Coupa Software

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 31, 2022
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to
Commission File Number 001-37901
COUPA SOFTWARE INCORPORATED
(Exact name of Registrant as specified in its charter)
Delaware
20-4429448
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
1855 S. Grant Street
San Mateo, CA 94402
(Address of principal executive offices, including zip code)
    
(650) 931-3200
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock, par value $0.0001 per share
COUP
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 preceding 12 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 of this 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 whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the
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 financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
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, 2021, the aggregate
market value of its shares (based on a closing price of $217.00 per share) held by non-affiliates was approximately $16.0 billion. Shares of common stock held by each executive 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 a conclusive determination for other
purposes.
The number of shares of Registrant’s common stock outstanding as of March 9, 2022 was 75,066,000.

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s Proxy Statement relating to the 2022 Annual Meeting of Stockholders, scheduled to be filed with the Securities and Exchange Commission within 120 days after the
end of the Registrant’s fiscal year ended January 31, 2022, are incorporated by reference into Part III of this Annual Report on Form 10-K.

COUPA SOFTWARE INCORPORATED
Form 10-K for the Fiscal Year Ended January 31, 2022
Table of Contents
Page
PART I
Item 1.
Business
1
Item 1A.
Risk Factors
14
Item 1B.
Unresolved Staff Comments
42
Item 2.
Properties
42
Item 3.
Legal Proceedings
42
Item 4.
Mine Safety Disclosures
42
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
43
Item 6.
[Reserved]
44
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
45
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
58
Item 8.
Financial Statements and Supplementary Data
59
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
59
Item 9A.
Controls and Procedures
59
Item 9B.
Other Information
60
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
61
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
62
Item 11.
Executive Compensation
62
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
62
Item 13.
Certain Relationships and Related Transactions, and Director Independence
62
Item 14.
Principal Accountant Fees and Services
62
PART IV
Item 15.
Exhibits, Financial Statement Schedules
63
Item 16.
Form 10-K Summary
66
i

NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements. All statements other than statements of historical facts contained in this
report, including statements regarding our future results of operations and financial position, the expected impact of the COVID-19 pandemic on our
business, results of operations and financial condition, customer lifetime value, strategy and plans, market size and opportunity, competitive position,
industry environment, potential growth opportunities, product capabilities, expected impact of business acquisitions, our expectations for future operations
and our convertible senior 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 identify forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future
events and trends that we 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
Results of Operations,” "Business" and “Risk Factors.”
These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors” and
elsewhere in this Annual Report on Form 10-K. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from
time to 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 these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Annual Report on Form 10-K may not
occur and actual results 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 the
forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected
in the forward-looking statements will be achieved or occur. Moreover, except as required by law, neither we nor any other person assumes responsibility
for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for
any reason after 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 I
Item 1. Business.
Overview
We are a leading provider of Business Spend Management (“BSM”) solutions. We offer a comprehensive, cloud-based BSM platform that has
connected our customers with more than seven million suppliers globally. Our platform provides greater visibility into and control over how companies
spend money, optimize supply chains, and manage liquidity. Using our platform, businesses are able to achieve real, measurable value and savings that
drive their profitability.
Our BSM platform is designed for the modern global workforce that is mobile and expects real-time results, flexibility, and agility from software
solutions. The look, feel and functionality of our intuitive, mobile and browser-based interface evoke a familiar e-commerce experience that is intended to
appeal to users across an entire organization, rather than just a small group of power users with specialized training. The simplicity and accessibility of our
solution encourages widespread adoption within an organization—and the broader the user adoption, the more spend under management that an
organization achieves. In this way, our user-centric approach enables organizations to gain greater control over their procurement, invoicing, payment and
other related spend activities, and to manage these processes more efficiently than with traditional, legacy solutions. By de-centralizing BSM workflows
and removing unnecessary complexity, our platform reduces an organization’s dependence on its often-backlogged back-office functions, and empowers
personnel across the organization to source and purchase goods and services on their own—without sacrificing visibility and control over spending.
Our BSM platform delivers a broad range of capabilities that would typically require the purchase and use of multiple disparate point applications.
The core of our platform consists of procurement, invoicing, expense management, and payment solutions that form the transactional engine for managing
a company’s business spend. In addition, our platform offers specialized solutions targeted for power users, to help companies manage more technical and
strategic areas of BSM, including areas such as strategic sourcing, contract management, contingent workforce, inventory management, supplier risk
management, supply chain design and planning, treasury management, and spend analysis.
We benefit from powerful network effects as our customer and supplier populations continue to grow. As more businesses subscribe to our BSM
platform, the collective spend under management on our platform grows. The greater the total amount of spend under management on our platform, the
more attractive our platform is to suppliers. As more suppliers join our platform, our buyers benefit from a broader range of purchasing options, which in
turn encourages greater use of our platform by existing customers, while also attracting new customers to our platform. In addition, the increasing number
of transactions on our platform leads to incrementally powerful prescriptive spend insights and risk management recommendations from our Coupa
Community.ai capabilities, creating more value for customers and providing additional incentives for increased adoption. As we generate more revenue
from the increase in customer subscriptions to our services, we are able to make greater investments into our platform, for example, to add new features or
improve the functionality and user interface of our solutions, and these enhancements further encourage greater adoption of our platform by businesses,
enhancing the network effects that benefit all constituencies.
Our customers benefit from our rapidly growing network in a multitude of ways. We describe the ecosystem of business buyers, suppliers and
partners that use our services as a “community.” Like any community, each member can contribute value to the community, and can also benefit, directly or
indirectly, from the participation of other members of the community. For example, through programs that leverage group buying power; through
recommendations based on insights extracted from anonymized data on transactions occurring within the platform; and through access to community
message boards and channels for direct communication between community participants. Our Community.ai offering provides two sets of broad
capabilities for each community member to benefit from the collective power of our entire community - Community Insights and Community Connections.
Our Community Insights capabilities apply artificial intelligence and machine learning to spend transactions across the growing Coupa community to
identify trends and prescribe best practices that help customers optimize spend, reduce risk, and improve efficiency. Additionally, through our Community
Connections capabilities, we provide purchasing programs, such as Coupa Instant Advantage, which offers access to pre-negotiated discounts from various
suppliers, and Coupa Sourcing Advantage, which connects community members to engage in group sourcing events, allowing them to leverage pooled
buying power to achieve better contracting terms and capture greater savings. Moreover, through our Coupa Open Business Network, suppliers of all sizes
can list their goods and services, establish pricing, and interact with buyers electronically, thus significantly reducing paper, improving operating
efficiencies, and reducing costs.
1

We believe a critical, differentiating feature of Coupa’s approach to BSM is our company culture. That culture is built on three guiding principles
we refer to as our core values: (1) ensuring customer success, (2) focusing on results; and (3) striving for excellence. We emphasize these principles
continuously through formal training and informal messaging within the organization, and the results of our annual employee surveys consistently
demonstrate that our employees have adopted and strive to embody them. These principles inform how we treat each other within our organization, and
how we approach interactions with our customers, suppliers, partners, and others with whom we do business. Our unwavering focus on customer success
means that we expect to deliver quantifiable business value to our customers by helping them maximize their spend under management. We believe this
mindset serves as the foundation for the successful execution of our strategy, and, as a result, is critical to our growth. We focus on results. Our market
leading technology supports rapid time-to-deployment, typically ranging from a few weeks to several months, achieving swift time to value. We strive for
excellence in many ways, one example of which is through our product release and update cycles. Here, we seek to improve product design iteratively,
based on user feedback, as we look to build ever-more intuitive, easy-to-use interfaces to shield users from the complexity associated with more traditional,
legacy enterprise resource planning (“ERP”) and procurement solutions. Our relentless commitment to the embodiment of our core values supports the
creation of meaningful, measurable customer value within a short timeframe, resulting in a rapid return on investment for our customers.
We have developed a rich partner ecosystem of systems integrators, implementation partners, resellers, and technology partners. We work closely
with several global systems integrators, including Accenture, Deloitte, KPMG, and others that help us scale our business, extend our global reach, and
drive increased market penetration. We expect the number of partner-led implementations and sales referrals to continue to increase over time.
We have achieved rapid growth in customer adoption, cumulative spend under management, and transactions conducted through our platform. Our
cumulative spend under management is highlighted below:
As of January 31, 2022, 2021, and 2020, our cumulative spend under management was $3,340 billion, $2,359 billion and $1,655 billion,
respectively. Cumulative spend under management does not directly correlate to our revenue or results of operations because we do not generally charge
our customers based on actual usage of our BSM platform. However, we believe that cumulative spend under management illustrates the adoption, scale,
and value of our platform, which we believe enhances our ability to maintain existing customers and attract new customers.
For our fiscal years ended January 31, 2022, 2021, and 2020, our total revenues were $725.3 million, $541.6 million and $389.7 million,
respectively, and our net losses were $379.0 million, $180.1 million and $90.8 million, respectively, as we focused on growing our business.
2

The Coupa BSM Platform
Our BSM platform provides businesses with real-time visibility and control of spend and liquidity. The platform’s modern, user-centric interface
enables businesses to drive adoption of the platform, to capture, analyze, and control their spend, and to achieve real, measurable value and savings, and
directly improve their profitability:
•
Adopt. Our platform applies a user-centric approach that shields users from complexity and provides a mobile-enabled intuitive customer
experience, thus enabling widespread adoption of our platform by users across the entire organization, and across the customer’s supplier
base.
•
Capture. At the core of our platform is our transactional engine comprised of our procurement, invoicing, expense management, and payment
management capabilities, which comprehensively help capture and manage spend within an organization. Because 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 analytical insights
to help businesses identify problems and make better spending decisions. Real-time analytical and prescriptive insights are critical to helping
identify savings opportunities and risks, isolating problem areas in the spending process, and providing recommendations to target
improvement efforts. Our supply chain design and planning capabilities help businesses analyze options for optimizing their supply chains to
optimize for profitability, cost, and risk reduction.
•
Control. We help our customers control and streamline their spending activity, realize efficiencies that result in real savings, and reduce
supplier and other third party risks. Our platform has extensive functionality that enables managers to prevent excessive spend, reduce spend
through efficiencies and cost savings associated with strategic sourcing and contract compliance, and identify and manage risky suppliers
across various layers of 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 enabling strategic
sourcing via reverse auctions where suppliers bid down prices at which they are willing to sell their goods and services to businesses.
3

