppliers are motivated to join our network due to ease of enablement, flexibility and lack of supplier fees. •Access to extensive spending data in real time, which leads to superior decision-making that can result in significant cost savings. •Ability to stay agile and adapt to changes in operating and regulatory environments with our easily configurable platform. •Process efficiency improvements that allow businesses to free up valuable resources and staff who can be deployed effectively elsewhere inthe organization. •Enhanced compliance with governmental regulations through greater auditability, documentation and control of spending activity.Key Benefits to Employees •Intuitive and simple user experience that shields users from complexity and enables adoption of our platform with minimal training. •Efficiency improvements as employees are more rapidly able to procure the goods and services they need to fulfill their job responsibilities. •Mobile access from anywhere in the world. •Convenience to employees, as our platform gathers data on historical activity and leverages the insights to help populate requests andminimize data entry. •Faster reimbursement to employees due to more efficient expense management processes.Key Benefits to Suppliers •Participating in our Coupa Open Business Network. •Fast registration process and flexibility to interact with customers through the Coupa Supplier Portal, direct integration or simply by use ofdirect email. •Elimination of manual processes and efficiency improvements through electronic invoicing and streamlined procurement and paymentprocesses. •Real-time visibility into invoice status, often through direct push notifications without having to log in to a portal. •Seamless audit, documentation and archiving of electronic purchase orders and invoices that helps suppliers comply with changinggovernment regulations, as well as avoid risks. •Opportunity to display supplier information and catalog of products and services on the Coupa Open Business Network for existing andprospective customers.Our Competitive Strengths •Comprehensive Platform With Powerful Functionality. We offer a comprehensive BSM platform that is tightly integrated and delivers abroad range of capabilities to manage different types of spend that would otherwise require the purchase and use of multiple disparate pointapplications. By offering a platform with powerful functionality that integrates different modules, we deliver a comprehensive solution forcustomers to drive adoption, and capture, analyze and control spend across their entire company, thus significantly enhancing savingspotential.7 •Independence and Interoperability. We are agnostic as to the enterprise resource planning (ERP) system and other back-end systems usedby our customers and our open architecture enables interoperability with numerous software applications, back-end systems and other third-party offerings. Customers can use our application programming interfaces (APIs), flat files, commerce eXtensible Markup Language (cXML)and electronic data interchange (EDI) data formats or custom code to make seamless connections between our platform and their ERPplatform, supplier or other third-party system. •Easy and Intuitive User Interface that Enables Widespread Employee Adoption. Our focus on an intuitive and simple user experienceshields our users from complexity and results in superior employee adoption. •Powerful Network Effects. As more businesses subscribe to our platform, the collective spend under management on our platform grows.Greater aggregate spend under management on our platform attracts more suppliers, which in turn attracts more businesses that want to takeadvantage of the goods and services available through our platform, thereby creating powerful network effects. In addition, as morebusinesses and employees use our platform, the amount of spend under management continues to increase. By harnessing the collectiveinsights from our platform’s transactional spend data, Coupa Community Intelligence delivers prescriptive spend and risk managementinsights and performance benchmarking to customers. This leads to more value for customers and improves our ability to attract morebusinesses. The resulting increase in sales enables us to further invest in our platform and to improve our functionality and user interface tocontinue to attract more businesses and suppliers to our platform, which enhances the network effects that benefit all parties. •Fast Time-to-Value. We are built from the ground up as a SaaS application delivered via the cloud. As a result, our total cost of ownership islow, our deployment times are short and we can seamlessly deploy the latest updates and upgrades to all our customers via our cloud-basedplatform. •Rich Partner Ecosystem. We have developed strong strategic relationships with a number of leading partners including global systemsintegrators, implementation partners, resellers and technology partners. While implementation partners such as Accenture, Deloitte andKPMG help us scale our business by extending our global reach and driving increased market penetration, our various technology partnershelp extend and enhance the capabilities of our platform by facilitating integrations that can deliver a higher level of value to customers. •Results-Driven Culture. We have a relentless focus on real measurable customer success and work extensively with customers to achievesignificantly improved business value in the form of savings through the use of our platform. •Higher Supplier Adoption. We do not charge suppliers any upfront or ongoing fees to participate in our Coupa Open Business Network andoffer suppliers an easy and flexible way to interact with customers with minimal friction. As a result, suppliers are motivated to join ournetwork and adopt our platform, which represents a significant competitive advantage over legacy vendors that often struggle with supplieradoption. •Community Intelligence Enables Superior Insights. Our platform presents spend activity data that managers can easily analyze usingpowerful built-in reports and dashboards. Using our platform’s data, we are able to provide benchmarking analytics and evaluate supplierperformance, which can help decision makers at our customers identify areas of improvement and realize cost savings. As the amount ofspend through our platform grows, we acquire more data that enables us to provide unique insights to our customers, thus strengthening ourpowerful value proposition.Growth StrategyKey elements of our strategy include: •driving enterprise and mid-market customer expansion and global sales capability; •expanding global brand awareness, acquisition and advocacy for our solutions;8 •developing and expanding our partner ecosystem; •acquiring key assets to broaden our value proposition; •launching innovations to drive a greater share of an organization’s spending; and •cultivating a winning culture and community. Sales and MarketingWe sell our software applications through our direct sales organization and our partner program, Coupa Partner Connect. Our direct sales team isglobal and comprised of inside sales and field sales personnel who are organized by geography, account size and application type.We generate customer leads, accelerate sales opportunities and build brand awareness through our marketing programs, including such programs withour strategic relationships. For example, we have joint marketing programs and sponsorship agreements with KPMG, Deloitte and Accenture.Our principal marketing programs include: •our annual INSPIRE user conference, which is held over multiple days to connect customers, disseminate best practices, and reinforce ourbrand among existing and new customers. •field marketing events for customers and prospective customers; •programmatic account-based marketing efforts in close partnership with sales to target the ICP accounts in our respective sales segments; •territory development representatives who respond to incoming leads to convert them into new sales opportunities; •participation in, and sponsorship of, user conferences, executive events, trade shows and industry events; •focused cross-channel campaigns with existing customers to drive expansion; •public relations, analyst relations and social media initiatives; •integrated marketing campaigns, including direct e-mail, online web advertising, blogs and webinars; •cooperative marketing efforts with partners, including joint press announcements, joint trade show activities, channel marketing campaignsand joint seminars; •development of our ideal customer profile (ICP), which are the accounts with the highest propensity to buy, for each of our sales segments; •customer programs, including regional user group meetings; and •use of our website to provide application and company information, as well as learning opportunities for potential customers;Partnerships and Strategic RelationshipsAs a core part of our strategy, we have developed an ecosystem of partners to extend our sales capabilities and coverage, to broaden and complementour application offerings and to provide a broad array of services that lie outside of our primary areas of focus.Our partnerships increase our ability to grow and scale quickly and efficiently and allow us to maintain greater focus on executing against ourstrategy. •Referral Partners. Our referral partners provide global, national and regional expertise in business spend management, procurement andexpense management. They help organizations through9 operational transformation by leveraging process, best practices and new technology. These partners may refer customer prospects to us andassist us in selling to them. In return, we typically pay these partners a percentage of the first-year subscription revenue generated by thecustomers they refer. •Implementation Partners. In order to offer the full breadth of implementation services, change management, and strategic consultingservices to our customers, we work with leading global systems integrators such as Accenture, Deloitte and KPMG, as well as boutique andregional consulting firms. Our strategy is to enable the majority of our projects to be led by implementation partners with additionalspecialized support from us. Our implementation partners are highly skilled and trained by our team. When working with implementationpartners, we are typically in a “co-sell” arrangement where we will sell our subscription directly to the customer and our partner will sell itsimplementation services directly to the customer. •Reseller Partners. Our reseller partners enhance our customer impact and extend our global presence with integrated technologies,applications, business process outsourcing (BPO) services and region-specific offerings. All of our reseller partners have been trained todemonstrate and promote our applications suites. •Technology Partners. Our technology partners provide market-leading technology, complementary products and infrastructure-relatedservices that power and extend our suite of cloud-based business spend management applications. Our technology partners span a wide rangeof solutions providers including Dell Boomi, Sabre and Thomson Reuters that enhance the capabilities of our platform by facilitatingintegrations that can deliver a higher level of value to customers.Technology Infrastructure and OperationsThe technologies used to build our platform and modules are native cloud and designed to scale to millions of users. We utilize a modern technologystack to take advantage of advancements in web-design, open source technologies, scalability and security. We have implemented industry-standard securitypractices to help us protect our customers’ critical information.We have partnered with leading hosting and infrastructure companies to provide the hardware and infrastructure to support our BSM platform. Withthese partnerships, we are able to easily scale the service during peak load periods, allowing us to continuously add users and customers without significantdowntime or lead-time to procure new capacity. We also have the ability to offer our solutions globally across various different physical locations, such asthe U.S., Europe and Asia-Pacific.Research and DevelopmentOur ability to compete depends in large part on our continuous commitment to research and development and our ability to rapidly introduce newapplications, technologies, features and functionality. Our research and development organization is responsible for the design, development, testing andcertification of our applications. We focus our efforts on developing new applications and core technologies and further enhancing the usability,functionality, reliability, performance and flexibility of existing applications.CompetitionWe believe the overall market for BSM software is highly competitive, marked by rapid consolidation, fragmented and rapidly evolving due totechnological innovations. We have been recognized, however, as a technology and market leader.Our competitors fall into the following categories: •Large enterprise software vendors such as Oracle Corporation and SAP AG that predominantly focus on database and ERP software solutions.SAP acquired both Ariba, Inc., Fieldglass, Inc. and Concur Technologies, Inc. in 2012, 2014, and 2015, respectively, to form the core of theircloud offerings that compete with us.10 •Niche software vendors that either address only a portion of the capabilities we provide or predominantly focus on narrow industry verticals.We believe the principal competitive factors in our market include the following: •focus on customer success; •ability to deliver measurable value and savings; •ability to offer a comprehensive BSM platform; •ease of use; •widespread adoption by users; •time to deployment; •cloud-based architecture; •total cost of ownership; •configurability and agility; •rich reporting capabilities; •product extensibility and ability to integrate with other technology infrastructures; •independence; and •adoption by suppliers.We believe that we compare favorably on the basis of these factors. However, many of our competitors have greater financial, technical and otherresources, greater brand recognition and larger sales and marketing budgets; therefore, we may not compare favorably with respect to some or all of the factorsabove.Intellectual PropertyWe rely on a combination of trade secrets, patents, copyrights and trademarks, as well as contractual protections, to establish and protect ourintellectual property rights. While we have obtained or applied for patent protection for some of our intellectual property, we do not believe that we arematerially dependent on any one or more of our patents. We require our employees, consultants and other third parties to enter into confidentiality andproprietary rights agreements and control access to software, documentation and other proprietary information.We pursue the registration of domain names, trademarks and service marks in the United States and in various jurisdictions outside the United States.We also actively seek patent protection covering inventions originating from our company.We control access to and use of our proprietary technology and other confidential information through the use of internal and external controls,including contractual protections with employees, contractors, customers, and partners, and our software is protected by U.S. and international intellectualproperty laws. Our policy is to require employees and independent contractors to sign agreements assigning to us any inventions, trade secrets, works ofauthorship, developments and other processes generated by them on our behalf and agreeing to protect our confidential information. In addition, wegenerally enter into confidentiality agreements with our vendors and customers. We also control and monitor access to, and distribution of our software,documentation and other proprietary information.Despite our efforts to protect our proprietary technology and our intellectual property rights, unauthorized parties may attempt to copy or obtain anduse our technology to develop applications with the same functionality as our applications. Policing unauthorized use of our technology and intellectualproperty rights is difficult. In addition, we intend to expand our international operations, and effective protection of our technology and intellectual propertyrights may not be available to us in every country in which our software or services are available.11We and others in our industry have been, and we expect that we will continue to be, subject to third-party infringement claims as the number ofcompetitors grows and the functionality of applications in different industry segments overlaps. Moreover, many of our competitors and other industryparticipants have been issued patents and/or have filed patent applications, and have asserted claims and related litigation regarding patent and otherintellectual property rights. From time to time, third parties, including certain of these companies, have asserted patent, copyright, trademark, trade secret andother intellectual property rights within the industry. Any of these third parties might make a claim of infringement against us at any time.Our CustomersAs of January 31, 2019, we have 988 customers that are doing business in more than 100 countries and our platform is offered in more than 20languages. We define a customer as a separate and distinct buying entity, such as a company, an educational or government institution, or a distinct businessunit of a large corporation that has an active contract with us or our partner to access our platform. Our customers include leading businesses in a diverse setof industries, including healthcare and pharmaceuticals, retail, financial services, manufacturing, and technology.EmployeesAs of January 31, 2019, we had 1,202 full-time employees globally, of which 728 work in the U.S. None of our U.S. employees are represented by alabor union or are the subject of a collective bargaining agreement. We have not experienced any work stoppages, and we consider our relations with ouremployees to be good.Corporate InformationWe were incorporated in February 2006 in Delaware. Our principal executive offices are located at 1855 S. Grant Street, San Mateo, CA 94402, andour telephone number is (650) 931-3200. Our website address is www.coupa.com. The information on, or that can be accessed through, our website is not partof this report. We have included our website address as an inactive textual reference only.Available InformationOur Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed pursuant toSections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on the Investor Relations section of our website atwww.coupa.com as soon as reasonably practicable after we file such material with the Securities and Exchange Commission (“SEC”). The SEC also maintainsan Internet website that contains reports and other information regarding issuers, such as Coupa, that file electronically with the SEC. The SEC’s Internetwebsite is located at http://www.sec.gov. Item 1A. Risk Factors.A description of the risks and uncertainties associated with our business is set forth below. You should carefully consider the risks described below,as well as the other information in this Annual Report on Form 10-K, including our consolidated financial statements and the related notes and“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” particularly before deciding whether to invest in oursecurities. The occurrence of any of the events or developments described below could materially and adversely affect our business, financial condition,results of operations and growth prospects. In such an event, the market price of our common stock could decline, and you may lose all or part of yourinvestment. The risks described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deemimmaterial may also impair our business operations.Risks Related to Our Business and IndustryWe have a limited operating history, which makes it difficult to predict our future operating results.We were incorporated in 2006 and introduced our first software module shortly thereafter and over time have invested in building our integratedplatform. As a result of our limited operating history, our ability to forecast our12future operating results is limited and subject to a number of uncertainties, including our ability to plan for and model future growth. We have encounteredand will encounter risks and uncertainties frequently experienced by growing companies in rapidly changing industries, such as the risks and uncertaintiesdescribed herein. If our assumptions regarding these risks and uncertainties (which we use to plan our business) are incorrect or change, or if we do notaddress these risks successfully, our operating and financial results could differ materially from our expectations and our business could suffer.Any success that we may experience in the future will depend, in large part, on our ability to manage the risks discussed herein and to, among otherthings: •retain and expand our customer base on a cost-effective basis; •successfully compete in our markets; •continue to add features and functionality to our platform to meet customer demand; •increase revenues from existing customers as they add users or purchase additional modules; •continue to invest in research and development; •scale our internal business operations in an efficient and cost-effective manner; •scale our global customer success organization to make our customers successful in their business spend management deployments; •help our partners to be successful in deployments of our platform; •successfully expand our business domestically and internationally; •successfully protect our intellectual property and defend against intellectual property infringement claims; •hire, integrate and retain professional and technical talent; and •successfully integrate companies and technologies that we acquire.If we are unable to attract new customers, the growth of our revenues will be adversely affected.To increase our revenues, we must add new customers, increase the number of users at existing customers and sell additional modules to currentcustomers. As our industry matures or if competitors introduce lower cost and/or differentiated products or services that are perceived to compete with ours,our ability to sell based on factors such as pricing, technology and functionality could be impaired. As a result, we may be unable to attract new customers atrates or on terms that would be favorable or comparable to prior periods, which could have an adverse effect on the growth of our revenues.Because our platform is sold to large enterprises with complex operating environments, we encounter long and unpredictable sales cycles, which couldadversely affect our operating results in a given period.Our ability to increase revenues and achieve profitability depends, in large part, on widespread acceptance of our platform by large enterprises. As wetarget our sales efforts at these customers, we face greater costs, longer sales cycles and less predictability in completing some of our sales. As a result of thevariability and length of the sales cycle, we have only a limited ability to forecast the timing of sales. A delay in or failure to complete sales could harm ourbusiness and financial results, and could cause our financial results to vary significantly from period to period. Our sales cycle varies widely, reflectingdifferences in potential customers’ decision-making processes, procurement requirements and budget cycles, and is subject to significant risks over which wehave little or no control, including: •customers’ budgetary constraints and priorities; •the timing of customers’ budget cycles;13 •the need by some customers for lengthy evaluations; and •the length and timing of customers’ approval processes.In the large enterprise market, the customer’s decision to use our platform may be an enterprise-wide decision; therefore, these types of sales requireus to provide greater levels of education regarding the use and benefits of our platform, which causes us to expend substantial time, effort and moneyeducating them as to the value of our platform. In addition, because we are a relatively new company with a limited operating history, our target customersmay prefer to purchase software that is critical to their business from one of our larger, more established competitors. Our typical sales cycle can range fromthree to nine months, and it's possible that sales cycles may continue to be lengthy or increase. Longer sales cycles could cause our operating and financialresults to suffer in a given period.If our security measures are breached or unauthorized access to customer data is otherwise obtained, our platform may be perceived as not being secure,customers may reduce the use of or stop using our platform and we may incur significant liabilities.Our platform involves the storage and transmission of our customers’ sensitive proprietary information, including their spending and other relateddata. As a result, unauthorized access or security breaches could result in the loss of information, litigation, indemnity obligations and other liability. Whilewe have security measures in place that are designed to protect customer information and prevent data loss and other security breaches, if these measures arebreached as a result of third-party action, employee error, malfeasance or otherwise, and someone obtains unauthorized access to our customers’ data, wecould face loss of business, regulatory investigations or orders, our reputation could be severely damaged, we could be required to expend significant capitaland other resources to alleviate the problem, as well as incur significant costs and liabilities, including due to litigation, indemnity obligations, damages forcontract breach, penalties for violation of applicable laws or regulations, and costs for remediation and other incentives offered to customers or other businesspartners in an effort to maintain business relationships after a breach.We cannot assure you that any limitations of liability provisions in our contracts would be enforceable or adequate or would otherwise protect usfrom any liabilities or damages with respect to any particular claim relating to a security lapse or breach. We also cannot be sure that our existing insurancecoverage will continue to be available on acceptable terms or will be available in sufficient amounts to cover one or more large claims related to a securitybreach, or that the insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed availableinsurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurancerequirements, could have a material adverse effect on our business, including our financial condition, operating results, and reputation.14Cyber-attacks and other malicious Internet-based activities continue to increase generally. Because the techniques used to obtain unauthorizedaccess or sabotage systems change frequently and generally are not identified until they are launched against a target, we may be unable to anticipate thesetechniques or to implement adequate preventative measures. In addition, third parties may attempt to fraudulently induce employees or users to discloseinformation to gain access to our data or our customers’ data. While it did not involve any customer data, we have previously suffered the loss of certainemployee information related to an employee error. If any of these events occur, our or our customers’ information could be accessed or disclosed improperly.Any or all of these issues could negatively affect our ability to attract new customers, cause existing customers to elect to not renew their subscriptions, resultin reputational damage or subject us to third-party lawsuits, regulatory fines or other action or liability, which could adversely affect our operating results.Our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business.Our quarterly results of operations, as well as our key metrics discussed elsewhere in this annual report, including the levels of our revenues, grossmargin, cash flow and deferred revenue, may vary significantly in the future and period-to-period comparisons of our operating results and key metrics maynot be meaningful. Accordingly, the results of any one quarter should not be relied upon as an indication of future performance. Our quarterly financialresults and metrics may fluctuate as a result of a variety of factors, many of which are outside of our control, as a result they may not fully reflect theunderlying performance of our business. These quarterly fluctuations may negatively affect the value of our common stock. Factors that may cause thesefluctuations include, without limitation: •our ability to attract new customers; •the addition or loss of large customers, including through acquisitions or consolidations; •the timing of recognition of revenues; •the amount and timing of operating expenses; •general economic, industry and market conditions, both domestically and internationally; •the timing of our billing and collections; •customer renewal and expansion rates; •significant security breaches of, technical difficulties with, or interruptions to the delivery and use of our products on our platform; •the amount and timing of completion of professional services engagements; •increases or decreases in the number of users for our platform, increases or decreases in the modules purchased for our platform or pricingchanges upon any renewals of customer agreements; •changes in our pricing policies or those of our competitors; •seasonal variations in sales of our software subscriptions, which have historically been highest in the fourth quarter of a calendar year butmay vary in future quarters; •the timing and success of new module introductions by us or our competitors or any other change in the competitive dynamics of ourindustry, including consolidation among competitors, customers or strategic partners; •changes in foreign currency exchange rates; •extraordinary expenses such as litigation or other dispute-related expenses or settlement payments; •sales tax and other tax determinations by authorities in the jurisdiction in which we conduct business; •the impact of new accounting pronouncements and the adoption thereof; •fluctuations in stock-based compensation expense;15 •expenses in connection with mergers, acquisitions or other strategic transactions; and •the timing of expenses related to the development or acquisition of technologies or businesses and potential future charges for impairment ofgoodwill or intangibles from acquired companies.The markets in which we participate are intensely competitive, and if we do not compete effectively, our operating results could be adversely affected.The market for business spend management software is highly competitive, with relatively low barriers to entry for some software or serviceorganizations. Our competitors include Oracle Corporation (“Oracle”) and SAP AG (“SAP”), well-established providers of business spend managementsoftware that have long-standing relationships with many customers. Some customers may be hesitant to switch vendors or to adopt cloud-based softwaresuch as ours and prefer to maintain their existing relationships with their legacy software vendors. Oracle and SAP are larger and have greater namerecognition, much longer operating histories, larger marketing budgets and significantly greater resources than we do. These vendors, as well as othercompetitors, may offer business spend management software on a standalone basis at a low price or bundled as part of a larger product sale. In order to takeadvantage of customer demand for cloud-based software, legacy vendors are expanding their cloud-based software through acquisitions and organicdevelopment. For example, SAP acquired Ariba, Inc. and Concur Technologies, Inc. Legacy vendors may also seek to partner with other leading cloudproviders. We also face competition from custom-built software vendors and from vendors of specific applications, some of which offer cloud-basedsolutions. We may also face competition from a variety of vendors of cloud-based and on-premise software products that address only a portion of ourplatform. In addition, other companies that provide cloud-based software in different target markets may develop software or acquire companies that operatein our target markets, and some potential customers may elect to develop their own internal software. With the introduction of new technologies and marketentrants, we expect this competition to intensify in the future.Many of our competitors are able to devote greater resources to the development, promotion and sale of their products and services. Furthermore, ourcurrent or potential competitors may be acquired by third parties with greater available resources and the ability to initiate or withstand substantial pricecompetition. In addition, many of our competitors have established marketing relationships, access to larger customer bases and major distributionagreements with consultants, system integrators and resellers. Our competitors may also establish cooperative relationships among themselves or with thirdparties that may further enhance their product offerings or resources. If our platform does not become more accepted relative to our competitors’, or if ourcompetitors are successful in bringing their products or services to market earlier than ours, or if their products or services are more technologically capablethan ours, then our revenues could be adversely affected. In addition, some of our competitors may offer their products and services at a lower price. If we areunable to achieve our target pricing levels, our operating results will be negatively affected. Pricing pressures and increased competition could result inreduced sales, reduced margins, losses or a failure to maintain or improve our competitive market position, any of which could adversely affect our business.Our business depends substantially on our customers renewing their subscriptions and purchasing additional subscriptions from us. Any decline in ourcustomer renewals would harm our future operating results.In order for us to maintain or improve our operating results, it is important that our customers renew their subscriptions when the initial contract termexpires and add additional authorized users and additional business spend management modules to their subscriptions. Our customers have no obligation torenew their subscriptions, and we cannot assure you that our customers will renew subscriptions with a similar contract period or with the same or a greaternumber of authorized users and modules. Some of our customers have elected not to renew their agreements with us, and we may not be able to accuratelypredict renewal rates.Our renewal rates may decline or fluctuate as a result of a number of factors, including our customers’ satisfaction with our subscription service, ourprofessional services, our customer support, our prices and contract length, the prices of competing solutions, mergers and acquisitions affecting our customerbase, the effects of global economic conditions or reductions in our customers’ spending levels. Our future success also depends in part on our ability to addadditional authorized users and modules to the subscriptions of our current customers. If our customers do not renew their subscriptions, renew on lessfavorable terms or fail to add more authorized users or additional16business spend management modules, our revenues may decline, and we may not realize improved operating results from our customer base.We have experienced rapid growth and expect our growth to continue and if we fail to manage our growth effectively, we may be unable to execute ourbusiness plan, maintain high levels of service or adequately address competitive challenges.We have experienced a rapid growth in our business, headcount and operations since inception. We have also significantly increased the size of ourcustomer base. We anticipate that we will continue to expand our operations and headcount, including internationally. This growth has placed, and futuregrowth will place, a significant strain on our management, administrative, operational and financial infrastructure. Our success will depend in part on ourability to manage this growth effectively. To manage the expected growth of our operations and personnel, we will need to continue to improve ouroperational, financial and management controls and our reporting systems and procedures. Failure to effectively manage growth could result in difficulty ordelays in deploying customers, declines in quality or customer satisfaction, increases in costs, difficulties in introducing new features and/or otheroperational difficulties, any of which could adversely affect our business performance and results of operations.Acquisitions could be difficult to identify, pose integration challenges, divert the attention of management, disrupt our business, dilute stockholder value,and adversely affect our operating results and financial condition.We have in the past acquired and may in the future seek to acquire or invest in businesses, products or technologies that we believe couldcomplement or expand our platform, enhance our technical capabilities or otherwise offer growth opportunities. For example, we acquired Hiperos LLC inDecember 2018, acquired Vinimaya, Inc. (d/b/a Aquiire) in October 2018 and acquired certain assets from DCR Workforce in August 2018. Acquisitions maydisrupt our business, divert our resources and require significant management attention that would otherwise be available for development of our existingbusiness. In addition, we have limited experience in acquiring other businesses and we may not be able to integrate the acquired personnel, operations andtechnologies successfully, or effectively manage the combined business following the acquisition. We also may not achieve the anticipated benefits from theacquired business due to a number of factors, including: •inability to integrate or benefit from acquired technologies or services in a profitable manner; •unanticipated costs, accounting charges or other liabilities associated with the acquisition; •incurrence of acquisition-related costs; •difficulty integrating the accounting systems, internal controls, operations and personnel of the acquired business; •difficulties and additional expenses associated with supporting legacy products and hosting infrastructure of the acquired business,including due to language, geographical or cultural differences; •difficulty converting the customers of the acquired business onto our platform and contract terms, including disparities in the revenues,licensing, support or professional services model of the acquired company; •adverse effects to our existing business relationships with business partners and customers as a result of the acquisition; •the potential loss of key employees; •use of resources that are needed in other parts of our business; and •use of substantial portions of our available cash to consummate the acquisition.17In addition, a significant portion of the purchase price of companies we acquire may be allocated to acquired goodwill and other intangible assets.Goodwill must be assessed for impairment at least annually, and other intangible assets are assessed for impairment whenever events or changes incircumstances indicate that the carrying amount may not be recoverable. In the future, if our acquisitions do not yield expected returns, we may be required totake charges to our operating results based on this impairment assessment process, which could adversely affect our results of operations. In addition, ourexposure to risks associated with various claims, including the use of intellectual property, may be increased as a result of acquisitions of other companies.For example, we may have a lower level of visibility into the development process with respect to intellectual property or the care taken to safeguard againstinfringement risks with respect to the acquired company or technology. In addition, third parties may make infringement and similar or related claims after wehave acquired technology that has not been asserted prior to our acquisition. Acquisitions could also result in dilutive issuances of equity securities or theincurrence of debt, which could adversely affect our operating results. In addition, if an acquired business fails to meet our expectations, our operating results,business and financial position may suffer.Because we recognize subscription revenues over the term of the contract, fluctuations in new sales and renewals may not be immediately reflected in ouroperating results and may be difficult to discern.We generally recognize subscription revenues from customers ratably over the terms of their contracts, which are typically three years, although somecustomers commit for longer or shorter periods. As a result, most of the subscription revenues we report on each quarter are derived from the recognition ofdeferred revenue relating to subscriptions entered into during previous quarters. Consequently, a decline in new or renewed subscriptions in any singlequarter would likely have only a small impact on our revenues for that quarter. However, such a decline would negatively affect our revenues in futurequarters. Accordingly, the effect of significant downturns in sales and market acceptance of our platform, and potential changes in our pricing policies or rateof renewals, may not be fully apparent from our reported results of operations until future periods.We may be unable to adjust our cost structure to reflect the changes in revenues. In addition, a significant majority of our costs are expensed asincurred, while subscription revenues are recognized over the life of the customer agreement. As a result, increased growth in the number of our customerscould result in our recognition of more costs than revenues in the earlier periods of the terms of our agreements. Our subscription model also makes it difficultfor us to rapidly increase our revenues through additional sales in any period, as revenues from new customers must be recognized over the applicablesubscription term.If we fail to develop widespread brand awareness cost-effectively, our business may suffer.We believe that developing and maintaining widespread awareness of our brand in a cost-effective manner is critical to achieving widespreadacceptance of our platform and attracting new customers. For example, widespread awareness of our brand is critical to ensuring that we are invited toparticipate in requests for proposals from prospective customers. Our success in this area will depend on a wide range of factors, some of which are beyond ourcontrol, including the following: •the efficacy of our marketing efforts; •our ability to offer high-quality, innovative and error- and bug-free modules; •our ability to retain existing customers and obtain new customers; •the ability of our customers to achieve successful results by using our platform; •the quality and perceived value of our platform; •our ability to successfully differentiate our offerings from those of our competitors; •actions of competitors and other third parties; •our ability to provide customer support and professional services; •any misuse or perceived misuse of our platform and modules;18 •positive or negative publicity; •interruptions, delays or attacks on our platform or modules; and •litigation, legislative or regulatory-related developments.Brand promotion activities may not generate customer awareness or increase revenues, and, even if they do, any increase in revenues may not offsetthe expenses we incur in building our brand. If we fail to successfully promote and maintain our brand, or incur substantial expenses, we may fail to attract orretain customers necessary to realize a sufficient return on our brand-building efforts or to achieve the widespread brand awareness that is critical for broadcustomer adoption of our platform.Furthermore, negative publicity (whether or not justified) relating to events or activities attributed to us, our employees, our partners or othersassociated with any of these parties, may tarnish our reputation and reduce the value of our brand. Damage to our reputation and loss of brand equity couldreduce demand for our platform and have an adverse effect on our business, operating results and financial condition. Moreover, any attempts to rebuild ourreputation and restore the value of our brands may be costly and time consuming, and such efforts may not ultimately be successful.Changes in privacy laws, regulations, and standards may cause our business to suffer.Our customers can use our platform to collect, use and store certain types of personal or identifying information regarding their employees andsuppliers. Federal, state and foreign government bodies and agencies have adopted, are considering adopting or may adopt laws and regulations regardingthe collection, use, storage and disclosure of personal information obtained from consumers and individuals, such as compliance with the Health InsurancePortability and Accountability Act and the recently created EU-U.S. Privacy Shield. The costs of compliance with, and other burdens imposed by, such lawsand regulations that are applicable to the businesses of our customers may limit the use and adoption of our platform and reduce overall demand or lead tosignificant fines, penalties or liabilities for any noncompliance with such privacy laws. Furthermore, privacy concerns may cause our customers’ employeesto resist providing the personal data necessary to allow our customers to use our platform effectively. Even the perception of privacy concerns, whether or notvalid, may inhibit market adoption of our platform in certain industries.All of these domestic and international legislative and regulatory initiatives may adversely affect our customers’ ability to process, handle, store, useand transmit demographic and personal information from their employees, customers and suppliers, which could reduce demand for our platform. TheEuropean Union (“EU”) and many countries in Europe have stringent privacy laws and regulations, which may affect our ability to operate cost effectively incertain European countries. In particular, the EU has adopted the General Data Protection Regulation (“GDPR”) which went into effect on May 25, 2018 andcontains numerous requirements and changes, including more robust obligations on data processors and heavier documentation requirements for dataprotection compliance programs by companies. Specifically, the GDPR introduced numerous privacy-related changes for companies operating in the EU,including greater control for data subjects (e.g., the “right to be forgotten”), increased data portability for EU consumers, data breach notificationrequirements, and increased fines. In particular, under the GDPR, fines of up to 20 million Euros or up to 4% of the annual global revenue of thenoncompliant company, whichever is greater, could be imposed for violations of certain of the GDPR’s requirements. Complying with the GDPR may causeus to incur substantial operational costs or require us to change our business practices. Despite our efforts to bring practices into compliance with the GDPR,we may not be successful either due to internal or external factors such as resource allocation limitations or a lack of vendor cooperation. Non-compliancecould result in proceedings against us by governmental entities, customers, data subjects or others. We may also experience difficulty retaining or obtainingnew European or multi-national customers due to the compliance cost, potential risk exposure, and uncertainty for these entities, and we may experiencesignificantly increased liability with respect to these customers pursuant to the terms set forth in our engagements with them. We may find it necessary toestablish systems to maintain personal data originating from the EU in the European Economic Area, which may involve substantial expense and distractionfrom other aspects of our business. In the meantime, there could be uncertainty as to how to comply with EU privacy law.19In addition, California enacted the California Consumer Privacy Act of 2018 which takes effect on January 1, 2020 and will broadly define personalinformation, give California residents expanded privacy rights and protections and provide for civil penalties for violations. The effects of this legislation arepotentially far-reaching and may require us to modify our data management practices and to incur substantial expense in an effort to comply.Because the interpretation and application of many privacy and data protection laws along with contractually imposed industry standards areuncertain, it is possible that these laws may be interpreted and applied in a manner that is inconsistent with our existing data management practices or thefeatures of our products and platform capabilities. If so, in addition to the possibility of fines, lawsuits, and other claims and penalties, we could be requiredto fundamentally change our business activities and practices or modify our products and platform capabilities, which could have an adverse effect on ourbusiness. Any inability to adequately address privacy and security concerns, even if unfounded, or comply with applicable privacy and data security laws,regulations, and policies, could result in additional cost and liability to us, damage our reputation, inhibit sales, and adversely affect our business.Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations, and policies that are applicable to the businesses of ourcustomers may limit the use and adoption of, and reduce the overall demand for, our products. Privacy and data security concerns, whether valid or not valid,may inhibit market adoption of our products, particularly in certain industries and foreign countries. If we are not able to adjust to changing laws, regulations,and standards related to the Internet, our business may be harmed.We may be sued by third parties for various claims including alleged infringement of their proprietary rights.We are involved in various legal matters arising from normal course of business activities. These may include claims, suits, and other proceedingsinvolving alleged infringement of third-party patents and other intellectual property rights, as well as commercial, corporate and securities, labor andemployment, wage and hour, and other matters. In particular, there has been considerable activity in our industry to develop and enforce intellectual propertyrights. Our success depends upon our not infringing upon the intellectual property rights of others. Our competitors, as well as a number of other entities andindividuals, may own or claim to own intellectual property relating to our industry. In the past third parties have claimed and in the future third parties mayclaim that we are infringing upon their intellectual property rights, and we may be found to be infringing upon such rights. For example, between March2012 and August 2014 and between May 2014 and September 2015, we and Ariba, Inc. were involved in patent and trade secret litigation cases, each ofwhich eventually resulted in a settlement agreement that requires us to maintain certain ongoing compliance measures that if challenged, could be costly,time-consuming and divert the attention of our management and key personnel from our business operations.We may experience future claims that our platform and underlying technology infringe or violate others’ intellectual property rights, and we may befound to be infringing upon such rights. We may be unaware of the intellectual property rights that others may claim cover some or all of our technology orservices. Any claims or litigation could cause us to incur significant expenses and, if successfully asserted against us, could require that we pay substantialdamages or ongoing royalty payments, prevent us from offering our services or require that we comply with other unfavorable terms. We may also beobligated to indemnify our customers and business partners or to pay substantial settlement costs, including royalty payments, in connection with any suchclaim or litigation and to obtain licenses, modify our platform or refund fees, which could be costly. Even if we were to prevail in such a dispute, anylitigation regarding our intellectual property could be costly, distracting and time-consuming and could harm our brand, business, results of operations andfinancial condition.20The profitability of our customer relationships may fluctuate.Our business model focuses on maximizing the lifetime value of our customer relationships and we need to make significant investments in order toadd new customers to grow our customer base. The profitability of a customer relationship in any particular period depends in part on how long the customerhas been a subscriber on our platform. In general, the upfront costs associated with new customers are higher in the first year than the aggregate revenues werecognize from those new customers in the first year.We review the lifetime value and associated acquisition costs of our customers, as discussed further in “Management’s Discussion and Analysis ofFinancial Condition and Results of Operations” in this annual report. The lifetime value of our customers and customer acquisition costs has and willcontinue to fluctuate from one period to another depending upon the amount of our net new subscription revenues (which depends on the number of newcustomers in a period, upsells of additional modules to existing customers and changes in subscription fees charged to existing customers), gross margins(which depends on investments in and other changes to our cost of customer support and allocated overhead), sales and marketing expenses and renewal rates(which depend on our ability to maintain or grow subscription fees from customers). These amounts have fluctuated from quarter to quarter and will continueto fluctuate in the future. We may not experience lifetime value to customer acquisition cost ratios in future years or periods similar to those we haveachieved to date. Other companies may calculate lifetime value and customer acquisition costs differently than our chosen method and, therefore, may not bedirectly comparable.We depend on our senior management team and the loss of our chief executive officer or one or more key employees or an inability to attract and retainhighly skilled employees could adversely affect our business.Our success depends largely upon the continued services of our key executive officers. In particular, our chief executive officer, Robert Bernshteyn,is critical to our vision, strategic direction, culture and overall business success. We also rely on our leadership team in the areas of research and development,marketing, sales, services and general and administrative functions, and on mission-critical individual contributors in research and development. From timeto time, there may be changes in our executive management team resulting from the hiring or departure of executives, which could disrupt our business. Wedo not maintain key-man insurance for Mr. Bernshteyn or any other member of our senior management team. We do not have employment agreements withour executive officers or other key personnel that require them to continue to work for us for any specified period and, therefore, they could terminate theiremployment with us at any time. The loss of one or more of our executive officers or key employees could have a serious adverse effect on our business.To execute our growth plan, we must attract and retain highly qualified personnel. Competition for these personnel is intense, especially forengineers with high levels of experience in designing and developing software for Internet-related services. We have from time to time experienced, and weexpect to continue to experience, difficulty in hiring and retaining employees with appropriate qualifications. Many of the companies with which wecompete for experienced personnel have greater resources than we have. If we hire employees from competitors or other companies, their former employersmay attempt to assert that these employees or our company have breached their legal obligations, resulting in a diversion of our time and resources. Inaddition, job candidates and existing employees in the San Francisco Bay Area often consider the value of the stock awards they receive in connection withtheir employment. If the perceived value of our stock declines, it may adversely affect our ability to recruit and retain highly skilled employees. If we fail toattract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects could be adversely affected.If we cannot maintain our company culture as we grow, we could lose the innovation, teamwork, passion and focus on execution that we believe contributeto our success and our business may be harmed.We believe that a critical component of our success has been our company culture, which is based on our core values of ensuring customer success,focusing on results and striving for excellence. We have invested substantial time and resources in building our team within this company culture. As wegrow and develop the infrastructure of a public company, we may find it difficult to maintain these important aspects of our company culture. If we fail topreserve our culture, our ability to retain and recruit personnel and to effectively focus on and pursue our corporate objectives could be compromised,potentially harming our business.21 We have a history of cumulative losses, and we do not expect to be profitable for the foreseeable future.We have incurred significant losses in each period since our inception in 2006. We incurred net losses of $55.5 million, $43.8 million, and $37.6million in the fiscal years ended January 31, 2019, 2018, and 2017, respectively. We had an accumulated deficit of $254.9 million at January 31, 2019. Ourlosses and accumulated deficit reflect the substantial investments we made to acquire new customers and develop our platform. We expect our operatingexpenses to increase in the future due to anticipated increases in sales and marketing expenses, research and development expenses, operations costs andgeneral and administrative costs, and, therefore, we expect our losses to continue for the foreseeable future. Furthermore, to the extent we are successful inincreasing our customer base, we will also incur increased losses because costs associated with acquiring customers are generally incurred up front, whilesubscription revenues are generally recognized ratably over the terms of the agreements (typically three years, although some customers commit for longer orshorter periods). You should not consider our recent growth in revenues as indicative of our future performance. Accordingly, we cannot assure you that wewill achieve profitability in the future, or that, if we do become profitable, we will sustain profitability or achieve our target margins on a midterm or long-term basis. We do not have a long history with our subscription or pricing models and changes could adversely affect our operating results.We have limited experience with respect to determining the optimal prices and contract length for our platform. As the markets for our softwaresubscriptions grow, as new competitors introduce new products or services that compete with ours or as we enter into new international markets, we may beunable to attract new customers at the same price or based on the same pricing model as we have used historically. For example, customers may demandpricing models that include price adjustments that are correlated to the savings they realize using our products and services. While this is not and has notbeen our pricing model, we have discussed it with some customers in the past and may choose to implement it in the future. Moreover, regardless of pricingmodel used, large customers, which are the focus of our sales efforts, may demand higher price discounts than in the past. As a result, in the future we may berequired to reduce our prices, offer shorter contract durations or offer alternative pricing models, which could adversely affect our revenues, gross margin,profitability, financial position and cash flow.If we are not able to provide successful and timely enhancements, new features and modifications for our platform and modules, we may lose existingcustomers or fail to attract new customers and our revenues and financial performance may suffer.If we are unable to provide enhancements and new features for our existing modules or new modules that achieve market acceptance or to integratetechnology, products and services that we acquire into our platform, our business could be adversely affected. The success of enhancements, new features andmodules depends on several factors, including the timely completion, introduction and market acceptance of the enhancements or new features or modules.Failure in this regard may significantly impair the growth of our revenues. We have experienced, and may in the future experience, delays in the plannedrelease dates of enhancements to our platform, and we have discovered, and may in the future discover, errors in new releases after their introduction. Eithersituation could result in adverse publicity, loss of sales, delay in market acceptance of our platform or customer claims, including, among other things,warranty claims against us, any of which could cause us to lose existing customers or affect our ability to attract new customers.We rely heavily on Amazon Web Services to deliver our platform and modules to our customers, and any disruption in service from Amazon Web Servicesor material change to our arrangement with Amazon Web Services could adversely affect our business.We rely heavily upon Amazon Web Services (“AWS”) to operate certain aspects of our platform and any disruption of or interference with our use ofAWS could impair our ability to deliver our platform and modules to our customers, resulting in customer dissatisfaction, damage to our reputation, loss ofcustomers and harm to our business. We have architected our software and computer systems to use data processing, storage capabilities and22other services provided by AWS. Currently, most of our cloud service infrastructure is run on AWS. Given this, we cannot easily switch our AWS operationsto another cloud provider, so any disruption of or interference with our use of AWS would adversely affect our operations and potentially our business.AWS provides us with computing and storage capacity pursuant to an agreement that continues until terminated by either party. AWS may terminatethe agreement for cause with 30 days’ prior written notice, including any material default or breach of the agreement by us that we do not cure within the30 day period. Additionally, AWS has the right to terminate the agreement immediately with notice to us in certain scenarios such as if AWS believesproviding the services could create a substantial economic or technical burden or material security risk for AWS, or in order to comply with the law orrequests of governmental entities. The agreement requires AWS to provide us their standard computing and storage capacity and related support in exchangefor timely payment by us. If any of our arrangements with AWS were terminated, we could experience interruptions in our software as well as delays andadditional expenses in arranging new facilities and services.We utilize third-party data center hosting facilities operated by AWS, located in various facilities around the world. Our operations depend, in part,on AWS’s abilities to protect these facilities against damage or interruption due to a variety of factors, including infrastructure changes, human or softwareerrors, natural disasters, power or telecommunications failures, criminal acts, capacity constraints and similar events. For instance, in February 2017, AWSsuffered a significant outage in the United States that had a widespread impact on the ability of certain of our customers to fully use our modules for a smallperiod of time. Despite precautions taken at these data centers, the occurrence of spikes in usage volume, a natural disaster, an act of terrorism, vandalism orsabotage, a decision to close a facility without adequate notice or other unanticipated problems at a facility could result in lengthy interruptions in theavailability of our platform. Even with current and planned disaster recovery arrangements, our business could be harmed. Also, in the event of damage orinterruption, our insurance policies may not adequately compensate us for any losses that we may incur. These factors in turn could further reduce ourrevenues, subject us to liability and cause us to issue credits or cause customers to fail to renew their subscriptions, any of which could harm our business.If we are unable to maintain effective internal controls over financial reporting in the future, investors may lose confidence in the accuracy andcompleteness of our financial reports and the market price of our common stock may be negatively affected.As a public company, we are required to maintain internal controls over financial reporting and to report any material weaknesses in such internalcontrols. Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”) requires that we evaluate and determine the effectiveness of our internalcontrols over financial reporting and provide a management report on the internal controls over financial reporting, which must be attested to by ourindependent registered public accounting firm. In accordance with guidance issued by the Securities and Exchange Commission (“SEC”), companies arepermitted to exclude acquisitions from their final assessment of internal control over financial reporting for the first fiscal year in which the acquisitionoccurred. After that time, however, the internal controls of companies that we have acquired must be included in our management report on internal controlsover financial reporting and the attestation of our independent registered public accounting firm. If we have a material weakness in our internal controls overfinancial reporting (including in the control environment of our acquired companies), we may not detect errors on a timely basis and our financial statementsmay be materially misstated. While we were able to determine the effectiveness of our internal controls over financial reporting in our management’s report asof January 31, 2019, as well as provide an unqualified attestation report from our independent registered public accounting firm to that effect, in the future,we may not be able to complete our evaluation, testing, and any required remediation in a timely fashion, or otherwise assert that our internal controls areeffective, and additionally, our independent registered public accounting firm may not be able to formally attest to the effectiveness of our internal controlsover financial reporting.If in the future we identify material weaknesses in our internal controls over financial reporting (including in the control environment of our acquiredcompanies), if we are unable to comply with the requirements of Section 404 in a timely manner, if we are unable to assert that our internal controls overfinancial reporting are effective or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internalcontrols over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of ourcommon stock could be negatively affected, and we could become23subject to investigations by the SEC, stock exchange or other regulatory authorities, which could require additional financial and management resources toaddress.Sales to customers outside the United States or with international operations expose us to risks inherent in international sales.A key element of our growth strategy is to expand our international operations and develop a worldwide customer base. The combined revenues fromnon-U.S. regions, as determined based on the billing address of our customers, constituted 38%, 35%, and 32% of our total revenues for the fiscal years endedJanuary 31, 2019, 2018, and 2017, respectively. Operating in international markets requires significant resources and management attention and will subjectus to regulatory, economic and political risks that are different from those in the United States. Because of our limited experience with internationaloperations, our international expansion efforts may not be successful in creating additional demand for our platform outside of the United States or ineffectively selling subscriptions to our platform in all of the international markets we enter. There can be no assurance that we will be able to continue togrow our combined revenues from non-U.S. regions as a percentage of our total revenues. In addition, we will face risks in doing business internationally thatcould adversely affect our business, including: •the need to localize and adapt our platform for specific countries, including translation into foreign languages and associated expenses; •data privacy laws that require customer data to be stored and processed in a designated territory; •difficulties in staffing and managing foreign operations and working with foreign partners; •different pricing environments, longer sales cycles and longer accounts receivable payment cycles and collections issues; •new and different sources of competition; •weaker protection for intellectual property and other legal rights than in the United States and practical difficulties in enforcing intellectualproperty and other rights outside of the United States; •laws and business practices favoring local competitors; •compliance challenges related to the complexity of multiple, conflicting and changing governmental laws and regulations, includingemployment, tax, privacy and data protection laws and regulations; •increased financial accounting and reporting burdens and complexities; •restrictions on the transfer of funds; •fluctuations in currency exchange rates, which could increase the price of our products outside of the United States, increase the expenses ofour international operations and expose us to foreign currency exchange rate risk; •adverse tax consequences; •unstable regional and economic political conditions; and •the fragmentation of longstanding regulatory frameworks caused by Brexit.24As we continue to expand our business globally, our success will depend, in large part, on our ability to anticipate and effectively manage these andother risks associated with our international sales and operations. Our failure to manage any of these risks successfully, or to comply with these laws andregulations, could harm our operations, reduce our sales and harm our business, operating results and financial condition. For example, in certain foreigncountries, particularly those with developing economies, certain business practices that are prohibited by laws and regulations applicable to us, such as theForeign Corrupt Practices Act, may be more commonplace. Although we have policies and procedures designed to ensure compliance with these laws andregulations, our employees, contractors and agents, as well as channel partners involved in our international sales, may take actions in violation of ourpolicies. Any such violation could have an adverse effect on our business and reputation.Some of our business partners also have international operations and are subject to the risks described above. Even if we are able to successfullymanage the risks of international operations, our business may be adversely affected if our business partners are not able to successfully manage these risks.If we fail to manage our technical operations infrastructure, our existing customers may experience service outages and our new customers mayexperience delays in the implementation of our platform.We have experienced significant growth in the number of users, transactions and data that our operations infrastructure supports. We seek to maintainsufficient excess capacity in our operations infrastructure to meet the needs of all of our customers, as well as to facilitate the rapid provision of new customerimplementations and the expansion of existing customer implementations. In addition, we need to properly manage our technological operationsinfrastructure in order to support version control, changes in hardware and software parameters and the evolution of our platform. However, the provision ofnew hosting infrastructure requires significant lead time. We have experienced, and may in the future experience, website disruptions, outages and otherperformance problems. These problems may be caused by a variety of factors, including infrastructure changes, human or software errors, viruses, securityattacks, fraud, spikes in customer usage and denial of service issues. In some instances, we may not be able to identify the cause or causes of theseperformance problems within an acceptable period of time. If we do not accurately predict our infrastructure requirements, our customers may experienceservice outages that may subject us to financial penalties, financial liabilities and customer losses. If our operations infrastructure fails to keep pace withincreased sales, customers may experience delays as we seek to obtain additional capacity, which could adversely affect our revenue as well as our reputation.Our business could be adversely affected if our customers are not satisfied with the implementation services provided by us or our partners.Our business depends on our ability to satisfy our customers, both with respect to our platform and modules and the professional services that areperformed to help our customers use features and functions that address their business needs. Professional services may be performed by our own staff, by athird-party partner or by a combination of the two. Our strategy is to work with partners to increase the breadth of capability and depth of capacity fordelivery of these services to our customers, and we expect the number of our partner-led implementations to continue to increase over time. If a customer isnot satisfied with the quality of work performed by us or a partner or with the type of professional services or modules delivered, we may incur additionalcosts to in addressing the situation, the profitability of that work might be impaired and the customer’s dissatisfaction with our services could damage ourability to expand the number of modules subscribed to by that customer. In addition, negative publicity related to our customer relationships, regardless of itsaccuracy, may further damage our business by affecting our ability to compete for new business with current and prospective customers.25We typically provide service level commitments under our customer contracts. If we fail to meet these contractual commitments, we could be obligated toprovide credits or refunds for prepaid amounts related to unused subscription services or face contract terminations, which could adversely affect ourrevenues.Our customer agreements typically provide service level commitments on a monthly basis. If we are unable to meet the stated service levelcommitments or suffer extended periods of unavailability for our platform, we may be contractually obligated to provide these customers with service credits,typically 10% of the customer’s subscription fees for the month in which the service level was not met, and we could face contract terminations, in which casewe would be subject to refunds for prepaid amounts related to unused subscription services. Our revenues could be significantly affected if we sufferunexcused downtime under our agreements with our customers. Any extended service outages could adversely affect our reputation, revenues and operatingresults.If we fail to integrate our platform with a variety of third-party technologies, our platform may become less marketable and less competitive or obsoleteand our operating results may be harmed.Our platform must integrate with a variety of third-party technologies, and we need to continuously modify and enhance our platform to adapt tochanges in cloud-enabled hardware, software, networking, browser and database technologies. Any failure of our platform to operate effectively with futuretechnologies could reduce the demand for our platform, resulting in customer dissatisfaction and harm to our business. If we are unable to respond to thesechanges in a cost-effective manner, our platform may become less marketable and less competitive or obsolete and our operating results may be negativelyaffected. In addition, an increasing number of individuals within the enterprise are utilizing mobile devices to access the Internet and corporate resources andto conduct business. If we cannot continue to effectively make our platform available on these mobile devices and offer the information, services andfunctionality required by enterprises that widely use mobile devices, we may experience difficulty attracting and retaining customers.Any failure to offer high-quality technical support services may adversely affect our relationships with our customers and our financial results.Once our modules are implemented, our customers depend on our support organization to resolve technical issues relating to our modules. We maybe unable to respond quickly enough to accommodate short-term increases in customer demand for support services. We also may be unable to modify theformat of our support services to compete with changes in support services provided by our competitors. Increased customer demand for these services,without corresponding revenues, could increase costs and adversely affect our operating results. In addition, our sales process is highly dependent on ourplatform and business reputation and on positive recommendations from our existing customers. Any failure to maintain high-quality technical support, or amarket perception that we do not maintain high-quality support, could adversely affect our reputation, our ability to sell subscriptions to our modules toexisting and prospective customers and our business, operating results and financial position.Failure to adequately expand our direct sales force will impede our growth.We will need to continue to expand and optimize our sales infrastructure in order to grow our customer base and our business. We plan to continue toexpand our direct sales force, both domestically and internationally. Identifying and recruiting qualified personnel and training them in the use of oursoftware requires significant time, expense and attention. It often takes six months or longer before our sales representatives are fully-trained and productive.Our business may be adversely affected if our efforts to expand and train our direct sales force do not generate a corresponding increase in revenues. Inparticular, if we are unable to hire, develop and retain talented sales personnel or if new direct sales personnel are unable to achieve desired productivitylevels in a reasonable period of time, we may not be able to realize the expected benefits of this investment or increase our revenues.The loss of one or more of our key customers could negatively affect our ability to market our platform.We rely on our reputation and recommendations from key customers in order to promote subscriptions to our platform. The loss of any of our keycustomers could have a significant impact on our revenues, reputation and our ability to obtain new customers. In addition, acquisitions of our customerscould lead to cancellation of our contracts26with those customers or by the acquiring companies, thereby reducing the number of our existing and potential customers.Weakened global economic conditions may harm our industry, business and results of operations.Our overall performance depends in part on worldwide economic conditions. Global financial developments and downturns seemingly unrelated tous or the enterprise software industry may harm us. The United States and other key international economies have been affected from time to time by fallingdemand for a variety of goods and services, restricted credit, poor liquidity, reduced corporate profitability, volatility in credit, equity and foreign exchangemarkets, bankruptcies, and overall uncertainty with respect to the economy, including with respect to tariff and trade issues. In particular, the economies ofcountries in Europe have been experiencing weakness associated with high sovereign debt levels, weakness in the banking sector and uncertainty over thefuture of the Euro zone, including instability surrounding “Brexit,” the United Kingdom’s decision to exit the European Union. We have operations, as wellas current and potential new customers, throughout most of Europe. If economic conditions in Europe and other key markets for our platform continue toremain uncertain or deteriorate further, many customers may delay or reduce their information technology spending.The growth of our revenues and potential profitability of our business depends on demand for platform and modules generally, and business spendmanagement specifically. In addition, our revenues are dependent on the number of users of our modules. Historically, during economic downturns therehave been reductions in spending on enterprise software as well as pressure for extended billing terms or pricing discounts, which would limit our ability togrow our business and negatively affect our operating results. These conditions affect the rate of enterprise software spending and could adversely affect ourcustomers’ ability or willingness to subscribe to our platform, delay prospective customers’ purchasing decisions, reduce the value or duration of theirsubscriptions or affect renewal rates, all of which could harm our operating results.Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States.Generally accepted accounting principles in the United States are subject to interpretation by the Financial Accounting Standards Board (“FASB”),the SEC and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could havea significant effect on our reported financial results for periods prior and subsequent to such change. For example, recent new standards issued by the FASBthat could materially impact our financial statements include revenue from contracts with customers, accounting for leases, and implementation costsincurred in a hosting arrangement that is a service contract. We may adopt one or more of these standards retrospectively to prior periods and the adoptionmay result in an adverse change to previously reported results. Additionally, the adoption of these standards may potentially require enhancements orchanges in our systems and will require significant time and cost on behalf of our financial management.We adopted the new revenue recognition standard on February 1, 2018 using a modified retrospective approach. One of the impacts of the newstandard on us is the removal of the previous limitation on contingent revenue. In addition, commissions accounting under the new standard is significantlydifferent than our previous capitalization policy. The new standard results in additional types of costs that are capitalized and amounts that are amortizedover a period longer than our previous policy of amortizing the deferred amounts over the specific revenue contract-terms. Specifically, incremental contractcosts will be deferred and amortized over an estimated customer life of five years, which is calculated based on quantitative and qualitative factors. The newstandard also requires incremental disclosures including information about the remaining performance obligations. We have implemented control activitiesrelated to the new standard, particularly related to evaluating the impact of the standard on our revenue recognition policies, the determination of averagecustomer life, and the new disclosure requirements, and did not require the implementation of new information technology systems.The prescribed periods of adoption of these standards and other pending changes in accounting principles generally accepted in the United States,are further discussed in Note 2 “Significant Accounting Policies—Recent Accounting Guidance” in the notes to our consolidated financial statements.27We may face exposure to foreign currency exchange rate fluctuations, which could adversely affect our business, results of operations and financialcondition.As our international operations expand, our exposure to the effects of fluctuations in currency exchange rates grows because our internationalcontracts are sometimes denominated in local currencies, in particular with respect to the Euro, British Pound Sterling, Swedish Krona, Swiss Franc, andAustralian Dollar. Over time, an increasing portion of our international contracts may be denominated in local currencies. Therefore, as exchange rates vary,revenue, cost of revenue, operating expenses and other operating results, when re-measured, may differ materially from expectations. We do not currentlyengage in currency hedging activities to limit the risk of exchange rate fluctuations. However, in the future, we may use derivative instruments, such asforeign currency forward and option contracts, to hedge certain exposures to fluctuations in foreign currency exchange rates. The use of such hedgingactivities may not offset any or more than a portion of the adverse financial effects of unfavorable movements in foreign exchange rates over the limited timethe hedges are in place. Additionally, the use of hedging instruments may introduce additional risks if we are unable to structure effective hedges with suchinstruments. Moreover, we anticipate growing our business further outside of the United States, and the effects of movements in currency exchange rates willincrease as our transaction volume outside of the United States increases.If we cannot continue to expand the use of our platform, our ability to grow our business may be harmed and the growth rate of our revenues may decline.Our ability to grow our business depends in part on our ability to compete in the market for the additional modules on our platform, includingstrategic sourcing, inventory, contracts, supplier management and spend analysis. Our efforts to market these other modules is relatively new, and it isuncertain whether these other modules will ever result in significant revenues for us. While we have recently acquired businesses related to certain of thesemodules, there can be no assurance that these acquisitions will facilitate our efforts to market and sell these other modules. Further, the introduction of newmodules beyond these markets may not be successful.Large customers often demand more configuration and integration services, or customized features and functions that we do not offer, which couldadversely affect our business and operating results.Large customers may demand more configuration and integration services, which increase our upfront investment in sales and deployment efforts,with no guarantee that these customers will increase the scope of their subscription. As a result of these factors, we must devote a significant amount of salessupport and professional services resources to individual customers, increasing the cost and time required to complete sales. Additionally, our platform doesnot currently permit customers to modify our code. If prospective customers require customized features or functions that we do not offer and that would bedifficult for them to deploy themselves, then the market for our platform will be more limited and our business could suffer.If our platform fails to perform properly, our reputation could be adversely affected, our market share could decline and we could be subject to liabilityclaims.Our platform is inherently complex and may contain material defects or errors. Any defects in functionality or that cause interruptions in theavailability of our platform could result in: •loss or delayed market acceptance and sales; •breach of warranty claims; •sales credits or refunds for prepaid amounts related to unused subscription services; •loss of customers; •diversion of development and customer service resources; and •injury to our reputation.The costs incurred in correcting any material defects or errors might be substantial and could adversely affect our operating results.28Because of the large amount of data that we collect and manage, it is possible that hardware failures or errors in our systems could result in data lossor corruption or cause the information that we collect to be incomplete or contain inaccuracies that our customers regard as significant. Furthermore, theavailability or performance of our platform could be adversely affected by a number of factors, including customers’ inability to access the Internet, failure ofour network or software systems, security breaches or variability in user traffic for our platform. We may be required to issue credits or refunds for prepaidamounts related to unused services or otherwise be liable to our customers for damages they incur resulting from certain of these events. For example, ourcustomers access our modules through their Internet service providers. If a service provider fails to provide sufficient capacity to support our modules orotherwise experiences service outages, such failure could interrupt our customers’ access to our modules and adversely affect their perception of our modules’reliability. In addition to potential liability, if we experience interruptions in the availability of our platform, our reputation could be adversely affected andwe could lose customers.Our errors and omissions insurance may be inadequate or may not be available in the future on acceptable terms, or at all. In addition, our policy maynot cover all claims made against us and defending a suit, regardless of its merit, could be costly and divert management’s attention.Our growth depends in part on the success of our strategic relationships with third parties.We have established strategic relationships with a number of other companies. In order to grow our business, we anticipate that we will continue toestablish and maintain relationships with third parties, such as implementation partners, system integrator partners and technology providers. Identifyingpartners, and negotiating and documenting relationships with them, requires significant time and resources. Our competitors may be effective in providingincentives to third parties to favor their products or services or to prevent or reduce subscriptions to our services. In addition, acquisitions of our partners byour competitors could result in a decrease in the number of our current and potential customers, as our partners may no longer facilitate the adoption of ourplatform by potential customers.If we are unsuccessful in establishing or maintaining our relationships with third parties, our ability to compete in the marketplace or to grow ourrevenues could be impaired and our operating results could suffer. Even if we are successful in our strategic relationships, we cannot assure you that theserelationships will result in increased customer usage of our platform or increased revenues.Our estimates of market opportunity and forecasts of market growth that we have publicly disclosed may prove to be inaccurate, and even if the market inwhich we compete achieves the forecasted growth, our business could fail to grow at similar rates.Market opportunity estimates and growth forecasts are subject to significant uncertainty and are based on assumptions and estimates that may notprove to be accurate. Our estimates and forecasts relating to the size and expected growth of our market that we have publicly disclosed may prove to beinaccurate. Even if the market in which we compete meets our size estimates and forecasted growth, our business could fail to grow at similar rates.Any failure to protect our intellectual property rights could impair our ability to protect our proprietary technology and our brand.Our success and ability to compete depend in part upon our intellectual property. We primarily rely on copyright, patent, trade secret and trademarklaws, trade secret protection and confidentiality or contractual agreements with our employees, customers, partners and others to protect our intellectualproperty rights. However, the steps we take to protect our intellectual property rights may be inadequate.In order to protect our intellectual property rights, we may be required to expend significant resources to monitor and protect such rights. Litigationbrought to protect and enforce our intellectual property rights could be costly, time-consuming and distracting to management and could result in theimpairment or loss of portions of our intellectual property. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses,counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights. Our failure to secure, protect and enforce ourintellectual property rights could seriously adversely affect our brand and our business.29We have incurred and will continue to incur significantly increased costs and devote substantial management time as a result of operating as a publiccompany.As a public company, we have incurred and will continue to incur significant legal, accounting and other expenses that we did not incur as a privatecompany. For example, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, and are required to comply with theapplicable requirements of the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules and regulationssubsequently implemented by the SEC and the Nasdaq Global Select Market, including the establishment and maintenance of effective disclosure andfinancial controls and changes in corporate governance practices. Compliance with these requirements has increased our legal and financial compliance costsand made some activities more time consuming and costly. In addition, our management and other personnel need to divert attention from operational andother business matters to devote substantial time to these public company requirements. In particular, we are incurring significant expenses and devotingsubstantial management effort toward ensuring ongoing compliance with the requirements of Section 404 of the Sarbanes-Oxley Act, which have increasednow that we are no longer an emerging growth company, as defined by the JOBS Act. We have hired and may need to continue to hire additional accountingand financial staff with appropriate public company experience and technical accounting knowledge and maintain an internal audit function. We cannotpredict or estimate the amount of additional costs we may incur as a result of becoming a public company or the timing of such costs.We may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs.We have funded our operations since inception primarily through equity and debt financings and prepayments by customers. We do not know whenor if our operations will generate sufficient cash to fund our ongoing operations. In the future, we may require additional capital to respond to businessopportunities, challenges, acquisitions, a decline in the level of customer prepayments or unforeseen circumstances and may determine to engage in equity ordebt financings or enter into credit facilities for other reasons, and we may not be able to timely secure additional debt or equity financing on favorable terms,or at all. Any debt financing obtained by us in the future could involve restrictive covenants relating to our capital raising activities and other financial andoperational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potentialacquisitions. If we raise additional funds through further issuances of equity, convertible debt securities or other securities convertible into equity, ourexisting stockholders could suffer significant dilution in their percentage ownership of our company, and any new equity securities we issue could haverights, preferences and privileges senior to those of holders of our common stock or our outstanding noteholders. If we are unable to obtain adequatefinancing or financing on terms satisfactory to us when we require it, our ability to continue to grow or support our business and to respond to businesschallenges could be significantly limited.Our customers may fail to pay us in accordance with the terms of their agreements, necessitating action by us to compel payment.We typically enter into multiple year, non-cancelable arrangements with our customers. If customers fail to pay us under the terms of our agreements,we may be adversely affected both from the inability to collect amounts due and the cost of enforcing the terms of our contracts, including litigation. The riskof such negative effects increases with the term length of our customer arrangements. Furthermore, some of our customers may seek bankruptcy protection orother similar relief and fail to pay amounts due to us, or pay those amounts more slowly, either of which could adversely affect our operating results, financialposition and cash flow.Contractual disputes with our customers could be costly, time-consuming and harm our reputation.Our business is contract intensive and we are party to contracts with our customers all over the world. Our contracts can contain a variety of terms,including service levels, security obligations, indemnification and regulatory requirements. Contract terms may not always be standardized across ourcustomers and can be subject to differing interpretations, which could result in disputes with our customers from time to time. If our customers notify us of acontract breach or otherwise dispute our contract, the resolution of such disputes in a manner adverse to our interests could negatively affect our operatingresults.30Pursuant to agreements with certain of our customers, we have placed, and in the future may be required to place in escrow the source code of some ofour modules. Under these escrow arrangements, the source code pertaining to the modules may, in specified circumstances, be made available to ourcustomers. This factor may increase the likelihood of misappropriation or other misuse of our modules.Our business is subject to the risks of earthquakes, fire, floods and other natural catastrophic events, and to interruption by man-made problems such aspower disruptions, computer viruses, data security breaches or terrorism.Our corporate headquarters are located in the San Francisco Bay Area, a region known for seismic activity. A significant natural disaster, such as anearthquake, fire or flood, occurring at our headquarters, at one of our other facilities or where a business partner is located could adversely affect our business,results of operations and financial condition. Further, if a natural disaster or man-made problem were to affect Internet service providers, this could adverselyaffect the ability of our customers to use our products and platform. Although we maintain incident management and disaster response plans, in the event of amajor disruption caused by a natural disaster or man-made problem, we may be unable to continue our operations and may endure system interruptions,reputational harm, delays in our development activities, lengthy interruptions in service, breaches of data security and loss of critical data, any of whichcould adversely affect our business, results of operations and financial condition.We are subject to the tax laws of various jurisdictions, which are subject to unanticipated changes and to interpretation, which could harm our futureresults.We are subject to income taxes in the United States and foreign jurisdictions, and our domestic and international tax liabilities are subject to theallocation of expenses in differing jurisdictions. Our effective tax rate could be adversely affected by changes in the mix of earnings and losses in countrieswith differing statutory tax rates, certain non-deductible expenses as a result of acquisitions, the valuation of deferred tax assets and liabilities, and changesin federal, state, or international tax laws and accounting principles.Further, each jurisdiction has different rules and regulations governing sales and use, value added, and similar taxes, and these rules and regulationsare subject to varying interpretations that change over time. Certain jurisdictions in which we did not collect such taxes may assert that such taxes areapplicable, which could result in tax assessments, penalties, and interest, and we may be required to collect such taxes in the future. In addition, we may besubject to income tax audits by many tax jurisdictions throughout the world, many of which have not established clear guidance on the tax treatment ofcloud-based companies. Any tax assessments, penalties, and interest, or future requirements may adversely affect our results of operations. Moreover,imposition of such taxes on us going forward would effectively increase the cost of our products to our customers and might adversely affect our ability toretain existing customers or to gain new customers in the areas in which such taxes are imposed.In addition, the application of the tax laws of various jurisdictions, including the United States, to our international business activities is subject tointerpretation and depends on our ability to operate our business in a manner consistent with our corporate structure. As we operate in numerous taxingjurisdictions, the application of tax laws can also be subject to diverging and sometimes conflicting interpretations by tax authorities of these jurisdictions.On December 22, 2017, the U.S. government enacted comprehensive federal tax legislation commonly referred to as the Tax Cuts and Jobs Act of2017 (the “Tax Act”). The Tax Act makes changes to the corporate tax rate, business-related deductions and taxation of foreign earnings, among others, thatwill generally be effective for taxable years beginning after December 31, 2017. These changes could have a material adverse impact on the value of our U.S.deferred tax assets, result in significant one-time charges in the current or future taxable years and increase our future U.S. tax expense. For example, while theTax Act allows for federal net operating losses incurred in tax years beginning after December 31, 2017 to be carried forward indefinitely, the Tax Act alsoimposes an 80% limitation on the use of net operating losses that are generated in tax years beginning after December 31, 2017. We are continuing toevaluate the Tax Act and its requirements, as well as its application to our business and its impact on our effective tax rate. At this stage, it is unclear howmany U.S. states will incorporate these federal law changes, or portions thereof, into their tax codes. The implementation by us of new practices and processesdesigned to comply with, and benefit from, the Tax Act and its rules and regulations could require us to make substantial changes to our business practices,allocate additional resources, and increase our costs, which could negatively affect our business, results of operations and financial condition.31We may not be able to utilize a significant portion of our net operating loss or research tax credit carryforwards, which could adversely affect ourpotential profitability.We have federal and state net operating loss carryforwards due to prior period losses, which if not utilized will begin to expire in 2026 and 2029 forfederal and state purposes, respectively. These net operating loss carryforwards could expire unused and be unavailable to offset future income tax liabilities,which could adversely affect our potential profitability.In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), our ability to utilize net operating losscarryforwards or other tax attributes, such as research tax credits, in any taxable year may be limited if we experience an “ownership change.” Such an“ownership change” generally occurs if one or more stockholders or groups of stockholders who own at least 5% of our stock increase their ownership bymore than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws. As ofour initial public offering and our subsequent follow-on offering we have not had an ownership change that has triggered any material limitation on the useof our tax attributes for purposes of Section 382 of the Code. Subsequent changes in our stock ownership, however, could cause an “ownership change.” It ispossible that an ownership change, or any future ownership change, could have a material effect on the use of our net operating loss carryforwards or other taxattributes, which could adversely affect our potential profitability.We have incurred substantial indebtedness that may decrease our business flexibility, access to capital, and/or increase our borrowing costs, and we maystill incur substantially more debt, which may adversely affect our operations and financial results.In January 2018, we issued $230 million aggregate principal amount of 0.375% convertible senior notes due 2023, or the Convertible Notes. Ourindebtedness may: •limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions or other general business purposes; •limit our ability to use our cash flow or obtain additional financing for future working capital, capital expenditures, acquisitions or othergeneral business purposes; •require us to use a substantial portion of our cash flow from operations to make debt service payments; •limit our flexibility to plan for, or react to, changes in our business and industry; •place us at a competitive disadvantage compared to our less leveraged competitors; and •increase our vulnerability to the impact of adverse economic and industry conditions.Further, the indenture governing the Convertible Notes does not restrict our ability to incur additional indebtedness and we and our subsidiaries mayincur substantial additional indebtedness in the future, subject to the restrictions contained in any future debt instruments existing at the time, some of whichmay be secured indebtedness.Servicing our debt will require a significant amount of cash. We may not have sufficient cash flow from our business to pay our substantial debt, and wemay not have the ability to raise the funds necessary to settle conversions of the Convertible Notes in cash or to repurchase the Convertible Notes upon afundamental change, which could adversely affect our business and results of operations.Our ability to make scheduled payments of the principal of, to pay interest on, or to refinance our indebtedness, including the amounts payable underthe Convertible Notes, depends on our future performance, which is subject to economic, financial, competitive, and other factors beyond our control. Ourbusiness may not continue to generate cash flow from operations in the future sufficient to service our indebtedness and make necessary capital expenditures.If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt, or obtainingadditional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets andour financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which couldresult in a default on our debt obligations.32Further, holders of the Convertible Notes have the right to require us to repurchase all or a portion of their Convertible Notes upon the occurrence ofa “fundamental change” (as defined in the indenture governing the Convertible Notes (the “indenture”)) before the maturity date at a repurchase price equalto 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest, if any. In addition, upon conversion of theConvertible Notes, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering anyfractional share), we will be required to make cash payments in respect of the Convertible Notes being converted. However, we may not have enoughavailable cash or be able to obtain financing at the time we are required to make repurchases of Convertible Notes surrendered therefor or pay cash withrespect to Convertible Notes being converted.The conditional conversion feature of the Convertible Notes, when triggered, may adversely affect our financial condition and operating results.In the event the conditional conversion feature of the Convertible Notes is triggered, holders of the Convertible Notes will be entitled to convert theirConvertible Notes at any time during specified periods at their option. If one or more holders elect to convert their Convertible Notes, unless we elect tosatisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), wewould be required to settle a portion or all of our conversion obligation in cash, which could adversely affect our liquidity. As disclosed in Note 9 of notes toour consolidated financial statements, the conditional conversion feature was triggered as of January 31, 2019, and the Convertible Notes are currentlyconvertible at the option of the holders as of January 31, 2019 through April 30, 2019.In addition, even if holders of Convertible Notes do not elect to convert their Convertible Notes, we could be required under applicable accountingrules to reclassify all or a portion of the outstanding principal of the Convertible Notes as a current rather than long-term liability, which would result in amaterial reduction of our net working capital. As disclosed in Note 9 of notes to our consolidated financial statements, because the conditional conversionfeature was triggered as of January 31, 2019, the Convertible Notes have remained classified as current liabilities on the consolidated balance sheet as ofJanuary 31, 2019.The accounting method for convertible debt securities that may be settled in cash, such as the Convertible Notes, could have a material effect on ourreported financial results.Under Accounting Standards Codification 470-20, Debt with Conversion and Other Options (“ASC 470-20”), an entity must separately account forthe liability and equity components of the convertible debt instruments (such as the Convertible Notes) that may be settled entirely or partially in cash uponconversion in a manner that reflects the issuer’s economic interest cost. The effect of ASC 470-20 on the accounting for the Convertible Notes is that theequity component is required to be included in the additional paid-in capital section of stockholders’ equity on our consolidated balance sheet at theissuance date and the value of the equity component would be treated as debt discount for purposes of accounting for the debt component of the ConvertibleNotes. As a result, we will be required to record a greater amount of non-cash interest expense as a result of the amortization of the discounted carrying valueof the Convertible Notes to their face amount over the term of the Convertible Notes. We will report larger net losses (or lower net income) in our financialresults because ASC 470-20 will require interest to include both the amortization of the debt discount and the instrument’s non-convertible coupon interestrate, which could adversely affect our reported or future financial results, the trading price of our common stock and the trading price of the ConvertibleNotes.In addition, under certain circumstances, convertible debt instruments (such as the Convertible Notes) that may be settled entirely or partly in cashmay be accounted for utilizing the treasury stock method, the effect of which is that the shares issuable upon conversion of such Convertible Notes are notincluded in the calculation of diluted earnings per share except to the extent that the conversion value of such Convertible Notes exceeds their principalamount. Under the treasury stock method, for diluted earnings per share purposes, the transaction is accounted for as if the number of shares of common stockthat would be necessary to settle such excess, if we elected to settle such excess in shares, are issued. We cannot be sure that the accounting standards in thefuture will continue to permit the use of the treasury stock method. If we are unable or otherwise elect not to use the treasury stock method in accounting forthe shares issuable upon conversion of the Convertible Notes, then our diluted earnings per share could be adversely affected.33The capped call transactions may affect the value of the Convertible Notes and our common stock.In connection with the pricing of the Convertible Notes, we entered into capped call transactions with certain financial institutions. The capped calltransactions are expected generally to reduce or offset the potential dilution upon conversion of the Convertible Notes and/or offset any cash payments weare required to make in excess of the principal amount of converted Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap.In connection with establishing their initial hedges of the capped call transactions, these financial institutions or their respective affiliates likelypurchased shares of our common stock and/or entered into various derivative transactions with respect to our common stock concurrently with or shortly afterthe pricing of the Convertible Notes. These financial institutions or their respective affiliates may modify their hedge positions by entering into or unwindingvarious derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary markettransactions following the pricing of the Convertible Notes and prior to the maturity of the Convertible Notes (and are likely to do so during any observationperiod related to a conversion of Convertible Notes). This activity could also cause or avoid an increase or a decrease in the market price of our commonstock or the Convertible Notes.The potential effect, if any, of these transactions and activities on the price of our common stock or the Convertible Notes will depend in part onmarket conditions and cannot be ascertained at this time. Any of these activities could adversely affect the value of our common stock.Conversion of the Convertible Notes will dilute the ownership interest of existing stockholders, including holders who had previously converted theirConvertible Notes, or may otherwise depress the price of our common stock.The conversion of some or all of the Convertible Notes will dilute the ownership interests of existing stockholders to the extent we deliver shares ofour common stock upon conversion of any of the Convertible Notes. The Convertible Notes are currently convertible and may from time to time in the futurebe convertible at the option of their holders prior to their scheduled terms under certain circumstances. Any sales in the public market of the common stockissuable upon such conversion could adversely affect prevailing market prices of our common stock. In addition, the existence of the Convertible Notes mayencourage short selling by market participants because the conversion of the Convertible Notes could be used to satisfy short positions, or anticipatedconversion of the Convertible Notes into shares of our common stock could depress the price of our common stock.Risks Related to Ownership of Our Common StockOur stock price has been subject to fluctuations, and will likely continue to be subject to fluctuations and decline, due to factors beyond our control andyou may lose all or part of your investment.The market price of our common stock is subject to wide fluctuations in response to various factors, some of which are beyond our control. Thesefactors, as well as the volatility of our common stock, could affect the price at which our convertible noteholders could sell the common stock received uponconversion of the Convertible Notes and could also impact the trading price of the Convertible Notes. Since shares of our common stock were sold in ourinitial public offering in October 2016 at a price of $18.00 per share, the reported high and low sales prices of our common stock has ranged from $22.50 to$87.00 through January 31, 2019. The market price of our common stock may fluctuate significantly in response to numerous factors, many of which arebeyond our control, including: •the overall performance of the equity markets; •our operating performance and the performance of other similar companies; •changes in our projected operating results and key metrics that we provide to the public, our failure to meet or exceed these projections orchanges in recommendations by securities analysts that elect to follow our common stock;34 •announcements of technological innovations, pricing changes, new software or enhancements to services, acquisitions, strategic alliances orsignificant agreements by us or by our competitors; •disruptions in our services due to computer hardware, software or network problems; •announcements of customer additions and customer cancellations or delays in customer purchases; •recruitment or departure of key personnel; •the economy as a whole, market conditions in our industry and the industries of our customers; •extraordinary expenses such as litigation or other dispute-related expenses or settlement payments; •the size of our market float; and •any other factors discussed in this annual report.In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices ofequity securities of many technology companies. Stock prices of many technology companies have fluctuated in a manner unrelated or disproportionate tothe operating performance of those companies. In the past, stockholders have filed securities class action litigation following periods of market volatility. Ifwe were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from ourbusiness and adversely affect our business.Sales of a substantial number of shares of our common stock in the public market, or the perception that they might occur, could cause the price of ourcommon stock to decline.The price of our common stock could decline if there are substantial sales of our common stock, particularly sales by our directors, executive officers,and significant stockholders. The shares held by these persons may be sold in the public market in the United States, subject to prior registration in theUnited States, if required, or reliance upon an exemption from United States registration, including, in the case of shares held by affiliates or control persons,compliance with the volume restrictions of Rule 144. In addition, some of our executive officers have entered into Rule 10b5-1 trading plans under whichthey have contracted with a broker to sell shares of our common stock on a periodic basis.Sales of a substantial number of shares of our common stock in the public market, or the perception that these sales might occur, for whatever reason,could cause the market price of our common stock and the trading price of the Convertible Notes to decline or make it more difficult for our stockholders tosell their common stock at a time and price that they deem appropriate and could impair our ability to raise capital through the sale of additional equity orequity linked securities. In addition, we have filed a registration statement to register shares reserved for future issuance under our equity compensation plans.Subject to the satisfaction of applicable exercise periods and, in the case of shares held by affiliates or control persons, compliance with the volumerestrictions of Rule 144, the shares issued upon exercise of outstanding stock options, settlement of outstanding restricted stock units, or conversion of theConvertible Notes into common stock will be available for immediate resale in the United States in the open market.We have also reserved a substantial amount of shares of our common stock in connection with awards issued under our equity incentive plans andupon conversion of the Convertible Notes, the issuance of which will dilute the ownership interests of existing stockholders. Any sales in the public marketof the common stock issuable upon such issuance or conversion could adversely affect prevailing market prices of our common stock.We are unable to predict the effect that sales, or the perception that our shares may be available for sale, will have on the prevailing market price ofour common stock and the trading price of the Convertible Notes. 35If securities or industry analysts do not continue to publish research or publish inaccurate or unfavorable research about our business, our stock price andtrading volume could decline.The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about us or ourbusiness. If industry analysts cease coverage of us, the trading price for our common stock and the trading price of the Convertible Notes will be negativelyaffected. If one or more of the analysts who cover us downgrade our common stock or publish inaccurate or unfavorable research about our business, ourcommon stock price and the trading price of the Convertible Notes will likely decline. If one or more of these analysts cease coverage of us or fail to publishreports on us regularly, demand for our common stock could decrease, which might cause our common stock price and trading volume, and the trading priceof the Convertible Notes, to decline.In addition, independent industry analysts, such as Gartner and Forrester, often provide reviews of our products and platform capabilities, as well asthose of our competitors, and perception of our offerings in the marketplace may be significantly influenced by these reviews. We have no control over whatthese industry analysts report, and because industry analysts may influence current and potential customers, our brand could be harmed if they do not providea positive review of our products and platform capabilities or view us as a market leader.We do not intend to pay dividends for the foreseeable future.We have never declared nor paid cash dividends on our capital stock. We currently intend to retain any future earnings to finance the operation andexpansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. Consequently, stockholders, including holders ofour Convertible Notes who receive shares of our common stock upon conversion of the Convertible Notes, must rely on sales of their common stock afterprice appreciation, which may never occur, as the only way to realize any future gains on their investment.Delaware law, provisions in our amended and restated certificate of incorporation (“Restated Certificate”) and amended and restated bylaws (“RestatedBylaws”), and provisions in the indenture for our Convertible Notes could make a merger, tender offer or proxy contest difficult, thereby depressing thetrading price of our common stock and Convertible Notes.Our status as a Delaware corporation and the anti-takeover provisions of the Delaware General Corporation Law may discourage, delay or prevent achange in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the personbecomes an interested stockholder, even if a change of control would be beneficial to our existing stockholders. In addition, our Restated Certificate andRestated Bylaws contain provisions that may make the acquisition of our company more difficult, including the following: •the requirement of a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change themembership of a majority of our board of directors; •the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms of those shares, includingpreferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror; •the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or theresignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; •a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of ourstockholders; •the requirement that a special meeting of stockholders be called only by a majority vote of our entire board of directors, the chairman of ourboard of directors or our chief executive officer, which could delay the ability of our stockholders to force consideration of a proposal or totake action, including to remove directors;36 •the requirement for the affirmative vote of holders of at least 66 2/3% of the voting power of all of the then-outstanding shares of the votingstock, voting together as a single class, to amend the provisions of our Restated Certificate relating to the management of our business or ourRestated Bylaws, which may inhibit the ability of an acquiror to effect such amendments to facilitate an unsolicited takeover attempt; and •advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to beacted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to electthe acquiror’s own slate of directors or otherwise attempting to obtain control of us.In addition, as a Delaware corporation, we are subject to Section 203 of the Delaware General Corporation Law. These provisions may prohibit largestockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us for a certain period of time.A Delaware corporation may opt out of this provision by express provision in its original certificate of incorporation or by amendment to itscertificate of incorporation or bylaws approved by its stockholders. However, we have not opted out of this provision.In addition, if a fundamental change occurs prior to the maturity date of the Convertible Notes, holders of the Convertible Notes will have the right,at their option, to require us to repurchase all or a portion of their Convertible Notes. If a “make-whole fundamental change” (as defined in the indenture)occurs prior the maturity date, we will in some cases be required to increase the conversion rate of the Convertible Notes for a holder that elects to convert itsConvertible Notes in connection with such make-whole fundamental change. Furthermore, the indenture prohibits us from engaging in certain mergers oracquisitions unless, among other things, the surviving entity assumes our obligations under the Convertible Notes.These and other provisions in our Restated Certificate, Restated Bylaws, Convertible Notes, indenture and in Delaware law could deter or prevent athird party from acquiring us or could make it more difficult for stockholders or potential acquirors to obtain control of our board of directors or initiateactions that are opposed by our then-current board of directors, including to delay or impede a merger, tender offer, or proxy contest involving our company.The existence of these provisions could negatively affect the price of our common stock and the trading price of the Convertible Notes and limitopportunities for you to realize value in a corporate transaction.Our Restated Certificate provides that the Court of Chancery of the State of Delaware is the exclusive forum for substantially all disputes between us andour stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers oremployees.Our Restated Certificate provides that the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceedingbrought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the Delaware GeneralCorporation Law, our Restated Certificate or our Restated Bylaws or any action asserting a claim against us that is governed by the internal affairs doctrine.This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or ourdirectors, officers or other employees and may discourage these types of lawsuits. Alternatively, if a court were to find the choice of forum provisioncontained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we might incur additional costsassociated with resolving such action in other jurisdictions.37Item 1B. Unresolved Staff Comments.None.Item 2. Properties.We lease approximately 69,220 square feet of space for our corporate headquarters in San Mateo, California pursuant to a master lease that expires inApril 2024.We have additional domestic offices in New York, Cincinnati, Pittsburgh, Boca Raton, San Diego, and Reno. We also have international offices inAustralia, Canada, Germany, India, Ireland, Italy, Mexico, the Netherlands, Singapore, Sweden, Switzerland, the United Kingdom, and Japan. We may furtherexpand our facilities capacity as our employee base grows. We believe that we will be able to obtain additional space on commercially reasonable terms.Item 3. Legal Proceedings.From time to time we may become involved in legal proceedings or be subject to claims arising in the ordinary course of business. As our growthcontinues, we may become party to an increasing number of litigation matters and claims. Although the results of litigation and claims cannot be predictedwith certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business, operatingresults, financial condition or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs,diversion of management resources and other factors.Item 4. Mine Safety Disclosures.Not applicable.38PART IIItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.Market Information for Common StockOur common stock is traded on the Nasdaq Global Select Market under the symbol “COUP.”HoldersAs of January 31, 2019 there were 109 registered stockholders of record of our common stock and we believe a substantially greater number ofbeneficial owners who hold shares through brokers, banks or other nominees.DividendsWe have never declared or paid any cash dividends on our capital stock, and we do not currently intend to pay any cash dividends on our capitalstock in the foreseeable future. We currently intend to retain all available funds and any future earnings to support operations and to finance the growth anddevelopment of our business. Any future determination to pay dividends will be made at the discretion of our board of directors subject to applicable lawsand will depend upon, among other factors, our results of operations, financial condition, contractual restrictions and capital requirements. Our future abilityto pay cash dividends on our capital stock may also be limited by the terms of any future debt or preferred securities or future credit facility.Unregistered Sales of Equity SecuritiesOn August 1, 2018, the Company completed the acquisition of the technology assets of DCR Workforce Inc. ("DCR") for aggregate cashconsideration of $25.0 million paid at closing (of which $3.8 million is being held back by the Company until the second anniversary after closing of theacquisition) and certain contingent stock consideration that may be earned and issued in the future. The maximum contingent stock consideration that maybe earned and issued is up to 668,740 shares of the Company’s common stock. The payout of the contingent stock consideration will be determined based onthe achievement of distinct revenue performance targets for each of three separate measurement periods that continue through December 31, 2022. During theyear ended January 31, 2019, the revenue performance target for the first measurement period ending October 31, 2019 has been fully met, and therefore theCompany issued 291,602 shares of the Company’s common stock to the shareholders of DCR in the fourth quarter ending January 31, 2019. This transactionwas exempt from registration under the Securities Act pursuant to Section 4(a)(2) of the Securities Act.Performance GraphThe following shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated byreference into any of our other filings under the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended.The graph below compares the cumulative total stockholder return on our common stock with the cumulative total return on the Nasdaq CompositeIndex and the Nasdaq Computer Index. The graph assumes $100 was invested at the market close on October 6, 2016, which was our initial trading day, inour common stock. Data for the Nasdaq Composite Index and the Nasdaq Computer Index assume reinvestment of dividends. Our offering price of ourcommon stock in our IPO, which had a closing stock price of $33.28 on October 6, 2016, was $18.00 per share.39The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of ourcommon stock. 