Our BSM Platform’s Capabilities
Our BSM platform includes the following capabilities:
Coupa’s Transactional Engine
The core of our platform is our transactional engine, which is comprised of the following solutions:
•
Procure: Our procurement solution enables customers to strategically establish spend policies and approval rules to govern company
spending. The application provides an intuitive, e-commerce-type shopping experience so that employees can easily and quickly find the
goods and services they need to do their jobs. For example, employees searching for goods can see inventory-on-hand balances in the search
results, which eliminates redundant spending. They also can access a marketplace of approved providers directly from the application. Our
procurement solution streamlines purchase 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 process inefficiencies, while ease of configuration enables businesses to
effortlessly adjust business processes to meet continually changing requirements.
•
Invoice: Customers may quickly configure invoice approval and matching rules so invoices can be routed without accounts payable team
member effort and cost. Easy, no-cost means for suppliers to create electronic invoices that comply with government regulations allow
businesses to eliminate paper and further reduce their invoice processing costs, all while reducing invoice payment fraud risk. Furthermore,
our invoicing solution enables customers to improve cash management through the effective management of supplier invoices via embedded
dashboards and work queues that prioritize invoices with early payment discount opportunities.
•
Expense: Our travel and expense management solution enables customers to gain visibility and control of corporate travel and the other
expenses incurred by employees. Innovative mobile capabilities such as GPS and geo-location make it easy for travelers to create expense
reports on-the-go. Frugal meter capabilities automatically assess the appropriateness of employee charges based on the customer’s configured
policies and thresholds. Seamless connectivity to Coupa Pay virtual cards and credit card providers directly feeds charges into our expense
management solution for added ease of payment, visibility and reconciliation. Coupa also provides travel management capabilities, such as an
online booking tool with embedded travel price assurance that helps companies capture savings from flight and hotel price decreases that
happen after the booking has been placed.
4

•
Pay: Coupa Pay represents a set of solutions that help customers consolidate and optimize their processes to manage working capital and
make payments to suppliers and contractors, as well as to employees for travel and expense reimbursements. With Coupa Pay, customers can
make payments using different methods, including domestic and international bank transfers, one-time-use virtual credit cards, digital checks,
and digital wallets. Coupa's comprehensive approach to payments removes silos between Procurement, Accounts Payable, and Treasury, thus
increasing process efficiency, reducing invoice volume through the use of secure virtual credit cards at the time of purchase order, and
unlocking the opportunity to take advantage of early pay discounts. Customers are equipped with a single portal to manage all payments
across multiple banks, and their suppliers get visibility into payment status. The process to create, approve, and release payments is automated
to save time and avoid potential error and fraud. This process is secured with access controls and encrypted transmission and storage of
payment-related information. With payments management as a core capability within our unified BSM platform, all types of payment
transactions are automatically reconciled to supporting documentation for better visibility and control of business spend.
Supporting Solutions
Our platform offers the following supporting solutions that help companies further manage their spend, and associated back-office processes:
Strategic Sourcing. Our strategic sourcing solution enables customers to find the best suppliers for the goods or services they need to run their
businesses. It also offers advanced capabilities for complex sourcing categories such as direct raw materials and logistics. Customers easily create sourcing
events containing the specifics of their business needs and invite suppliers to participate. Suppliers are able to review and bid effortlessly and without 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-price
elements to find the combination of suppliers and goods and services that meet the constraints they specify.
Contract Management. Our contracts solution enables customers to let their employees author new contracts within “guardrails” to manage risk
while improving efficiency for their legal teams. Higher-risk contract terms can be escalated for legal review, while lower-risk choices can be pre-approved.
Once negotiated, approved and signed, customers can operationalize contracts, making these contracts easily available for use by employees across the
organization. Buying under the terms of negotiated contracts can increase savings through the use of pre-agreed rates and mitigate risk through contractual
protections. Customers get visibility into how contracts affect spending with embedded dashboards at both the contract and summary level. Advanced
contract analysis capabilities give customers visibility into contract terms and risk, while automatic alerts remind employees to review contracts prior to
expiration or auto-renewal dates.
Contingent Workforce. Our contingent workforce solution enables customers to gain better visibility, control and optimization of services spend,
as part of their holistic business spend management program. Customers can easily initiate requests for temporary work or advanced SOW-based projects
as well as source and collect bids. Having better visibility to preferred suppliers helps customers optimize costs by selecting appropriate vendors with
competitive rates. Onboarding and offboarding contingent workers is fast and secure, while tracking worker performance and ensuring compliance with
company policies is simplified for both customers and contingent workers.
Supplier Risk Management. Our supplier risk management solution enables customers to collect the supplier information required to manage and
pay suppliers and provides data about potential risks associated with a given supplier. Customers can also use this solution to help ensure compliance and
mitigate third-party risk by extensively evaluating their supplier base against critical risk domains, including information security, anti-bribery and anti-
corruption, and GDPR compliance, while also staying informed on potential supplier risk by leveraging credit ratings and other searches of publicly
available databases. Customers can track additional supplier attributes related to sustainability, diversity and inclusion, and other measures and then report
on program performance against sustainability and diversity and inclusion goals.
Supply Chain Design and Planning. Our supply chain design and planning solution leverages a foundation of internal and external data sources,
in addition to artificial intelligence and advanced analytics, to generate a comprehensive digital model of the extended supply chain. Customers with global,
complex physical supply chains use Coupa to continuously design their supply chains, performing scenario planning to analyze options and trade-offs that
help build supply chain resiliency and agility. This includes an easy-to-use “no code” app building environment that enables customers to leverage Coupa’s
deep domain-specific algorithm library to efficiently deploy purpose-built apps to support a range of supply chain use cases made available to decision
makers across the enterprise. A tight linkage with Coupa’s sourcing capabilities allows customers to easily initiate sourcing events for any gaps identified
during the supply chain design process.
5

Treasury Management. Our treasury management solution enables organizations to optimize cash and liquidity by gaining better insights into
future liquidity demands and linking cash management to purchasing and invoicing processes to improve forecasting across the entire enterprise.
Organizations can connect to most banks worldwide using SWIFT, H2H or domestic communication standards for statement collection. Coupa provides
organizations with visibility into their financial data across multiple subsidiaries, entities, currencies, and geographies, automating liquidity planning and
enabling them to manage and record financial instruments. Organizations can consolidate subsidiary exposure and streamline intercompany transfers with
centralized group-wide payments, cash pooling and intercompany account structures for all subsidiaries. Organizations can reduce risk and protect liquidity
compliant workflows with exposure and hedge ratio tracking and by having all spend and payment data in one place enabled by real-time data and insights
through analytics and reporting. Fraud prevention detects suspicious activities with a central vendor database and streamlines payment approval using
validation status.
Spend Analysis. Our spend analysis solution provides managers a large set of built-in reports and dashboards that allow users to see spending
activity, 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 Community.ai and our artificial intelligence capabilities to automate complex business spend data classification and identify
potentially fraudulent transactions within our system. We have created more than one hundred 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, and spend by commodity, supplier and
contract. Users can also create new metrics, reports and dashboards with our intuitive user interface, as well as include external data like corporate and
travel expenses or integrate with third-party systems, to get a holistic view of their spend patterns.
Coupa Open Business Network
Our Coupa Open Business Network instantly connects business customers and suppliers, providing businesses with a platform that is accessible to
suppliers of all sizes—even those typically ignored by fee-based closed networks—to drive success. Suppliers have a variety of options to connect with
businesses including:
•
Coupa Supplier Portal. This portal is a tool for suppliers to easily do business with our customers. The Supplier Portal lets suppliers manage
content and settings on a customer-by-customer basis, including managing company information, setting up purchase order transmission
preferences, creating and managing online catalogs, managing procurement orders and invoices across multiple customers and gaining
visibility into the status of invoices.
•
Coupa Supplier Actionable Notifications. These notifications enable suppliers to receive HTML purchaser orders and convert these purchase
orders into invoices right from the procurement order e-mail, which represents the easiest way to submit electronic invoices through our
platform.
•
Direct Connection via cXML and EDI. Our platform supports various communication formats such as cXML or EDI for suppliers that want
to automate their invoicing through a tighter integration with our platform.
•
Direct E-mail. Suppliers can choose to send PDF invoices simply through e-mail. Our platform supports automatic reading of PDF invoices,
requiring no human intervention.
By using our Coupa Open Business Network, companies can improve compliance with government regulations, increase profitability, and reduce
costs by driving electronic transactions away from paper-based transactions. Our Coupa Open Business Network user interface is easy to navigate and
requires little to no training for suppliers. Businesses are able to interact with millions of suppliers already using our Coupa Supplier Portal, assess the
suppliers' suitability for their business, quickly onboard new suppliers, integrate directly or simply use our smart e-mail tools. Businesses can also use the
Coupa Open Business Network to layer on top of their existing technology, including third-party systems such as Oracle iProcurement, SAP SRM, material
resource planning (“MRP”) solutions, and others. Suppliers of all sizes benefit, as they are able to join the networked economy without changing their
technology or spending money on transaction fees.
Coupa Advantage and Coupa Source Together
Our Coupa Advantage program offers customers the opportunity to leverage pre-negotiated discounts from select suppliers in several business
categories such as office supplies, branded promotional products, background checks, employee perquisites and more. The program leverages the collective
buying power of Coupa customers to offer potential savings opportunities. Similarly, the Coupa Source Together program offers customers the ability to
pool spend for bespoke sourcing events, driving better outcomes across price, quality, and terms.
6

Coupa Community Connections
Our Community Connections capabilities connect industry practitioners across companies to foster best practice knowledge sharing and mutually
beneficial relationships in the BSM space. These capabilities are embedded throughout our platform and include, for example: informative discussion
forums surfaced in-context to users as they make spend decisions within Coupa; the ability to find and message BSM professionals at other organizations;
and a spend matchmaking capability that automatically recommends connections with community experts to provide input or work together on a sourcing
event, among others. These capabilities, combined with the scale of Coupa’s customer base and the volume of educational content and programming
produced on Coupa for the entire BSM community, produce a network effect that enables us to provide more value to our customers.
Coupa Community Insights
Our Community Insights capabilities, which extend across our BSM platform, provides information to Coupa customers by applying artificial
intelligence-powered analysis to the structured, normalized data collected from the comprehensive set of business spend transactions that have occurred on
the Coupa platform. This innovative analysis provides Coupa customers with prescriptive recommendations to optimize their spend decisions, improve
operational efficiency, and reduce risk based on best practices from the Coupa community. Participating customers are able to contribute to and benefit
from Community Insights, with use cases spanning various areas of spend management, including: Supplier Insights and Supplier Risk Management which
help companies find and evaluate new and existing suppliers to reduce risk levels; operational insights which help businesses measure their own
performance on key operational metrics against other Coupa customers and follow best practices to drive efficiency and savings, Commodity and
Procurable Insights which help companies identify spend consolidation and savings opportunities, and Spend Guard, which leverages artificial intelligence
on behavior patterns to automatically surface potential errors and fraud across all business spend.
Key Benefits to Businesses
•
Rapid time to value through fast deployment cycles and low cost of ownership of a cloud-based model.
•
Opportunity to achieve significant and sustainable savings that can translate into improved profitability.
•
High employee adoption of our easy-to-use BSM platform, which enables better visibility into spend and liquidity, allowing both procurement and
sourcing 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 in the
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 and minimize
data entry.
•
Faster reimbursement to employees due to more efficient expense management processes.
7

Key Benefits to Suppliers
•
Participating in our Coupa Open Business Network, which allows suppliers to display their information and catalog of products and services on
our platform for existing and prospective customers.
•
Fast registration process and flexibility to interact with customers through the Coupa Supplier Portal, direct integration or simply by use of direct
email.
•
Elimination of manual processes and efficiency improvements through electronic invoicing and streamlined procurement and payment processes.
•
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 changing government
regulations, as well as avoid risks.
Sales and Marketing
We sell our software applications through our direct sales organization and our partner program, Coupa Partner Connect. Our direct sales team is
global 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
with our strategic relationships. For example, we have joint marketing programs and sponsorship agreements with KPMG, Deloitte, and Accenture.
Our principal marketing programs include:
•
our annual Coupa Inspire conferences which are held in multiple jurisdictions and over multiple days to connect customers, disseminate best
practices, and reinforce our brand among existing and new customers. As a result of the COVID-19 pandemic, we replaced our 2021 in-
person Inspire conference with web-based events for our customers, prospects, and partners;
•
field marketing events for customers and prospective customers;
•
development of our ideal customer profile (ICP), which helps identify the accounts with the highest propensity to buy, for each of our sales
segments;
•
programmatic account-based marketing and field 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, industry analyst relations, and social media initiatives;
•
thought leadership development in the form of books, blogs, and third-party content;
•
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 campaigns,
and joint seminars;
•
customer programs, including regional user group meetings; and
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•
use of our website to provide application and company information, as well as learning opportunities for potential customers.
Recent Acquisitions
In February 2021, we completed the acquisition of Pana Industries, Inc. (“Pana”), a corporate travel booking solution company that puts an
emphasis on the traveler experience. In connection with the completion of the acquisition, we paid aggregate cash of approximately $48.5 million, and
issued 23,822 shares of our common stock.
Partnerships and Strategic Relationships
As a core part of our strategy, we have developed an ecosystem of partners to extend our sales capabilities and coverage, to broaden and
complement our 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 our
strategy.
•
Referral Partners. Our referral partners provide global, national and regional expertise in business spend management, procurement and
expense management. They help organizations through operational transformation by leveraging process, best practices and new technology.
These partners may refer customer prospects to us and assist us in selling to them. In return, we typically pay these partners a percentage of
the first-year subscription revenue generated by the customers they refer.
•
Implementation Partners. In order to offer the full breadth of implementation services, change management, and strategic consulting services
to our customers, we work with leading global systems integrators such as Accenture, Deloitte and KPMG, as well as boutique and regional
consulting firms. Our strategy is to enable the majority of our projects to be led by implementation partners with additional specialized
support from us. Our implementation partners are highly skilled and trained by our team. When working with implementation partners, we are
typically in a “co-sell” arrangement where we will sell our subscription directly to the customer and our partner will sell its implementation
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 to
demonstrate and promote our applications suites.
•
Financial Services Company Partners. Our financial services company partners provide deep expertise as well as transactional solutions for
executing payments. Partners include leading card issuers American Express, Bank of America, Barclaycard, Citibank, HSBC, J.P. Morgan
Chase, and money-movement provider Transfermate, as well as others. These partner-provided solutions let customers use their existing bank
relationships to move money globally.
•
Technology Partners. Our technology partners provide market-leading technology, complementary products and infrastructure-related
services that power and extend our suite of cloud-based business spend management applications. Our technology partners span a wide range
of solutions providers including MuleSoft, Dell, Ecovadis, and DocuSign that enhance the capabilities of our platform by facilitating
integrations that can deliver a higher level of value to customers. As a core part of our strategy, we have developed an ecosystem of partners
to extend our sales capabilities and coverage, to broaden and complement our application offerings and to provide a broad array of services
that lie outside of our primary areas of focus. Many of these partners are featured in the Coupa App Marketplace.
Technology Infrastructure and Operations
The technologies used to build our platform and solution capabilities are cloud-native and designed to scale to millions of users. We utilize a
modern technology stack to take advantage of advancements in web design, open-source technologies, scalability and security. We have implemented
industry-standard security practices 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.
With these partnerships, we are able to easily scale the service during peak load periods, allowing us to continuously add users and customers without
significant downtime or lead-time to procure new capacity. We also have the ability to offer our solutions globally across various different physical
locations, such as the U.S., Europe and Asia-Pacific.
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Research and Development
Our ability to compete depends in large part on our continuous commitment to research and development, and our ability to rapidly introduce new
applications, technologies, features and functionality. Our research and development organization is responsible for the design, development, testing and
certification 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.
Competition
We believe the overall market for BSM software is highly competitive, marked by rapid consolidation, fragmented, and rapidly evolving due to
technological innovations. We have been recognized, however, as a technology and market leader.
Our main competitors fall into the following categories:
•
Large enterprise software vendors such as Oracle Corporation, SAP AG and Workday that predominantly focus on database and ERP
software solutions;
•
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;
•
adoption by suppliers;
•
ability to deliver prescriptive insights based on aggregated, anonymized data;
•
ability to leverage extensive data to detect supplier and employee risk; and
•
community-driven collaboration and savings opportunities.
We believe that we compare favorably on the basis of these factors. However, many of our competitors have greater financial, technical and other
resources, greater brand recognition and larger sales and marketing budgets; therefore, we may not compare favorably with respect to some or all of the
factors above.
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Intellectual Property
We rely on a combination of trade secrets, patents, copyrights and trademarks, as well as contractual protections, to establish and protect our
intellectual property rights. While we have obtained or applied for patent protection for some of our intellectual property, we do not believe that we are
materially dependent on any one or more of our patents. We require our employees, consultants and other third parties to enter into confidentiality and
proprietary 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 intellectual
property laws. Our policy is to require employees and independent contractors to sign agreements assigning to us any inventions, trade secrets, works of
authorship, developments and other processes generated by them on our behalf and agreeing to protect our confidential information. In addition, we
generally 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
and use our technology to develop applications with the same functionality as our applications. Policing unauthorized use of our technology and intellectual
property rights is difficult. In addition, we intend to expand our international operations, and effective protection of our technology and intellectual property
rights may not be available to us in every country in which our software or services are available.
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 of
competitors grows and the functionality of applications in different industry segments overlaps. Moreover, many of our competitors and other industry
participants have been issued patents and/or have filed patent applications, and have asserted claims and related litigation regarding patent and other
intellectual property rights. From time to time, third parties, including certain of these companies, have asserted patent, copyright, trademark, trade secret
and other intellectual property rights within the industry. Any of these third parties might make a claim of infringement against us at any time.
Government Regulations
Various U.S. federal and state, as well as foreign laws and regulations, including environmental regulations, applicable to us have become
effective or are under consideration in many parts of the world. To date, such developments have not had a substantial adverse impact on our capital
expenditures, results of operations, or competitive position. However, if new or amended laws or regulations impose significant operational restrictions and
compliance requirements upon us or our business, our capital expenditures, results of operations, or competitive position could be negatively impacted.
Refer to Item 1A. titled “Risk Factors” for further information, including the risks described under the caption “Government, Regulatory and Tax-Related
Risks.”
Our Customers
As of January 31, 2022, our customers are doing business in more than 70 countries and our products are offered in more than 30 languages. We
generally define a customer as a separate and distinct entity (such as a company or an educational or government institution), a distinct business unit of a
large corporation or a partner organization, in each case that have an active contract with us to access our services. Our customers include leading
businesses in a diverse set of industries, including healthcare and pharmaceuticals, retail, financial services, manufacturing, and technology.
Human Capital
We are committed to fostering a diverse and inclusive workplace that attracts and retains exceptional talent through ongoing employee
development, comprehensive compensation and benefits, and a focus on health, safety and employee well-being. As of January 31, 2022, we had 3,076
full-time employees globally, of which 1,590 work in the U.S. and 1,486 work in our international locations. Coupa was named on Fortune's “Best
Workplaces in Technology” for 2021, Fortune's “100 Best Medium Workplaces” for 2021 and 2020.
Culture and Values
Coupa’s culture plays a critical role in guiding how we identify, develop and deploy our human capital resources. We have built our culture around
three principles:
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•
Ensure customer success
•
Focus on results
•
Strive for excellence
We believe these principles set clear expectations for those who join our community; help ensure our employees are working towards the same
goals; and guide how we treat one another, our customers, and the communities we serve.
We conduct an annual employee survey to better understand and improve the employee experience. Part of the survey seeks to measure the extent
to which these three principles have been adopted by our workforce. In 2021, 71% of our global employees participated in our annual survey, 93% of our
employees believe the organization works hard to ensure customer success, 94% believe there is a strong focus on results, and 93% are encouraged to strive
for excellence day to day.
Diversity, Equity and Inclusion
We believe that diversity and inclusion must be embedded into the way that we do business because we know that companies thrive when they are
powered by a diversity of people and culture, while people thrive in a culture that promotes dignity, equity, and respect. We work to support our goals of
diversifying our workforce through attraction, education, and advocacy. Our aim is to ensure that our employees feel a strong sense of belonging and are
comfortable bringing their authentic selves to work every day, and our employee resource groups help support that. These groups consist of volunteer
Coupa employees who provide personal and professional support to our diverse communities, beyond the scope of their core job duties. Our employee
resource groups include the following:
Coupa Empower. Empower's mission is to break down barriers to women’s success by creating a community of individuals and organizations
working together to unleash the impact of women in business. The three pillars of Empower are as follows:
•
Discover. Focused on the individual, Discover provides development tools for career growth to build a gender balanced pool of leaders who
can create and sustain a positive culture.
•
Connect. Focused on driving company initiatives, Connect partners with other organizations to expand beyond its existing internal network to
develop bonds and impact change across our shared ecosystem of women's leadership.
•
Impact. Focused on the community we live in and the world around us, Impact provides opportunities to work with socially responsible
programs and organizations that benefit the global community.
Coupa Illuminate. Illuminate’s purpose is to support our LGBTQ+ community by inspiring connection, inclusiveness, and diversity. We respect
gender fluidity and non-traditional family units, advocate for equality and fairness, and foster opportunities for stewardship and growth in our local
communities.
Coupa Engage. Engage stands to uplift and expand the underrepresented community at Coupa. This group provides a personal and professional
platform to support colleagues of color to network and form closer relationships with allies within the company. This group sets its principles on three
major pillars: leadership development, inclusion and equity, and community enrichment.
Coupa Green: Launched in 2021, this employee led group is focused on having a positive impact on our environment both in the workplace and at
home through educating employees on environmental issues and encouraging action.
Growth and Development
We foster a learning culture where employees are empowered to drive their career progression and professional development. Our Coupa
University platform provides our employees with access to a wide range of training and development programs, as well as virtual learning resources on-
demand to help them excel in their careers. Employees may also participate in our student loan repayment assistance program to help pay off their student
loans faster.
Compensation and Benefits Program
Our compensation program is designed to attract and reward talented individuals who possess the skills necessary to support our business
objectives, assist in the achievement of our strategic goals and create long-term value for our stockholders. We provide employees with compensation
packages that typically include base salary, annual incentive bonuses, and long-term equity awards that vest subject to continued service. We also offer an
employee stock purchase plan which allows our employees to contribute a portion of their wages towards the purchase of our stock at a discount. During
the year ended January 31, 2022, our overall ESPP participation rate was approximately 74% which remains strong relative to the global benchmark. We
believe that a compensation program with both short-term and long-term incentives provides fair and competitive compensation and aligns employee and
stockholder interests. In addition to cash and equity compensation, we also offer employees benefits such as life and health (medical, dental and vision)
insurance, paid time off, paid parental leave, and a 401(k) plan.
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Health, Safety and Wellness
We believe we maintain a high-quality work environment, and we strive to provide a safe and healthy workplace for all employees. We endeavor
to comply with applicable local laws and regulations regarding workplace safety, including recognition and control of workplace hazards, tracking injury
and illness rates, utilizing a global travel health program, and maintaining robust emergency and disaster recovery plans. We also offer our employees with
a wide range of virtual on-demand fitness programs to promote regular physical fitness.
COVID-19 Response
The spread of COVID-19 has also caused us to modify our business practices. Focusing on the safety and well-being of our employees and their
families, at the beginning of the pandemic, we closed our offices globally and required our employees to work remotely. Since the second quarter of fiscal
2022, we have implemented a phased-in approach in re-opening certain of our offices and invited our employees to return to work on a voluntary basis if
they wished to do so. Our employees' health and safety is our top priority, and we will continue to monitor local restrictions across the world, the
administration of vaccines, and the number of new cases. Any incidents of actual or perceived transmission may require us to temporarily close any
impacted office. Additionally, due to concerns over risks related to travel and large gatherings, for the last two fiscal years we have replaced our in-person,
annual Inspire conferences and other in-person marketing events with other web-based virtual events. As the pandemic continues, the health and well-being
of our workforce remains our top priority while we work to ensure the productivity and enablement of our workforce as they continue to work from home.
Corporate Social Responsibility: “Coupa Cares”
A core part of our corporate social responsibility efforts is engaging employees through various initiatives. This includes Coupa Cares, our social
impact program that is focused on three key areas:
•
Serve: We support employees in dedicating their time and skills for social and environmental causes. This includes mobilizing employees to
volunteer and utilize 16 hours of annual “Volunteer Time Off” benefits; organizing Coupa’s “Global Volunteer Day”; and organizing in-person
and virtual volunteer events.
•
Give: We invest in our local communities. This includes providing funding to charitable organizations, administering an employee donation
matching and volunteer rewards program with a $250 annual match, and awarding educational scholarships.
•
Lead: We inspire our employees and broader Coupa Community to take action and amplify our collective impact around the world by
collaborating with our employee resource groups and partnering with external organizations.
Environmental, Social, and Governance (“ESG”) Impact
Coupa is committed to advancing our sustainable business practices and strives to drive environmental and social impact for our customers and in
our communities. We continue to work on our ESG program through a cross-functional working group that helps drive our strategic initiatives. We
understand the importance of transparency and in 2021 we published our first annual ESG report, in which we outlined our priorities and communicated the
details of our initiatives and progress.
Corporate Information
We were incorporated in February 2006 in Delaware. Our principal executive offices are located at 1855 S. Grant Street, San Mateo, CA 94402,
and our 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 part of this report. We have included our website address as an inactive textual reference only.
Available Information
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed pursuant to
Sections 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
at www.coupa.com as soon as reasonably practicable after we file such material with the Securities and Exchange Commission (“SEC”). The SEC also
maintains an Internet website that contains reports and other information regarding issuers, such as Coupa, that file electronically with the SEC. The SEC’s
Internet website is located at http://www.sec.gov.
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We have used, and intend to continue to use, our website, LinkedIn, and Twitter accounts as a means of disclosing material non-public information
and for complying with our disclosure obligations under Regulation FD. We webcast our earnings calls and certain events we participate in or host with
members of the investment community on our investor relations website. Additionally, we provide notifications of news or announcements regarding our
financial performance, including SEC filings, investor events, press and earnings releases as part of our investor relations website.
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 our
securities. 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 your
investment. The risks described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem
immaterial may also impair our business operations.
Summary Risk Factors
The following is a summary of key risk factors you should consider in connection with an investment in our common stock. You should read this summary
together with the more detailed description of each risk factor under the bold and italicized subcaptions further below.
•
We have a limited operating history at our current scale, which makes it difficult to predict our future operating results.
•
If we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high levels of service, or adequately address
competitive challenges.
•
We may not achieve the benefits and synergies that we had expected from our acquisitions, and our business may be adversely impacted by
integration challenges, assumption of unknown or unforeseen liabilities, or our inability to retain customers.
•
If we are unable to attract new customers, our revenue growth will be adversely affected.
•
Because we sell our services to large enterprises with complex operating environments, we tend to encounter long and unpredictable sales cycles.
•
The markets in which we participate are intensely competitive.
•
We face risks related to the current COVID-19 pandemic, which could have a material adverse effect on our business and results of operations.
•
Our business depends in part on our existing customers renewing their subscriptions and purchasing additional subscriptions.
•
We may not be successful in expanding our marketing and sales capabilities or in developing widespread brand awareness in a cost-effective
manner.
•
If we lose the services of our chief executive officer or one or more of our other key employees, or if we are unable to attract and retain highly
skilled employees more broadly, our business could be adversely affected.
•
Our international operations and sales to customers outside the United States or with international operations expose us to risks inherent in
international sales.
•
Our business may be adversely impacted by foreign currency exchange rates.
•
If our security measures are breached, or if we fail to prevent unauthorized access to customer data, we may experience disruption in service and
revenues, our reputation may be harmed and we may face contractual liability as well as fines from government agencies.
•
If we fail to integrate our platform with a variety of third-party technologies, our platform may become less marketable.
•
Any failure to protect our intellectual property rights could impair the value of our technology and harm our brand.
•
Our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business.
•
We have a history of cumulative losses, and we do not expect to be profitable for the foreseeable future.
•
Changes in privacy laws, regulations, and standards may cause our business to suffer.
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•
Servicing our debt will require a significant amount of cash, and we may not have sufficient cash flow from our business or the ability to raise the
funds necessary to settle conversions of, or to repurchase or redeem, our convertible senior notes.
•
Our stock price has been subject to fluctuations, and will likely continue to be subject to fluctuations, due to factors beyond our control.
•
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
our common stock to decline.
•
If securities or industry analysts do not continue to publish research or if they publish inaccurate or unfavorable research about our business, our
stock price and trading volume could decline.
•
Delaware law, provisions in our charter documents, and provisions in the indentures for our convertible senior notes could make a merger, tender
offer or proxy contest difficult, thereby depressing the trading price of our common stock.
Risks Related to Global Economic Trends
Weakened global economic conditions, including those from the recent COVID-19 pandemic and global events, may harm our industry, business and
results of operations.
Our overall performance depends in part on worldwide economic conditions. Global financial developments, downturns and global health crises or
pandemics seemingly unrelated to us or the enterprise software industry, may harm us, including due to disruptions or restrictions on our employees’ ability
to work and travel. The United States and other key international economies have been affected from time to time by falling demand for a variety of goods
and services, restricted credit, poor liquidity, reduced corporate profitability, volatility in credit, equity and foreign exchange markets, bankruptcies,
outbreaks of COVID-19 and the resulting impact on business continuity and travel, supply chain disruptions, inflation and overall uncertainty with respect
to the economy, including with respect to tariff and trade issues. For example, financial markets around the world experienced volatility following the
invasion of Ukraine by Russia in February 2022. In response to the invasion, the US, UK and EU, along with others, imposed significant new sanctions and
export controls against Russia, Russian banks and certain Russian individuals and may implement additional sanctions or take further punitive actions in
the future. The full economic and social impact of the sanctions imposed on Russia (as well as possible future punitive measures that may be implemented),
as well as the counter measures imposed by Russia, in addition to the escalating military conflict between Ukraine and Russia, which could conceivably
expand into the surrounding region, remains uncertain; however, both the conflict and related sanctions have resulted and could continue to result in
disruptions to trade, commerce, pricing stability, credit availability, and/or supply chain continuity, in both Europe and globally, and has introduced
significant uncertainty into global markets. As the adverse effects of this conflict continue to develop and potentially spread, both in Europe and throughout
the rest of the world, our customers may be negatively impacted which in turn may cause them to delay purchasing decisions, affect subscription renewal
rates and otherwise depress the level of spend conducted by such customers through our platform. As a result, our business and results of operations may be
adversely affected by the ongoing conflict between Ukraine and Russia, particularly to the extent it escalates to involve additional countries, further
economic sanctions and wider military conflict. We have operations, as well as current and potential new customers, throughout most of Europe. If
economic conditions in Europe and other key markets for our platform continue to remain uncertain or deteriorate further, including as a result of COVID-
19 or otherwise, 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 our platform and solutions generally, and business
spend management specifically. In addition, our revenues are dependent on the number of users of our solutions. Historically, during economic downturns
there have been reductions in spending on enterprise software as well as pressure for extended billing terms or pricing discounts, which would limit our
ability to grow our business and negatively affect our operating results. These conditions affect the rate of enterprise software spending and could adversely
affect our customers’ ability or willingness to subscribe to our platform, delay prospective customers’ purchasing decisions, reduce the value or duration of
their subscriptions or affect renewal rates, all of which could harm our operating results.
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Risks Related to Our Growth
We have a limited operating history at our current scale, which makes it difficult to predict our future operating results.
We were incorporated in 2006 and introduced our first cloud-based software solution shortly thereafter. Over time we have invested in building a
comprehensive, integrated platform of business spend management (“BSM”) services, and in marketing, selling and supporting this platform. Although in
recent years our quarterly and annual revenues have consistently increased on a year-over-year basis, in future periods, our revenue growth rate could slow
or our revenues could decline for a number of reasons, including any reduction in demand for our platform or existing services, increased competition,
contraction of our overall market, international or domestic economic instability, downturns or other events, such as the COVID-19 pandemic, our inability
to accurately forecast demand for our platform or our failure, for any reason, to capitalize on growth opportunities.
As a result of our limited operating history, our ability to forecast our future operating results is limited and subject to a number of uncertainties,
including our ability to plan for and model future growth. This risk is exacerbated to the extent that we enter new product areas or introduce new solutions,
particularly in cases where the revenue model differs from our traditional subscription model. We have encountered and will encounter risks and
uncertainties frequently experienced by growing companies in rapidly changing industries, such as the risks and uncertainties described in this report. If our
assumptions regarding these risks and uncertainties (which we use to plan our business) are incorrect or change, or if we do not address these risks
successfully, our operating and financial results could differ materially from our expectations and our business could suffer.
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 our
business plan, maintain high levels of service or adequately address competitive challenges.
We have experienced rapid growth in our business, headcount and operations in recent years. Although we cannot provide any assurance that our
business will continue to grow at the same rate or at all, we anticipate that we will continue to expand our operations and headcount, including
internationally, in the near future. Our success will depend in part on our ability to manage this growth effectively. The rapid growth in our headcount and
operations has placed and will continue to place significant demands on our management and our administrative, operational and financial infrastructure.
As we continue to grow, we must effectively integrate, develop and motivate a large number of new employees, while maintaining the effectiveness of our
business execution and the beneficial aspects of our corporate culture. In particular, we intend to continue to make directed and substantial investments to
expand our research and development, sales and marketing, and general and administrative organizations, as well as our international operations.
To effectively manage growth, we must continue to improve our operational, financial and management controls, risk management activities, and
our reporting systems and procedures by, among other things:
•
improving our key business applications, processes and IT infrastructure to support our business needs;
•
enhancing information and communication systems to ensure that our employees and offices around the world are well-coordinated and can
effectively communicate with each other and our growing base of customers and channel partners;
•
enhancing our internal controls to ensure timely and accurate reporting of all of our operations and financial results;
•
appropriately documenting our IT systems and our business processes; and
•
continuing to expand our risk management activities to keep up with the growth in our relationships with partners, acquired companies, customers,
suppliers, employees, and other internal and external constituencies.
The systems enhancements and improvements necessary to support our business as we continue to scale will require significant capital expenditures
and allocation of valuable management and employee resources. If we fail to implement these improvements effectively, our ability to manage our expected
growth, ensure uninterrupted operation of key business systems and comply with the rules and regulations that are applicable to public reporting companies
will be impaired. Additionally, failure to effectively manage growth could result in difficulty or delays in deploying customers, challenges identifying,
integrating and maintaining implementation partners, declines in quality or customer satisfaction, increases in costs, difficulties in introducing new features
and/or other operational 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 could
complement or expand our platform, enhance our technical capabilities or otherwise offer growth opportunities. For example, we acquired Pana Industries,
Inc. in February 2021, LLamasoft, Inc. in November 2020, Bellin Treasury International GmbH in June 2020, ConnXus, Inc. in May 2020, Yapta, Inc. in
December 2019 and Exari Group, Inc. in May 2019. Acquisitions may disrupt our business, divert our resources and require significant management
attention that would otherwise be available for development of our existing business.
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In addition, we may not be able to integrate the acquired personnel, operations and technologies successfully, or effectively manage the combined
business following the acquisition. We also may not achieve the anticipated benefits from the acquired 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 fulfilling the contractual obligations or expectations of customers of acquired businesses or transitioning 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, or large numbers of employees within key functions;
•
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.
In addition, acquisitions often have an adverse impact on short-term operating results (such as by diluting gross margin) even if such acquisitions
are expected to be beneficial to our operating results over the medium- and long-term.
A significant portion of the purchase price of companies we acquire may be allocated to acquired goodwill and other intangible assets. In
connection with our acquisition of LLamasoft, for example, $932.9 million of the purchase price was allocated to goodwill, increasing our total goodwill
balance to $1.5 billion as of January 31, 2021, which was roughly three times the amount of goodwill we had as of January 31, 2020. Our acquisition of
Pana, in February 2021, further increased our goodwill balance. As of January 31, 2022, our goodwill balance was $1,514.6 million. Goodwill must be
assessed for impairment at least annually, and other intangible assets are assessed for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. In the future, if our acquisitions do not yield expected returns, we may be required to take charges to our
operating results based on this impairment assessment process, which could adversely affect our results of operations. In addition, our exposure 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 against infringement
risks with respect to the acquired company or technology. In addition, third parties may make infringement and similar or related claims after we have
acquired technology that were not asserted prior to our acquisition. Acquisitions could also result in dilutive issuances of equity securities or the incurrence
of debt, which could adversely affect our operating results. In connection with the LLamasoft acquisition, for example, we issued approximately 2.4 million
shares of our common stock as consideration, which represented over 3% of our outstanding shares of common stock at that time. In addition, if the
performance of an acquired business fails to meet our expectations, our operating results, business and financial position may suffer. Some of our
acquisitions include earnouts, meaning that a portion of the purchase price is payable only if the acquired business achieves certain revenue or other post-
closing milestones. These contingent payment provisions can lead to disputes with the sellers of the business, such as the litigation described in Item 3
—“Legal Proceedings.”
If we cannot maintain our company culture as we grow, we could lose the innovation, teamwork, passion and focus on execution that we believe
contribute to 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 we
grow, including as a result of acquiring other businesses, we may find it difficult to maintain these important aspects of our company culture. Moreover, the
COVID-19 pandemic requires action to preserve culture among an employee base temporarily working predominantly remotely and facing unique personal
and professional challenges. If we fail to preserve 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.
17