40Item 6. Selected Financial Data.The following selected consolidated financial data should be read in conjunction with “Management’s Discussion and Analysis of FinancialCondition and Results of Operations” and the consolidated financial statements and related notes included within this Annual Report on Form 10-K. Theconsolidated statements of operations data for the fiscal years ended January 31, 2019, 2018 and 2017, and the consolidated balance sheet data as ofJanuary 31, 2019 and 2018 are derived from our audited consolidated financial statements and related notes included elsewhere in this Annual Report onForm 10-K. The consolidated statements of operations data for the fiscal years ended January 31, 2016 and 2015, and the consolidated balance sheet data asof January 31, 2017, 2016 and 2015 are derived from audited consolidated financial statements that are not included in this Annual Report on Form 10-K.Our historical results are not necessarily indicative of our future results. The selected consolidated financial data in this section are not intended to replaceour consolidated financial statements and the related notes, and are qualified in their entirety by the consolidated financial statements and related notesincluded elsewhere in this Annual Report on Form 10-K. Since we adopted the new revenue standard effective on February 1, 2018 using the modifiedretrospective method, the financial data for fiscal 2019 were prepared under the new revenue standard, and the financial data for the years from fiscal 2015 to2018 were prepared prior to the adoption of the new revenue standard. See Note 2 “Significant Accounting Policies—Recent Accounting Guidance—Recently Adopted Accounting Pronouncements.” For the year ended January 31, 2019 2018 2017 2016 2015 (in thousands, except per share data) Consolidated Statements of Operations Data: Revenues: Subscription services $233,428 $164,865 $117,788 $75,667 $43,051 Professional services and other 26,938 21,915 15,987 8,011 7,794 Total revenues 260,366 186,780 133,775 83,678 50,845 Cost of revenues: Subscription services(1) 53,153 36,481 25,055 16,804 8,813 Professional services and other(1) 30,301 23,425 21,214 15,107 9,911 Total cost of revenues 83,454 59,906 46,269 31,911 18,724 Gross profit 176,912 126,874 87,506 51,767 32,121 Operating expenses: Research and development(1) 61,608 44,536 30,262 22,767 11,887 Sales and marketing(1) 105,659 88,722 68,562 54,713 33,724 General and administrative(1) 57,005 38,578 24,106 19,540 13,146 Total operating expenses 224,272 171,836 122,930 97,020 58,757 Loss from operations (47,360) (44,962) (35,424) (45,253) (26,636)Interest expense (12,518) (502) (14) — — Interest income and other, net 3,817 3,307 (1,321) (568) (563)Loss before provision for (benefit from) income taxes (56,061) (42,157) (36,759) (45,821) (27,199)Provision for (benefit from) income taxes (537) 1,648 848 335 101 Net loss $(55,524) $(43,805) $(37,607) $(46,156) $(27,300)Net loss per share attributable to common stockholders, basic and diluted(2) $(0.96) $(0.83) $(1.88) $(9.81) $9.10 Weighted-average number of shares used in computing net loss per share attributable to common stockholders, basic and diluted(2) 57,716 52,999 19,988 4,704 2,999 Other Financial Data: Non-GAAP operating profit (loss) $12,466 $(11,833) $(24,869) $(32,355) $(17,818)Non-GAAP net profit (loss) $11,583 $(11,319) $(27,125) $(33,258) $(18,482)Free cash flows $29,908 $15,138 $(25,446) $(25,937) $(14,299) 41(1)Includes stock-based compensation expense as follows: For the year ended January 31, 2019 2018 2017 2016 2015 (in thousands) Cost of revenues: Subscription services $4,285 $2,105 $715 $235 $109 Professional services and other 4,269 2,722 772 1,014 110 Research and development 11,841 6,928 1,766 1,236 337 Sales and marketing 14,786 8,476 3,130 1,347 433 General and administrative 17,765 9,464 3,069 6,736 818 Total stock-based compensation $52,946 $29,695 $9,452 $10,568 $1,807 (2)See Note 13 to our consolidated financial statements for an explanation of the method used to calculate basic and diluted net loss per share attributable to commonstockholders. As of January 31, 2019 2018 2017 2016 2015 (in thousands) Consolidated Balance Sheet Data: Cash and cash equivalents $141,250 $412,903 $201,721 $92,348 $41,974 Marketable securities 180,169 — — — — Working capital 32,051 335,278 153,039 48,601 13,278 Total assets 740,064 572,450 283,864 139,926 69,606 Deferred revenue, current and non-current 182,587 128,030 90,840 64,926 40,739 Convertible senior notes, net 174,615 163,010 — — — Convertible preferred stock — — — 164,950 88,444 Total stockholders’ equity (deficit) 313,281 240,545 173,892 (106,239) (72,569) Non‑GAAP Financial MeasuresIn addition to our results determined in accordance with U.S. generally accepted accounting principles, or GAAP, we believe the followingnon‑GAAP measures are useful in evaluating our operating performance. We regularly review the measures set forth below as we evaluate our business. For the year ended January 31, 2019 2018 2017 2016 2015 (in thousands) Non-GAAP operating profit (loss) $12,466 $(11,833) $(24,869) $(32,355) $(17,818)Non-GAAP net profit (loss) 11,583 (11,319) (27,125) (33,258) (18,482)Free cash flows 29,908 15,138 (25,446) (25,937) (14,299) We define non‑GAAP operating profit (loss) as operating profit (loss) before stock‑based compensation, litigation‑related costs, and amortization ofacquired intangible assets. We define non‑GAAP net profit (loss) as net profit (loss) before stock‑based compensation, litigation‑related costs andamortization of acquired intangible assets, amortization of debt discount and issuance costs, and related tax effects including non-recurring income taxadjustments. We define free cash flows as operating cash flows less purchases of property and equipment.We believe non‑GAAP operating profit (loss) and non-GAAP net profit (loss) provide investors and other users of our financial informationconsistency and comparability with our past financial performance and facilitate period to period comparisons of operations. We believe non‑GAAPoperating profit (loss) and non-GAAP net profit (loss) are useful in evaluating our operating performance compared to that of other companies in our industry,as these metrics generally eliminate the effects of certain items that may vary for different companies for reasons unrelated to overall operating performance.We believe information regarding free cash flows provides useful information to investors because it is an indicator of the strength and performance of ourbusiness operations.42We use non‑GAAP operating profit (loss), non-GAAP net profit (loss) and free cash flows in conjunction with traditional GAAP measures as part ofour overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness ofour business strategies and to communicate with our board of directors concerning our financial performance. Our definitions may differ from the definitionsused by other companies and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Thus, ournon‑GAAP operating profit (loss), non-GAAP net profit (loss) and free cash flows should be considered in addition to, not as substitutes for, or in isolationfrom, measures prepared in accordance with GAAP.We compensate for these limitations by providing investors and other users of our financial information a reconciliation of non‑GAAP operatingprofit (loss) to loss from operations, non-GAAP net profit (loss) to net loss, and free cash flows, to the related GAAP financial measure. We encourageinvestors and others to review our financial information in its entirety, not to rely on any single financial measure and to view non‑GAAP operating profit(loss), non-GAAP net profit (loss), and free cash flows in conjunction with loss from operations, net loss, and the consolidated statements of cash flows. Thefollowing tables provide a reconciliation of loss from operations to non‑GAAP operating profit (loss), from net loss to non-GAAP net profit (loss), and fromnet cash provided by (used in) operating activities to free cash flows: For the year ended January 31, 2019 2018 2017 2016 2015 (in thousands) Loss from operations $(47,360) $(44,962) $(35,424) $(45,253) $(26,636)Stock-based compensation 52,946 29,695 9,452 10,568 1,807 Litigation-related costs — — 151 1,943 6,958 Amortization of acquired intangible assets 6,880 3,434 952 387 53 Non-GAAP operating profit (loss) $12,466 $(11,833) $(24,869) $(32,355) $(17,818) For the year ended January 31, 2019 2018 2017 2016 2015 (in thousands) Net loss $(55,524) $(43,805) $(37,607) $(46,156) $(27,300)Stock-based compensation 52,946 29,695 9,452 10,568 1,807 Litigation-related costs — — 151 1,943 6,958 Amortization of acquired intangible assets 6,880 3,434 952 387 53 Amortization of debt discount and issuance costs 11,605 459 — — — Aggregate adjustment for income taxes (4,324) (1,102) (73) — — Non-GAAP net profit (loss) $11,583 $(11,319) $(27,125) $(33,258) $(18,482) For the year ended January 31, 2019 2018 2017 2016 2015 (in thousands) Net cash provided by (used in) operating activities $37,436 $19,626 $(20,955) $(22,069) $(11,929)Less: purchases of property and equipment (7,528) (4,488) (4,491) (3,868) (2,370)Free cash flows $29,908 $15,138 $(25,446) $(25,937) $(14,299)43Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidatedfinancial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. As discussed in the section titled “Note About Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptionsthat, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-lookingstatements. Factors that could cause or contribute to these differences include, but are not limited to, those identified below, those discussed in “Note AboutForward-Looking Statements” and those discussed in the section titled “Risk Factors” under Part I, Item 1A in this Annual Report on Form 10-K.OverviewWe are a leading provider of business spend management (“BSM”) solutions, with a comprehensive, cloud-based platform that connects ourcustomers with more than four million suppliers globally.Our platform provides greater visibility into and control over how companies spend money. Using our platform, businesses are able to achieve real,measurable value and savings that drive their profitability; we call this “Value as a Service.” We refer to the process companies use to purchase goods andservices as business spend management and to the money that they manage with this process as spend under management. We offer a comprehensive, cloud-based BSM platform that is tightly integrated and delivers a broad range of capabilities that would otherwise require the purchase and use of multipledisparate point applications. The core of our platform consists of procurement, invoicing and expense management modules that form our transactionalengine and capture a company’s spend. In addition, our platform offers supporting modules to help companies further manage their spend, including strategicsourcing, spend analysis, contract management, supplier management, contingent workforce and inventory management. We also offer a purchasing program,Coupa Advantage, that leverages the collective buying power of Coupa customers, and we provide benchmarking and insights to customers on our BSMplatform through a solution we refer to as Community Intelligence. Moreover, through our Coupa Open Business Network, suppliers of all sizes can easilyinteract with buyers electronically, thus significantly reducing paper, improving operating efficiencies and reducing costs.We offer access to our platform under a Software-as-a-Service (“SaaS”) business model. At the time of initial deployment, our customers often make aset of common functions available to the majority of their licensed employees, as well as incremental modules for select employees and procurementspecialists, who we refer to as power users. Therefore, we are typically able to capture a majority of the expected annual recurring revenue opportunity at theinception of our customer relationships, rather than targeting specific power users at the outset of the customer relationship with the intention of expandingand getting more annual recurring revenue at later stages of the customer relationship. Customers can rapidly implement our platform, with implementationperiods typically ranging from a few weeks to several months. Customers also benefit from software updates that typically require little downtime.We market and sell our solutions to a broad range of enterprises worldwide. We have a diverse, multi-national customer base spanning various sizesand industries and no significant customer concentration. No customer accounted for more than 10% of our total revenues for the years ended January 31,2019, 2018 and 2017, respectively.We market our platform primarily through a direct sales force and also benefit from leads driven by our partner ecosystem. Our initial contract termsare typically three years, although some customers commit for longer or shorter periods. Substantially all of our customers pay annually, one year in advance.We provide a scaled pricing model based on the number of users per module—as the number of users increases, the subscription price per user decreases. Oursubscription fee includes access to our service, technical support and management of the hosting infrastructure. We generally recognize revenues from oursubscription fees ratably over the contractual term of the arrangement. We do not charge suppliers who are on our platform to transact with our customers. Webelieve this approach helps attract more suppliers to our platform and increases the value of our platform to customers.44We have continued to make significant expenditures and investments for long-term growth, including investment in our platform and infrastructureto deliver new functionality and modules to meet the evolving needs of our customers and to take advantage of our market opportunity. We intend tocontinue to increase our investment in sales and marketing, as we further expand our sales teams, increase our marketing activities, and grow our internationaloperations. Internationally, we currently offer our platform in Europe, the Middle East and Africa (“EMEA”), Latin America (“LATAM”) and Asia-Pacific(“APAC”), including Japan. The combined revenues from non-U.S. regions, as determined based on the billing address of our customers, constituted 38%,35% and 32%, respectively, of our total revenues for the years ended January 31, 2019, 2018 and 2017. We believe there is further opportunity to increaseour international revenues in absolute dollars and as a percentage of our total revenues. As a result, we are increasingly investing in our internationaloperations and we intend to expand our footprint in international markets.Operating in international markets requires significant resources and management attention and will subject us to regulatory, economic and politicalrisks that are different from those in the United States. Because of our limited experience with international operations, our international expansion effortsmay not be successful in creating additional demand for our platform outside of the United States or in effectively selling subscriptions to our platform in anyor all of the international markets we enter.Recent Business DevelopmentsIn August 2018, we completed the acquisition of the technology assets of DCR Workforce Inc. ("DCR"), a provider of contingent workforcemanagement and services procurement software, for aggregate cash consideration of $25.0 million paid at closing (of which $3.8 million is being held backuntil the second anniversary of the closing of the acquisition) and contingent stock consideration that may be earned and issued in the future. The maximumcontingent stock consideration that may be earned and issued is up to 668,740 shares of Coupa’s common stock. The payout of the contingent stockconsideration is determined based on the achievement of distinct revenue performance targets for each of three separate measurement periods that continuethrough December 31, 2022. The fair value of the contingent stock consideration was determined to be $27.2 million, resulting in a total purchaseconsideration of $52.2 million. During the year ended January 31, 2019, the revenue performance target for the first measurement period ending October 31,2019 was fully met, and therefore we issued 291,602 shares of our common stock to the shareholders of DCR in the fourth quarter ending January 31, 2019.In October 2018, we completed the acquisition of Vinimaya, Inc., a real-time supplier catalog search company, which conducted business as Aquiire.We paid aggregate consideration of approximately $49.5 million, comprised of $30.5 million in cash (of which $3.8 million is being held in escrow for 18months after the transaction closing date) and 300,560 shares of Coupa’s common stock with fair value of approximately $19.0 million (of which 37,570shares are being held back by Coupa for 18 months after closing of the acquisition).In December 2018, we completed the acquisition of Hiperos, LLC, a leading third-party risk management provider. We paid aggregate considerationof approximately $94.8 million in cash (of which $8.6 million is being held in escrow for 18 months after the transaction closing date). The Hiperosacquisition extended Coupa’s capability to manage third-party risk and compliance including advanced risks such as information security, bribery andcorruption, and demanding new data privacy regulations like the General Data Protection Regulation.Our Business ModelOur business model focuses on maximizing the lifetime value of a customer relationship, and we continue to make significant investments in order togrow our customer base. Due to our subscription model, we recognize subscription revenues ratably over the term of the subscription period. As a result, theprofitability of a customer to our business in any particular period depends in part upon how long a customer has been a subscriber on our platform. Ingeneral, the associated upfront costs with respect to new customers are higher in the first year than the aggregate revenues we recognize from those newcustomers in the first year. We believe that, over time, as our customer base grows and a relatively higher percentage of our subscription revenues areattributable to renewals versus new customers or upsells to existing customers, associated sales and marketing expenses and other allocated upfront costs as apercentage of revenues will decrease, subject to investments we plan to make in our business. Over the lifetime of the customer relationship, we also incursales and marketing costs to manage the account, renew or upsell the customer to more modules and more users. However, these costs are significantly lessthan the costs45initially incurred to acquire the customer. We calculate the lifetime value of our customers and associated customer acquisition costs for a particular year bycomparing (i) gross profit from net new subscription revenues for the year multiplied by the inverse of the estimated subscription renewal rate to (ii) totalsales and marketing expense incurred in the preceding year. On this basis, we estimate that for each of fiscal 2019, 2018 and 2017, the calculated lifetimevalue of our customers has exceeded six times the associated cost of acquiring them.Key MetricsWe review the following key metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate businessplans and make strategic decisions: As of January 31, 2019 2018 2017 Cumulative spend under management ($ billions) $1,079.2 $680.2 $364.6 Backlog ($ millions) $349.0 $230.8 $168.2 Deferred revenue ($ millions) $182.6 $128.0 $90.8 Total customers 988 717 535Cumulative Spend Under ManagementCumulative spend under management represents the aggregate amount of money that has been transacted through our core Coupa platform for all ofour customers collectively since we launched our core platform. We calculate this metric by aggregating the actual transaction data for purchase orders,invoices and expenses from customers on our core Coupa platform. Cumulative spend under management does not include spending data associated withmodules from acquired companies. The cumulative spend under management metrics presented above do not directly correlate to our revenue or results ofoperations because we do not generally charge our customers based on actual usage of our core platform. However, we believe the cumulative spend undermanagement metrics do illustrate the adoption, scale and value of our platform, which we believe enhances our ability to maintain existing customers andattract new customers.Backlog and Deferred RevenueBacklog represents future non-cancellable amounts to be invoiced under our agreements. We generally sign multiple-year subscription contracts andinvoice an initial annual amount at contract signing followed by subsequent annual invoices. At any point in the contract term, there can be amounts that wehave not yet been contractually able to invoice. Until such time as these amounts are invoiced, they are not recorded in our consolidated financial statements,and are considered by us to be backlog. We expect backlog to fluctuate up or down from period to period for several reasons, including the timing andduration of customer contracts, varying billing cycles and the timing and duration of customer renewals.In addition, our deferred revenue consists of amounts that have been invoiced but that have not yet been recognized as revenues as of the end of areporting period. We generally sign multiple year subscription contracts for our platform and invoice an initial amount at contract signing followed bysubsequent annual invoices. The majority of our deferred revenue balance consists of subscription revenues that are recognized ratably over the contractualperiod. Together, the sum of deferred revenue and backlog represents the total billed and unbilled contract value and provides visibility into future revenuestreams.46Total CustomersWe define a customer as a separate and distinct buying entity, such as a company, an educational or government institution, or a distinct businessunit of a large corporation that has an active contract with us or our partner to access our services. We believe the number of total customers is a key indicatorof our market penetration, growth and future revenues. Our ability to attract new customers is primarily affected by the effectiveness of our marketingprograms and our direct sales force. Accordingly, we have aggressively invested in and intend to continue to invest in our direct sales force. In addition, weare continuing to pursue additional partnerships with global systems integrators and other strategic partners. Components of Results of OperationsRevenuesWe offer subscriptions to our cloud-based BSM platform, including procurement, invoicing and expense management. We derive our revenuesprimarily from subscription fees and professional services fees. Subscription revenues consist primarily of fees to provide our customers access to our cloud-based platform, which includes routine customer support at no additional cost. Professional services fees include deployment services, optimization services,and training. Subscription revenues are a function of renewal rates, the number of customers, the number of users at each customer, the number of modulessubscribed to by each customer, and the price of our modules.Generally, subscription fees are recognized ratably as revenues over the contract term beginning on the date the application is made available to thecustomer. Our new business subscriptions typically have a term of three years, although some customers commit for longer or shorter periods. We generallyinvoice our customers in annual installments at the beginning of each year in the subscription period. Amounts that have been invoiced are initially recordedas deferred revenue and are recognized ratably over the subscription period. Amounts that will be invoiced and recognized as revenue in future periods arereflected as remaining performance obligations within our notes to our consolidated financial statements.Professional services revenues consist primarily of fees associated with the implementation and configuration of our subscription service.Professional services are generally sold on a time-and-materials or fixed-fee basis. Revenue for both time-and-material and fixed-fee arrangements arerecognized over-time as the services are performed. We have the ability to reasonably measure progress toward complete satisfaction of the professionalservices arrangement. For fixed-fee arrangements, we recognize revenue on the basis of performed hours relative to the total estimated hours to completesatisfaction of the professional service arrangement.Our professional services engagements typically span from a few weeks to several months. For this reason, our professional services revenues mayfluctuate significantly from period to period. The terms of our typical professional services arrangements provide that our customers pay us within 30 daysfrom the invoice date. Fixed-fee services arrangements are generally invoiced in advance. We have made significant investments in our professional servicesbusiness that are designed to ensure customer success and adoption of our platform. We are continuing to invest in expanding our professional servicespartner ecosystem to further support our customers. As the professional services practices of our partner firms continue to develop, we expect them toincreasingly contract directly with our subscription customers and we incentivize our sales force to further this objective.Cost of RevenuesSubscription ServicesCost of subscription services consists primarily of expenses related to hosting our service and providing customer support. Significant expenses arecomprised of data center capacity costs; personnel and related costs directly associated with our cloud infrastructure and customer support, including salaries,benefits, bonuses and stock-based compensation; allocated overhead; amortization of developed technology and capitalized software development costs.47Professional Services and Other Cost of RevenuesCost of professional services and other cost of revenues consist primarily of personnel and related costs directly associated with our professionalservices and training departments, including salaries, benefits, bonuses and stock-based compensation; the costs of contracted third-party vendors; andallocated overhead. These costs are generally expensed in the period incurred.Professional services associated with the implementation and configuration of our subscription platform are performed directly by our services team,as well as by contracted third-party vendors. In cases in which third party vendors invoice us for services performed for our customers, those fees are accruedover the requisite service period.Operating ExpensesResearch and DevelopmentResearch and development expenses consist primarily of personnel costs of our development team, including salaries, benefits, bonuses, stock-basedcompensation expense and allocated overhead costs. Our cycle of frequent updates has facilitated rapid innovation and the introduction of new modulesthroughout our history. We have aggressively invested, and intend to continue to invest, in developing technology to support our growth. We capitalizecertain software development costs that are attributable to developing new modules and features and adding incremental functionality to our platform, andwe amortize such costs as costs of subscription revenues over the estimated life of the new application or incremental functionality, which is either two yearsor three years. Sales and MarketingSales and marketing expenses consist primarily of personnel and related costs directly associated with our sales and marketing staff, includingsalaries, benefits, bonuses, commissions and stock-based compensation. Commissions earned by our sales force that are considered incremental costs forobtaining a noncancellable subscription contract are deferred and amortized over a period of benefit that we have determined to be five years. Other sales andmarketing costs include promotional events to promote our brand, including our INSPIRE conferences, advertising, allocated overhead and amortization ofcustomer relationships and trademark. General and AdministrativeGeneral and administrative expenses consist of personnel costs and related expenses for executive, finance, legal, human resources, recruiting, andadministrative personnel, including salaries, benefits, bonuses and stock-based compensation expense; professional fees for external legal, accounting,recruiting and other consulting services; allocated overhead costs; and legal settlements. Interest ExpenseInterest expense consists primarily of interest expense associated with our convertible senior notes issued in January 2018. Interest Income and Other, NetInterest income and Other, net consists primarily of interest income earned on our investments in marketable securities and cash and cash equivalents,in addition to the effects of exchange rates on our foreign currency-denominated asset and liability balances. All translation adjustments are recorded asforeign currency gains (losses) in the consolidated statements of operations.Provision for (Benefit from) Income TaxesProvision for income taxes consists primarily of income taxes related to foreign and state jurisdictions in which we conduct business. Benefit fromincome taxes is primarily related to the release of a valuation allowance for deferred tax assets for the year ended January 31, 2019, partially offset by incometaxes related to foreign and state jurisdictions. We maintain a full valuation allowance on net deferred tax assets of our U.S. and the majority of ourinternational entities as we have concluded that it is not more likely than not that the deferred assets will be utilized.48On December 22, 2017, the Tax Act was enacted into law, which significantly changes existing U.S. tax law and includes numerous provisions thataffect our business, such as imposing a one-time transition tax on deemed repatriation of deferred foreign income, reducing the U.S. federal statutory tax rate,and adopting a modified territorial tax system.Results of OperationsThe following tables set forth selected consolidated statements of operations data and such data as a percentage of total revenues for each of theperiods indicated: For the year ended January 31, 2019 2018 2017 (in thousands) Revenues: Subscription services $233,428 $164,865 $117,788 Professional services and other 26,938 21,915 15,987 Total revenues 260,366 186,780 133,775 Cost of revenues: Subscription services 53,153 36,481 25,055 Professional services and other 30,301 23,425 21,214 Total cost of revenues 83,454 59,906 46,269 Gross profit 176,912 126,874 87,506 Operating expenses: Research and development 61,608 44,536 30,262 Sales and marketing 105,659 88,722 68,562 General and administrative 57,005 38,578 24,106 Total operating expenses 224,272 171,836 122,930 Loss from operations (47,360) (44,962) (35,424)Interest expense (12,518) (502) (14)Interest income and other, net 3,817 3,307 (1,321)Loss before provision for (benefit from) income taxes (56,061) (42,157) (36,759)Provision for (benefit from) income taxes (537) 1,648 848 Net loss $(55,524) $(43,805) $(37,607)49 For the year ended January 31, 2019 2018 2017 Revenues: Subscription services 90 % 88 % 88 %Professional services and other 10 12 12 Total revenues 100 100 100 Cost of revenues: Subscription services 20 20 19 Professional services and other 12 13 16 Total cost of revenues 32 33 35 Gross profit 68 67 65 Operating expenses: Research and development 24 24 23 Sales and marketing 41 48 51 General and administrative 22 21 18 Total operating expenses 87 93 92 Loss from operations (19) (26) (27) Interest expense (5) — — Interest income and other, net 1 2 (1) Loss before provision for (benefit from) income taxes (23) (24) (28) Provision for (benefit from) income taxes — 1 1 Net loss (23)% (25)% (29)% Fiscal Years Ended January 31, 2019, 2018 and 2017Revenues For the year ended January 31, 2018 to 2019 2017 to 2018 2019 2018 2017 % Change % Change (in thousands) Subscription services $233,428 $164,865 $117,788 42% 40%Professional services and other 26,938 21,915 15,987 23% 37%Total revenues $260,366 $186,780 $133,775 39% 40% Total revenues were $260.4 million for the fiscal year ended January 31, 2019, compared to $186.8 million for the fiscal year ended January 31,2018, an increase of $73.6 million, or 39%. Subscription services revenues were $233.4 million, or 90% of total revenues, for the fiscal year ended January31, 2019, compared to $164.9 million, or 88% of total revenues, for the fiscal year ended January 31, 2018. This increase in absolute dollars was primarilydue to the acquisition of new customers, the sale of additional users or modules to existing customers, and to a lesser extent, new revenues generated by theacquisitions completed during the fourth quarter ended January 31, 2018 and the fiscal year ended January 31, 2019. Professional services revenues were$26.9 million for the fiscal year ended January 31, 2019, compared to $21.9 million for the fiscal year ended January 31, 2018. This increase of $5.0 million,or 23%, was primarily due to new revenues generated from acquisitions completed during the fiscal year ended January 31, 2019 and increase in trainingservices.50Total revenues were $186.8 million for the fiscal year ended January 31, 2018, compared to $133.8 million for the fiscal year ended January 31,2017, an increase of $53.0 million, or 40%. Subscription services revenues were $164.9 million, or 88% of total revenues, for the fiscal year ended January31, 2018, compared to $117.8 million, or 88% of total revenues, for the fiscal year ended January 31, 2017. This increase in absolute dollars was primarilydue to the acquisition of new customers, the sale of additional users or modules to existing customers, and to a lesser extent, new revenues generated by theacquisitions completed during the fiscal year ended January 31, 2018. Professional services revenues were $21.9 million for the fiscal year ended January 31,2018, compared to $16.0 million for the fiscal year ended January 31, 2017. This increase of $5.9 million, or 37%, was primarily due to an increase incustomers and a favorable impact from the timing of completion of various projects for which revenue was recognized under the completed performancemethod of accounting.Cost of Revenues For the year ended January 31, 2018 to 2019 2017 to 2018 2019 2018 2017 % Change % Change (in thousands) Subscription services $53,153 $36,481 $25,055 46% 46%Professional services and other 30,301 23,425 21,214 29% 10%Total cost of revenues $83,454 $59,906 $46,269 39% 29% Cost of subscription services was $53.2 million for the fiscal year ended January 31, 2019, compared to $36.5 million for the fiscal year endedJanuary 31, 2018, an increase of $16.7 million, or 46%. The increase in cost of subscription services was primarily due to an increase of $6.8 million inhosting fees to accommodate our increased customer footprint and increased consumption by our recent acquisitions, an increase of $6.0 million in employeecompensation costs related to higher headcount, including stock-based compensation costs, an increase of $2.6 million in amortization of intangible assetsdue to acquisitions completed during the fourth quarter ended January 31, 2018 and the fiscal year ended January 31, 2019, and an increase of $2.4 millionrelated to allocated facilities and other costs driven by our overall growth. These increases were offset by a $1.1 million decrease in amortization ofcapitalized software development costs during the year.Cost of subscription services was $36.5 million for the fiscal year ended January 31, 2018, compared to $25.1 million for the fiscal year endedJanuary 31, 2017, an increase of $11.4 million, or 46%. The increase in cost of subscription services was primarily due to an increase of $4.0 million inemployee related expenses largely due to higher stock-based compensation costs, an increase of $2.4 million in hosting fees to accommodate customergrowth, an increase of $2.3 million in amortization of capitalized software development costs and intangible assets due to acquisitions completed during theyear, an increase of $2.7 million related to allocated facilities and other costs driven by our overall growth.Cost of professional services was $30.3 million for the fiscal year ended January 31, 2019, compared to $23.4 million for the fiscal year endedJanuary 31, 2018, an increase of $6.9 million, or 29%. The increase in cost of professional services was primarily due to an increase of $5.7 million inemployee related expenses related to higher headcount, including stock-based compensation costs, and an increase of $1.2 million related to allocatedfacilities and travel costs driven by our overall growth. Cost of professional services was $23.4 million for the fiscal year ended January 31, 2018, compared to $21.2 million for the fiscal year endedJanuary 31, 2017, an increase of $2.2 million, or 10%. The increase in cost of professional services was primarily due to an increase of $5.0 million inemployee related expenses largely due to higher stock-based compensation costs, and an increase of $1.1 million related to allocated facilities and travelcosts driven by our overall growth. These increases were offset by a $3.9 million decrease in costs associated with work performed by subcontractors forengagements where we or our partner firms had contracted directly with the customer to perform the professional services. 51Gross Profit For the year ended January 31, 2018 to 2019 2017 to 2018 2019 2018 2017 % Change % Change (in thousands) Gross profit $176,912 $126,874 $87,506 39% 45% Gross profit was $176.9 million for the fiscal year ended January 31, 2019, compared to $126.9 million for the fiscal year ended January 31, 2018, anincrease of $50.0 million, or 39%. The increase in gross profit was primarily due to the acquisition of new customers, and the sale of new additional users ormodules to existing customers, in addition and to a lesser extent, new revenues generated by the acquisitions completed during the fourth quarter endedJanuary 31, 2018 and the fiscal year ended January 31, 2019. Gross margin percentage, defined as gross profit divided by total revenues, was 68% for thefiscal year ended January 31, 2019, compared to 67% for the fiscal year ended January 31, 2018. Gross profit was $126.9 million for the fiscal year ended January 31, 2018, compared to $87.5 million for the fiscal year ended January 31, 2017, anincrease of $39.4 million, or 45%. The increase in gross profit was primarily due to the acquisition of new customers, and the sale of new additional users ormodules to existing customers, in addition and to a lesser extent, new revenues generated by the acquisitions completed during the fiscal year ended January31, 2018. In addition, professional services gross profit improved, driven by a favorable impact from the timing of completion of various projects for whichrevenue was recognized under the completed performance method of accounting. Gross margin percentage, defined as gross profit divided by total revenues,was 67% for the fiscal year ended January 31, 2018, compared to 65% for the fiscal year ended January 31, 2017. Operating ExpensesResearch and Development For the year ended January 31, 2018 to 2019 2017 to 2018 2019 2018 2017 % Change % Change (in thousands) Research and development $61,608 $44,536 $30,262 38% 47% Research and development expenses were $61.6 million for the fiscal year ended January 31, 2019, compared to $44.5 million for the fiscal yearended January 31, 2018, an increase of $17.1 million, or 38%. The increase was primarily due to an increase of $13.0 million in employee related expenseslargely due to higher headcount and stock-based compensation costs, an increase of approximately $2.0 million primarily related to contracted consultantcosts of acquired entities, and an increase of $2.1 million related to allocated facilities, travel and other costs driven by our overall growth. We expectresearch and development expenses will continue to increase in absolute dollars in fiscal 2020 as we continue to invest in research and developmentactivities. Research and development expenses were $44.5 million for the fiscal year ended January 31, 2018, compared to $30.3 million for the fiscal yearended January 31, 2017, an increase of $14.2 million, or 47%. The increase was primarily due to an increase of $12.4 million in employee related expenseslargely due to higher headcount and stock-based compensation costs, and an increase of $1.8 million related to allocated facilities, travel and other costsdriven by our overall growth. 52Sales and Marketing For the year ended January 31, 2018 to 2019 2017 to 2018 2019 2018 2017 % Change % Change (in thousands) Sales and marketing $105,659 $88,722 $68,562 19% 29% Sales and marketing expenses were $105.7 million for the fiscal year ended January 31, 2019, compared to $88.7 million for the fiscal year endedJanuary 31, 2018, an increase of $17.0 million, or 19%. The increase was primarily due to an increase of $10.4 million in employee related expenses largelydue to higher headcount and stock-based compensation costs, an increase of $3.1 million in marketing, travel and event costs, an increase of $2.3 millionrelated to allocated facilities costs and other costs driven by our overall growth, and an increase of $1.2 million for the amortization of customer relationshipsarising from acquisitions. We expect sales and marketing expenses will continue to increase in absolute dollars and as a percentage of revenue in fiscal 2020as we continue to expand our operations. Sales and marketing expenses were $88.7 million for the fiscal year ended January 31, 2018, compared to $68.6 million for the fiscal year endedJanuary 31, 2017, an increase of $20.1 million, or 29%. The increase was primarily due to an increase of $15.4 million in employee related expenses largelydue to higher headcount and stock-based compensation costs, an increase of $2.8 million in marketing, travel and event costs, an increase of $1.9 millionrelated to allocated facilities costs and other costs driven by our overall growth. General and Administrative For the year ended January 31, 2018 to 2019 2017 to 2018 2019 2018 2017 % Change % Change (in thousands) General and administrative $57,005 $38,578 $24,106 48% 60% General and administrative expenses were $57.0 million for the fiscal year ended January 31, 2019, compared to $38.6 million for the fiscal yearended January 31, 2018, an increase of $18.4 million, or 48%. The increase was primarily due to an increase of $14.3 million in employee related expenseslargely due to higher headcount and stock-based compensation costs, $2.5 million for professional and outside services primarily related to acquisition costfor the completed acquisitions during the year and recruiting expenses, and an increase of $1.6 million related to allocated facilities costs, travel and othercosts driven by our overall growth. We expect general and administrative expenses will continue to increase in absolute dollars in fiscal 2020 due to thegrowth of our company. General and administrative expenses were $38.6 million for the fiscal year ended January 31, 2018, compared to $24.1 million for the fiscal yearended January 31, 2017, an increase of $14.5 million, or 60%. The increase was primarily due to an increase of $10.5 million in employee related expenseslargely due to higher headcount and stock-based compensation costs, $3.4 million for professional and outside services due to the continued transition tobeing a public company, and an increase of $0.6 million related to allocated facilities costs, travel and other costs driven by our overall growth. Interest Expense For the year ended January 31, 2018 to 2019 2017 to 2018 2019 2018 2017 % Change % Change (in thousands) Interest expense $12,518 $502 $14 NM NM 53Interest expense was $12.5 million for the fiscal year ended January 31, 2019, compared to an interest expense of $0.5 million for the fiscal yearended January 31, 2018, an increase of $12.0 million. The increase in interest expense was primarily due to the interest accrued on the convertible notes andamortization of the debt discount and issuance costs on our convertible senior notes issued in the fourth quarter of fiscal 2018. Interest expense was $0.5 million for the fiscal year ended January 31, 2018, compared to an interest expense of $14,000 for the fiscal year endedJanuary 31, 2017, an increase of $488,000. The increase in interest expense was primarily due to the interest accrued on the convertible notes andamortization of the debt discount and issuance costs on our convertible senior notes issued in the fourth quarter of fiscal 2018.Interest Income and Other, Net For the year ended January 31, 2018 to 2019 2017 to 2018 2019 2018 2017 % Change % Change (in thousands) Interest income and other, net $3,817 $3,307 $(1,321) 15% NM Interest income and other, net was $3.8 million for the fiscal year ended January 31, 2019, compared to an interest income and others of $3.3 millionfor the fiscal year ended January 31, 2018, an increase of $0.5 million. The increase in interest income and other net was due to a $4.6 million increase ininterest income and accretion income earned from our greater investment in marketable securities and money market funds, offset by a $4.1 millionunfavorable change in foreign currency exchange impact, primarily driven by the weakened British Pound and Euro during the fiscal year. Interest income and other, net was $3.3 million for the fiscal year ended January 31, 2018, compared to a net loss of $1.3 million for the fiscal yearended January 31, 2017, an increase of $4.6 million. The increase was due to $3.1 million of favorable foreign currency impact, primarily driven by thestrengthened British Pound and Euro during the period, $0.9 million increase in interest income, and $0.6 million mark-to-market expense related to anoutstanding warrant that was recorded in fiscal year 2017.Provision for (Benefit From) Income Taxes For the year ended January 31, 2018 to 2019 2017 to 2018 2019 2018 2017 % Change % Change (in thousands) Provision for (benefit from) income taxes $(537) $1,648 $848 -133% 94% The benefit from income taxes was $0.5 million for the year ended January 31, 2019, compared to an income tax provision of $1.6 million for incometaxes for the year ended January 31, 2018. The $2.1 million decrease primarily relates to an income tax benefit of $3.1 million due to the release of valuationallowance which resulted from the recording of deferred income tax liabilities associated with the Aquiire acquisition during the year ended January 31,2019. This decrease was partially offset by increased tax expense primarily in foreign jurisdictions.Provision for income taxes was $1.6 million for the fiscal year ended January 31, 2018, compared to $0.8 million for the year ended January 31,2017, an increase of $0.8 million. This increase is driven by our increased tax expense primarily in foreign jurisdictions. 