Risks Related to Our Business and Industry
If we are unable to attract new customers, the growth of our revenues will be adversely affected.
To increase our revenues, we have historically depended more on the addition of new customers to our platform, particularly large enterprise
customers, than on increasing the number of users at existing customers or selling additional solutions to them. The expansion of our customer base is
critical to our ability to continue the growth of our revenues. If we do not grow our customer base, our revenues will slow in future periods or will start to
decline, as a result of customers not renewing.
If competitors introduce lower cost or differentiated products or services that are perceived to compete with ours or are better able to adapt to
changing market conditions (such as by addressing shifts in existing and prospective customer needs as a result of the COVID-19 pandemic), or if
competitors are willing to provide concessions such as extended billing terms or price discounts in order to win customers amidst the changing business
environment , 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 at rates 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 and who often demand more configuration and integration
services or customized features and functions, we encounter long and unpredictable sales cycles, which could adversely affect our operating results in a
given period.
Our ability to increase revenues and achieve profitability depends, in large part, on our ability to continue to attract large enterprises to our platform
and grow this segment of our customer base. We expect to continue to focus a substantial portion of our sales efforts on these customers in the near future.
Accordingly, we will continue to face greater costs, longer sales cycles and less predictability in completing some of our sales, than would be expected
from selling to a predominantly mid-market target customer base. A delay in or failure to close a large sale to one or more prospective new enterprise
customers could cause us to fail to meet the expectations of management or analysts, harm our business and financial results, and cause our financial results
to vary significantly from period to period.
Our typical sales cycle ranges from three to nine months. The wide range reflects a number of timing factors that can vary significantly between
prospective customers, many of which we cannot control, including:
•
customers’ budgetary constraints and priorities;
•
the timing of customers’ budget cycles;
•
customers' demands with respect to configuration and integration services or customized features and functions;
•
the need by some customers for lengthy evaluations; and
•
the length and timing of customers’ approval processes.
In addition, as a result of the ongoing COVID-19 pandemic, many local governments as well as enterprises have limited travel and in-person
meetings and implemented other restrictions that are making the sales process more lengthy and difficult, particularly for new customers.
Large enterprises tend to have more complex operating environments than smaller businesses, making it more difficult and time-consuming for us to
demonstrate the value of our platform to these prospective customers. In the large enterprise market, the customer’s decision to use our platform may be an
enterprise-wide decision requiring integration of our platform across operations spanning numerous jurisdictions. In addition, large enterprise customers
also generally demand more configuration and integration services, as well as customized features and functions, than our mid-market customer base,
which generally increases our upfront investment in related sales efforts. Therefore, these types of sales require us to access and address more frequent
requests with respect to configuration, integration and customization services and to provide greater levels of education regarding the use and benefits of
our platform, which causes us to expend substantial time, effort and money with respect to individual prospective enterprise customers. In addition, we
have no assurance that a prospective customer will ultimately purchase any services from us at all, regardless of the amount of time or resources we have
spent on the opportunity. For example, our platform does not currently permit customers to modify our code. If prospective customers require customized
features or functions that we do not offer and that would be difficult for them to deploy themselves, they may decide to utilize a competing solution which
allows the desired level of customization.
As a result of the variability and length of the sales cycle associated with large enterprise customers, we have only a limited ability to forecast the
timing of sales, and our results of operations may differ from expectations.
18

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 service
organizations. Our competitors include Oracle Corporation (“Oracle”), SAP AG (“SAP”) and Workday, Inc. (“Workday”), well-established providers of
enterprise resource planning solutions, including BSM software, that have long-standing relationships with many customers. Some customers may be
hesitant to switch or to adopt cloud-based software such as ours for this part of their business and prefer to maintain their existing relationships with their
legacy software vendors. Oracle, SAP and Workday are larger and have greater name recognition, longer operating histories, larger marketing budgets and
significantly greater resources than we do. These vendors, as well as other competitors, 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 take advantage of customer demand for cloud-based software, legacy vendors are
expanding their cloud-based software through acquisitions and organic development. Legacy vendors may also seek to partner with other leading cloud
providers. We also face competition from custom-built software vendors and from vendors of specific applications, some of which offer cloud-based
solutions.
We may also face competition from a variety of vendors of cloud-based and on-premise software products and point solutions that may have some of
the core functionality of our BSM services (such as procure-to-pay) but that address only a portion of the capabilities and features of our platform. In
addition, other companies that provide cloud-based software in different target markets may develop software or acquire companies that operate in our
target markets, and some potential customers may elect to develop their own internal software. With the introduction of new technologies and market
entrants, we expect this competition to intensify in the future.
Some of our competitors are able to devote greater resources to the development, promotion and sale of their products and services, including with
respect to concessions (such as extended billing terms or price discounts) granted in order to win customers in the challenging business environment
created by the COVID-19 pandemic and overall global geopolitical events. Furthermore, our current or potential competitors may be acquired by third
parties with greater available resources and the ability to initiate or withstand substantial price competition. In addition, many of our competitors have
established marketing relationships, access to larger customer bases and major distribution agreements with consultants, system integrators and resellers.
Our competitors may also establish cooperative relationships among themselves or with third parties that may further enhance their product offerings or
resources. If our platform does not become more accepted relative to our competitors’, or if our competitors are successful in bringing their products or
services to market earlier than ours, or if their products or services are more technologically capable than 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 are unable to achieve our target pricing levels,
our operating results will be negatively affected. Pricing pressures and increased competition could result in reduced 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 significantly on our customers renewing their subscriptions. Any decline in our customer 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
term expires and, to a lesser extent, that they add additional authorized users and additional business spend management solutions to their subscriptions.
Our customers have no obligation to renew their subscriptions, and we cannot assure you that our customers will renew subscriptions with a similar
contract period or with the same or a greater number of authorized users and solutions. Some of our customers have elected not to renew their agreements
with us, and we may not be able to accurately predict 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, our
professional services, our introduction of platform enhancements (including new features and new solutions), our customer support, our prices and contract
length, the prices of and concessions offered with respect to competing solutions, mergers and acquisitions affecting our customer base, the effects of
global economic conditions, reductions in our customers’ spending levels or changing customer needs due to temporary or permanent changes to their
operating models and business spend management patterns adopted in response to the COVID-19 pandemic. If our customers do not renew their
subscriptions, renew on less favorable terms or fail to add more authorized users or additional business spend management solutions, our revenues may
decline or fail to increase in line with expectations, and we may not realize improved operating results from our customer base.
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 risk of such negative effects increases with the term length of our customer arrangements. Furthermore, some of our customers may seek
bankruptcy protection or other 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, financial position and cash flow.
19