54Liquidity and Capital ResourcesAs of January 31, 2019, our principal sources of liquidity were cash, cash equivalents and marketable securities of approximately $321.4 million. Wehad an outstanding debt in the form of convertible senior notes with a $230 million principal amount as of January 31, 2019. For more than twenty tradingdays during the thirty consecutive trading days ended January 31, 2019, the last reported sale price of our common stock exceeded 130% of the conversionprice of the convertible senior notes. As a result, the convertible senior notes were convertible at the option of the holders and the $174.6 million carryingamount of the convertible senior notes was classified as a short-term liability which reduced the net working capital compared to the prior year.In conjunction with the issuance of the convertible senior notes, we entered into a capped call transaction that reduces our exposure to additionalcash payments above the $230 million principal balance in the event of a cash conversion of the senior convertible notes. We may owe additional cash to thenote holders upon early conversion if our stock price exceeds $63.821 per share. Although our incremental exposure to the additional cash payment abovethe principal amount of the senior convertible notes is reduced by the capped call, we may experience dilution to the ownership interests of existingstockholders.Our cash equivalents are comprised primarily of bank deposits and money market funds. We believe our existing cash and cash equivalents will besufficient to meet our projected operating requirements for at least the next 12 months.Our future capital requirements will depend on many factors, including our pace of growth, subscription renewal activity, the timing and extent ofspend to support development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced services offerings and thecontinuing market acceptance of our services. We may in the future enter into arrangements to acquire or invest in complementary businesses, services andtechnologies and intellectual property rights. We may be required to seek additional equity or debt financing. In the event that additional financing isrequired from outside sources, we may not be able to raise it on terms acceptable to us, or at all. If we are unable to raise additional capital when desired, ourbusiness, operating results and financial condition would be adversely affected.Operating ActivitiesFor the year ended January 31, 2019, cash provided by operating activities was $37.4 million, compared to $19.6 million for the year ended January31, 2018. This increase was driven by growth in customer billings and collections on accounts receivable, partially offset by increased payments foroperating expenses which were higher compared to the previous year due to increased headcount and overall growth.Cash provided by operating activities of $19.6 million for the fiscal year ended January 31, 2018, was primarily due to stock-based compensation of$29.7 million, depreciation and amortization, including deferred commissions, of $11.6 million, and a change in the working capital of $21.7 million, offsetby a net loss of $43.8 million. The net change in operating assets and liabilities was primarily due to a favorable change from the deferred revenue balance of$36.1 million and accrued expenses and other liabilities of $7.1 million partially offset by the unfavorable change in accounts receivable of $10.7 million,deferred commissions of $5.7 million, accounts payable of $4.0 million and prepaid and other assets of $1.1 million.Cash used in operating activities of $21.0 million for the fiscal year ended January 31, 2017, was primarily due to a net loss of $37.6 million,partially offset by stock-based compensation of $9.5 million, and depreciation and amortization, including deferred commissions, of $8.6 million. The netchange in operating assets and liabilities was primarily due to an unfavorable change from increases in accounts receivable of $20.0 million, deferredcommissions of $4.5 million and prepaid and other assets of $5.7 million, partially offset by the favorable change in the deferred revenue balance of $25.9million and accrued expenses, accounts payable and other liabilities of $2.0 million.55Investing ActivitiesCash used in investing activities for the fiscal year ended January 31, 2019 of $330.2 million was primarily related to the net purchase of marketablesecurities of $178.8 million, $143.9 million spent on business acquisitions, net of cash acquired, and purchases of property and equipment of $7.5 million.Cash used in investing activities for the fiscal year ended January 31, 2018, of $50.6 million was primarily related to the acquisitions of TradeExtensions and Simeno for $46.1 million and purchases of property and equipment of $4.5 million.Cash used in investing activities for the fiscal year ended January 31, 2017, of $11.2 million was primarily related to the acquisition of Spend360 for$6.8 million and purchases of property and equipment of $4.5 million.Financing ActivitiesCash provided by financing activities for the fiscal year ended January 31, 2019 of $21.1 million, was primarily due to proceeds from the exercise ofstock options and issuance of our common stock under the stock purchase and stock option plans, offset by the payment of $0.6 million in issuance costsrelated to the issuance of our convertible notes.Cash provided by financing activities for the fiscal year ended January 31, 2018, of $241.9 million, was primarily due to the net proceeds obtainedfrom the issuance of the convertible notes net of issuance costs incurred and costs to purchase the capped call for approximately $200.4 million, cash raisedin our follow-on common stock offering net of underwriting discount, commissions and offering costs for $22.3 million and $19.3 million in proceeds fromthe exercise of stock options and issuance of our common stock under the stock purchase and stock option plans. Cash provided by financing activities for the fiscal year ended January 31, 2017, of $141.6 million, was primarily due to the net proceeds raised inour IPO for $137.2 million and $4.3 million in proceeds from the exercise of stock options. Off-Balance Sheet ArrangementsThrough January 31, 2019, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured financeor special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow orlimited purposes.Commitments and Contractual ObligationsOur principal commitments and contractual obligations consist of our senior notes due in 2023, obligations under operating leases for office facilitiesand contractual purchase obligations for hosting services that support our business operations. The following table summarizes our non-cancelablecontractual obligations as of January 31, 2019. Payments due by period Total Less Than1 Year 1-3 Years 3-5 Years More Than5 Years (in thousands) Convertible senior notes(1) $230,000 $— $— $230,000 $— Aggregate interest obligation(1)(2) 3,451 863 1,725 863 — Operating lease obligations 33,694 7,349 13,791 11,323 1,231 Purchase obligations 24,500 12,500 12,000 — — Total contractual obligations $291,645 $20,712 $27,516 $242,186 $1,231 (1)The conversion period for the Convertible Notes was open as of January 31, 2019, and as such the net carrying value of the Convertible Notes isincluded within current liabilities on our Consolidated Balance Sheet. The principal balances of the Convertible Notes are reflected in the paymentperiod in the table above based on the contractual maturity assuming no conversion.56 (2)Represents estimated aggregate interest obligations for our outstanding Convertible Notes that are payable in cash.Critical Accounting Policies and EstimatesOur management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have beenprepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reportedamounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenuesgenerated and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that webelieve are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities thatare not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe that theaccounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areasinvolving management’s judgments and estimates.Revenue RecognitionWe derive our revenues primarily from subscription services fees and professional services fees. Revenues are recognized when control of theseservices are transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those services. Revenues arerecognized net of applicable taxes imposed on the related transaction. Our revenue recognition policy follows guidance from Accounting StandardsCodification 606, Revenue from Contracts with Customers (Topic 606).We determine revenue recognition through the following five-step framework: •Identification of the contract, or contracts, with a customer; •Identification of the performance obligations in the contract; •Determination of the transaction price; •Allocation of the transaction price to the performance obligations in the contract; and •Recognition of revenue when, or as, the Company satisfies a performance obligation. Subscription Services RevenuesWe offer subscriptions to our cloud-based business spend management platform, including procurement, invoicing and expense management.Subscription services revenues consist primarily of fees to provide our customers access to our cloud-based platform, which includes routine customersupport. Subscription service contracts do not provide customers with the right to take possession of the software, are non-cancelable, and do not containgeneral rights of return. Generally subscription revenues are recognized ratably over the contractual term of the arrangement, beginning on the date that theservice is made available to the customer. Subscription contracts typically have a term of three years with invoicing occurring in annual installments at thebeginning of each year in the subscription period.Professional Services RevenuesWe offer professional services which include deployment services, optimization services, and training. Professional services are generally sold on atime-and-materials basis or fixed-fee basis. For services billed on a time-and-materials basis, revenue is recognized over time as services are performed. Forservices billed on a fixed-fee basis, invoicing typically occurs in advance, and revenue is recognized over time based on the proportion performed.57Significant JudgmentsOur contracts with customers often include promises to transfer multiple products and services to a customer. For these contracts, we account forindividual performance obligations separately if they are distinct. Subscription services and professional services are both distinct performance obligationsthat are accounted for separately. In contracts with multiple performance obligations, the transaction price is allocated to each separate performanceobligations on a relative standalone selling price basis.The determination of standalone selling price (“SSP”) for each distinct performance obligations requires judgment. We determine SSP forperformance obligations based on overall pricing objectives, which take into consideration market conditions and entity-specific factors. This includes areview of historical sales data related to the size of arrangements, the cloud applications being sold, customer demographics and the numbers and types ofusers within the arrangements. We use a range of amounts to estimate SSP for performance obligations. There is typically more than one SSP for individualproducts and services due to the stratification of those products and services by certain considerations such as size and type of customer.Deferred CommissionsCommissions are earned by sales personnel upon the execution of the sales contract by the customer, and commission payments are made shortlyafter they are earned. Commission costs can be associated specifically with subscription and professional services arrangements. Commissions earned by oursales personnel are considered incremental and recoverable costs of obtaining a contract with a customer. These costs are deferred and then amortized over aperiod of benefit of five years. We determined the period of benefit by taking into consideration our past experience with customers, future cash flowsexpected from customers, industry peers and other available information. We capitalized commission costs of $15.3 million, $5.7 million and $4.5 million and amortized $5.8 million, $4.0 million and $4.0 million to salesand marketing expense in the accompanying consolidated statements of operations during the years ended January 31, 2019, 2018 and 2017, respectively.This increase of capitalized commissions costs during the fiscal year ended January 31, 2019, was primarily due to our adoption of ASC 606 on February 1,2018.Capitalized Software Development CostsWe capitalize certain development costs incurred in connection with software development for our cloud-based platform. Costs incurred in thepreliminary stages of development are expensed as incurred.Once software has reached the application development stage, internal and external costs, if direct and incremental, are capitalized until the softwareis substantially complete and ready for its intended use. Capitalization ceases upon completion of all substantial testing. These software development costsare recorded as part of property and equipment. Capitalized software development costs are amortized on a straight-line basis over the technology’s estimateduseful life, which is generally two to three years. During the fiscal year ended January 31, 2019 we capitalized $5.6 million in software development costs.Amortization expense related to software development costs was approximately $3.1 million for the fiscal year ended January 31, 2019. We capitalizedsoftware development costs of $4.2 million and amortized $3.9 million to expense during the fiscal year ended January 31, 2018. We capitalized softwaredevelopment costs of $4.3 million and amortized $3.3 million to expense during the fiscal year ended January 31, 2017.Costs incurred in the maintenance and minor upgrade and enhancement of Company’s software platform without adding additional functionality areexpensed as incurred.Stock-Based CompensationStock-based compensation expense is measured and recognized in the financial statements based on the fair value of the awards granted. The fairvalue of stock options and shares issued from our employee share purchase plan are estimated on the grant date using the Black-Scholes option-pricingmodel. The fair value of an RSU is58measured using the fair value of our common stock on the date of the grant. The fair value of market-based awards is determined using a Monte Carlosimulation approach. Stock-based compensation expense is recognized over the requisite service periods of the awards, which is generally four years.Our use of the Black-Scholes option-pricing model requires the input of subjective assumptions, including the fair value of our underlying commonstock, expected term of the option, expected volatility of the price of our common stock, risk-free interest rates and the expected dividend yield of ourcommon stock. The assumptions used in our option-pricing model represent management’s best estimates. These estimates involve inherent uncertainties andthe application of management’s judgment. If factors change and different assumptions are used, our stock-based compensation expense could be materiallydifferent in the future.These assumptions and estimates are as follows: •Fair Value of Common Stock. Prior to our initial public offering in October 2016, our stock was not publicly traded and we estimated the fairvalue of common stock using various methodologies, including valuation analyses performed by third-party valuation firms. After the initialpublic offering, we used the publicly quoted price as the fair value of our common stock. •Expected Term. The expected term of employee stock options represents the weighted-average period that the stock options are expected toremain outstanding. To determine the expected term, we generally apply the simplified approach in which the expected term of an award ispresumed to be the mid-point between the vesting date and the expiration date of the award as we do not have sufficient historical exercisedata to provide a reasonable basis for an estimate of expected term. •Risk-Free Interest Rate. We base the risk-free interest rate on the yields of U.S. Treasury securities with maturities approximately equal to theterm of employee stock option awards. •Expected Volatility. As we do not have an extensive trading history for our common stock, the expected volatility for our common stock hasbeen estimated by taking the historic price volatility for industry peers based on daily price observations over a period equivalent to theexpected term of the stock option awards. Industry peers consist of several public companies in our industry. •Dividend Rate. We have never declared or paid any cash dividends and do not presently plan to pay cash dividends in the foreseeable future.As a result, we use a dividend rate of zero.We will continue to use judgment in evaluating the assumptions related to our stock-based compensation on a prospective basis. As we continue toaccumulate additional data related to our common stock, we may have refinements to our estimates, which could materially impact our future stock-basedcompensation expense.Business Combinations and Valuation of Goodwill and Other Acquired Intangible Assets and Assumed LiabilitiesWe account for acquisitions of entities that include inputs and processes and have the ability to create outputs as business combinations. Foracquired businesses, we record tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition dates.The excess of the purchase price over those fair values is recorded as goodwill. During the measurement period, which may be up to one year from theacquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion ofthe measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments arerecorded to the consolidated statements of operations.Accounting for business combinations requires our management to make significant estimates and assumptions at the acquisition date, includingestimated fair value of acquired intangible assets, and related amortization period. The estimates of fair value require management to also make estimates of,among other things, future expected cash flows, discount rates or expected costs to reproduce an asset. Although we believe the assumptions and estimates wehave made in the past have been reasonable and appropriate, these estimates are based on historical experience and information obtained from themanagement of the acquired companies and are inherently uncertain.59We review goodwill for impairment annually during the fourth quarter or more frequently if events or changes in circumstances would more likelythan not reduce the fair value of our single reporting unit below its carrying value. As of January 31, 2019, no impairment of goodwill has been identified.Acquired finite-lived intangible assets are amortized over their estimated useful lives. We evaluate the recoverability of our intangible assets forpossible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. We have not recorded anysignificant impairment charges during the years presented.In addition to the recoverability assessment, we routinely review the remaining estimated useful lives of our finite-lived intangible assets. If wemodify the estimated useful life assumption for any asset, the remaining unamortized balance would be amortized over the revised estimated useful life.Convertible NotesWe account for the issued Convertible Notes as separate liability and equity components. The carrying amount of the liability component wascalculated by measuring the fair value of a similar liability that does not have an associated conversion feature. The carrying amount of the equitycomponent representing the conversion option was determined by deducting the fair value of the liability component from the par value of the ConvertibleNotes as a whole. This difference represents a debt discount that is amortized to interest expense over the term of the Convertible Notes using the effectiveinterest rate method. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. We allocated issuancecosts incurred to the liability and equity components. Issuance costs attributable to the liability component are being amortized to expense over therespective term of the Convertible Notes, and issuance costs attributable to the equity component were netted with the respective equity component inAdditional paid-in capital.Income TaxesWe account for income taxes under the asset and liability method. We record deferred tax assets and liabilities for the future tax consequencesattributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as foroperating loss and tax credit carryforwards. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in theyears in which we expect to recover or settle those temporary differences. We recognize the effect of a change in tax rates on deferred tax assets and liabilitiesin the results of operations in the period that includes the enactment date. We assess the likelihood that deferred tax assets will be realized, and we recognizea valuation allowance if it is more likely than not that some portion of the deferred tax assets will not be realized. This assessment requires judgment as to thelikelihood and amounts of future taxable income by tax jurisdiction.We account for uncertain tax positions by recognizing the financial statement effects of a tax position only when, based upon technical merits, it ismore likely than not that the position will be sustained upon examination. We recognize potential accrued interest and penalties associated withunrecognized tax positions within our global operations in income tax expense.The Tax Cuts and Jobs Act, or the Tax Act, was enacted on December 22, 2017. The Tax Act reduces the U.S. federal corporate tax rate from 35% to21%, requiring companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxeson certain foreign sourced earnings. In connection with the initial analysis of the impact of the Tax Act during the fiscal year ended January 31, 2018, weremeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future. The remeasurement of our deferredtax balance was offset by application of our valuation allowance. As of January 31, 2019, there are no specific impacts of Tax Reform that could not bereasonably estimated which the Company accounted for under prior tax law.The SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), whichallowed us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. As a result, we previouslyprovided a provisional estimate of the effect of the Tax Act in our financial statements. In the fourth quarter of fiscal 2019, we completed our analysis todetermine the effect of the Tax Act and recorded immaterial adjustments as of January 31, 2019.60Recent Accounting PronouncementsRefer to Note 2, “Significant Accounting Policies” in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report foranalysis of recent accounting pronouncements that are applicable to our business. Item 7A. Quantitative and Qualitative Disclosures About Market Risk.Foreign Currency Exchange RiskOur results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in theEuro and British Pound Sterling. Due to the relative size of our international operations to date, our foreign currency exposure has been limited and thus wehave not instituted a hedging program. We performed a sensitivity analysis as of January 31, 2019 and determined that a 10% change in the value of the U.S.dollar would result in an approximate $3.3 million impact on our current year net loss. We performed a sensitivity analysis as of January 31, 2018 anddetermined that a 10% change in the value of the U.S. dollar would result in an approximate $3.1 million impact on our prior year net loss. We expect ourinternational operations to continue to grow in the near term and we are continually monitoring the foreign currency exposure to determine when we shouldbegin a hedging program. Most of our agreements have been, and we expect will continue to be, denominated in U.S. dollars.Market Risk and Market Interest RiskIn January 2018, we issued $230 million aggregate principal amount of 0.375% convertible senior notes due 2023. Our Convertible Notes have fixedannual interest rates at 0.375% and, therefore, we do not have economic interest rate exposure on our Convertible Notes. However, the values of theConvertible Notes are exposed to interest rate risk. Generally, the fair market value of our fixed interest rate Convertible Notes will increase as interest ratesfall and decrease as interest rates rise. In addition, the fair values of the Convertible Notes are affected by our stock price. The fair value of the convertiblesenior notes will generally increase as our common stock price increases and will generally decrease as our common stock price declines in value.Additionally, we carry the convertible senior notes at face value less unamortized discount on our balance sheet, and we present the fair value for requireddisclosure purposes only.Our exposure to interest rate risk also is related to our interest-bearing assets, primarily our cash, cash equivalents and marketable securities.Fluctuations in interest rates impact the yield of the investment. A hypothetical 100 basis points increase in interest rates would have impacted interestincome by $2.8 million for the year ended January 31, 2019 and $2.0 million for the year ended January 31, 2018.Item 8. Financial Statements and Supplementary Data.The financial statements and supplementary financial information required by this Item 8 are included in our consolidated financial statements andnotes and are set forth in the pages indicated in Part IV, Item 15(a) of this Annual Report on Form 10‑K and are incorporated herein by reference.Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.None.Item 9A. Controls and Procedures. a)Evaluation of Disclosure Controls and Procedures.Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosurecontrols and procedures as of January 31, 2019. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under theExchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in thereports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the61SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information requiredto be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, includingits principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Based on the evaluation of our disclosure controls and procedures as of January 31, 2019, our Chief Executive Officer and Chief Financial Officerconcluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level. b)Management's Report on Internal Control Over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined inExchange Act Rule 13a-15(f). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our management, including the CEO and CFO, conducted an evaluation of the effectiveness of our internal control over financial reporting based onthe Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Inaccordance with guidance issued by the Securities and Exchange Commission, companies are permitted to exclude acquisitions from their final assessment ofinternal control over financial reporting for the first fiscal year in which the acquisition occurred. We have excluded from our evaluation of the internalcontrol over financial reporting current year acquisitions, all of which are included in the January 31, 2019 consolidated financial statements and constitutedcollectively less than 3% of total assets and 3% of total revenues as of and for the year ended January 31, 2019. Based on the results of this evaluation, ourmanagement concluded that our internal control over financial reporting was effective as of January 31, 2019. The effectiveness of our internal control over financial reporting as of January 31, 2019 has been audited by Ernst & Young LLP, an independentregistered public accounting firm, as stated in their report which is included elsewhere herein. c)Changes in Internal Control Over Financial Reporting.There was no change in our internal control over financial reporting that occurred during the quarter ended January 31, 2019 that has materiallyaffected, or is reasonably likely to materially affect, our internal control over financial reporting. d)Inherent Limitations on Effectiveness of Controls.Our management, including our principal executive officer and principal financial officer, do not expect that our disclosure controls or our internalcontrol over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide onlyreasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there areresource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, noevaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitationsinclude the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally,controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. Thedesign of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that anydesign will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes inconditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system,misstatements due to error or fraud may occur and not be detected.Item 9B. Other Information.None.62PART IIIItem 10. Directors, Executive Officers and Corporate Governance.The information called for by this item will be set forth in our Proxy Statement for the 2019 Annual Meeting of Stockholders to be filed with the SECwithin 120 days of the fiscal year ended January 31, 2019 (Proxy Statement) and is incorporated herein by reference.Item 11. Executive Compensation.The information called for by this item will be set forth in our Proxy Statement and is incorporated herein by reference.Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.The information required by this item will be set forth in our Proxy Statement and is incorporated herein by reference.Item 13. Certain Relationships and Related Transactions, and Director Independence.The information required by this item will be set forth in our Proxy Statement and is incorporated herein by reference.Item 14. Principal Accountant Fees and Services.The information required by this item will be set forth in our Proxy Statement and is incorporated herein by reference.63PART IVItem 15. Exhibits, Financial Statement Schedules.(a) Documents Filed with Report(1) Financial Statements. Reports of Independent Registered Public Accounting FirmF-2 Consolidated Balance Sheets as of January 31, 2019 and 2018F-5 Consolidated Statements of Operations for the Years ended January 31, 2019, 2018 and 2017F-6 Consolidated Statements of Comprehensive Loss for the Years ended January 31, 2019, 2018 and 2017F-7 Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the Years ended January 31, 2019, 2018 and 2017F-8 Consolidated Statements of Cash Flows for the Years ended January 31, 2019, 2018 and 2017F-9 Notes to Consolidated Financial StatementsF-10 (2) Financial Statement Schedules.Schedule II – Valuation and Qualifying Accounts(in thousands) Balance as ofbeginning ofyear Additions Deductions Balance as ofend of year Year ended January 31, 2019 Allowance for doubtful accounts $9 $94 $(33) $70 Year ended January 31, 2018 Allowance for doubtful accounts $672 $105 $(768) $9 Year ended January 31, 2017 Allowance for doubtful accounts $115 $562 $(5) $672 Schedules not listed above have been omitted because the information required to be set forth therein is not applicable or is shown in the financialstatements or notes herein. 64(3) Exhibits. Incorporated by Reference Exhibit No. Description Form File No. Exhibit Filing Date FiledHerewith 2.1 Share purchase agreement dated April 7, 2017. 8-K 001-37901 2.1 4/7/2017 2.2 Purchase Agreement, dated December 4, 2018,by and among Coupa Software Incorporated,Hiperos, LLC, GTCR/Opus Blocker Corp., GTCRFund X/C LP, GTCR/Opus Splitter LP, and OpusGlobal Holdings, LLC. 8-K 001-37901 2.1 12/10/2018 3.1 Amended and Restated Certificate ofIncorporation of Registrant. 10-Q 001-37901 3.1 12/9/2016 3.2 Amended and Restated Bylaws of Registrant. 10-Q 001-37901 3.2 12/9/2016 4.1 Amended and Restated Investors’ RightsAgreement, dated May 26, 2015, by and amongthe Registrant and the parties thereto. S-1 333-213546 4.1 9/8/2016 4.2 Waiver of Notice and Registration Rights andAmendment to Amended and Restated InvestorsRights Agreement. S-1/A 333-217105 4.1.2 4/10/2017 4.3 Indenture dated as of January 17, 2018, betweenthe Company and Wilmington Trust, NationalAssociation, as trustee. 8-K 001-37901 4.1 1/18/2018 10.1* Form of Indemnification Agreement between theRegistrant and each of its directors and executiveofficers. S-1/A 333-213546 10.1 9/23/2016 10.2* 2006 Stock Plan, as amended, and forms ofagreements thereunder. S-1/A 333-213546 10.2 9/23/2016 10.3* Registrant’s 2016 Equity Incentive Plan andforms of agreements thereunder. S-1/A 333-213546 10.3 9/23/2016 10.4* Registrant’s 2016 Employee Stock Purchase Planand form of Participation Agreement thereunder. S-1/A 333-213546 10.4 10/4/2016 10.5* Incentive Bonus Plan. S-1 333-213546 10.5 9/8/2016 10.6* Offer Letter, dated May 19, 2016, and Severanceand Change in Control Agreement, between theRegistrant and Robert Bernshteyn. S-1 333-213546 10.6 9/8/2016 65 Incorporated by Reference Exhibit No. Description Form File No. Exhibit Filing Date FiledHerewith 10.7* Offer Letter, dated May 19, 2016, and Severanceand Change in Control Agreement, between theRegistrant and Todd Ford. S-1 333-213546 10.8 9/8/2016 10.8* Offer Letter, dated September 27, 2017, andSeverance and Change in Control Agreement,between the Registrant and Mark Riggs. X 10.9* Offer Letter, dated August 25, 2016, between theRegistrant and Steven Winter. S-1 333-213546 10.10 9/8/2016 10.10* Offer Letter, dated May 19, 2016, and Severanceand Change in Control Agreement, between theRegistrant and Ravi Thakur. S-1 333-213546 10.9 9/8/2016 10.11 Lease Agreement, dated March 20, 2014, amongthe Registrant and Crossroads Associates andClocktower Associates, as amended. S-1 333-213546 10.11 9/8/2016 10.11.1 Third Amendment, dated May 1, 2017, to theLease Agreement by and between the Registrantand BCSP Crossroads Property LLC. 10-Q 001-37901 10.1 9/8/2017 10.12* Compensation Program for Non-EmployeeDirectors. 10-Q 001-37901 10.1 9/6/2018 10.13 Form of Base Capped Call Confirmation. 8-K 001-37901 99.1 1/18/2018 10.14 Form of Additional Capped Call Confirmation. 8-K 001-37901 99.2 1/18/2018 10.15 Form of Director Confidentiality Agreement. 10-K 001-37901 10.14 3/28/2018 21.1 List of Subsidiaries of Registrant. X 23.1 Consent of Independent Registered PublicAccounting Firm. X 24.1 Power of Attorney (contained in the signaturepage to this Annual Report on Form 10-K). 31.1 Certification of Principal Executive OfficerPursuant to Rules 13a-14(a) and 15d-14(a) underthe Securities Exchange Act of 1934, as AdoptedPursuant to Section 302 of the Sarbanes-OxleyAct of 2002. X66 Incorporated by Reference Exhibit No. Description Form File No. Exhibit Filing Date FiledHerewith 31.2 Certification of Principal Financial OfficerPursuant to Rules 13a-14(a) and 15d-14(a) underthe Securities Exchange Act of 1934, as AdoptedPursuant to Section 302 of the Sarbanes-OxleyAct of 2002. X 32.1 Certification of Principal Executive OfficerPursuant to 18 U.S.C. Section 1350, as AdoptedPursuant to Section 906 of the Sarbanes-OxleyAct of 2002. X 32.2 Certification of Principal Financial OfficerPursuant to 18 U.S.C. Section 1350, as AdoptedPursuant to Section 906 of the Sarbanes-OxleyAct of 2002. X 101.INS XBRL Instance Document X 101.SCH XBRL Taxonomy Extension Schema Document X 101.CAL XBRL Taxonomy Extension CalculationLinkbase Document X 101.DEF XBRL Taxonomy Extension DefinitionLinkbase Document X 101.LAB XBRL Taxonomy Extension Label LinkbaseDocument X 101.PRE XBRL Taxonomy Extension PresentationLinkbase Document X *Indicates a management contract or compensatory plan.(b) Exhibits: See Item 15(a)(3), above.(c) Financial Statement Schedules: See Item 15(a)(2), above. Item 16. Form 10-K Summary. None.67SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed onits behalf by the undersigned, thereunto duly authorized. Coupa Software Incorporated Date: March 27, 2019 By:/s/ Robert Bernshteyn Robert Bernshteyn Chief Executive OfficerPOWER OF ATTORNEYKNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Robert Bernshteynand Todd Ford, and each of them, as his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her in any and allcapacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents inconnection therewith, with the SEC, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thingrequisite and necessary to be done in connection therewith, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying andconfirming all that said attorney-in-fact and agent, or his substitute, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theRegistrant in the capacities and on the dates indicated. Name Title Date /s/ Robert Bernshteyn Chief Executive Officer and Director March 27, 2019Robert Bernshteyn (Principal Executive Officer) /s/ Todd Ford Chief Financial Officer March 27, 2019Todd Ford (Principal Financial Officer) /s/ Anthony Tiscornia Chief Accounting Officer March 27, 2019Anthony Tiscornia (Principal Accounting Officer) /s/ Leslie Campbell Director March 27, 2019Leslie Campbell /s/ Roger Siboni Director March 27, 2019Roger Siboni /s/ Tayloe Stansbury Director March 27, 2019Tayloe Stansbury /s/ Scott Thompson Director March 27, 2019Scott Thompson /s/ Frank van Veenendaal Director March 27, 2019Frank van Veenendaal 68INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Reports of Independent Registered Public Accounting FirmF-2 Consolidated Balance Sheets as of January 31, 2019 and 2018F-5 Consolidated Statements of Operations for the Years ended January 31, 2019,2018 and 2017F-6 Consolidated Statements of Comprehensive Loss for the Years ended January 31, 2019,2018 and 2017F-7 Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the Years ended January 31, 2019, 2018 and 2017F-8 Consolidated Statements of Cash Flows for the Years ended January 31, 2019, 2018 and 2017F-9 Notes to Consolidated Financial StatementsF-10 F-1Report of Independent Registered Public Accounting FirmThe Stockholders and Board of Directors of Coupa Software IncorporatedOpinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of Coupa Software Incorporated (the Company) as of January 31, 2019 and 2018, the relatedconsolidated statements of operations, comprehensive loss, convertible preferred stock and stockholders’ equity (deficit) and cash flows for each of the threeyears in the period ended January 31, 2019, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred toas the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial positionof the Company at January 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended January 31,2019, in conformity with U.S. generally accepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company'sinternal control over financial reporting as of January 31, 2019, based on criteria established in Internal Control — Integrated Framework issued by theCommittee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 27, 2019 expressed an unqualifiedopinion thereon.Adoption of ASU No. 2014-09As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for revenue from contracts with customers,and incremental costs to acquire contracts with customers in the year ended January 31, 2019, due to the Company’s adoption of ASC No. 2014-09, Revenuefrom contracts with customers.Basis for OpinionThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financialstatements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Companyin accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing proceduresto assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also includedevaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financialstatements. We believe that our audits provide a reasonable basis for our opinion. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2015. San Jose, California March 27, 2019 F-2Report of Independent Registered Public Accounting FirmThe Stockholders and Board of Directors of Coupa Software IncorporatedOpinion on Internal Control over Financial ReportingWe have audited Coupa Software Incorporated’s internal control over financial reporting as of January 31, 2019, based on criteria established in InternalControl — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).In our opinion, Coupa Software Incorporated (the Company) maintained, in all material respects, effective internal control over financial reporting as ofJanuary 31, 2019, based on the COSO criteria.As indicated in the accompanying Management's Report on Internal Control over Financial Reporting, management's assessment of and conclusion on theeffectiveness of internal control over financial reporting did not include the internal controls over current year acquisitions, which are included in the 2019consolidated financial statements of the Company and collectively constituted less than 3% of total assets as of January 31, 2019, and less than 3% ofrevenues for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internalcontrol over financial reporting over current year acquisitions.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2019 consolidatedbalance sheets of the Company as of January 31, 2019 and 2018, the related consolidated statements of operations, comprehensive loss, convertible preferredstock and stockholders’ equity (deficit) and cash flows for each of the three years in the period ended January 31, 2019 and the related notes and our reportdated March 27, 2019 expressed an unqualified opinion thereon.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness ofinternal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Ourresponsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firmregistered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing andevaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considerednecessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.Definition and Limitations of Internal Control Over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonableF-3assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effecton the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate. /s/ Ernst & Young LLP San Jose, California March 27, 2019 F-4COUPA SOFTWARE INCORPORATEDCONSOLIDATED BALANCE SHEETS(In thousands, except share and per share amounts) As of January 31, 2019 2018 Assets Current assets: Cash and cash equivalents $141,250 $412,903 Marketable securities 180,169 — Accounts receivable, net of allowances 95,274 61,366 Prepaid expenses and other current assets 10,343 10,952 Deferred commissions, current portion 7,324 3,756 Total current assets 434,360 488,977 Property and equipment, net 10,549 5,186 Deferred commissions, net of current portion 18,904 3,896 Goodwill 209,560 44,410 Intangible assets, net 55,925 20,020 Other assets 10,766 9,961 Total assets $740,064 $572,450 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $5,485 $1,342 Accrued expenses and other current liabilities 41,792 26,643 Deferred revenue, current portion 179,967 125,714 Convertible senior notes, net (Note 9) 174,615 — Total current liabilities 401,859 153,699 Convertible senior notes, net (Note 9) — 163,010 Deferred revenue, net of current portion 2,620 2,316 Other liabilities 22,304 12,880 Total liabilities 426,783 331,905 Commitments and contingencies (Note 10) Stockholders’ equity: Preferred stock, $0.0001 par value per share; 25,000,000 shares authorized at January 31, 2019 and 2018; zero shares issued and outstanding at January 31, 2019 and 2018 — — Common stock, $0.0001 par value per share; 625,000,000 shares authorized at January 31, 2019 and January 31, 2018; 60,455,381 and 55,712,342 shares issued and outstanding as of January 31, 2019 and January 31, 2018, respectively 6 6 Additional paid-in capital 567,797 445,318 Accumulated other comprehensive income (loss) 335 (298)Accumulated deficit (254,857) (204,481)Total stockholders’ equity 313,281 240,545 Total liabilities and stockholders’ equity $740,064 $572,450 See Notes to Consolidated Financial Statements.F-5COUPA SOFTWARE INCORPORATEDCONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share amounts) For the year ended January 31, 2019 2018 2017 Revenues: Subscription services $233,428 $164,865 $117,788 Professional services and other 26,938 21,915 15,987 Total revenues 260,366 186,780 133,775 Cost of revenues: Subscription services 53,153 36,481 25,055 Professional services and other 30,301 23,425 21,214 Total cost of revenues 83,454 59,906 46,269 Gross profit 176,912 126,874 87,506 Operating expenses: Research and development 61,608 44,536 30,262 Sales and marketing 105,659 88,722 68,562 General and administrative 57,005 38,578 24,106 Total operating expenses 224,272 171,836 122,930 Loss from operations (47,360) (44,962) (35,424)Interest expense (12,518) (502) (14)Interest income and other, net 3,817 3,307 (1,321)Loss before provision for (benefit from) income taxes (56,061) (42,157) (36,759)Provision for (benefit from) income taxes (537) 1,648 848 Net loss $(55,524) $(43,805) $(37,607)Net loss per share attributable to common stockholders, basic and diluted $(0.96) $(0.83) $(1.88)Weighted-average number of shares used in computing net loss per share attributable to common stockholders, basic and diluted 57,716 52,999 19,988 See Notes to Consolidated Financial Statements. F-6 COUPA SOFTWARE INCORPORATEDCONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS(In thousands) For the year ended January 31, 2019 2018 2017 Net loss $(55,524) $(43,805) $(37,607)Other comprehensive income (loss) in relation to defined benefit plans, net of tax 598 (298) — Unrealized gain on marketable securities, net of tax 35 — — Comprehensive loss $(54,891) $(44,103) $(37,607) See Notes to Consolidated Financial Statements. F-7COUPA SOFTWARE INCORPORATEDCONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)(In thousands, except share amounts) Convertible PreferredStock Common Stock AdditionalPaid-In AccumulatedOtherComprehensive Accumulated TotalStockholdersEquity Shares Amount Shares Amount Capital Loss Deficit (Deficit) Balance at January 31, 2016 33,431,855 $164,950 5,758,338 $1 $16,629 $— $(122,869) $(106,239)Initial public offering, net of issuance costs of $5,344 — — 8,510,000 1 137,112 — — 137,113 Conversion of preferred stock (33,431,855) (164,950) 34,610,979 3 164,947 — — 164,950 Issuance of common stock for acquisitions — — 150,545 — 2,357 — — 2,357 Exercise of Series E preferred stock warrants — — 36,971 — 924 — — 924 Exercise of stock options — — 1,184,708 — 2,186 — — 2,186 Vesting of early exercised stock options — — — — 606 — — 606 Stock-based compensation expense — — — — 9,551 — — 9,551 Excess income tax benefit — — — — 51 — — 51 Net loss — — — — — — (37,607) (37,607)Balance at January 31, 2017 — — 50,251,541 5 334,363 — (160,476) 173,892 Secondary offering, net of issuance costs of $816 — — 959,618 — 22,263 — — 22,263 Equity component of convertible senior notes, net of issuance costs — — — — 60,470 — — 60,470 Purchase of capped calls — — — — (23,322) — — (23,322)Issuance of common stock for acquisitions — — 369,733 — — — — — Issuance of common stock for employee share purchaseplan — — 441,124 — 6,824 — — 6,824 Exercise of stock options — — 3,399,499 1 12,498 — — 12,499 Vesting of early exercised stock options — — — — 2,219 — — 2,219 Stock-based compensation expense — — — — 29,803 — — 29,803 Vested restricted stock units — — 290,827 — — — — — Impact of the adoption of new accountingpronouncements — — — — 200 — (200) — Other comprehensive loss — — — — — (298) — (298)Net loss — — — — — — (43,805) (43,805)Balance at January 31, 2018 — $— 55,712,342 $6 $445,318 $(298) $(204,481) $240,545 Issuance of common stock for acquisitions (Note 4) — — 553,746 — 46,157 — — 46,157 Issuance of common stock for employee share purchaseplan — — 505,717 — 8,778 — — 8,778 Exercise of stock options — — 2,824,836 — 13,606 — — 13,606 Vesting of early exercised stock options — — — — 333 — — 333 Stock-based compensation expense — — — — 53,605 — — 53,605 Vested restricted stock units — — 858,740 — — — — — Impact of the adoption of new accountingpronouncements (Note 2) — — — — — — 5,148 5,148 Other comprehensive income — — — — — 633 — 633 Net loss — — — — — — (55,524) (55,524)Balance at January 31, 2019 — $— 60,455,381 $6 $567,797 $335 $(254,857) $313,281 See Notes to Consolidated Financial Statements. F-8 COUPA SOFTWARE INCORPORATEDCONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands) For the year ended January 31, 2019 2018 2017 Cash flows from operating activities Net loss $(55,524) $(43,805) $(37,607)Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 10,442 7,562 4,575 Accretion of discounts on marketable securities, net (1,621) — — Amortization of deferred commissions 5,791 4,001 4,004 Amortization of debt discount and issuance costs 11,605 459 — Stock-based compensation 52,945 29,694 9,452 Change in fair value of preferred stock warrant liability — — 627 Others 282 41 355 Changes in operating assets and liabilities net of effects from acquisitions: Accounts receivable (28,493) (10,710) (20,041)Prepaid expenses and other current assets 410 (390) (4,600)Other assets (3,402) (746) (1,136)Deferred commissions (15,332) (5,667) (4,468)Accounts payable 3,182 (4,005) 224 Accrued expenses and other liabilities 11,399 7,120 1,772 Deferred revenue 45,752 36,072 25,888 Net cash provided by (used in) operating activities 37,436 19,626 (20,955)Cash flows from investing activities Purchases of marketable securities (302,922) — — Maturities of marketable securities 124,139 — — Acquisitions, net of cash acquired (143,885) (46,075) (6,750)Purchases of property and equipment (7,528) (4,488) (4,491)Net cash used in investing activities (330,196) (50,563) (11,241)Cash flows from financing activities Proceeds from issuance of convertible senior notes, net of issuance costs (639) 223,675 — Purchase of capped calls — (23,322) — Proceeds from issuance of common stock, net of underwriting discounts, commissions and offering costs — 22,264 137,216 Proceeds from the exercise of common stock options 12,964 12,500 4,252 Excess tax benefit from stock-based compensation — — 51 Proceeds from issuance of common stock for employee stock purchase plan 8,778 6,824 — Proceeds from the exercise of preferred stock warrants — — 50 Net cash provided by financing activities 21,103 241,941 141,569 Net increase (decrease) in cash, cash equivalents, and restricted cash (271,657) 211,004 109,373 Cash, cash equivalents, and restricted cash at beginning of period 412,976 201,972 92,599 Cash, cash equivalents, and restricted cash at end of period $141,319 $412,976 $201,972 Supplemental disclosure of cash flow data Cash paid for income taxes $4,910 $1,314 $390 Interest income received $920 $— $— Supplemental disclosure of non-cash investing and financing activities Issuance of common stock in connection with acquisitions $46,157 $— $2,357 Vesting of early exercised stock options $333 $2,219 $606 Property and equipment included in accounts payable and accrued expenses and other current liabilities $832 $70 $84 Conversion of convertible preferred stock to common stock $— $— $164,950 Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets Cash and cash equivalents $141,250 $412,903 201,721 Restricted cash, included in other assets 69 73 251 Total cash, cash equivalents, and restricted cash $141,319 $412,976 $201,972 See Notes to Consolidated Financial Statements. F-9 COUPA SOFTWARE INCORPORATEDNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNote 1. Organization and Description of BusinessThe CompanyCoupa Software Incorporated (the “Company”) was incorporated in the state of Delaware in 2006. The Company provides a comprehensive, cloud-based business spend management (or BSM) platform that provide greater visibility into and control over how companies spend money. The BSM platformenables businesses to achieve savings that drive profitability. The Company is based in San Mateo, California.The Company’s fiscal year ends on January 31.Note 2. Significant Accounting PoliciesBasis of PresentationThe accompanying consolidated financial statements have been prepared using accounting principles generally accepted in the United States ofAmerica (“GAAP”). The consolidated financial statements include the results of the Company and its wholly owned subsidiaries. All significantintercompany transactions and balances have been eliminated during consolidation. Certain amounts in the consolidated financial statements and notes tothe consolidated financial statements for prior years have been reclassified to conform to the presentation for the year ended January 31, 2019. Net operatingresults have not been affected by these reclassifications.Use of EstimatesThe preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affectthe reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and thereported amounts of revenue and expenses during the reporting period. On an ongoing basis, management evaluates its significant estimates including, butnot limited to, the valuation of accounts receivable, the lives of tangible and intangible assets, stock-based compensation, the fair value of the contingentstock consideration, the valuation of acquired intangible assets and the recoverability or impairment of tangible and intangible assets, including goodwill,revenue recognition, the fair value of marketable securities, convertible senior notes fair value, the benefit period of deferred commissions, and provision for(benefit from) income taxes. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions thatmanagement believes to be reasonable under the circumstances. Actual results could differ from those estimates and such differences could be material to thefinancial position and results of operations. Foreign Currency TranslationThe functional currency for the Company’s foreign operations is the U.S. dollar. Foreign currency transaction gains and losses are included in“Interest income and other, net” in the consolidated statements of operations for the period. All assets and liabilities denominated in a foreign currency aretranslated into U.S. dollars at the exchange rate prevailing on the balance sheet date. Revenues and expenses are translated at the transaction spot rate. For theyears ended January 31, 2019, 2018 and 2017, realized foreign currency transaction gains and losses were comprised of a net loss of $225,000, a gain of$292,000, and a net loss of $638,000, respectively.Risks and UncertaintiesThe Company’s services are concentrated in an industry which is characterized by significant competition, rapid technological advances andchanges in customer requirements and industry standards. The success of the Company depends on management’s ability to anticipate and respond quicklyand adequately to technological developments in the industry and changes in customer requirements and industry standards. Any significant delays in thedevelopment or introduction of services could have a material adverse effect on the Company’s business and operating results. Furthermore, the effects ofpotential legal activity that could be brought against the Company,F-10 including costs incurred to defend legal cases, relationships with customers and market perception, and the financial impact of any judicial decisions, couldhave a material adverse effect on the Company’s business and operating results.The Company serves customers and users from data center facilities located across various different physical locations, such as the U.S., Europe andAsia-Pacific, most of which are operated by a single third party. The Company has internal procedures to restore services in the event of disasters at thecurrent data center facilities. Even with these procedures for disaster recovery in place, cloud applications could be significantly interrupted during theprocedures to restore services.Concentration of Risk and Significant CustomersFinancial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents, marketablesecurities and accounts receivable. Cash deposits may, at times, exceed amounts insured by the Federal Deposit Insurance Corporation (“FDIC”) and theSecurities Investor Protection Corporation (“SIPC”). The Company has not experienced any losses on its deposits of cash and cash equivalents to date.No single customer balance comprised 10% or more of total accounts receivable at January 31, 2019 or 2018.During the years ended January 31, 2019, 2018 and 2017, revenues by geographic area, based on billing addresses of the customers, was as follows(in thousands): For the year ended January 31, 2019 2018 2017 United States $161,494 $121,440 $90,449 Foreign countries 98,872 65,340 43,326 Total revenues $260,366 $186,780 $133,775 No single foreign country represented more than 10% of the Company’s revenues in any period.Additionally, no single customer represented more than 10% of the Company’s revenues in any period.Fair Value of Financial InstrumentsThe Company’s financial instruments include cash and cash equivalents, marketable securities, trade receivables, accounts payable, accruedliabilities, and convertible senior notes. Cash and cash equivalents and marketable securities are reported at fair value. The recorded carrying amount of tradereceivables, accounts payable, and accrued liabilities approximate their fair value due to their short-term nature. The Company carries convertible seniornotes at face value less unamortized debt discount and issuance costs on its consolidated balance sheet, and it presents the fair value of the convertible seniornotes for disclosure purposes only.Cash and Cash EquivalentsThe Company considers all highly liquid investments purchased with original maturities of less than three months from the date of purchase to becash equivalents. The Company’s cash and cash equivalents consist of monies held in bank demand deposits and money market funds and are presented atfair market value based on quoted market prices. Marketable SecuritiesMarketable securities consist of financial instruments such as U.S. treasury securities, U.S. agency obligations, corporate notes and bonds,commercial paper, and asset backed securities. The Company classifies marketable securities as available-for-sale at the time of purchase and reevaluates suchclassification as of each balance sheet date. All marketable securities are recorded at estimated fair value.F-11 Unrealized gains and losses for available-for-sale securities are included in accumulated other comprehensive loss, a component of stockholders’equity. The Company evaluates its marketable securities to assess whether those with unrealized loss positions are other than temporarily impaired.Impairments are considered to be other than temporary if they are related to a deterioration in credit risk or if it is likely that the Company will sell thesecurities before recovering its cost basis. Realized gains and losses and declines in value judged to be other than temporary are determined based on thespecific identification method and are reported in interest income and other, net in the consolidated statements of operations.If quoted prices for identical instruments are available in an active market, marketable securities are classified within Level 1 of the fair valuehierarchy. If quoted prices for identical instruments in active markets are not available, fair values are estimated using quoted prices of similar instrumentsand are classified within Level 2 of the fair value hierarchy.Research and Development CostsResearch and development costs are expensed as incurred. Research and development costs consist primarily of compensation related costs incurredfor the maintenance and bug fixing of the Company’s software platform, as well as planning, predevelopment and post implementation costs associated withthe development of enhancements to the Company’s software platform.Advertising CostsAdvertising costs are expensed as incurred and are primarily included in sales and marketing expense in the accompanying consolidated statementsof operations. Advertising expense totaled $2.2 million, $1.6 million and $446,000 for the years ended January 31, 2019, 2018 and 2017, respectively.Capitalized Software Development CostsThe Company capitalizes certain development costs incurred in connection with software development for its cloud-based platform. Costs incurredin the preliminary stages of development are expensed as incurred. Once the software has reached the development stage, internal and external costs, if directand incurred for adding incremental functionality to the Company’s platform, are capitalized until the software is substantially complete and ready for itsintended use. Capitalization ceases upon completion of all substantial testing. These software development costs are recorded as part of property andequipment.Capitalized software development costs are amortized on a straight-line basis to cost of revenues—subscription services over the technology’sestimated useful life, which is generally two to three years. During the years ended January 31, 2019, 2018 and 2017, the Company capitalized $5.6 million,$4.2 million and $4.3 million, respectively, in software development costs.Costs incurred in the maintenance and minor upgrade and enhancement of the Company’s software platform without adding additional functionalityare expensed as incurred.Property and EquipmentProperty and equipment are stated at cost net of accumulated depreciation and amortization. Depreciation is calculated using the straight-linemethod over the estimated useful lives of the assets. Furniture and equipment is amortized over an estimated useful life of three to five years. Leaseholdimprovements are amortized over the shorter of their useful life, estimated at five years, or the remaining term of the lease. Upon retirement or sale of assets,the cost and related accumulated depreciation and amortization are removed from the consolidated balance sheet and the resulting gain or loss is reflected inthe consolidated statement of operations. Maintenance and repair costs are expensed as incurred.F-12 Goodwill and Other Intangible AssetsGoodwill is the excess of costs over fair value of net assets of the business acquired. Goodwill and other intangible assets acquired that aredetermined to have an indefinite useful life are not amortized but are tested for impairment at least annually.Other intangible assets, which includes acquired developed technology, customer relationships, and trademarks are recorded at fair value, net ofaccumulated amortization, and are amortized using the straight-line method. The Company assesses the impairment of long-lived intangible assets wheneverevents or changes in circumstances indicate that the carrying amount may not be recoverable.The Company has not recorded impairment charges on goodwill and other intangible assets for the periods presented in these consolidated financialstatements.Revenue RecognitionThe Company derives its revenues primarily from subscription services fees and professional services fees. Revenues are recognized when control ofthese services are transferred to the Company’s customers in an amount that reflects the consideration expected to be entitled to in exchange for thoseservices. Revenues are recognized net of applicable taxes imposed on the related transaction. The Company’s revenue recognition policy follows guidancefrom Accounting Standards Codification 606, Revenue from Contracts with Customers (Topic 606).The Company determines revenue recognition through the following five-step framework: •Identification of the contract, or contracts, with a customer; •Identification of the performance obligations in the contract; •Determination of the transaction price; •Allocation of the transaction price to the performance obligations in the contract; and •Recognition of revenue when, or as, the Company satisfies a performance obligation.Subscription Services RevenuesThe Company offers subscriptions to its cloud-based business spend management platform, including procurement, invoicing and expensemanagement. Subscription services revenues consist primarily of fees to provide the Company’s customers access to its cloud-based platform, which includesroutine customer support. Subscription service contracts do not provide customers with the right to take possession of the software, are non-cancelable, anddo not contain general rights of return. Generally, subscription revenues are recognized ratably over the contractual term of the arrangement, beginning onthe date that the service is made available to the customer. Subscription contracts typically have a term of three years with invoicing occurring in annualinstallments at the beginning of each year in the subscription period.Professional Services Revenues and OtherThe Company offers professional services which include deployment services, optimization services, and training. Professional services are generallysold on a time-and-materials or fixed-fee basis. For services billed on a time-and-materials basis, revenue is recognized over time as services are performed.For services billed on a fixed-fee basis, invoicing typically occurs in advance, and revenue is recognized over time based on the proportion performed.Significant JudgmentsThe Company’s contracts with customers often include promises to transfer multiple products and services to a customer. For these contracts, theCompany accounts for individual performance obligations separately if they are distinct. Subscription services and professional services are both distinctperformance obligations that are accounted for separately. In contracts with multiple performance obligations, the transaction price is allocated to separateperformance obligations on a relative standalone selling price basis.F-13 The determination of standalone selling price (“SSP”) for each distinct performance obligations requires judgment. The Company determines SSP forperformance obligations based on overall pricing objectives, which take into consideration market conditions and entity-specific factors. This includes areview of historical sales data related to the size of arrangements, the cloud applications being sold, customer demographics and the numbers and types ofusers within the arrangements. The Company uses a range of amounts to estimate SSP for performance obligations. There is typically more than one SSP forindividual products and services due to the stratification of those products and services by considerations such as size and type of customer.Contract BalancesThe timing of revenue recognition may differ from the timing of invoicing for contracts with customers. The Company records a receivable whenrevenue is recognized prior to invoicing. Deferred revenue primarily consists of billings or payments received in advance of revenue recognition.Subscription services and fixed-fee professional services arrangements are commonly billed in advance, recognized as deferred revenue, and then amortizedinto revenue over time. However, other professional services arrangements, primarily a time-and-materials arrangement, are billed in arrears following servicesthat have been rendered. This may result in revenue recognition greater than invoiced amounts which results in a receivable balance. Receivables representan unconditional right to payment. As of January 31, 2019 and 2018, the balance of accounts receivable, net of the allowance for doubtful accounts, was$95.3 million and $61.4 million, respectively. Of these balances, $1.5 million and $1.2 million represent unbilled receivable amounts as of January 31, 2019and 2018, respectively.When the timing of revenue recognition differs from the timing of invoicing, the Company uses judgment to determine whether the contract includesa significant financing component requiring adjustment to the transaction price. Various factors are considered in this determination including the durationof the contract, payment terms, and other circumstances. Generally, the Company determined that contracts do not include a significant financingcomponent. The Company applies the practical expedient for instances where, at contract inception, the expected timing difference between when promisedgoods or services are transferred and associated payment will be one year or less. Payment terms vary by contract type, however arrangements typicallystipulate a requirement for the customer to pay within 30 days.At any point in the contract term, the transaction price may be allocated to performance obligations that are unsatisfied or are partially unsatisfied.These amounts relate to remaining performance obligations on non-cancelable contracts which include both the deferred revenue balance and amounts thatwill be invoiced and recognized as revenue in future periods. As of January 31, 2019, the aggregate amount allocated to performance obligations that areunsatisfied was approximately $498.6 million, a majority of which is related to multi-year subscription arrangements. Approximately three fourths of thisamount is expected to be recognized as revenue within the next 24 months and the remainder thereafter. The Company applies the practical expedient toexclude remaining performance obligations for which revenue is recognized on the basis when invoices are issued and remaining obligations that are part ofcontracts with an original expected duration of one year or less. During the year ended January 31, 2019, the revenue recognized from performanceobligations satisfied in prior periods was approximately $825,000.Accounts Receivable and Allowance for Doubtful AccountsThe Company extends credit to its customers in the normal course of business and does not require cash collateral or other security to support thecollection of customer receivables. The Company estimates the amount of uncollectible accounts receivable at the end of each reporting period based on theaging of the receivable balance, historical experience, and communications with customers, and provides a reserve when needed. Accounts receivable arewritten off when deemed uncollectible. The allowance for doubtful accounts was not material at January 31, 2019 and 2018.Deferred RevenueDeferred revenue consists of customer billings or payments received in advance of the recognition of revenue and is recognized as revenue as therevenue recognition criteria are met. The Company generally invoices its customers annually for the forthcoming year of service. Accordingly, theCompany’s deferred revenue balance doesF-14 not include revenue for future years of multiple year non-cancellable contracts that have not yet been billed. During the year ended January 31, 2019, theCompany recognized revenue of $125.6 million that was included in the deferred revenue balance as of January 31, 2018.Deferred CommissionsCommissions are earned by sales personnel upon the execution of the sales contract by the customer, and commission payments are made shortlyafter they are earned. Commission costs can be associated specifically with subscription and professional services arrangements. Commissions earned by theCompany’s sales personnel are considered incremental and recoverable costs of obtaining a contract with a customer. These costs are deferred and thenamortized over a period of benefit of five years. The Company determined the period of benefit by taking into consideration its past experience withcustomers, future cash flows expected from customers, industry peers and other available information. The Company capitalized commission costs of $15.3 million, $5.7 million and $4.5 million and amortized $5.8 million, $4.0 million and$4.0 million to sales and marketing expense in the accompanying consolidated statements of operations during the years ended January 31, 2019, 2018 and2017, respectively. The increase in capitalized commission costs during the year was primarily due to the adoption of the new revenue standard. Income TaxesThe Company accounts for income taxes under the asset and liability method, which requires that deferred income taxes be provided for temporarydifferences between the financial reporting and tax basis of the Company’s assets and liabilities. In addition, deferred tax assets are recorded for the futurebenefit from the utilization of net operating losses and research and development credit carryforwards. A valuation allowance is provided against deferred taxassets unless it is more likely than not that they will be realized.The Company’s policy for accounting for uncertainty in income taxes requires the evaluation of tax positions taken or expected to be taken in thecourse of the preparation of tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained on examination by theapplicable tax authorities based on the technical merits of the position. Tax positions not deemed to meet the more-likely-than-not threshold would berecorded as a tax expense in the current year. The Company recognizes interest and penalties related to unrecognized tax benefits as income tax expense.Since the date of adoption of accounting for uncertain tax positions, the Company has accrued immaterial interest and penalties associated withunrecognized tax benefits for all periods presented. Stock-Based CompensationThe Company measures and recognizes stock-based compensation expense for all stock-based awards, including grants of stock, restricted stockunits (“RSU”) and options to purchase stock, made to employees, outside directors and consultants based on estimated fair values.The Company uses the Black-Scholes option pricing model to value its options at the date of grant based on certain assumptions. The Companyrecognizes stock-based compensation expense for grants that vest based on only a service condition using the straight-line single-option approach. TheCompany recognizes stock-based compensation expense related to shares issued pursuant to its 2016 Employee Stock Purchase Plan (“ESPP”) on a straight-line basis over the offering period, which is 24 months.For RSUs, the Company generally recognizes stock-based compensation using the straight-line method as the awards only contain a servicecondition. The fair value of an RSU is measured using the fair value of the Company’s common stock on the date of the grant.The Company recognizes stock-based compensation expense from market-based awards using the graded-vesting method. The fair value of suchawards is determined using a Monte Carlo simulation approach.F-15 The Company records stock-based compensation expense from stock-based awards granted to non-employees at the estimated fair value of theawards upon vesting. The Company values options granted to non-employees using the Black-Scholes option pricing model. These awards are remeasuredover their term until vested, exercised, cancelled or expired.The Company recognizes stock-based compensation expense based on actual forfeitures.Convertible Senior NotesThe Company accounts for the issued Convertible Senior Notes (“Convertible Notes”) as separate liability and equity components. The carryingamount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. Thecarrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from thepar value of the Convertible Notes as a whole. This difference represents a debt discount that is amortized to interest expense over the term of the ConvertibleNotes using the effective interest rate method. The equity component is not remeasured as long as it continues to meet the conditions for equityclassification. The Company has allocated issuance costs incurred to the liability and equity components. Issuance costs attributable to the liabilitycomponent are being amortized to expense over the respective term of the Convertible Notes, and issuance costs attributable to the equity components werenetted with the respective equity component in additional paid in capital.Comprehensive LossComprehensive loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstancesfrom non-owner sources. The Company’s comprehensive loss consists of net loss, other comprehensive income (loss) in relation to defined benefits plans, netof tax, and an unrealized gain on marketable securities, net of tax. The other comprehensive income (loss) in relationship to defined benefits plans representsnet deferred gains and losses and prior service costs and credits for the defined benefit pension plans.Recent Accounting GuidanceRecently Adopted Accounting PronouncementsIn May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606)which provided a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Topic 606 superseded the revenuerecognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. The core principle of Topic 606 is to recognize revenueto depict the transfer of promised goods or services to a customer in an amount that reflects the consideration to which the entity expects to be entitled inexchange for those goods or services. Topic 606 also includes Subtopic 340-40 which provides accounting guidance for incremental costs of obtaining acontract with a customer. The Company refers to Topic 606 and Subtopic 340-40 collectively as the “new revenue standard.”The Company adopted the new revenue standard effective on February 1, 2018 using the modified retrospective method applied to all contracts notcompleted as of the adoption date. Results for reporting periods beginning on February 1, 2018 are presented under the new revenue standard, whilecomparative results have not been restated. The primary impact of adopting the new revenue standard relates to Subtopic 340-40 and the deferral ofincremental commission costs to obtain contracts with customers. Under Topic 605, the Company deferred only direct and incremental commission costs toobtain a contract and amortized those costs over the non-cancelable contract term. Under the new revenue standard, the Company defers all incrementalcommission costs to obtain the contract. The Company amortizes these costs over a period of benefit of five years. The adoption of the new revenue standardalso removed the limitation on contingent revenue under Topic 605 which impacted revenue recognition and is reflected in the changes to the Company’srevenue recognition accounting policy.F-16 The following table summarizes the cumulative impact of adoption of the new revenue standard for revenue recognition on line items within theConsolidated Balance Sheets (in thousands): As of January 31, 2018 As PreviouslyReported Adjustmentsfor the NewRevenueStandard As Adjusted Assets Deferred commissions, current portion $3,756 $778 $4,534 Deferred commissions, net of current portion 3,896 8,257 12,153 Liabilities and Stockholders’ Equity Deferred revenue, current portion 125,714 (1,732) 123,982 Deferred revenue, net of current portion 2,316 (10) 2,306 Accumulated deficit (204,481) 10,777 (193,704) The impact of adoption on the consolidated statements of cash flows for the year ended January 31, 2019 was immaterial. The impact to sales andmarketing expense within the consolidated statements of operations was a decrease of approximately $1.7 million for the year ended January 31, 2019, due todeferred commission costs that would have been expensed prior to adoption of the new standard. The impact to total revenues within the consolidatedstatements of operations was an increase of approximately $810,000 for the year ended January 31, 2019, due to subscription and professional servicerevenues that would have not been recognized during the period prior to the adoption of the new standard. The following table summarizes the effects of thenew revenue standard for revenue recognition on line items within the Consolidated Balance Sheets (in thousands): As of January 31, 2019 Prior toAdoption of theNew RevenueStandard Adjustmentsfor the NewRevenueStandard As Adjusted Assets Deferred commissions, current portion $5,353 $1,971 $7,324 Deferred commissions, net of current portion 5,581 13,323 18,904 Liabilities and Stockholders’ Equity Deferred revenue, current portion 182,509 (2,542) 179,967 Deferred revenue, net of current portion 2,539 81 2,620 Accumulated deficit (272,612) 17,755 (254,857) In October 2016, the FASB issued ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory (“ASU 2016-16"). ASU 2016-16 requiresentities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The new standard iseffective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. As of January 31, 2018, the Company had anaggregate prepaid tax asset of $5.6 million recorded in prepayments and other current assets and other long-term assets, which represents tax expense that wasdeferred in accordance with GAAP prior to adoption of ASU 2016-16. The Company adopted this standard on February 1, 2018 and reversed the deferred taxcharge of $5.6 million through a cumulative-effect adjustment to the accumulated deficit.In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”). ASU 2016-18requires an entity to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows, andan entity will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows.This guidance is effective for annual and interim reporting periods, beginning after December 15, 2017. Entities are required to apply the standard’sprovisions on a retrospective basis. The Company adopted this standard on February 1, 2018, which did not have material impact on the Companyconsolidated statement of cash flows.In March 2017, the FASB issued ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic PostretirementBenefit Cost (Topic 715), (“ASU 2017-07”). ASU 2017-07 provides guidance on the presentation of the service cost component and the other components ofnet period pension cost in theF-17 consolidated statements of operations. The standard is effective for annual and interim reporting periods beginning after December 15, 2017 and requiresretrospective adoption. The Company adopted this standard on February 1, 2018, which did not have a material impact on the Company’s consolidatedfinancial statements and related disclosures.In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”), which provides clarified guidance on applying modification accounting to changes in the terms or conditions of a share-based payment award. ASU2017-09 is effective for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted. This change is required to beapplied prospectively to an award modified on or after the adoption date. The Company adopted this standard on February 1, 2018, which did not haveimpact on the Company’s consolidated financial statements and related disclosures.New Accounting Pronouncements Not Yet AdoptedIn February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”) which provides guidance for lease accounting. Since the issuance ofASU 2016-02, the FASB has also issued ASU 2017-13, ASU 2018-01, ASU 2018-10 and ASU 2018-11, all of which clarify certain aspects of ASU 2016-02.The new lease standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for allleases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expenserecognition in the income statement. The new lease standard is effective for fiscal years beginning after December 15, 2018, including interim periods withinthose fiscal years and early adoption is permitted. A modified retrospective transition approach is required for lessees with capital and operating leasesexisting at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedientsavailable.The Company will adopt this new standard as of February 1, 2019, and has elected to adopt the package of practical expedients permitted under thetransition guidance within the new standard, which among other things, allows the Company to carry forward historical lease classifications. The Companywill also elect the practical expedient related to comparative periods, allowing it to carry forward its current accounting treatment for leases up to the date ofadoption, and the practical expedient to not separate lease and non-lease components. The Company will make an accounting policy election to keep leaseswith an initial term of twelve months or less off of the balance sheet. The Company will recognize those lease payments in the Consolidated Statements ofOperations on a straight-line basis over the lease term.The adoption of the standard will result in recognition of additional lease assets and lease liabilities between $26 million to $30 million as ofFebruary 1, 2019. The difference between the lease assets and lease liabilities will be recorded as an adjustment to retained earnings. The standard is notexpected to materially affect the Company’s consolidated net earnings or liquidity. In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment(“ASU 2017-04”), which simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test. Instead, if thecarrying amount of a reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess, limited to the totalamount of goodwill allocated to that reporting unit. ASU 2017-04 also clarifies the requirements for excluding and allocating foreign currency translationadjustments to reporting units related to an entity’s testing of reporting units for goodwill impairment, and clarifies that an entity should consider income taxeffects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. Theguidance is effective for annual reporting periods beginning after January 1, 2020 and interim periods within those fiscal years. The Company has elected toearly adopt this standard on February 1, 2019 and is not expecting the adoption to have an impact on its historical financial statements.In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Non-Employee Share BasedPayment Accounting (“ASU 2018-07”), with an intent to reduce cost and complexity and to improve financial reporting for share-based payments issued tonon-employees. The amendments in ASU 2018-07 provide for the simplification of the measurement of share-based payment transactions for acquiring goodsand services from non-employees. Currently, the accounting requirements for nonemployee and employee share-based payment transactions are significantlydifferent. This standard expands theF-18 scope of Topic 718 to include share-based payments issued to nonemployees for goods or services, aligning the accounting for share-based payments tononemployees and employees. ASU 2018-17 is effective for annual reporting periods beginning after December 15, 2018, including interim periods withinthose periods, and early adoption is permitted. The Company does not believe that this standard will have a material impact on its consolidated financialstatements.In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement(“ASU 2018-13”), which amends ASC 820, Fair Value Measurement. ASU 2018-13 modifies the disclosure requirements for fair value measurements byremoving, modifying, or adding certain disclosures. The effective date is the first quarter of fiscal year 2021, with early adoption permitted for the removeddisclosures and delayed adoption until fiscal year 2021 permitted for the new disclosures. The removed and modified disclosures will be adopted on aretrospective basis and the new disclosures will be adopted on a prospective basis. The Company is currently evaluating the impact of adopting ASU 2018-13 on its consolidated financial statements.In August 2018, the FASB issued ASU No. 2018-14, which amends FASB ASC Topic 715, "Compensation - Retirement Benefits." The amendmentsin this guidance modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The amendments in thisguidance remove disclosures that no longer are considered cost beneficial, clarify the specific requirements of disclosures and add disclosure requirementsidentified as relevant. This guidance is effective for annual reporting periods ending after December 15, 2020, with early adoption permitted, and is requiredto be adopted retrospectively. The Company is currently evaluating the method of adoption and related impact of ASU 2018-14 on its consolidated financialstatements.In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-use Software (subtopic 350-40): Customer’sAccounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract (“ASU 2018-15”). The amendment aligns therequirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizingimplementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Theeffective date is for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption allowed. TheCompany is currently evaluating the timing and impact of its adoption of this standard on its consolidated financial statements. Note 3. Marketable Securities The following is a summary of available-for-sale marketable securities, excluding those securities classified within cash and cash equivalents on theconsolidated balance sheets at January 31, 2019 (in thousands): AmortizedCost UnrealizedGain UnrealizedLosses Fair Value U.S. agency obligations$40,284 $16 $(5) $40,295 U.S. treasury securities84,805 29 (4) 84,830 Corporate notes and bonds29,322 10 (6) 29,326 Commercial paper14,876 — — 14,876 Asset backed securities10,835 9 (2) 10,842 Total marketable securities$180,122 $64 $(17) $180,169 As of January 31, 2019, the fair values of available-for-sale marketable securities, by remaining contractual maturity, were as follows (in thousands): Due within one year$157,376 Due in one year through five years22,793 $180,169 The Company does not believe that any unrealized losses represent other-than-temporary impairments based on its evaluation of available evidence.To determine whether a decline in value is other-than-temporary, theF-19 Company evaluates, among other factors: the duration and extent to which the fair value has been less than the carrying value and its intent and ability toretain the marketable securities for a period of time sufficient to allow for any anticipated recovery in fair value. The Company considers all marketablesecurities as available for use in current operations, including those with maturity dates beyond one year, and therefore classifies these securities as currentassets in the accompanying consolidated balance sheets.Note 4. Business CombinationsAcquisitions in Fiscal Year Ended January 31, 2019Hiperos, LLC On December 7, 2018, the Company acquired all the outstanding equity securities of Hiperos, LLC, a Delaware limited liability company, andGTCR/Opus Blocker Corp., a Delaware corporation, (together herein referred to as “Hiperos”) for a purchase price of approximately $94.8 million in cash,subject to adjustments based on the amount of working capital of Hiperos. Approximately, $8.6 million of the purchase consideration is being held in escrowfor 18 months after the transaction closing date. Hiperos is a third-party risk management provider, and the acquisition enables the Company’s businessspend management solution with the advanced technology to extensively evaluate the risk of supplier base to further protect brand and bottom line. The acquisition was accounted for as a business combination and, accordingly, the total fair value of purchase consideration was allocated to thetangible and intangible assets acquired and liabilities assumed based on their fair values on the acquisition date. The major classes of assets and liabilities towhich the Company has allocated the fair value of purchase consideration were as follows (in thousands): December 7,2018 Cash and cash equivalent$167 Accounts receivable 3,904 Intangible assets 17,585 Other assets 1,025 Goodwill 83,891 Accounts payable and other current liabilities (2,792)Deferred revenue (7,938)Other non-current liabilities (1,000)Total consideration$94,842 The Company continues to collect information with regards to its estimates and assumptions and will record any adjustments to the Company’spreliminary estimates to goodwill provided that the Company is within the measurement period. The goodwill recognized was primarily attributed toincreased synergies that are expected to be achieved from the integration of Hiperos, and is partially deductible for income tax purposes. The Companydetermined the fair values of intangible assets acquired and liabilities assumed with the assistance of third party valuation consultants. Based on thisvaluation, the intangible assets acquired are (in thousands): Fair Value Useful life(in Years)Developed technology$10,000 6Customer relationships 7,400 5Trademarks$185 1Total intangible assets$17,585 The Company incurred costs related to this acquisition of approximately $1.0 million for the year ended January 31, 2019. All acquisition relatedcosts were expensed as incurred and have been recorded in general and administrative expenses in the accompanying consolidated statements of operations. F-20 The revenue and earnings of the acquired business have been included in the Company’s results since the acquisition date and are not material to theCompany’s consolidated financial results. The following unaudited pro forma financial information presents combined results of operations for each of theperiods presented, as if Hiperos had been acquired as of the beginning of the comparable prior annual reporting period, giving effect on a pro forma basis topurchase accounting adjustments such as amortization of intangible assets and acquisition-related costs. The unaudited pro forma information presentedbelow is for informational purposes only and is not necessarily indicative of our consolidated results of operations of the combined business had theacquisition actually occurred at the beginning of the Company’s fiscal year 2018 or of the results of the Company’s future operations of the combinedbusiness (in thousands). Fiscal Year 2019 2018 Pro forma total revenues$ 277,888 $206,610 Pro forma net loss$ (54,653) $(59,858) Vinimaya, Inc. (d/b/a Aquiire)On October 12, 2018, the Company completed its acquisition of Vinimaya, Inc. which conducted business as Aquiire. Aquiire is a real-time suppliercatalog search company, and the acquisition extended the Company’s capability to deliver a comprehensive business-to-business shopping experiencespanning real-time, cached, and localized catalog search.The acquisition was accounted for as a business combination and, accordingly, the total fair value of purchase consideration was allocated to thetangible and intangible assets acquired and liabilities assumed based on their fair values on the acquisition date. The total fair value of the purchaseconsideration was approximately $49.5 million, comprised of $30.5 million in cash (of which $3.8 million is being held back by the Company for 18 monthsafter closing of the acquisition) and 300,560 shares of the Company’s common stock with fair value of approximately $19.0 million (of which 37,570 sharesare being held back by the Company for 18 months after closing of the acquisition). The major classes of assets and liabilities to which the Company has allocated the fair value of purchase consideration were as follows (in thousands): October 12,2018 Accounts receivable$1,511 Intangible assets 12,400 Other assets 1,104 Goodwill 41,898 Accounts payable and other liabilities (1,610)Deferred revenue (2,609)Deferred tax liability, net (3,174)Total consideration$49,520 F-21 Other assets include indemnification assets totaling approximately $1.1 million due to an assumed liability for which the seller is responsible. TheCompany will continue to collect information and reevaluate the estimates and assumptions and records any adjustments to the Company’s preliminaryestimates to goodwill provided that the Company is within the measurement period. The goodwill recognized was primarily attributed to increased synergiesthat are expected to be achieved from the integration of Aquiire and is not expected to be deductible for income tax purposes. The Company determined thefair values of intangible assets acquired and liabilities assumed with the assistance of third party valuation consultants. Based on this valuation, theintangible assets acquired are (in thousands): Fair Value Useful life(in Years)Developed technology$8,900 5Customer relationships 3,500 5Total intangible assets$12,400 The Company incurred costs related to this acquisition of approximately $517,000 during the year ended January 31, 2019. All acquisition relatedcosts were expensed as incurred and have been recorded in general and administrative expenses in the accompanying consolidated statements of operations.The revenue and earnings of the acquired business have been included in the Company’s results since the acquisition date and are not material to theCompany’s consolidated financial results. Pro forma results of operations for this acquisition have not been presented as the financial impact to theCompany’s consolidated financial statements would be immaterial.DCR Workforce, Inc.On August 1, 2018, the Company completed the acquisition of the technology assets of DCR Workforce Inc. ("DCR") for aggregate cashconsideration of $25.0 million paid at closing (of which $3.8 million