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 widespread
acceptance of our platform and attracting new customers. For example, widespread awareness of our brand is critical to ensuring that we are invited to
participate 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
our control, including the following:
•
the efficacy of our marketing efforts;
•
our ability to offer high-quality, innovative and error- and bug-free solutions;
•
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;
•
the satisfactory provision of services and customer support by our implementation partners;
•
any misuse or perceived misuse of our platform and solutions;
•
positive or negative publicity;
•
interruptions, delays or attacks on our platform or solutions; and
•
litigation, legislative or regulatory-related developments.
The COVID-19 pandemic and prophylactic measures adopted in response have forced us to suspend or reduce some of our marketing activities,
particularly those that require travel and in-person participation. Brand promotion activities may not generate customer awareness or increase revenues,
and, even if they do, any increase in revenues may not offset the expenses we incur in building our brand. If we fail to successfully promote and maintain
our brand, or incur substantial expenses in doing so, we may fail to attract or retain customers necessary to realize a sufficient return on our brand-building
efforts or to achieve the widespread brand awareness that is critical for broad customer adoption of our platform.
Furthermore, negative publicity (whether or not justified) relating to events or activities attributed to us, our employees, our partners or others
associated 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 could
reduce demand for our platform and have an adverse effect on our business, operating results and financial condition. Moreover, any attempts to rebuild our
reputation and restore the value of our brands may be costly and time consuming, and such efforts may not ultimately be successful.
Failure to effectively develop and expand our marketing and sales capabilities could harm our ability to increase our customer base and achieve
broader market acceptance of our platform.
Our ability to increase our customer base and achieve broader market acceptance of our platform will depend to a significant extent on our ability
to expand our marketing and sales operations, both domestically and internationally. We plan to continue expanding our direct sales force and engaging
additional partners that can provide sales referrals in the near future. This expansion will require us to invest significant financial and other resources. Our
business and operating results will be harmed if our efforts do not generate a corresponding increase in revenues. We may not achieve anticipated revenue
growth from expanding our direct sales force if we are unable to hire and develop talented direct sales personnel, if our new direct sales personnel are
unable to achieve desired productivity levels in a reasonable period of time or if we are unable to retain our existing direct sales personnel. It often takes six
months or longer before our sales representatives are fully-trained and productive. We also may not achieve anticipated growth in revenues from our
partners if we are unable to attract, train, support and retain additional motivated partners, if any existing or future channel partners fail to successfully
market, resell, implement or support our platform for their customers, or if they represent multiple providers and devote greater resources to market, resell,
implement and support the products and solutions of these other providers. For example, some of our partners also sell or provide integration and
administration services for our competitors’ products, and if such partners devote greater resources to marketing, reselling and supporting competing
products, this could harm our business, results of operations and financial condition.
20

Any failure to achieve forecasted revenue growth from the expansion of our sales activities could similarly result in our non-GAAP operating
income, non-GAAP net income attributable to Coupa Software Incorporated, adjusted free cash flows and other key metrics and operating results to fall
short of management forecasts and/or analysts’ expectations, which could cause our stock price to decline.
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 solutions on our platform, including
strategic sourcing, inventory, contracts, supplier management, spend analysis, payments, treasury management, supply chain design and planning and travel
optimization. Our efforts to market these other solutions is relatively new and we have allocated significant resources to develop, acquire or otherwise bring
these solutions to market, and it is uncertain whether these other solutions will ever result in significant revenues for us. In certain cases, new solutions call
for the introduction of new revenue models. For example, our Coupa Pay solution involves both subscription revenue and transaction revenue. Predicting
client adoption of new solutions and forecasting their contribution to operating results is inherently difficult given the lack of operating history with respect
to such solutions, and actual results may differ significantly from the expectations of our management, securities analysts or investors. While we have
acquired businesses in order to integrate certain of these solutions, there can be no assurance that these acquisitions will facilitate our efforts to market and
sell these other solutions in a cost-effective manner, or that we will be successful in integrating these solutions into our platform in a manner that creates
value for our customers and engenders widespread adoption. Further, the introduction of new solutions beyond these markets may not be successful. If we
are unable to achieve satisfactory customer adoption of new solutions, our ability to expand spend under management and grow our revenues could be
adversely affected.
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 to
add new customers to grow our customer base. The profitability of a customer relationship in any particular period depends in part on how long the
customer has 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 we recognize from those new customers in the first year. Furthermore, we focus many of our sales and marketing efforts on large enterprise
customers and this customer segment commonly demands more configuration and integration services which generally increases our upfront investment in
sales and deployment efforts - even for deployments that are handled primarily by one of our implementation partners - with no guarantee that these
customers will increase the scope of their subscription in order to offset our greater upfront costs.
We review the lifetime value and associated acquisition costs of our customers, as discussed further in “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in this Annual Report. The lifetime value of our customers and customer acquisition costs has and will
continue to fluctuate from one period to another depending upon the amount of our net new subscription revenues (which depends on the number and
segment mix of new customers in a period, upsells of additional solutions 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 continue to fluctuate in the future. We may not experience lifetime value to customer acquisition cost ratios in future years
or periods similar to those we have achieved to date. Furthermore, as a result of the ongoing global COVID-19 pandemic, it is possible that customers may
reduce the scope of their subscriptions in response to evolving operating models and related needs, may not renew their subscriptions at all or may
temporarily halt paying us, which would adversely affect our lifetime value metrics.
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 key
customers could have a significant impact on our revenues, reputation and our ability to obtain new customers. We may lose customers for a variety of
reasons, including the decision of a business customer to commence bankruptcy proceedings, restructure itself, dissolve or otherwise cease operations. We
believe the risk of such events has increased with the ongoing COVID-19 pandemic and will further increase as the pandemic continues. In addition,
acquisitions of our customers by unrelated third parties could lead to cancellation of our contracts with those customers or by the acquiring companies,
thereby reducing the number of our existing and potential customers.
21

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 our
customers 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
a contract breach or otherwise dispute our contract, the resolution of such disputes in a manner adverse to our interests could negatively affect our operating
results. Furthermore, entry into adversarial legal proceedings with our customers, including in varying geographic jurisdictions, could harm our reputation
and adversely impact our ability to attract new customers and retain existing customers.
Our business is subject to the risks of earthquakes, fire, floods and other natural catastrophic events, and to interruption by man-made problems such
as power 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 an
earthquake, fire or flood, occurring at our headquarters, at one of our other facilities, at any of our cloud hosting provider 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 (“ISPs”), this could adversely affect the ability of our
customers to use our products and platform. Although we maintain incident management and disaster response plans, in the event of a major 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 which could adversely affect
our business, results of operations and financial condition.
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 to
establish and maintain relationships with third parties, such as implementation partners, system integrator partners and technology providers. Identifying
partners, and negotiating and documenting relationships with them, as well as providing training and support, requires significant time and resources.
Partner solutions may not continue to be available to us on commercially reasonable terms. Furthermore, our competitors may be effective in providing
incentives to third parties to favor their products or services or to prevent or reduce subscriptions to our services. In addition, acquisitions of our partners by
our 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 our
platform 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 our
revenues could be impaired and our operating results could suffer. Even if we are successful in our strategic relationships, we cannot assure you that these
relationships 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
in which 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 not
prove to be accurate and could be adversely affected in the near term by the COVID-19 pandemic, global events (such as Russia's invasion of Ukraine and
the consequential implementation of sanctions and export controls) and related shifts in existing and prospective customer needs as a result of evolving
operating models and business spend management patterns that may persist after COVID-19 restrictions are lifted and as global events emerge, develop or
resolve. This uncertainty is exacerbated by the fact that Business Spend Management is relatively new (as a distinct industry category), and our platform
includes features and functionality that extend into other industry categories, such as Travel Expense Management and Treasury Management, for example.
Our estimates and forecasts relating to the size and expected growth of our market that we have publicly disclosed may prove to be inaccurate. Even if the
market in which we compete meets our size estimates and forecasted growth, our business could fail to grow at similar rates.
22

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 retain
highly 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 time to time, there may be changes in our executive management team resulting from the hiring or departure of executives, which could
disrupt our business. We do not maintain key-man insurance for Mr. Bernshteyn or any other member of our senior management team. We do not have
employment agreements with our executive officers or other key personnel that require them to continue to work for us for any specified period and,
therefore, they could terminate their employment 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 for
engineers with high levels of experience in designing and developing software for Internet-related services. We have from time to time experienced, and we
expect to continue to experience, difficulty in hiring and retaining employees with appropriate qualifications. Many of the companies with which we
compete for experienced personnel have greater resources than we have. If we hire employees from competitors or other companies, their former
employers may attempt to assert that these employees or our company have breached their legal obligations, resulting in a diversion of our time and
resources. In addition, job candidates and existing employees in the San Francisco Bay Area often consider the value of the stock awards they receive in
connection with their 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 to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects could be
adversely affected.
Our international operations and 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. For example, in March
2021 we established a joint venture in Japan intended to enable us to support Japanese companies looking to utilize BSM solutions. The revenues from
non-U.S. regions, as determined based on the billing address of our customers, constituted 40%, 38% and 36% of our total revenues for the fiscal years
ended January 31, 2022, 2021 and 2020, respectively. Operating in international markets requires significant resources and management attention and
subjects us to regulatory, economic and political risks that are different from those in the United States. While we are gaining additional experience with
international operations, our international expansion efforts may not be successful in creating additional demand for our platform outside of the United
States or in effectively selling subscriptions to our platform in all of the international markets we enter. There can be no assurance that we will be able to
grow our combined revenues from non-U.S. regions as a percentage of our total revenues. In addition, we face risks in doing business internationally that
could 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, including identifying, training and supporting 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 intellectual
property 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, including employment,
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 of our
international operations and expose us to foreign currency exchange rate risk;
•
adverse tax consequences;
•
unstable regional and economic political conditions;
23