is being held back by the Company until the second anniversary after closing of theacquisition) and contingent stock consideration that may be earned and issued in the future. The maximum contingent stock consideration that may beearned and issued is up to 668,740 shares of the Company’s common stock. The payout of the contingent stock consideration will be determined based onthe achievement of distinct revenue performance targets for each of three separate measurement periods that continue through December 31, 2022.The acquisition was accounted for as a business combination. The contingent stock consideration for each of three separate measurement periodsmay individually result in the delivery of a fixed number of shares and as a result it was classified as equity on the Company’s consolidated balance sheet.The fair value of the contingent consideration as of the acquisition date was determined using the Monte Carlo simulation method. This estimate was basedon level 3 inputs under the fair value measurement and disclosure guidance which are not observable in the market including estimated amount and timing offuture revenues and discount rate. During the year ended January 31, 2019, the revenue performance target for the first measurement period ending October31, 2019 has been fully met, and therefore the Company issued 291,602 shares of the Company’s common stock to the shareholders of DCR in the fourthquarter ending January 31, 2019.The aggregate fair value of purchase consideration of $52.2 million, comprised of $25.0 million cash consideration and $27.2 million stockconsideration, was allocated to the tangible and intangible assets acquired and liabilities assumed based on their fair values on the acquisition date.F-22 The major classes of assets to which the Company has allocated the fair value of purchase consideration were as follows (in thousands): August 1,2018 Other current assets$46 Intangible assets 12,800 Goodwill 39,361 Total consideration$52,207 There were no liabilities assumed by the Company for the DCR acquisition. The Company continues to collect information and reevaluate theestimates and assumptions and records any adjustments to the Company’s preliminary estimates to goodwill provided that the Company is within themeasurement period. The goodwill recognized was primarily attributed to increased synergies that are expected to be achieved from the integration of DCRand is expected to be deductible for income tax purposes. The Company determined the fair values of intangible assets acquired with the assistance of thirdparty valuation consultants. Based on this valuation, the intangible assets acquired are as follows (in thousands): Fair Value Useful life(in Years)Developed technology$9,500 5Customer relationships 3,300 5Total intangible assets$12,800 The Company incurred costs related to this acquisition of approximately $327,000 during year ended January 31, 2019. All acquisition related costswere expensed as incurred and have been recorded in general and administrative expenses in the accompanying consolidated statements of operations.The revenue and earnings of the acquired business have been included in the Company’s results since the acquisition date. Pro forma results ofoperations for this acquisition have not been presented as the financial impact to the Company’s consolidated financial statements would be immaterial.In conjunction with the acquisition of technology assets of DCR, the Company signed a license agreement with DCR pursuant to which theCompany granted DCR a limited, non-sublicensable, non-transferable, and nonexclusive license right to use certain of the intellectual property that theCompany acquired from DCR. The Company also signed a transition service agreement, pursuant to which DCR will provide administrative services to theCompany during a transitional service period to support the continuing operation of the acquired business. In addition, the Company signed a three-yearoffice lease agreement beginning from August 1, 2018 with an entity that is wholly owned by the shareholders of DCR. Refer to Note 16 Related Parties foradditional disclosure on the agreements. Acquisitions in Fiscal Year Ended January 31, 2018Simeno Holdings AGOn December 1, 2017, the Company acquired all of the issued and outstanding capital stock held by of Simeno Holdings AG (“Simeno”), aSwitzerland based cross-catalog search and catalog management company.The acquisition was accounted for as a business combination and, accordingly, the total fair value of purchase consideration was allocated to thetangible and intangible assets acquired and liabilities assumed based on their fair values on the acquisition date. The total purchase consideration was $8.7million in cash, of which $1.5 million is being held until the second anniversary after closing of the acquisition. In addition, approximately $8.0 million inthe form of 221,257 shares of the Company’s common stock was issued to the selling shareholder of Simeno and this stock is subject to service vestingconditions including continued employment with the Company. The value assigned to the common stock issued will be recorded as post-acquisitioncompensation expense over the requisite service period and has been excluded from the purchase consideration.F-23 The major classes of assets and liabilities to which the Company has allocated the fair value of purchase consideration were as follows (in thousands): December 1,2017 Cash and cash equivalents$747 Accounts receivable 1,912 Intangible assets 3,820 Other assets, net 616 Goodwill 7,264 Accounts payable and other liabilities (1,405)Pension plan obligation (4,226)Total consideration$8,728 The goodwill recognized was primarily attributed to increased synergies that are expected to be achieved from the integration of Simeno and is notexpected to be deductible for income tax purposes. The Company determined the fair values of intangible assets acquired and liabilities assumed with theassistance of third party valuation consultants. Based on this valuation, the intangible assets acquired are as follows (in thousands): Fair Value Useful life(in Years)Developed technology$2,300 4Customer relationships 1,520 4Total intangible assets$3,820 Simeno maintained a pension plan covering employees in Switzerland pursuant to the requirements of Swiss pension law, which has been assumedby the Company upon the completion of the acquisition. The pension plan is accounted for as a defined benefit pension plan, which requires the Company torecognize the underfunded status of the plan as a liability in the consolidated balance sheets and changes in the funded status of defined benefit pension planthrough other comprehensive loss. As of the acquisition date in December 2017, the Company recorded net liabilities of $4.2 million on its consolidatedbalance sheet in connection with this pension plan.The Company incurred costs related to this acquisition of approximately $445,000 during the year ended January 31, 2018 and no significant costswere incurred during the year ended January 31, 2019. All acquisition related costs were expensed as incurred and have been recorded in general andadministrative expenses in the accompanying consolidated statements of operations.Trade Extensions TradeExt ABOn May 3, 2017, the Company acquired substantially all of the issued and outstanding capital stock held by shareholders of Trade ExtensionsTradeExt AB (“Trade Extensions”), a Swedish corporation. The acquisition enabled the Company to broaden its cloud platform for business spend,particularly in the area of strategic sourcing.Upon the closing of the acquisition, the Company paid aggregate consideration of approximately $40.9 million in cash, of which $7.2 million wasbeing held in escrow for 18 months after the transaction closing date. In November 2018, substantially all of the amount that was being held in escrow wasreleased after deducting certain amounts to cover indemnification obligations and associated contractual provisions.In addition, approximately $4.1 million in the form of 148,476 shares of the Company’s common stock was issued to certain key employees of TradeExtensions, which stock is subject to service vesting conditions including continued employment with the Company. The value assigned to the commonstock issued will be recorded as post-acquisition compensation expense and has been excluded from the purchase consideration.F-24 The major classes of assets and liabilities to which the Company has allocated the fair value of purchase consideration were as follows (in thousands): May 3, 2017 Cash and cash equivalents$2,016 Accounts receivable 1,172 Intangible assets 12,960 Other assets 2,086 Goodwill 30,840 Accounts payable and other liabilities (8,125)Total consideration$40,949 Other assets include indemnification assets totaling $1.4 million due to assumed liability for which the seller is responsible. The goodwill recognizedwas primarily attributed to increased synergies that are expected to be achieved from the integration of Trade Extensions and is not expected to be deductiblefor income tax purposes. The Company determined the fair values of intangible assets acquired with the assistance of third party valuation consultants.Based on this valuation, the intangible assets acquired are (in thousands): Fair Value Useful life(in Years)Developed technology$9,700 7Customer relationships 3,100 5Trademarks 160 1Total intangible assets$12,960 The Company incurred costs related to this acquisition of approximately $526,000 during the year ended January 31, 2018. All acquisition relatedcosts were expensed as incurred and have been recorded in general and administrative expenses in the accompanying consolidated statements of operations.Note 5. Goodwill and Other Intangible AssetsGoodwillThe following table represents the changes in goodwill (in thousands): Balance at January 31, 2017 $6,306 Additions from acquisitions 38,104 Balance at January 31, 2018 44,410 Additions from acquisitions 165,150 Balance at January 31, 2019 $209,560 F-25 Other Intangible AssetsThe following table summarizes the other intangible asset balances (in thousands): As of January 31, 2019 2018 WeightedAverageRemainingUsefulLives (inyears) GrossCarryingAmount AccumulatedAmortization NetCarryingAmount GrossCarryingAmount AccumulatedAmortization NetCarryingAmount Developed technology4.8 $48,435 $(9,198) $39,237 $19,385 $(4,153) $15,232 Customer relationships4.4 18,894 (2,363) 16,531 4,694 (597) 4,097 Trademarks0.8 345 (188) 157 160 (119) 41 In-process research and development — — — — 650 — 650 Total other intangible assets $67,674 $(11,749) $55,925 $24,889 $(4,869) $20,020 Amortization expense related to other intangible assets was approximately $6.9 million, $3.4 million and $952,000 for the years ended January 31,2019, 2018 and 2017, respectively. As of January 31, 2019, the future amortization expense of other intangible assets is as follows (in thousands): Year Ending January 31, 2020 $12,627 2021 12,450 2022 12,026 2023 9,732 2024 7,316 Thereafter 1,774 Total $55,925 The Company, which has one reporting unit, performed an annual test for goodwill impairment and determined that goodwill was not impaired. Inaddition, there have been no significant events or circumstances affecting the valuation of goodwill subsequent to the Company’s annual assessment.Furthermore, no events or changes in circumstances have occurred to suggest that the carrying amounts for any of the Company’s long-lived assets oridentifiable intangible assets may be non-recoverable. As such, the Company was not required to reevaluate the recoverability of its long-lived assets.Note 6. Property and Equipment, NetProperty and equipment consisted of the following (in thousands): As of January 31, 2019 2018 Furniture and equipment $3,595 $1,897 Software development costs 23,444 16,574 Leasehold improvements 1,255 557 Construction in progress 183 149 Total property and equipment 28,477 19,177 Less: accumulated depreciation and amortization (17,928) (13,991)Property and equipment, net $10,549 $5,186 Depreciation and amortization expense related to property and equipment, excluding software development costs, was approximately $849,000,$532,000 and $432,000 for the years ended January 31, 2019, 2018 and 2017,F-26 respectively. Amortization expense related to software development costs was approximately $3.1 million, $3.9 million and $3.3 million for the years endedJanuary 31, 2019, 2018 and 2017, respectively. Note 7. Fair Value MeasurementsFair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageousmarket for the asset or liability in an orderly transaction between market participants on the measurement date. Subsequent changes in fair value of thesefinancial assets and liabilities are recognized in earnings or other comprehensive loss when they occur. When determining the fair value measurements forassets and liabilities which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which theCompany would transact and the market-based risk measurement or assumptions that market participants would use in pricing the assets or liabilities, such asinherent risk, transfer restrictions and credit risk.The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases thecategorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: •Level 1 - Quoted prices in active markets for identical assets or liabilities. •Level 2 - Observable inputs other than quoted price in active markets for identical assets or similar assets or liabilities in inactive markets, orother inputs that are observable or can be corroborated by observable market data for substantially full term of assets or liabilities. •Level 3 - Inputs that are generally unobservable and typically reflect management’s estimates of assumptions that market participants woulduse in pricing the assets or liabilities.The following table summarizes the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis(in thousands): Level 1 Level 2 Level 3 Total January 31, 2019 Cash equivalents:(1) Money market funds $118,204 $— $— $118,204 U.S. agency obligations — 6,986 — 6,986 Commercial paper — 2,997 — 2,997 Marketable securities: U.S. agency obligations — 40,295 — 40,295 U.S. treasury securities — 84,830 — 84,830 Corporate notes and bonds — 29,326 — 29,326 Commercial paper — 14,876 — 14,876 Asset backed securities — 10,842 — 10,842 January 31, 2018 Money market funds (1) 389,357 — — 389,357 (1)Included in cash and cash equivalents The Company carries Convertible Senior Notes (the “Convertible Notes”) at face value less unamortized discount and issuance costs on itsconsolidated balance sheet and presents the fair value for required disclosure purposes only. As of January 31, 2019, the fair value of the Convertible Noteswas $428.4 million. The estimated fair values of the Convertible Notes, which the Company has classified as Level 2 financial instruments, were determinedbased on the quoted bid prices of the Convertible Notes on the last trading day of each reporting period. As of January 31, 2018, the fair value of theConvertible Notes approximated its carrying amount at that time. For Note 9 for further information on the Convertible Notes.F-27 Note 8. Accrued Expenses and Other Current LiabilitiesAccrued expenses and other current liabilities consisted of the following (in thousands): As of January 31, 2019 2018 Accrued compensation $23,112 $11,606 Accrued expenses 11,898 6,190 Income tax payable 2,231 5,092 Other current liabilities 4,551 3,755 Total accrued expenses and other current liabilities $41,792 $26,643 Included in the accrued compensation liability caption for the year ended January 31, 2019 and 2018, the Company had accrued $4.3 million and$3.2 million of employee stock purchase plan contributions received, respectively. For further information on the Company’s employee stock purchase plansee Note 11.Note 9. Convertible Senior NotesIn January 2018, the Company entered into a Purchase Agreement (the “Purchase Agreement”) with certain counterparties relating to the Company’ssale of $230.0 million aggregate principal amount of its 0.375% Convertible Senior Notes due 2023 (the “Convertible Notes”) to the counterparties in aprivate placement in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and for initial resale by the Initial Purchasersto qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A under the Securities Act. The Convertible Notesconsisted of a $200.0 million initial placement and an overallotment option that provided the initial purchasers of the Convertible Notes with the option topurchase an additional $30.0 million of the Convertible Notes, which was exercised in full by the counterparties prior to the Convertible Notes issuance. OnJanuary 17, 2018, for a total of $230.0 million, the Convertible Notes were issued in accordance with an Indenture (the “Indenture”) between the Companyand Wilmington Trust, National Association, as trustee.The net proceeds from the issuance of the Convertible Notes are $200.4 million, net of debt issuance costs, including the underwriting discount andthe cash used to purchase the capped call, discussed below.The Convertible Notes are senior, unsecured obligations of the Company, and interest is payable semi-annually in cash at a rate of 0.375% per annumon January 15 and July 15 of each year, beginning on July 15, 2018. The Convertible Notes will mature on January 15, 2023 unless redeemed, repurchased orconverted prior to such date. Prior to the close of business on the business day immediately preceding October 15, 2022, the Convertible Notes areconvertible at the option of holders during certain periods, upon satisfaction of certain conditions. On or after October 15, 2022, the Convertible Notes areconvertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. The Convertible Notes willhave an initial conversion rate of 22.4685 shares of common stock per $1,000 principal (equivalent to an initial conversion price ofapproximately $44.5068 per share of its common stock). The conversion rate is subject to customary adjustments for certain events as described in theIndenture. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of its common stock or a combination of cash and shares of itscommon stock, at its election. It is the Company’s current intent to settle conversions of the Convertible Notes through combination settlement, whichinvolves repayment of the principal portion in cash and any excess of the conversion value over the principal amount in shares of its common stock.Holders may convert their Convertible Notes, at their option, prior to the close of business on the business day immediately preceding October 15,2022, in multiples of $1,000 principal amount, only under the following circumstances: •during any fiscal quarter commencing after the fiscal quarter ending on April 30, 2018 (and only during such fiscal quarter), if the lastreported sale price of its common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive tradingdays ending on, and including,F-28 the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on eachapplicable trading day; •during the five business day period after any five consecutive trading day period (the “Measurement Period”) in which the trading priceper $1,000 principal amount of the Convertible Notes for each trading day of the Measurement Period was less than 98% of the product ofthe last reported sales price of the Company’s common stock and the conversion rate on each such trading day; •after the Company’s issuance of a notice of redemption and prior to the close of business on the second scheduled trading day immediatelypreceding the redemption date; or •upon the occurrence of specified corporate events, as defined in the Indenture. If the Company undergoes a fundamental change, as described in the Indenture, subject to certain conditions, holders may require the Company torepurchase for cash all or any portion of their Convertible Notes. The fundamental change repurchase price is equal to 100% of the principal amount ofthe Convertible Notes to be repurchased, plus accrued and unpaid interest up to, but excluding, the fundamental change repurchase date. If holders elect toconvert their Convertible Notes in connection with a make-whole fundamental change, as described in the Indenture, the Company will, to the extentprovided in the Indenture, increase the conversion rate applicable to the Convertible Notes.The Convertible Notes are the Company’s senior unsecured obligations and rank senior in right of payment to any of its indebtedness that isexpressly subordinated in right of payment to the Convertible Notes, and equal in right of payment to any of its indebtedness that is not so subordinated. TheConvertible Notes are effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securingsuch indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) and any preferred equity of its current or futuresubsidiaries.The Indenture contains customary events of default with respect to the Convertible Notes and provides that upon certain events of default occurringand continuing, the Trustee may, and the Trustee at the request of holders of at least 25% in principal amount of the Convertible Notes shall, declare allprincipal and accrued and unpaid interest, if any, of the Convertible Notes to be due and payable. In case of certain events of bankruptcy, insolvency orreorganization, involving us or a significant subsidiary, all of the principal of and accrued and unpaid interest on the Convertible Notes will automaticallybecome due and payable.In accounting for the issuance of the Convertible Notes, the Company separated the Convertible Notes into liability and equity components. Thecarrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertiblefeature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liabilitycomponent from the par value of the Convertible Notes as a whole. The difference between the principal amount of the Convertible Notes and the liabilitycomponent, equal to $62.3 million (the “debt discount”), is amortized to interest expense using the effective interest method over the term of the ConvertibleNotes. The equity component of the Convertible Notes will not be remeasured as long as it continues to meet the conditions for equity classification.The Company incurred in $7.0 million of transaction costs related to the issuance of the Convertible Notes. The Company allocated the total amountincurred to the liability and equity components using the same proportions as the proceeds from the Convertible Notes. Issuance costs attributable to theliability component are being amortized to interest expense over the term of the Convertible Notes using the effective interest method, and issuance costsattributable to the equity component are included along with the equity component in stockholders' equity.F-29 The Convertible Notes consisted of the following (in thousands): As ofJanuary 31, 2019 2018 Liability: Principal $230,000 $230,000 Less: debt discount, net of amortization (55,385) (66,990)Net carrying amount $174,615 $163,010 Equity $60,470 $60,470 As of January 31, 2019 and 2018, the debt discount on the Convertible Notes will be amortized over the remaining period of approximately 4 yearsand 5 years, respectively. For more than twenty trading days during the thirty consecutive trading days ended January 31, 2019, the last reported sale price of the Company’scommon stock exceeded 130% of the conversion price of the Convertible Notes. As a result, the Convertible Notes were convertible at the option of theholders and remained classified as current liabilities on the consolidated balance sheet as of January 31, 2019. As of the date of this filing, none of the holdersof the Convertible Notes have submitted requests for conversion. The following table sets forth interest expense recognized related to the Convertible Notes (dollars in thousands): Year EndedJanuary 31, 2019 2018 Contractual interest expense $863 $36 Amortization of debt issuance costs 876 36 Amortization of debt discount 10,734 423 Total $12,473 $495 The effective interest rates of the liability component of the Convertible Notes is 7.66%. As of January 31, 2019, the if-converted value of theCompany’s Convertible Notes exceeded the principal amount by $219.4 million. As of January 31, 2018, the if-converted value of the Company'sConvertible Notes did not exceed the principal amount.Capped CallIn conjunction with the issuance of the Convertible Notes, the Company purchased the Capped Call options on the Company’s stock with certaincounterparties at a price of $23.3 million.The Capped Call exercise price is equal to the Convertible Note’s initial conversion price and the cap price is $63.821 per share, subject to certainadjustments under the terms of the capped call transactions. The Capped Call options are exercisable on the same date when the conversion option isexercised.By entering into the Capped Call, the Company expects to reduce the potential dilution to its common stock (or, in the event the conversion issettled in cash, to reduce its cash payment obligation) in the event that at the time of conversion its stock price exceeds the conversion price under theConvertible Notes.The cost of the capped call is not expected to be tax deductible as the Company did not elect to integrate the capped call into the Convertible Notesfor tax purposes. The cost of the capped call was recorded as a reduction of the Company’s additional paid-in capital in the accompanying ConsolidatedFinancial Statements.F-30 Note 10. Commitments and ContingenciesCommitmentsThe Company leases office space under non-cancelable operating leases with various expiration dates through April 2024. Rent expense, which isbeing recognized on a straight-line basis over the lease term, was $7.4 million, $5.8 million and $3.8 million during the years ended January 31, 2019, 2018and 2017, respectively. The difference between the lease payments made and the lease expense recognized to date using the straight-line method is recordedas a liability and included within accrued expenses and other current liabilities in the accompanying consolidated balance sheet. Additionally, the Companyhas current contractual purchase obligations for hosting services that support business operations.Future minimum payments by year for our non-cancelable leases and purchase obligations as of January 31, 2019 are as follows (in thousands): Year Ending January 31, 2020 $19,849 2021 19,094 2022 6,697 2023 6,066 2024 5,257 Thereafter 1,231 Total $58,194 ContingenciesThe Company may become involved in legal proceedings or be subject to claims arising in the ordinary course of business. Although the results oflitigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these ordinary course matters will not havea material adverse effect on the Company’s business, operating results, financial condition or cash flows. Regardless of the outcome, litigation can have anadverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors.Warranties and IndemnificationsThe Company’s cloud-based software platform and applications are typically warranted against material decreases in functionality and to perform ina manner consistent with general industry standards and in accordance with the Company’s on-line documentation under normal use and circumstances.The Company includes service level commitments to its customers, typically regarding certain levels of uptime reliability and performance and if theCompany fails to meet those levels, customers can receive credits and in some cases, terminate their relationship with the Company. To date, the Companyhas not incurred any material costs as a result of such commitments.The Company generally agrees to defend and indemnify its customers against legal claims that the Company’s platform infringes certain patents,copyrights or other intellectual property rights of third parties. To date, the Company has not been required to make any payment resulting from suchinfringement claims and has not recorded any related liabilities.F-31 Note 11. Common Stock and Stockholders’ EquityCommon StockEach share of common stock has the right to one vote. The holders of the common stock are also entitled to receive dividends whenever funds arelegally available and when declared by the board of directors of the Company (the “Board of Directors”), subject to the prior rights of holders of all classes ofstock outstanding having priority rights as to dividends. No dividends have been declared or paid since inception.Preferred Stock As of January 31, 2019, the Company had authorized 25,000,000 shares of preferred stock, par value $0.0001, of which no shares were issued andoutstanding. 2016 Equity Incentive PlanThe 2016 Equity Incentive Plan, or 2016 Plan, was approved by the Company’s stockholders in September 2016. The 2016 Plan provides for thegrant of incentive stock options, nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights and performance cash awards.Awards could be granted under the 2016 Plan beginning on the effective date of the registration statement, October 5, 2016. The 2016 Plan replaced theCompany’s 2006 Stock Plan, however awards outstanding under the 2006 Stock Plan will continue to be governed by their existing terms.The Company has reserved 5,955,764 shares of its common stock for issuance under the 2016 Plan. The number of shares reserved for issuance underthe 2016 Plan will automatically increase on the first day of each fiscal year during the term of the 2016 Plan by a number of shares equal to 5% of itsoutstanding shares of common stock on the last day of the prior fiscal year. The number and class of shares reserved under the Company’s 2016 Plan will beadjusted in the event of a stock split, stock dividend or other changes in its capitalization.The following table summarizes stock option activity under the Company’s 2006 Stock Plan and the 2016 Plan during the year ended January 31,2019 (aggregate intrinsic value in thousands): Options Outstanding OutstandingStockOptions Weighted-AverageExercisePrice Weighted-AverageRemainingContractual Life(in years) AggregateIntrinsicValue Balance, January 31, 2018 9,301,253 $7.19 7.30 $288,713 Option grants 553,697 48.47 Options exercised (2,824,836) 4.82 Options forfeited (179,186) 9.49 Balance, January 31, 2019 6,850,928 11.44 6.84 $517,353 Exercisable at January 31, 2019 4,744,831 7.30 6.43 $377,978 The options exercisable as of January 31, 2019 include options that are exercisable prior to vesting. The aggregate intrinsic value of options vestedand exercisable as of January 31, 2019 is calculated based on the difference between the exercise price and the fair value of the Company’s common stock asof January 31, 2019. The aggregate intrinsic value of exercised options was $157.6 million, $89.3 million and $11.0 million for the years ended January 31,2019, 2018 and 2017, respectively, and is calculated based on the difference between the exercise price and the fair value of the Company’s common stock asof the exercise date.The weighted-average grant date fair value of options granted for the years ended January 31, 2019, 2018 and 2017 was $15.93, $11.58 and $4.65per share, respectively. F-32 The total grant date fair value of options vested during fiscal 2019, 2018 and 2017 was $9.0 million, $9.7 million and $5.0 million, respectively.Early Exercises of Stock OptionsCertain option grants under the 2006 Stock Plan are allowed to be exercised prior to vesting. The unvested shares of common stock exercised aresubject to the Company’s right to repurchase at the lower of the original exercise price or the fair market value of the share at the time the repurchase right isexercised. Early exercises of options are not deemed to be substantive exercises for accounting purposes and accordingly, amounts received for earlyexercises are initially recorded in accrued expenses and other current liabilities and reclassified to additional paid-in capital as the underlying shares vest. AtJanuary 31, 2019, the Company had no early exercise stock options recorded in accrued expenses and other current liabilities related to early exercises ofstock options.Restricted Stock Units (“RSUs”)The following table summarizes the activity related to the Company’s RSUs: Number ofRSUsOutstanding Weighted-AverageGrant DateFair Value Awarded and unvested at January 31, 2018 1,971,778 $27.14 Awards granted 2,015,384 $52.54 Awards vested (858,740) $32.99 Awards forfeited (336,305) $35.90 Awarded and unvested at January 31, 2019 2,792,117 $42.62 2016 Employee Stock Purchase PlanThe board of directors adopted the 2016 Employee Stock Purchase Plan (the “ESPP”) in September 2016 and it has been approved by the Company’sstockholders. The ESPP allows eligible employees to purchase shares of common stock through payroll deductions and is intended to qualify underSection 423 of the Internal Revenue Code.As of January 31, 2019, the Company had 931,493 shares of its common stock available for future issuances under the ESPP. The number of sharesreserved for issuance under the ESPP will automatically increase on the first day of each fiscal year during the term of the ESPP by a number of shares equal tothe least of (i) 1% of its outstanding shares of common stock on the last day of the prior fiscal year, (ii) 1,250,000 shares or (iii) a lesser number of sharesdetermined by the board of directors. The number and class of shares reserved under the ESPP will be adjusted in the event of a stock split, stock dividend orother changes in its capitalization.Each offering period will last a number of months determined by the administrator, up to a maximum of 27 months. The initial offering period beganon the effective date of the Company’s initial public offering, October 5, 2016, and ends on September 15, 2018, and new 24 month offering periods willbegin on each March 16 and September 16 thereafter. Currently each offering period consists of four consecutive purchase periods, of approximately 6months duration, at the end of which payroll contributions are used to purchase shares of the Company’s common stock. Participants may purchaseCompany’s common stock through payroll deductions, up to a maximum of 15% of their eligible compensation. Participants may withdraw from the ESPPand receive a refund of their accumulated payroll contributions at any time prior to a purchase date. Unless changed by the administrator, the purchase pricefor each share of common stock purchased under the ESPP will be 85% of the lower of the fair market value per share on the first day of the applicableoffering period (or, in the case of the initial offering period, the price at which one share of common stock is offered to the public in its IPO) or the fair marketvalue per share on the applicable purchase date.F-33 As of January 31, 2019, 946,841 shares of common stock were purchased under the 2016 ESPP. The Company selected the Black-Scholes option-pricing model as the method for determining the estimated fair value for the Company’s 2016 ESPP. As of January 31, 2019, total unrecognizedcompensation cost related to 2016 ESPP was $5.8 million which will be amortized over a weighted-average period of approximately one year.Market-based OptionsIn September 2016, the Board of Directors of the Company granted 544,127 stock options to the Chief Executive Officer (the “2016 CEO Grant”)under the 2006 Stock Plan with an exercise price of $13.04 per share. The 2016 CEO Grant is eligible to vest based on the achievement of market capitalappreciation targets after the consummation of the initial public offering, as well as continuous service over a four-year period following the grant date. InMarch 2018, the Board of Directors granted 334,742 stock options to the Chief Executive Officer (the “2018 CEO Grant”) under the 2016 Equity Plan withan exercise price of $48.47 per share. The 2018 CEO Grant is eligible to vest based on the achievement of a stock price appreciation target as well ascontinuous service over a four-year period following the grant date. The fair value of the 2016 and 2018 CEO Grants were determined using a Monte Carlosimulation approach. The Company amortizes the fair value of the option awards using the graded-vesting method.As of January 31, 2019, all performance-based milestones of the 2016 CEO Grant were achieved, resulting in 317,407 shares being vested andexercisable. As of January 31, 2019, the performance-based milestone was not achieved on the 2018 CEO Grant, resulting in no shares being vested andexercisable. Stock-based compensation expense recognized for market-based awards was approximately $2.2 million and $1.6 million for the year endedJanuary 31, 2019 and 2018, respectively.Stock-based CompensationThe Company’s total stock-based compensation expense was as follows (in thousands): For the year ended January 31, 2019 2018 2017 Cost of revenue: Subscription services $4,285 $2,105 $715 Professional services and other 4,269 2,722 772 Research and development 11,841 6,928 1,766 Sales and marketing 14,786 8,476 3,130 General and administrative 17,765 9,464 3,069 Total $52,946 $29,695 $9,452 Stock-based compensation capitalized in capitalized software development costs was approximately $1.0 million and $332,000 at January 31, 2019and 2018, respectively. Of the total stock-based compensation expense, costs recognized for options granted to non-employees were immaterial for all periods presented.As of January 31, 2019 and 2018, there was approximately $16.1 million and $19.3 million, respectively, of total unrecognized compensation costrelated to unvested stock options granted to employees and non-employee service providers under the 2006 Stock Plan and 2016 Equity Incentive Plan. Thisunrecognized compensation cost as of January 31, 2019 is expected to be recognized over an estimated weighted-average amortization period ofapproximately 2 years.As of January 31, 2019 and 2018, there was approximately $110.8 million and $48.4 million, respectively, of total unrecognized compensation costrelated to unvested restricted stock units granted to employees under the 2016 Equity Incentive Plan. This unrecognized compensation cost as of January 31,2019 is expected to be recognized over an estimated weighted-average amortization period of approximately 3 years.F-34 The fair values of the Company’s stock options granted during the years ended January 31, 2019, 2018 and 2017 were estimated using the followingassumptions: For the year ended January 31, 2019 2018 2017 Employee Stock Options Expected term (years) 6.0 6.0 6.0 Volatility 42.2% 46.0% 48.0% Risk-free interest rate 2.8% 1.9% - 2.2% 1.3% - 2.1% Dividend yield — — — Employee Stock Purchase Plan Expected term (years) 0.5 - 2.0 0.5 - 2.0 0.4 - 1.9 Volatility 31.1% - 34.1% 37.3% - 42.6% 48.0% Risk-free interest rate 2.0% - 2.8% 0.9% - 1.4% 0.5% - 0.8% Dividend yield — — — Market-Based Awards Expected term (years) 7.1 — 7.4 Volatility 43.7% — 48.0% Risk-free interest rate 2.8% — 1.6% Dividend yield — — — These assumptions and estimates are as follows: •Fair Value of Common Stock. After the initial public offering, the Company used the publicly quoted price as reported on the Nasdaq GlobalSelect Market as the fair value of its common stock. •Expected Term. The expected term represents the weighted-average period that the stock options are expected to remain outstanding. Todetermine the expected term, the Company generally applies the simplified approach in which the expected term of an award is presumed tobe the mid-point between the vesting date and the expiration date of the award as the Company does not have sufficient historical exercisedata to provide a reasonable basis for an estimate of expected term. •Risk-Free Interest Rate. The Company bases the risk-free interest rate on the yields of U.S. Treasury securities with maturities approximatelyequal to the term of employee stock option awards. •Expected Volatility. As the Company does not have an extensive trading history for its common stock, the expected volatility for its commonstock has been estimated by taking the historic price volatility for industry peers based on daily price observations over a period equivalentto the expected term of the stock option awards. Industry peers consist of several public companies in its industry. Note 12. Income TaxesThe following table presents the domestic and foreign components of loss before provision for income taxes for the periods presented (in thousands): For the year ended January 31, 2019 2018 2017 United States $(59,070) $(44,977) $(38,926)Foreign 3,009 2,820 2,167 Loss before provision for income taxes $(56,061) $(42,157) $(36,759) F-35 The provision for income taxes is composed of the following (in thousands): For the year ended January 31, 2019 2018 2017 Current income taxes: Federal $— $— $— State 151 116 82 Foreign 3,514 4,248 976 Total current income taxes 3,665 4,364 1,058 Deferred income taxes: Federal (2,701) (26) 13 State (365) 7 1 Foreign (1,136) (2,697) (224)Total deferred income taxes (4,202) (2,716) (210)Total provision for (benefit from) income taxes $(537) $1,648 $848 The effective tax rate differs from the federal statutory rate as follows: For the year ended January 31, 2019 2018 2017 Federal statutory income tax rate 21.0% 33.8% 34.0%Tax reform rate change impact — (80.7) — State tax, net of federal benefit 2.9 2.6 2.6 Change in valuation allowance (98.1) (23.6) (36.2)Stock-based compensation 71.6 63.5 (2.7)Other non-deductible items (2.1) (3.5) (1.8)Foreign rate differential (2.9) (0.5) (1.4)Tax credits 8.6 4.5 3.2 Total 1.0% (3.9)% (2.3)% The difference between the U.S. federal statutory tax rate of 21% and the Company’s effective tax rate in all periods presented is primarily due to afull valuation allowance related to the Company’s U.S. deferred tax assets offset by foreign tax expense on the Company’s profitable foreign operations.F-36 Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reportingpurposes and the amounts used for income tax purposes. The following table presents the significant components of the Company’s deferred tax assets andliabilities for the periods presented (in thousands): As of January 31, 2019 2018 Deferred tax assets: Net operating loss carryforwards $110,485 $61,671 Accruals and reserves 3,209 3,259 Stock-based compensation 5,852 4,476 Tax credits 9,250 5,636 Gross deferred tax assets 128,796 75,042 Valuation allowance (113,497) (58,027)Total deferred tax assets, net of valuation allowance 15,299 17,015 Deferred tax liabilities: Fixed assets and intangibles assets (1,693) (1,495)Accruals and reserves (951) (98)Discount on convertible notes (12,047) (14,803)Gross deferred tax liabilities (14,691) (16,396)Net deferred tax assets $608 $619 A valuation allowance is provided for deferred tax assets where the recoverability of the assets is uncertain. The determination to provide a valuationallowance is dependent upon the assessment of whether it is more likely than not that sufficient future taxable income will be generated to utilize the deferredtax assets. Based on the weight of the available evidence, which includes the Company’s historical operating losses, and lack of taxable income, theCompany provided a full valuation allowance against the deferred tax assets for the U.S. and some of the international entities. The valuation allowanceincreased by $55.5 million, $3.4 million and $13.1 million during the years ended January 31, 2019, 2018 and 2017, respectively.As of January 31, 2019, the Company had net operating loss carryforwards of approximately $457.6 million and $237.9 million available to reducefuture taxable income, if any, for federal and state income tax purposes, respectively. The U.S. federal and California state net operating loss carryforwardswill begin to expire in 2026 and 2029, respectively. As of January 31, 2019, the Company had research and development credit carryforwards ofapproximately $13.0 million and $11.2 million available to reduce its future tax liability, if any, for federal and California state income tax purposes,respectively. The federal credit carryforwards begin to expire in 2031. California credit carryforwards have no expiration date. As of January 31, 2019, theCompany has U.S. federal foreign tax credits carryforwards of $698,000 that will begin to expire in 2025.Federal and state laws impose restrictions on the utilization of net operating loss carryforwards and R&D credit carryforwards in the event of a changein ownership of the Company, which constitutes an ‘ownership change’ as defined by Internal Revenue Code Section 382 and 383. The Companyexperienced an ownership change in the past that does not materially impact the availability of its net operating losses and tax credits. Should there beownership change in the future, the Company’s ability to utilize existing carryforwards could be substantially restricted.As of January 31, 2019, the Company did not have unremitted earnings when evaluating the outside basis difference relating to its U.S. investment inforeign subsidiaries. However, there could be local withholding taxes payable due to various foreign countries if certain lower tier earnings are distributed.Withholding taxes and state income that would be payable upon remittance of these lower tier earnings were not material as of January 31, 2019.The Company accounts for uncertainty in income taxes in accordance with ASC 740. Tax positions are evaluated in a two-step process, whereby theCompany first determines whether it is more likely than not that a tax position will be sustained upon examination by tax authorities, including resolutionsof any related appeals orF-37 litigation processes, based on technical merit. If a tax position meets the more-likely-than-not recognition threshold it is then measured to determine theamount of benefit to recognized in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely ofbeing realized upon ultimate settlement.The following table summarizes the activity related to unrecognized tax benefits (in thousands): For the year ended