•
uncertainty surrounding the COVID-19 pandemic and the restrictions imposed by government authorities to combat the virus, which may impact
our international operations and growth prospects differently than our operations and growth prospects in the United States due to differences in,
for example, virus transmission rates and prevalence of more transmissible variants, availability of vaccines in various countries, the effectiveness
of government responses, the quality of the regional health care systems, and the economic resilience of the regions, among other factors; and
•
the fragmentation of longstanding regulatory frameworks caused by Brexit.
As we continue to expand our business globally, our success will depend, in large part, on our ability to anticipate and effectively manage these and
other risks associated with our international sales and operations. Our failure to manage any of these risks successfully, or to comply with applicable laws
and regulations, could harm our operations, reduce our sales and harm our business, operating results and financial condition. For example, in certain
foreign countries, particularly those with developing economies, certain business practices that are prohibited by laws and regulations applicable to us, such
as the Foreign Corrupt Practices Act, may be more commonplace. Although we have policies and procedures designed to ensure compliance with these
laws and regulations, our employees, contractors and agents, as well as channel partners involved in our international sales, may take actions in violation of
our policies. 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 successfully
manage the risks of international operations, our business may be adversely affected if our business partners are not able to successfully manage these risks.
We may face exposure to foreign currency exchange rate fluctuations, which could adversely affect our business, results of operations and financial
condition.
As our international operations expand, our exposure to the effects of fluctuations in currency exchange rates grows because our international
contracts are sometimes denominated in local currencies. Over time, an increasing portion of our international contracts may be denominated in local
currencies. Therefore, as exchange rates vary, revenues, cost of revenues, operating expenses and other operating results, when re-measured, may differ
materially from expectations. The effects of movements in currency exchange rates will become more pronounced to the extent our transaction volume in
local currencies increases. In the future, we may use foreign currency forward and option contracts and/or other derivative instruments to hedge certain
exposures to fluctuations in foreign currency exchange rates. The use of such hedging activities may not offset any or more than a portion of the adverse
financial effects of unfavorable movements in foreign exchange rates over the limited time the hedges are in place. Additionally, the use of hedging
instruments may introduce additional risks if we are unable to structure effective hedges with such instruments. These effects of movements in currency
exchange rates could also affect our customers. A strengthening of the U.S. dollar could increase the real cost of our platform to our customers outside of
the United States, which could adversely affect our business, operating results, financial condition, and cash flows.
Risks Related to Our Services and Our Platform
If our security measures are breached or unauthorized access to customer data is otherwise obtained, we may experience disruption in service, 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 customer data, including, for example, sensitive and proprietary information about our
customers’ spending. We may become the target of cyber-attacks by third parties seeking unauthorized access to our data or customers' data or to disrupt
our platform. Computer malware, viruses, spear phishing attacks, and general hacking have become more prevalent in our industry, particularly against
cloud services. Any unauthorized access or security breaches could result in the loss of sensitive customer information, prolonged disruption in services,
litigation, loss of our authorization under FedRAMP, fines and penalties, liability under indemnity obligations and other economic and reputational damage.
While we have security measures in place that are designed to protect customer information and prevent data loss and other security breaches, if these
measures are breached as a result of third-party action, employee error, malfeasance or otherwise, and someone obtains unauthorized access to our
customers’ data, we could face loss of business, regulatory investigations or orders, and our reputation could be severely damaged. In addition, we could be
required to expend significant capital and other resources to alleviate the problem, as well as incur significant costs and liabilities, including due to
litigation, indemnity obligations, damages for contract breach, penalties for violation of applicable laws or regulations, and costs for remediation and other
incentives offered to customers or other business partners in an effort to maintain business relationships after a breach.
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We cannot assure you that any limitations of liability provisions in our contracts would be enforceable or adequate or would otherwise protect us
from 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 insurance
coverage 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 security
breach, 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
available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or
co-insurance requirements, could have a material adverse effect on our business, including our financial condition, operating results, and reputation.
Cyber-attacks and other malicious Internet-based activities continue to increase generally. Because the techniques used to obtain unauthorized access
or sabotage systems change frequently and generally are not identified until they are launched against a target, we may be unable to anticipate these
techniques or to implement adequate preventative measures. In addition, third parties may attempt to fraudulently induce employees or users to disclose
information to gain access to our data or our customers’ data. 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, result in reputational damage or subject us to third-party lawsuits, regulatory fines or other action or liability, which could adversely affect
our operating results.
If we are not able to provide successful and timely enhancements, new features and modifications for our platform and solutions, we may lose existing
customers 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 solutions or new solutions that achieve market acceptance or to integrate
technology, products and services that we acquire into our platform, our business and operating results could be adversely affected. The success of
enhancements, new features and solutions depends on several factors, including the timely completion, introduction and market acceptance of the
enhancements or new features or solutions. Failure in this regard may significantly impair the growth of our revenues. We have experienced, and may in
the future experience, delays in the planned release dates of enhancements to our platform, and we have discovered, and may in the future discover, errors
in new releases after their introduction. Either situation 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.
In addition, if any of our existing services or any new solutions that we introduce in the future do not achieve customer adoption at the rates that we
or industry analysts have forecasted, our revenue and operating results may be adversely impacted, and our stock price may decline.
We rely on Amazon Web Services to deliver our platform and solutions to our customers, and any disruption in service from Amazon Web Services or
material change to our arrangement with Amazon Web Services could adversely affect our business.
We rely upon Amazon Web Services (“AWS”) to operate certain aspects of our platform and any disruption of or interference with our use of
AWS could impair our ability to deliver our platform and solutions to our customers, resulting in customer dissatisfaction, damage to our reputation, loss of
customers and harm to our business. We have architected our software and computer systems to use data processing, storage capabilities and other services
provided by AWS. Currently, most of our cloud service infrastructure is run on AWS. Given this, we cannot easily switch our AWS operations to 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
terminate the 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 the 30 day period. Additionally, AWS has the right to terminate the agreement immediately with notice to us in certain scenarios such as if AWS
believes providing the services could create a substantial economic or technical burden or material security risk for AWS, or in order to comply with the
law or requests of governmental entities. The agreement requires AWS to provide us their standard computing and storage capacity and related support in
exchange for timely payment by us. If any of our arrangements with AWS were terminated, we could experience interruptions in our software as well as
delays and additional expenses in arranging new facilities and services.
25

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 software
errors, natural disasters, power or telecommunications failures, criminal acts, capacity constraints and similar events. For instance, in February 2017, AWS
suffered a significant outage in the United States that had a widespread impact on the ability of certain of our customers to fully use our solutions for a
small period of time. Despite precautions taken at these data centers, the occurrence of spikes in usage volume, a natural disaster, an act of terrorism,
vandalism or sabotage, a decision to close a facility without adequate notice or other unanticipated problems at a facility could result in lengthy
interruptions in the availability of our platform. Even with current and planned disaster recovery arrangements, our business could be harmed. Also, in the
event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur. These factors in turn could
further reduce our revenues, 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 fail to manage our technical operations infrastructure, our existing customers may experience service outages and our new customers may
experience 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
maintain sufficient 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 customer implementations and the expansion of existing customer implementations. In addition, we need to properly manage our technological
operations infrastructure in order to support version control, changes in hardware and software parameters and the evolution of our platform. However, the
provision of new hosting infrastructure requires significant lead time. We have experienced, and may in the future experience, website disruptions, outages
and other performance problems. These problems may be caused by a variety of factors, including infrastructure changes, human or software errors,
viruses, security attacks, 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 these performance problems within an acceptable period of time. If we do not accurately predict our infrastructure requirements, our customers may
experience service outages that may subject us to financial penalties, financial liabilities and customer losses. If our operations infrastructure fails to keep
pace with increased 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 successful with the implementation services provided by us or our partners.
Our business depends on our ability to make our customers successful, both with respect to our platform and solutions and the professional
services that are performed to help our customers use features and functions that address their business needs. Professional services may be performed by
our own staff, by a third-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 for delivery of these services to our customers. If a customer is not satisfied with the quality of work performed by us or a partner or with a
virtual implementation or with the type of professional services or solutions delivered, we may incur additional costs in addressing the situation, the
profitability of that work might be impaired and the customer’s dissatisfaction with our services or those of our partners could damage our ability to retain
that customer or expand the number of solutions subscribed to by that customer. In addition, negative publicity related to our customer relationships,
regardless of its accuracy, may further damage our business by affecting our ability to compete for new business with current and prospective customers.
We typically provide service level commitments under our customer contracts. If we fail to meet these contractual commitments, we could be obligated
to provide credits or refunds for prepaid amounts related to unused subscription services or face contract terminations, which could adversely affect
our revenues.
Our customer agreements typically provide service level commitments on a monthly basis. If we are unable to meet the stated service level
commitments 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 case we would be subject to refunds for prepaid amounts related to unused subscription services. Our revenues could be significantly affected if we
suffer unexcused downtime under our agreements with our customers. Any extended service outages could adversely affect our reputation, revenues and
operating results.
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If we fail to integrate our platform with a variety of third-party technologies, our platform may become less marketable and less competitive or obsolete
and 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 to
changes in cloud-enabled hardware, software, networking, browser and database technologies. Any failure of our platform to operate effectively with future
technologies could reduce the demand for our platform, resulting in customer dissatisfaction and harm to our business. If we are unable to respond to these
changes in a cost-effective manner or if third-party developers and technology are unable or unwilling to provide necessary or complementary integrations,
our platform may become less marketable and less competitive or obsolete and our operating results may be negatively affected. In addition, an increasing
number of individuals within the enterprise are utilizing mobile devices to access the Internet and corporate resources and to conduct business. If we cannot
continue to effectively make our platform available on these mobile devices and offer the information, services and functionality 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 solutions are implemented, our customers depend on our support organization to resolve technical issues relating to our solutions. We may
be unable to respond quickly enough to accommodate short-term increases in customer demand for support services. We also may be unable to modify the
format 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 our
platform and business reputation and on positive recommendations from our existing customers. Any failure to maintain high-quality technical support, or
a market perception that we do not maintain high-quality support, could adversely affect our reputation, our ability to sell subscriptions to our solutions to
existing and prospective customers and our business, operating results and financial position.
If our platform fails to perform properly, our reputation could be adversely affected, our market share could decline and we could be subject to liability
claims.
Our platform is inherently complex and may contain material defects or errors. Any defects in functionality or that cause interruptions in the
availability 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;
•
loss of customer data;
•
diversion of development and customer service resources; and
•
negative publicity 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.
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 loss
or corruption or cause the information that we collect to be incomplete or contain inaccuracies that our customers regard as significant. For example, our
launch of Community.ai in February 2022, which utilizes proprietary artificial intelligence to aggregate and anonymize data from our customers and
empower them with actionable data-driven insights. Any deficiencies or failures in the data collection and management systems underlying Community.ai
which disrupt, degrade or otherwise adversely impact this process and the related data could result in customers receiving, and potentially acting on the
basis of, incomplete or inaccurate information, which could in turn adversely impact our customer relationships and retention rates and harm our reputation.
Additionally, data loss, breach, or unlawful or unintended disclosure, could occur as part of our Community.ai offering, which could result in the release of
sensitive customer information and create liability exposure.
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Furthermore, the availability or performance of our platform could be adversely affected by a number of factors, including customers’ inability to
access the Internet, failure of our network or software systems, security breaches or variability in user traffic for our platform. We may be required to issue
credits or refunds for prepaid amounts related to unused services or otherwise be liable to our customers for damages they incur resulting from certain of
these events. For example, our customers access our solutions through their ISPs. If an ISP fails to provide sufficient capacity to support our solutions or
otherwise experiences service outages, such failure could interrupt our customers’ access to our solutions and adversely affect their perception of our
solutions’ reliability. In addition to potential liability, if we experience interruptions in the availability of our platform, our reputation could be adversely
affected and we 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
may not cover all claims made against us and defending a suit, regardless of its merit, could be costly and divert management’s attention and result in
adverse publicity which harms our reputation.
Risks Related to our Technology and Intellectual Property
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 the normal course of business activities. These may include claims, suits, and other
proceedings involving alleged infringement of third-party patents and other intellectual property rights, as well as commercial, corporate and securities,
labor and employment, wage and hour, and other matters. In particular, there has been considerable activity in our industry to develop and enforce
intellectual property rights. Our success depends upon our not infringing upon the intellectual property rights of others. Our competitors, as well as a
number of other entities and individuals, 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 may claim that our platform and underlying technology are infringing upon or otherwise violating their intellectual property rights,
and we may be found 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 or services. As a result of our
acquisition of businesses and technologies, we may be subject to infringement claims arising subsequent to the consummation of such acquisitions with
respect to the acquired technology. Any claims or litigation could cause us to incur significant expenses and, if successfully asserted against us, could
require that we pay substantial damages or ongoing royalty payments, prevent us from offering our services or require that we comply with other
unfavorable terms. In the event a claim is brought against us with respect to an acquired technology, there can be no assurance that an applicable
indemnification we obtained (if any) will be sufficient to cover all or any portion of liability arising under such claim. We may also be obligated to
indemnify our customers and business partners or to pay substantial settlement costs, including royalty payments, in connection with any such claim 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, any litigation
regarding our intellectual property could be costly, distracting and time-consuming and could harm our brand, business, results of operations and financial
condition.
Any failure to protect our intellectual property rights could impair the value of our proprietary technology and damage our brand.
Our success and ability to compete depend in part upon our intellectual property. We primarily rely on copyright, patent, trade secret and trademark
laws, trade secret protection and confidentiality or contractual agreements with our employees, customers, partners and others to protect our intellectual
property rights. However, the steps we take to protect our intellectual property rights as well as the policies and procedures implemented to detect threats
(including from malfeasance by employees or contractors or other insiders with access to our technology and intellectual property, or unauthorized
intrusions into our networks and systems by third parties) may be inadequate. and may fail to identify in a timely manner, if at all, every instance of
infringement or attempted theft of our intellectual property. Any failure to identify, assess and expediently resolve attempted or actual theft, infringement or
other unauthorized use of our technology or intellectual property could adversely impact our business and reputation.
In addition, our international operations expose us to a variety of customers and other foreign actors that may operate in jurisdictions where it is
difficult or impossible for us to assert our intellectual property rights in case of infringement or theft, either as a statutory or practical matter. We have
engaged in, and may in the future engage in additional, joint ventures with strategic partners outside of the United States, which may expose our technology
and intellectual property to a heightened risk of unauthorized use or theft.
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In order to protect our intellectual property rights, we may be required to expend significant resources to monitor and protect such rights. Litigation
brought to protect and enforce our intellectual property rights could be costly, time-consuming and distracting to management and could result in the
impairment 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 our
intellectual property rights could seriously adversely affect our brand and our business. For example, such failures could delay further sales or the
implementation of our platform, impair the functionality of our platform, delay introductions of new solutions, result in our substituting inferior or more
costly technologies into our platform, or injure our reputation.
Our platform utilizes open source software, and any failure to comply with the terms of one or more of these open source licenses could negatively
affect our business.
Our platform utilizes software governed by open source licenses, including for example the MIT License and the Apache License. The terms of
various open source licenses have not been interpreted by United States courts, and there is a risk that such licenses could be construed in a manner that
imposes unanticipated conditions or restrictions on our ability to market our platform. By the terms of certain open source licenses, if we combine our
proprietary software with open source software in a certain manner, we could be required to release the source code of our proprietary software and make it
available under open source licenses. In the event that portions of our proprietary software are determined to be subject to an open source license, we could
be required to publicly release the affected portions of our source code, or to re-engineer all or a portion of our technologies or otherwise be limited in the
licensing of our technologies, each of which could reduce or eliminate the value of our technologies and services. We have established processes to help
alleviate these risks, but we cannot assure you that our processes for controlling our use of open source software in our platform will be effective. In
addition to risks related to license requirements, the use of open source software can lead to greater risks than use of third-party commercial software, as
open source licensors generally do not provide warranties or controls on the origin of the software. Many of the risks associated with the use of open source
software cannot be eliminated and could negatively affect our business.
We employ third-party licensed software for use in or with our platform, and the inability to maintain these licenses or errors in the software we license
could result in increased costs, or reduced service levels, which could adversely affect our business.
Our platform incorporates certain third-party software obtained under licenses from other companies. We anticipate that we will continue to rely on
such third-party software and development tools from third parties in the future. Although we believe that there are commercially reasonable alternatives to
the third-party software we currently license, this may not always be the case, or it may be difficult or costly to replace. In addition, integration of the
software used in our platform with new third-party software may require significant work and require substantial investment of our time and resources.
Also, to the extent that our platform depends upon the successful operation of third-party software in conjunction with our software, any undetected errors
or defects in this third-party software could prevent the deployment or impair the functionality of our platform, delay new solution introductions, result in a
failure of our solutions and injure our reputation. Our use of additional or alternative third-party software would require us to enter into license agreements
with third parties, which may be time consuming to negotiate or result in increased licensing costs and/or less favorable terms.
Risks Related to COVID-19
We continue to face financial and operational risks related to the current COVID-19 pandemic.
The COVID-19 pandemic has had a significant impact on businesses and people around the world since it was publicly reported on or around
December 2019. The duration of the pandemic, the potential for new variants, the potential need for new vaccines and the full extent of the impact of the
foregoing are unknown.
Our business has been and could continue to be adversely affected by the COVID-19 pandemic. The pandemic has adversely affected the
macroeconomic environment and increased economic and stock market volatility and uncertainty. Restrictions on business activities, such as stay-at-home
orders, whether imposed by governments or otherwise, may continue to adversely affect our sales activities, employee morale, operations and growth
prospects. These restrictions, together with changes in consumer and business spending behavior prompted by the pandemic, have caused businesses in the
United States and other jurisdictions to reduce or suspend their operations, lay-off employees, and in some cases shutdown operations—a pattern of global
economic phenomena for which there is little precedent in modern times.
29