January 31, 2019 2018 2017 Unrecognized tax benefit—beginning of year $12,663 $5,441 $3,304 Gross increases —prior year tax positions 295 — 472 Gross decreases —prior year tax positions (8) (5) (248)Gross increases — current year tax positions 7,127 7,227 1,913 Unrecognized tax benefit—end of year $20,077 $12,663 $5,441 As of January 31, 2019, 2018, and 2017, $14.9 million, $8.0 million, and $5.3 million of the unrecognized tax benefits were accounted for as areduction in the Company’s deferred tax assets. Due to the Company’s valuation allowance, only $5.2 million of the $20.1 million of unrecognized taxbenefits would affect the Company’s effective tax rate, if recognized. The Company does not believe it is reasonably possible that its unrecognized taxbenefits will significantly change in the next twelve months.The Company recognizes interest and penalties related to unrecognized tax benefits as income tax expense. There was an immaterial amount ofaccrued interest and penalties related to unrecognized tax benefits as of January 31, 2019 and 2018.The Company’s material income tax jurisdictions are the United States (federal) and California. As a result of net operating loss carryforwards, theCompany is subject to audits for tax years 2006 and forward for federal purposes and 2009 and forward for California purposes. There are tax years whichremain subject to examination in various other jurisdictions that are not material to the Company’s financial statements.In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB118), which allowed us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. As a result, wepreviously provided a provisional estimate of the effect of the Tax Act in our financial statements. The Company completed its analysis to determine theeffect of the Tax Act and recorded immaterial adjustments as of January 31, 2019.While the Tax Act provides for a modified territorial tax system, beginning in 2018, GILTI will be applied providing an incremental tax on certainforeign income. The GILTI provisions require the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowablereturn on the foreign subsidiary's tangible assets. Under GAAP, the Company is allowed to make an accounting policy election of either (1) treating taxes dueon the future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred, or the period cost method, or (2) factoring suchamounts into the Company's measurement of its deferred taxes, or the deferred method. The Company has selected the period cost method as its accountingpolicy with respect to the new GILTI tax rules.F-38 Note 13. Net Loss per Share Attributable to Common StockholdersBasic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by theweighted-average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities as they do notshare in losses. During periods when the Company is in a net loss position, basic net loss per share attributable to common stockholders is the same as dilutednet loss per share attributable to common stockholders as the effects of potentially dilutive securities are antidilutive given the net loss of the Company.The following table sets forth the computation of the basic and diluted net loss per share attributable to common stockholders during the years endedJanuary 31, 2019, 2018 and 2017 (in thousands, except per share amounts): January 31, 2019 2018 2017 Numerator: Net loss attributable to common stockholders $(55,524) $(43,805) $(37,607)Denominator: Weighted-average common shares outstanding 57,716 52,999 19,988 Net loss per share attributable to common stockholders, basic and diluted $(0.96) $(0.83) $(1.88) Since the Company was in a loss position for all periods presented, basic net loss per share attributable to common stockholders is the same as dilutednet loss per share for all periods as the inclusion of all potential common shares outstanding would have been anti-dilutive. Potentially dilutive securitiesthat were not included in the diluted per share calculations because they would be anti-dilutive were as follows: As of January 31, 2019 2018 2017 Options to purchase common stock 6,850,928 9,301,253 13,016,402 RSUs 2,792,117 1,971,778 77,883 Unvested common shares subject to repurchase 193,894 458,214 335,116 Shares committed under the ESPP 189,168 195,497 144,685 Contingent stock consideration for DCR acquisition 377,138 — — Holdback shares for Aquiire acquisition 37,570 — — Total 10,440,815 11,926,742 13,574,086 Additionally, approximately 5.2 million shares underlying the conversion option in the Convertible Notes are not considered in the calculation ofdiluted net loss per share as the effect would be anti-dilutive. The Company uses the treasury stock method for calculating any potential dilutive effect of theconversion option on diluted net income per share, if applicable. During the year ended January 31, 2019, the average market price of the Company’scommon stock exceeded the conversion price of the Convertible Notes of $44.51 per share. Note 14. Business Segment InformationThe Company’s chief operating decision maker is the Chief Executive Officer (“CEO”). The CEO reviews the financial information presented on aconsolidated basis for purposes of allocating resources and evaluating the Company’s financial performance. Accordingly, the Company has determined thatit operates in a single reporting segment: cloud platform.F-39 Note 15. Employee Benefit PlanThe Company maintained a qualified defined contribution plan under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan,participating employees may elect to contribute up to 90% of their eligible compensation, subject to certain limitations. The Company matches certainpercentages of employee contributions. Both employee and employer contributions vest immediately upon contribution. During the years ended January 31,2019, 2018 and 2017, the Company’s contributions to the 401(k) Plan amounted to approximately $2.0 million, $1.5 million and $1.4 million, respectively.The Company also maintains a limited number of defined benefit plans for certain non-U.S. locations. Total costs under these plans were notsignificant. Note 16. Related PartiesT. Rowe Associates, Inc. is an investment adviser of certain of the Company’s stockholders and a Company customer. The Company recognizedsubscription revenue from this customer of approximately $580,000, $573,000 and $509,000 for the period ended January 31, 2019, 2018 and 2017,respectively. The Company had no outstanding receivables from this customer as of January 31, 2019 and January 31, 2018.As disclosed in Note 4 Business Combination, in conjunction with the acquisition of technology assets of DCR on August 1, 2018, the Companysigned a lease, license agreement and Transition Service Agreement with DCR. For the year ended January 31, 2019, the Company recognized $1.1 million ofrevenue for the license agreement, and recorded $4.3 million for expenses which primarily include compensation for employees and contractors that DCRagreed to pay on behalf of the Company during the transitional period. As of January 31, 2019, outstanding accruals and payables due to DCR were $1.3million. There were no outstanding receivables due from DCR related to the license agreement. Note 17. Selected Quarterly Financial Data (unaudited)The following tables set forth selected unaudited quarterly consolidated statements of operations data for each of the eight quarters in fiscal 2019 and2018 (in thousands except per share data). Since the Company adopted the new revenue standard effective on February 1, 2018 using the modifiedretrospective method, the financial data for each quarter in fiscal 2019 were prepared according to the new revenue standard, and the financial data for eachquarter in fiscal 2018 were prepared prior to the adoption of the new revenue standard. Three months ended Jan. 31, Oct. 31, Jul. 31, Apr. 30, Jan. 31, Oct. 31, Jul. 31, Apr. 30, 2019 2018 2018 2018 2018 2017 2017 2017 (in thousands) Total revenues $74,908 $67,455 $61,651 $56,352 $53,752 $47,340 $44,551 $41,137 Gross profit 49,883 45,791 43,011 38,227 37,286 32,345 29,603 27,640 Loss from operations 14,749 9,918 10,624 12,069 9,057 11,159 14,359 10,387 Net loss 16,571 9,645 13,854 15,454 8,723 11,302 13,742 10,038 Net loss per share attributable to common stockholders, basic and diluted $0.28 $0.17 $0.24 $0.28 $0.16 $0.21 $0.26 $0.20 F-40Exhibit 10.8September 27th, 2017Mark RiggsDear Mark,On behalf of Coupa So(cid:30)ware Incorporated (the “Company” or “Coupa”), I am pleased to offer you employment withthe Company on the following terms:1.Position/Start Date. You will serve as CCO (Chief Customer Officer) working out of our San Mateooffice and reporting to Rob Bernshteyn, Chief Executive Officer. Your start date will be mutually agreed upon.2.Base Salary. Your annual base salary will be $275,000, less taxes and applicable withholdings,payable on a semi-monthly basis. 3.Annual Bonus. In addi(cid:49)on to your base salary, you will be eligible to par(cid:49)cipate in Coupa’s annualdiscre(cid:49)onary performance bonus program, with a target incen(cid:49)ve of 50% of your base salary, or $137,500. This yields a poten(cid:49)altotal annual compensa(cid:49)on of $412,500 This bonus is subject to your con(cid:49)nued employment, and will be prorated for 2017 basedon your start date. Your actual bonus payout will depend on Coupa’s performance and assessment of your individual performanceduring the period. You must be an ac(cid:49)ve employee of Coupa on the final day of the performance period to be eligible for anypayout.4.Equity. (a)General. As part of the Coupa team, we strongly believe that employee ownership inCoupa is an important factor to our success. Therefore, subject to approval of our Board of Directors and/or Compensa(cid:49)onCommi(cid:56)ee, you will be granted equity awards with a value of $1 million, half of which ($500,000 in value) will be delivered asrestricted stock units (“RSUs”) and half of which ($500,000 in value) will be delivered as stock op(cid:49)ons. The actual number of RSUsand op(cid:49)ons will be determined as of your first day of employment, using the closing price of the Company’s common stock onsuch date and, in the case of the options, a black-scholes methodology. (b)Other Terms. The exercise price per share of the stock op(cid:49)on will be equal to theclosing price of the Company’s common stock on the date the op(cid:49)on is granted. Your stock op(cid:49)ons & RSUs will be subject to theterms and conditions of the Coupa 2016 Equity Incentive Plan and form of award agreement (the “Plan”). Stock options will vest as follows: one-quarter (25%) will vest a(cid:30)er 12 months of con(cid:49)nuous employment and the balancewill vest in equal monthly installments over the next 36 months of con(cid:49)nuous employment. RSUs will vest over approximately 4years of con(cid:49)nuous employment as follows: one-quarter (25%) will vest on the first “Company ves(cid:49)ng date” that occurs on ora(cid:30)er 12 months of con(cid:49)nuous employment and the balance will vest in 12 equal quarterly installments over the next 36 months ofcon(cid:49)nuous employment. For administra(cid:49)ve reasons, ves(cid:49)ng of RSUs occur only on established quarterly Company ves(cid:49)ng dates,which are currently March 20, June 20, September 20 and December 20.5.Execu(cid:45)ve Severance Program. You will be eligible for our standard execu(cid:49)ve severance andaccelera(cid:49)on benefits, under the terms and condi(cid:49)ons described in our standard form of Severance and Change in ControlAgreement (the “Severance/CIC Agreement”), a copy of which will be provided to you prior to your acceptance of this offer. 6.Employee Benefits. Coupa offers medical, dental and vision plans (effec(cid:49)ve on your date of hire),a flexible spending plan, an ESPP, a 401(k) re(cid:49)rement savings plan (with company matching), as well as a “no limit” (cid:49)me offpolicy (subject to manager approval), and eleven paid holidays. Addi(cid:49)onally, Coupa offers a variety of other benefits, all of whichcan be found within our summary benefits brochure enclosed in this offer le(cid:56)er packet. If you have any ques(cid:49)ons regardingCoupa’s benefits prior to your start date, please email hr@coupa.com.7.Employment Rela(cid:45)onship. Coupa, in its sole discre(cid:49)on, may modify your du(cid:49)es, (cid:49)tle,compensa(cid:49)on and benefits at any (cid:49)me. Employment with the Company is not for a specified term, but instead is at-will. Accordingly, either you or the Company may terminate the employment rela(cid:49)onship, with or without cause, at any (cid:49)me andfor any reason. No documents provided by the Company and no oral statements or conduct can or will modify the at-will natureof your employment, and your at-will status can only be amended in a writing signed by you and Coupa’s Chief Executive Officer. 8.Taxes. All forms of compensa(cid:49)on referred to in this le(cid:56)er are subject to reduc(cid:49)on to reflectapplicable withholding and payroll taxes and other deductions required by law.9.Other Agreements. Like all new employees here at Coupa, you will be required, as a condi(cid:49)on ofyour employment, to sign a Mutual Agreement to Arbitrate. Along with its employees, Coupa’s proprietary and trade secretinforma(cid:49)on is the Company's most important asset. We therefore require that you sign, as a condi(cid:49)on to your employment, theenclosed Proprietary Information and Inventions Agreement (“PIIA Agreement”). We impress upon you that we do not want or need you to bring to Coupa any trade secret, confiden(cid:49)al orproprietary material of any former employer or to violate any obliga(cid:49)ons you may owe to your former employers or others. Acopy of these agreements will be provided separately. Please review and execute the Mutual Agreement to Arbitrate and the PIIAAgreement and return to Human Resources along with your signed offer letter.10.Entire Agreement. This le(cid:56)er agreement, together with the other documents referenced herein,represents the en(cid:49)re agreement between you and the Company with respect to the subject ma(cid:56)er herein and supersedes all prioror contemporaneous agreements, whether written or oral, with respect to the subject matter of this agreement. 11.Exclusivity of Employment. While you render services to the Company, you agree not to engagein any other employment, consul(cid:49)ng or other business ac(cid:49)vity (whether full-(cid:49)me or part-(cid:49)me), which might create a conflict ofinterest with the Company. The foregoing shall not, however, preclude you (a) from engaging in appropriate civic, charitable orreligious ac(cid:49)vi(cid:49)es, (b) from devo(cid:49)ng a reasonable amount of (cid:49)me to private investments, (c) from serving on the boards ofdirectors of other en(cid:49)(cid:49)es, or (d) from providing incidental assistance to family members on ma(cid:56)ers of family business, so long asthe foregoing ac(cid:49)vi(cid:49)es and service do not conflict with your responsibili(cid:49)es to the Company. By signing this le(cid:56)er, you confirmthat you have no contractual commitments or other legal obliga(cid:49)ons that would prohibit you from performing du(cid:49)es for theCompany.[Signature Page Follows] Please confirm your agreement with these terms by signing this letter using DocuSign.Sincerely,Rob BernshteynChief Executive OfficerCoupa Software Incorporated By signature below, I accept this employment arrangement based upon the terms stated in this le(cid:56)er. I also acknowledge that thisletter sets forth the full and complete agreement between myself and the Company related to the terms of my employment. /s/ Mark R. Riggs September 28, 2017Signature Date COUPA SOFTWARE INCORPORATEDSEVERANCE AND CHANGE IN CONTROL AGREEMENTThis Severance and Change in Control Agreement (the “Agreement”) is made and entered into by and between Mark Riggs (the“Executive”) and Coupa So(cid:30)ware Incorporated, a Delaware corpora(cid:49)on (the “Company”), effec(cid:49)ve as of the date specified inSection 1 below. Certain capitalized terms are defined in Section 8. The Company and Executive agree as follows:1.Term. This Agreement shall become effec(cid:49)ve as of Execu(cid:49)ve’s first day of employment with theCompany. Unless sooner terminated, this Agreement will terminate automa(cid:49)cally on October 12, 2019, which is the thirdanniversary of the closing date of the Company’s initial public offering. 2.Severance Benefits.(a)Termina(cid:49)on Not Involving a Change in Control. If Execu(cid:49)ve is subject to a Termina(cid:49)on WithoutCause which occurs more than three months prior to a Change in Control (if any) or more than twelve months a(cid:30)er a Change inControl and Execu(cid:49)ve sa(cid:49)sfies the condi(cid:49)ons described in Sec(cid:49)on 2(c) below, then Execu(cid:49)ve shall be en(cid:49)tled to the followingseverance benefits: (i) a lump-sum cash severance payment equal to six months of Execu(cid:49)ve’s Base Salary and (ii) an addi(cid:49)onallump-sum cash payment equal to $16,500. (b)Involuntary Termina(cid:49)on Involving a Change in Control. If Execu(cid:49)ve is subject to an InvoluntaryTermina(cid:49)on which occurs within three months prior to, or twelve months following, a Change in Control and Execu(cid:49)ve sa(cid:49)sfiesthe condi(cid:49)ons described in Sec(cid:49)on 2(c) below, then Execu(cid:49)ve shall be en(cid:49)tled to the following severance benefits: (i) a lump-sumcash severance payment equal to twelve months of Execu(cid:49)ve’s Base Salary, (ii) an addi(cid:49)onal lump-sum cash payment equal to$33,000 and (iii) unless the Company provides otherwise when an equity award is granted, one hundred percent (100%) of theunvested por(cid:49)on of each outstanding equity award that Execu(cid:49)ve holds as of the Involuntary Termina(cid:49)on will vest and, ifapplicable, become exercisable. In the case of equity awards subject to performance condi(cid:49)ons, the unvested por(cid:49)on of theaward will be determined at the greater of actual performance or based on “target” levels of achievement. For avoidance ofdoubt, if Execu(cid:49)ve is subject to an Involuntary Termina(cid:49)on that occurs within three months prior to a Change in Control, theportion of Executive’s then-outstanding and unvested equity awards that is eligible to vest and become exercisable pursuant to clause (iii) will remain outstanding for three months orthe occurrence of a Change in Control, whichever is sooner, so that any addi(cid:49)onal benefits due pursuant to clause (iii) may beprovided if a Change in Control occurs within three months a(cid:30)er Execu(cid:49)ve’s Involuntary Termina(cid:49)on, provided that in no eventwill any of Execu(cid:49)ve’s stock op(cid:49)ons remain outstanding beyond the op(cid:49)on’s maximum term to expira(cid:49)on. If a Change in Controldoes not occur within three months a(cid:30)er an Involuntary Termina(cid:49)on, any unvested por(cid:49)on of Execu(cid:49)ve’s equity awards thatremained outstanding following Executive’s Involuntary Termination will immediately and automatically be forfeited.(c)Precondi(cid:49)ons to Severance and Change in Control Benefits / Timing of Benefits. As a condi(cid:49)on toExecu(cid:49)ve’s receipt of any benefits described in Sec(cid:49)on 2, Execu(cid:49)ve shall execute and allow to become effec(cid:49)ve a general releaseof claims in substan(cid:49)ally the form a(cid:56)ached hereto and, if requested by the Company’s Board of Directors, must immediatelyresign as a member of the Company’s Board of Directors and as a member of the board of directors of any subsidiaries of theCompany. Execu(cid:49)ve must execute and return the release on or before the date specified by the Company, which will in no eventbe later than 50 days a(cid:30)er Execu(cid:49)ve’s employment terminates. If Execu(cid:49)ve fails to return the release by the deadline or ifExecu(cid:49)ve revokes the release, then Execu(cid:49)ve will not be en(cid:49)tled to the benefits described in this sec(cid:49)on 2. All such benefits willbe paid or provided within 60 days a(cid:30)er Execu(cid:49)ve’s Termina(cid:49)on Without Cause or Involuntary Termina(cid:49)on, as applicable, or iflater on the date a Change in Control occurs. If such 60 day period spans calendar years, then payment will in any event be madein the second calendar year. 3.Sec(cid:49)on 409A. The Company intends that all payments and benefits provided under this Agreement orotherwise are exempt from, or comply with, with the requirements of Sec(cid:49)on 409A of the Internal Revenue Code of 1986, asamended (the “Code”) so that none of the payments or benefits will be subject to the addi(cid:49)onal tax imposed under Code Sec(cid:49)on409A, and any ambigui(cid:49)es herein will be interpreted in accordance with such intent. For purposes of Code Sec(cid:49)on 409A, eachpayment, installment or benefit payable under this Agreement is hereby designated as a separate payment. In addi(cid:49)on, if theCompany determines that Execu(cid:49)ve is a “specified employee” under Code Sec(cid:49)on 409A(a)(2)(B)(i) at the (cid:49)me of Execu(cid:49)ve’sSepara(cid:49)on, then (i) any severance payments or benefits, to the extent that they are subject to Code Sec(cid:49)on 409A, will not be paidor otherwise provided un(cid:49)l the first business day following (A) expira(cid:49)on of the six-month period measured from Execu(cid:49)ve’sSepara(cid:49)on or (B) the date of Execu(cid:49)ve’s death and (ii) any installments that otherwise would have been paid or provided prior tosuch date will be paid or provided in a lump sum when the severance payments or benefits commence. 4.Sec(cid:49)on 280G. Notwithstanding anything contained in this Agreement to the contrary, in the event that thepayments and benefits provided pursuant to this Agreement, together with all other payments and benefits received or to bereceived by Execu(cid:49)ve (“Payments”), cons(cid:49)tute “parachute payments” within the meaning of Code Sec(cid:49)on 280G, and, but for thisSection 4, would be subject to the excise tax imposed by Code Section 4999 (the “Excise Tax”), then the Payments shall be made toExecu(cid:49)ve either (i) in full or (ii) as to such lesser amount as would result in no por(cid:49)on of the Payments being subject to the ExciseTax (a “Reduced Payment”), whichever of the foregoing amounts, taking into account applicable federal, state and local incometaxes and the Excise Tax, results in Execu(cid:49)ve’s receipt on an a(cid:30)er-tax basis, of the greatest amount of benefits, notwithstandingthat all or some por(cid:49)on of the Payments may be subject to the Excise Tax. If a Reduced Payment is to be made under this sec(cid:49)on,reduc(cid:49)on of Payments will occur in the following order: reduc(cid:49)on of cash payments, then cancella(cid:49)on of equity-based paymentsand accelerated ves(cid:49)ng of equity awards, and then reduc(cid:49)on of employee benefits. If accelerated ves(cid:49)ng of equity awards is tobe reduced, such accelera(cid:49)on of ves(cid:49)ng will be cancelled in the reverse order of the date of grant. In the event that cashpayments or other benefits are reduced, such reduc(cid:49)on shall occur in reverse order beginning with the payments and benefitswhich are to be paid furthest away in (cid:49)me. All determina(cid:49)ons required to be made under this Sec(cid:49)on 4 (including whether any ofthe Payments are parachute payments and whether to make a Reduced Payment) will be made by an independent accoun(cid:49)ngfirm selected by the Company. For purposes of making the calcula(cid:49)ons required by this sec(cid:49)on, the accoun(cid:49)ng firm may makereasonable assump(cid:49)ons and approxima(cid:49)ons concerning applicable taxes and may rely on reasonably, good faith interpreta(cid:49)onsconcerning the applica(cid:49)on of Code Sec(cid:49)ons 280G and 4999. The Company will bear the costs that the accoun(cid:49)ng firm mayreasonably incur in connec(cid:49)on with the calcula(cid:49)ons contemplated by this Sec(cid:49)on 4. The accoun(cid:49)ng firm’s determina(cid:49)on will bebinding on both Executive and the Company absent manifest error.5.Company’s Successors. Any successor to the Company to all or substan(cid:49)ally all of the Company’s businessand/or assets shall assume the Company’s obliga(cid:49)ons under this Agreement and agree expressly to perform the Company’sobliga(cid:49)ons under this Agreement in the same manner and to the same extent as the Company would be required to perform suchobligations in the absence of a succession.6.Miscellaneous Provisions.(a)Modifica(cid:49)on or Waiver. No provision of this Agreement may be modified, waived or dischargedunless the modifica(cid:49)on, waiver or discharge is agreed to in wri(cid:49)ng and signed by Execu(cid:49)ve and by an authorized officer of theCompany (other than Execu(cid:49)ve). No waiver by either party of any breach of, or of compliance with, any condi(cid:49)on or provision ofthis Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.(b)Integration. This Agreement represents the en(cid:49)re agreement and understanding between thepar(cid:49)es as to the subject ma(cid:56)er herein and supersedes all prior or contemporaneous agreements, whether wri(cid:56)en or oral, withrespect to the subject matter of this Agreement.(c)Choice of Law. The validity, interpreta(cid:49)on, construc(cid:49)on and performance of this Agreement shallbe governed by the internal substantive laws, but not the conflicts of law rules, of the State of California.(d)Tax Withholding. Any payments provided for hereunder are subject to reduc(cid:49)on to reflectapplicable withholding and payroll taxes and other reductions required under federal, state or local law.(e)Notices. Any no(cid:49)ce required by the terms of this Agreement shall be given in wri(cid:49)ng. It shall bedeemed effec(cid:49)ve upon (i) personal delivery, (ii) deposit with the United States Postal Service, by registered or cer(cid:49)fied mail, withpostage and fees prepaid or (iii) deposit with Federal Express Corpora(cid:49)on, with shipping charges prepaid. No(cid:49)ce shall beaddressed to the Company at its principal execu(cid:49)ve office (a(cid:56)en(cid:49)on General Counsel) and to the Execu(cid:49)ve at the address that heor she most recently provided to the Company in accordance with this Subsection (e).(f)Severability. The invalidity or unenforceability of any provision or provisions of this Agreementshall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.(g)Counterparts. This Agreement may be executed in counterparts, each of which shall be deemedan original, but all of which together will constitute one and the same instrument.7.At-Will Employment. Nothing contained in this Agreement shall (a) confer upon Execu(cid:49)ve any right tocon(cid:49)nue in the employ of the Company, (b) cons(cid:49)tute any contract or agreement of employment, or (c) interfere in any way withthe at-will nature of Executive’s employment with the Company.8.Definitions. The following terms referred to in this Agreement shall have the following meanings:(a)“Base Salary” means Execu(cid:49)ve’s annual base salary as in effect immediately prior to aTermina(cid:49)on Without Cause or Involuntary Termina(cid:49)on; provided, however, that in the event of a Resigna(cid:49)on for Good Reasondue to a material reduc(cid:49)on in Execu(cid:49)ve’s base salary, “Base Salary” means Execu(cid:49)ve’s annual base salary as in effect immediately prior to suchreduction or as in effect immediately prior to a Change in Control, whichever is greater.(b)“Cause” means (i) Execu(cid:49)ve’s unauthorized use or disclosure of the Company’s confiden(cid:49)alinforma(cid:49)on or trade secrets, which use or disclosure causes material harm to the Company, (ii) Execu(cid:49)ve’s material breach ofany agreement with the Company, (iii) Execu(cid:49)ve’s material failure to comply with the Company’s wri(cid:56)en policies or rules, (iv)Execu(cid:49)ve’s convic(cid:49)on of, or plea of “guilty” or “no contest” to, a felony under the laws of the United States or any State, (v)Execu(cid:49)ve’s gross negligence or willful misconduct, (vi) Execu(cid:49)ve’s con(cid:49)nuing failure to perform assigned du(cid:49)es a(cid:30)er receivingwri(cid:56)en no(cid:49)fica(cid:49)on of the failure from the Company’s Board of Directors or (vii) Execu(cid:49)ve’s failure to cooperate in good faith witha governmental or internal inves(cid:49)ga(cid:49)on of the Company or its directors, officers or employees, if the Company has requestedsuch coopera(cid:49)on. In the case of clauses (ii), (iii) and (vii), the Company will not terminate Execu(cid:49)ve’s employment for Causewithout first giving Execu(cid:49)ve wri(cid:56)en no(cid:49)fica(cid:49)on of the acts or omissions cons(cid:49)tu(cid:49)ng Cause and a reasonable cure period of notless than 10 days following such notice to the extent such events are curable (as determined by the Company). (c)“Change in Control” means:(i)Any “person” (as such term is used in Sec(cid:49)ons 13(d) and 14(d) of the Securi(cid:49)esExchange Act of 1934, as amended (the “Exchange Act”)) becomes the “beneficial owner” (as defined in Rule 13d-3 of theExchange Act), directly or indirectly, of securi(cid:49)es of the Company represen(cid:49)ng more than 50% of the total vo(cid:49)ng powerrepresented by the Company’s then-outstanding voting securities;(ii)The consumma(cid:49)on of the sale or disposi(cid:49)on by the Company of all or substan(cid:49)allyall of the Company’s assets;(iii)The consumma(cid:49)on of a merger or consolida(cid:49)on of the Company with or into anyother en(cid:49)ty, other than a merger or consolida(cid:49)on which would result in the vo(cid:49)ng securi(cid:49)es of the Company outstandingimmediately prior thereto con(cid:49)nuing to represent (either by remaining outstanding or by being converted into vo(cid:49)ng securi(cid:49)es ofthe surviving en(cid:49)ty or its parent) more than 50% of the total vo(cid:49)ng power represented by the vo(cid:49)ng securi(cid:49)es of the Company orsuch surviving entity or its parent outstanding immediately after such merger or consolidation; or(iv)Individuals who are members of the Company’s board of directors (the“Incumbent Board”) cease for any reason to cons(cid:49)tute at least a majority of the members of the Company’s board of directorsover a period of 12 months; provided, however, that if the appointment or elec(cid:49)on (or nomina(cid:49)on for elec(cid:49)on) of any new board member was approved orrecommended by a majority vote of the members of the Incumbent Board then s(cid:49)ll in office, such new member shall, forpurposes of this Agreement, be considered as a member of the Incumbent Board.A transac(cid:49)on shall not cons(cid:49)tute a Change in Control if its sole purpose is to change the state of the Company’s incorpora(cid:49)on orto create a holding company that will be owned in substan(cid:49)ally the same propor(cid:49)ons by the persons who held the Company’ssecuri(cid:49)es immediately before such transac(cid:49)on. In addi(cid:49)on, if a Change in Control cons(cid:49)tutes a payment event with respect toany amount which is subject to Code Sec(cid:49)on 409A, then the transac(cid:49)on must also cons(cid:49)tute a “change in control event” asdefined in Treasury Regulation Section 1.409A-3(i)(5) to the extent required by Code Section 409A.(d)“Involuntary Termination” means either (i) a Termina(cid:49)on without Cause or (ii) a Resigna(cid:49)on forGood Reason.(e)“Resigna(cid:45)on for Good Reason” means a Separa(cid:49)on as a result of Execu(cid:49)ve’s resigna(cid:49)on fromemployment a(cid:30)er one of the following condi(cid:49)ons has come into existence without Execu(cid:49)ve’s consent: (i) a substan(cid:49)al adversechange in the nature or scope of Execu(cid:49)ve’s responsibili(cid:49)es, authority, powers, func(cid:49)ons or du(cid:49)es within or to the Company, (ii) amaterial reduction in Executive’s annual base salary from the base salary in effect immediately prior to the Change in Control, (iii)a substan(cid:49)al reduc(cid:49)on in benefits other than across-the-board benefit reduc(cid:49)ons similarly affec(cid:49)ng all or substan(cid:49)ally allmanagement employees of the Company or (iv) Execu(cid:49)ve’s required reloca(cid:49)on to offices more than fi(cid:30)y (50) miles fromExecu(cid:49)ve’s principal place of business immediately prior to the Change in Control. In order to cons(cid:49)tute a Resigna(cid:49)on for GoodReason, Execu(cid:49)ve must give the Company wri(cid:56)en no(cid:49)ce of the condi(cid:49)on within 90 days a(cid:30)er it comes into existence, theCompany must fail to remedy the condi(cid:49)on within 30 days a(cid:30)er receiving Execu(cid:49)ve’s wri(cid:56)en no(cid:49)ce and Execu(cid:49)ve must terminatehis or her employment within 30 days after expiration of the cure period.(f)“Separation” means a “separa(cid:49)on from service” as defined in the regula(cid:49)ons under Code Sec(cid:49)on409A.(g)“Termina(cid:45)on Without Cause” means a Separa(cid:49)on as a result of the termina(cid:49)on of Execu(cid:49)ve’semployment by the Company without Cause and not as a result of Executive’s death or disability.[Signature Page Follows] IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer,as of the day and year indicated below. COMPANY By:/s/ Jon Stueve Name:Jon Stueve Title:VP and General Counsel Date:October 2, 2017 EXECUTIVE By:/s/ Mark R. Riggs Name:Mark R. Riggs Title:Chief Customer Officer Date:September 30, 2017 GENERAL RELEASE OF ALL CLAIMSIn considera(cid:49)on of the severance benefits to be paid to Mark Riggs (“Execu(cid:49)ve”) by Coupa So(cid:30)ware Incorporated (the“Company”), as described in Paragraph 1 below, Execu(cid:49)ve, on Execu(cid:49)ve’s own behalf and on behalf of Execu(cid:49)ve’s heirs,executors, administrators and assigns, to the fullest extent permi(cid:56)ed by applicable law, hereby fully and forever releases anddischarges the Company and its directors, officers, employees, agents, successors, predecessors, subsidiaries, parent,shareholders, employee benefit plans and assigns (together called “the Releasees”), from all known and unknown claims andcauses of ac(cid:49)on including, without limita(cid:49)on, any claims or causes of ac(cid:49)on arising out of or rela(cid:49)ng in any way to Execu(cid:49)ve’semployment with the Company, including the termination of that employment.1.If Execu(cid:49)ve signs (and does not revoke) this General Release of All Claims (“Release”), theCompany will provide Execu(cid:49)ve with the severance benefits described in Sec(cid:49)on 2 of the Severance and Change in ControlAgreement, dated _______ __, 2017, between the Company and Executive (the “Severance Agreement”).2.Execu(cid:49)ve’s Company equity awards, to the extent vested and outstanding as of Execu(cid:49)ve’semployment termina(cid:49)on date, will be treated as provided in the applicable equity plan and the related award agreements. Suchagreements will remain in effect in accordance with their terms, and Execu(cid:49)ve acknowledges that Execu(cid:49)ve will remain bound bythem. Any Company equity awards that are unvested as of Execu(cid:49)ve’s employment termina(cid:49)on date will be automa(cid:49)callyforfeited1, and Execu(cid:49)ve will have no further rights to such awards. Execu(cid:49)ve acknowledges that the enclosed report accuratelyreflects a summary of Executive’s outstanding equity awards.3.Execu(cid:49)ve understands and agrees that this Release is a full and complete waiver of all claimsincluding, without limita(cid:49)on, claims of wrongful discharge, construc(cid:49)ve discharge, breach of contract, breach of the covenant ofgood faith and fair dealing, harassment, retalia(cid:49)on, discrimina(cid:49)on, viola(cid:49)on of public policy, defama(cid:49)on, invasion of privacy,interference with a leave of absence, personal injury or emo(cid:49)onal distress and claims under Title VII of the Civil Rights Act of1964, the Fair Labor Standards Act, the Equal Pay Act of 1963, the Americans With Disabili(cid:49)es Act, the Civil Rights Act of 1866, theAge Discrimina(cid:49)on in Employment Act of 1967 (ADEA), the California Labor Code, the California Fair Employment and HousingAct, the California Family Rights Act, the Family Medical Leave Act or any other federal or state law or regula(cid:49)on rela(cid:49)ng toemployment or employment discrimina(cid:49)on. Execu(cid:49)ve further understands and agrees that this waiver includes all claims, knownand unknown, to the greatest extent permitted by applicable law. However, this release covers only those 1 Modify in case of an involuntary termination three months prior to a change in control. claims that arose prior to the execu(cid:49)on of this Release. Execu(cid:49)on of this Release does not bar any claim that arises herea(cid:30)er,including (without limita(cid:49)on) a claim for breach of this Release. In addi(cid:49)on, this Release does not cover any claim forindemnifica(cid:49)on Execu(cid:49)ve may have pursuant to the Company’s bylaws or applicable law or Execu(cid:49)ve’s right to coverage underany applicable D&O insurance policy with the Company.4.Execu(cid:49)ve also hereby agrees that nothing contained in this Release shall cons(cid:49)tute or be treated asan admission of liability or wrongdoing by the Releasees or Executive.5.In addi(cid:49)on, Execu(cid:49)ve hereby expressly waives any and all rights and benefits conferred uponExecutive by the provisions of Section 1542 of the Civil Code of the State of California, which states as follows:A general release does not extend to claims which the creditor does not know or suspectto exist in his or her favor at the time of executing the release, which if known by him orher must have materially affected his or her settlement with the debtor.6.If any provision of this Release is found to be unenforceable, it shall not affect the enforceability ofthe remaining provisions and the court shall enforce all remaining provisions to the full extent permitted by law.7.This Release cons(cid:49)tutes the en(cid:49)re agreement between Execu(cid:49)ve and Releasees with regard to thesubject ma(cid:56)er of this Release. It supersedes any other agreements, representa(cid:49)ons or understandings, whether oral or wri(cid:56)enand whether express or implied, which relate to the subject ma(cid:56)er of this Release. Execu(cid:49)ve understands and agrees that thisRelease may be modified only in a written document signed by Executive and a duly authorized officer of the Company.8.Execu(cid:49)ve understands and agrees that the Company shall have no obliga(cid:49)on to provide toExecu(cid:49)ve any severance benefits described in the Severance Agreement unless and un(cid:49)l Execu(cid:49)ve has complied with therequirements described in Sec(cid:49)on 2(c) of the Severance Agreement, including execu(cid:49)ng this Release within the (cid:49)me periodspecified in Paragraph 13 below. 9.Execu(cid:49)ve understands and agrees that at all (cid:49)mes in the future Execu(cid:49)ve shall remain bound bythe Execu(cid:49)ve’s Proprietary Informa(cid:49)on and Inven(cid:49)ons Agreement with the Company and Mutual Agreement to Arbitrate, copiesof which are enclosed herewith. 10.Execu(cid:49)ve agrees not to disclose to others the terms of the Severance Agreement or this Release,except that Execu(cid:49)ve may disclose such informa(cid:49)on to Execu(cid:49)ve’s spouse and to Execu(cid:49)ve’s a(cid:56)orney or accountant in order forsuch attorney or accountant to render services to Executive related to the Employment Agreement or this Release.11.Execu(cid:49)ve agrees that Execu(cid:49)ve will never make any nega(cid:49)ve or disparaging statements (orally orin wri(cid:49)ng) about the Company or its stockholders, directors, officers, employees, products, services or business prac(cid:49)ces, exceptas required by law. The Company agrees to instruct its execu(cid:49)ve officers and directors not to disparage Execu(cid:49)ve in any mannerlikely to be harmful to Execu(cid:49)ve’s personal or business reputa(cid:49)on; provided that the Company (and its execu(cid:49)ve officers anddirectors) may respond accurately and fully to any question, inquiry or request for information when required by legal process.12.This Release shall be governed by and its provisions interpreted under the laws of the state ofCalifornia.13.Execu(cid:49)ve understands that Execu(cid:49)ve has the right to consult with an a(cid:56)orney before signing thisRelease. Execu(cid:49)ve also understands that Execu(cid:49)ve has 21 days a(cid:30)er receipt of this Release to review and consider this Release,discuss it with an a(cid:56)orney of Execu(cid:49)ve’s own choosing, and decide to execute it or not execute it. Execu(cid:49)ve also understands thatExecutive may revoke this Release during a period of 7 days after Executive signs it and that this Release will not become effectivefor seven days a(cid:30)er Execu(cid:49)ve signs it (and then only if Execu(cid:49)ve does not revoke it). In order to revoke this Release, within sevendays a(cid:30)er Execu(cid:49)ve executes this Release Execu(cid:49)ve must deliver to the General Counsel at the Company a le(cid:56)er sta(cid:49)ng thatExecu(cid:49)ve is revoking it. Execu(cid:49)ve understands that if Execu(cid:49)ve chooses to revoke this Release within seven days a(cid:30)er Execu(cid:49)vesigns it, Executive will not receive any severance benefits and the Release will have no effect.14.Executive states that before signing this Release, Executive: •Has read it, •Understands it, •Knows that he or she is giving up important rights, •Is aware of his or her right to consult an attorney before signing it, and •Has signed it knowingly and voluntarily.  Date: Signature Print Full Name Enclosures: Equity ReportProprietary Information and Inventions AgreementMutual Agreement to Arbitrate Exhibit 21.1Subsidiaries as of January 31, 2019*NameJurisdiction of Incorporation or Organization8.5x14 Media Corp.CanadaCoupa Deutschland GmbHGermanyCoupa Operations, Inc.DelawareCoupa Operations, S de R.L. de C.V.MexicoCoupa Serviços Em Tecnologia Da Informação E Marketing Promocional Ltda.BrazilCoupa Software Australia Pty Ltd.AustraliaCoupa Software Godo KaishaJapanCoupa Software India Private LimitedIndiaCoupa Software Proprietary LimitedSouth AfricaGTCR/Opus Blocker CorporationDelawareHiperos LLCDelawareSimeno Holding AGSwitzerlandTrade Extensions TradeExt ABSwedenVinimaya LLC (dba Aquiire Inc.)Delaware * Inclusion on the list above is not an admission that any of the above entities, individually or in the aggregate, constitutes a significant subsidiary within the meaning of Rule 1-02(w) ofRegulation S-X and Item 601(b)(21)(ii) of Regulation S-K. Exhibit 23.1 Consent of Independent Registered Public Accounting Firm We consent to the incorporation by reference in the Registration Statements (Form S-8 Nos. 333-213991, 333-217104 and 333-223997)pertaining to the 2016 Equity Incentive Plan, 2006 Stock Plan, and the 2016 Employee Stock Purchase Plan of Coupa SoftwareIncorporated of our reports dated March 27, 2019, with respect to the consolidated financial statements and schedule of Coupa SoftwareIncorporated, and the effectiveness of internal control over financial reporting of Coupa Software Incorporated, included in this AnnualReport (Form 10-K) for the year ended January 31, 2019. /s/ Ernst & Young LLP San Jose, CaliforniaMarch 27, 2019  Exhibit 31.1CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICERPURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, Robert Bernshteyn, certify that:1.I have reviewed this annual report on Form 10-K of Coupa Software Incorporated;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have: (a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; (b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; (c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. Date: March 27, 2019By:/s/ Robert Bernshteyn Name:Robert Bernshteyn Title:Chief Executive Officer and Chairman of the Board (Principal Executive Officer)  Exhibit 31.2CERTIFICATION OF PRINCIPAL FINANCIAL OFFICERPURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, Todd Ford, certify that:1.I have reviewed this annual report on Form 10-K of Coupa Software Incorporated;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have: (a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; (b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; (c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. Date: March 27, 2019By:/s/ Todd Ford Name:Todd Ford Title:Chief Financial Officer (Principal Financial Officer)  Exhibit 32.1CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002I, Robert Bernshteyn, Chief Executive Officer of Coupa Software Incorporated (the “Company”), certify, pursuant to 18 U.S.C. Section 1350, asadopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: (1)The annual report on Form 10-K for the Company for the year ended January 31, 2019 (the “Report”) fully complies with the requirements ofSection 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany. Date: March 27, 2019By:/s/ Robert Bernshteyn Name:Robert Bernshteyn Title:Chief Executive Officer and Chairman of the Board (Principal Executive Officer)  Exhibit 32.2CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002I, Todd Ford, Chief Financial Officer of Coupa Software Incorporated (the “Company”), certify, pursuant to 18 U.S.C. Section 1350, as adoptedpursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: (1)The annual report on Form 10-K for the Company for the year ended January 31, 2019 (the “Report”) fully complies with the requirements ofSection 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany. Date: March 27, 2019By:/s/ Todd Ford Name:Todd Ford Title:Chief Financial Officer (Principal Financial Officer) 

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