The COVID-19 pandemic has had and may continue to have an adverse impact on us in a number of ways, any of which individually or together
could have a material adverse impact on our results of operations, financial condition and growth prospects. For example, although we derive a significant
portion of our revenue from sales to enterprise customers (a segment that may be more resilient to economic volatility), a prolonged economic downturn is
likely to impact many of our enterprise customers adversely. The extent of the damage to this segment of our customer base may not be apparent as quickly
as for other segments, and is likely to differ by industry. Certain solutions of our platform, such as those that focus on business travel spend, may not be
purchased by existing or prospective customers due to operational changes they made in response to the pandemic, such as restrictions placed on business
travel, which could adversely impact our sales and revenue. These trends may persist to the extent that remote working arrangements become more
commonplace. In addition, the pandemic may limit the ability of our suppliers and business partners to perform under their contracts with us, and we may
not be able to find and engage additional or substitute suppliers and partners in a timely manner and on terms acceptable to us.
We believe that many businesses have been and may continue to be more reluctant to invest in the purchase and implementation of a new software
solution like ours in the near term because of the economic uncertainty associated with the pandemic. It may become more difficult for us to acquire new
customers and could lead to longer sales cycles, higher acquisition costs and greater uncertainty around the timing and likelihood of closing sales
opportunities to which we have already devoted meaningful time and resources. Our existing customers may reduce their subscriptions or choose not to add
new users or adopt new solutions at the rate we expect based on past experience. In addition, if our results of operations or our assessment of our growth
prospects or potential for future revenue and profitability fail to meet investor and analyst expectations for any particular financial period, our stock price
may experience a substantial decline, even if our revenues have increased or our margins have improved relative to past periods.
The spread of COVID-19 has also caused us to modify our business practices. Working remotely has made our workforce more reliant on certain
cloud-based communication and collaboration services, and any disruption to these services would likely have an adverse impact on employee productivity.
In addition to the limitations imposed by an all or partially-remote environment, many of our employees must contend with additional personal and family
challenges from the COVID-19 pandemic that affect employee productivity and morale.
With the re-emergence of in-office working, any incidents of actual or perceived transmission may require us to temporarily close an impacted
office, disrupt our operations, expose us to liability from employee claims, adversely impact employee productivity and morale, and result in negative
publicity and reputational harm.
In addition, the stock market has experienced periods of high volatility during the COVID-19 pandemic and such volatility may continue. As a
result, our stock price may be adversely impacted for reasons unrelated to our performance. A decline in stock price may make it more difficult for us to
raise capital on terms acceptable to us or at all.
The extent to which the COVID-19 pandemic continues to impact our business, results of operations and financial condition will depend on future
developments, which are highly uncertain and difficult to predict, including, but not limited to, the duration and severity of the pandemic, the availability
and efficacy of new and existing vaccines in limiting infection and transmission, the emergence of potential new and more virulent or contagious variants,
the actions taken in the United States and globally to contain the virus or address its impact, and how quickly and to what extent normal economic and
operating activities can resume. To the extent the COVID-19 pandemic adversely affects our business, results of operations and financial condition, it may
also have the effect of heightening many of the other risks described in this “Risk Factors” section. Even after the pandemic has subsided, we may continue
to experience an adverse impact to our business as a result of its global economic impact, including any recession that has occurred or may occur in the
future. For the reasons discussed above and others that we may not have foreseen, we expect that the pandemic will continue to have adverse impacts on
aspects of our business in the near term, any of which individually or together may have a material adverse impact on our results of operations, financial
condition, growth prospects and stock price.
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Risks Related to our Financial Results and Reporting
Our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business.
Our results of operations and key metrics discussed elsewhere in this report, such as trailing twelve months calculated billings, remaining
performance obligations, deferred revenue, customers with annualized subscription revenue above $100,000 and cumulative spend under management, may
vary significantly in the future and period-to-period comparisons of our operating results and key metrics may not provide a full picture of our
performance. Accordingly, the results of any one quarter or year should not be relied upon as an indication of future performance. Our quarterly financial
results 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 the
underlying performance of our business. These quarterly fluctuations may negatively affect the value of our common stock. Factors that may cause these
fluctuations include, without limitation:
•
our ability to attract new customers and complete the sale of our platform to them within the range of our typical sales cycle;
•
the addition or loss of one or more of our larger customers, including as the result of 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, including the impact of the market volatility and
economic downturn caused by COVID-19 on our business, including but not limited to a decreased demand for our platform and services,
negative impacts on our revenue results, an increasing unpredictability in expenses and cash flow, and a decreased ability by our customers
to pay for our platform and services;
•
the timing of our billing and collections;
•
customer renewal and expansion rates;
•
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 solutions purchased for our platform or pricing
changes 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 but
may vary in future quarters;
•
the timing and success of new product or solution introductions by us or our competitors or any other change in the competitive dynamics of
our industry, 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 jurisdictions in which we conduct business;
•
the impact of new accounting pronouncements and the adoption thereof;
•
fluctuations in stock-based compensation expense;
•
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 of
goodwill or intangibles from acquired companies.
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Further, in future periods, our revenue growth could slow or our revenues could decline for a number of reasons, including slowing demand for our
offerings, increasing competition, a decrease in the growth of our overall market, global economic conditions, or our failure, for any reason, to continue to
capitalize on growth opportunities. In addition, our growth rate may slow in the future as our market penetration rates increase. As a result, our revenues,
operating results and cash flows may fluctuate significantly on a quarterly basis and revenue growth rates may not be sustainable and may decline in the
future, and we may not be able to achieve or sustain profitability in future periods, which could harm our business and cause the market price of our
common stock to decline.
Because we recognize subscription revenues over the term of the contract, fluctuations in new sales and renewals may not be immediately reflected in
our operating results and may be difficult to discern.
We generally recognize subscription revenues from customers ratably over the terms of their contracts. Most of the subscription revenues we report
on each quarter are derived from the recognition of deferred revenue relating to subscriptions and the PCS (as defined below) component of term-based
license contracts entered into during previous quarters. Consequently, a decline in new or renewed subscriptions and/or term-based licenses in any single
quarter would likely have only a small impact on our revenues for that quarter. However, such a decline would negatively affect our revenues in future
quarters. Accordingly, the effect of significant downturns in sales and market acceptance of our platform, delays in our sales cycles as a result of COVID-
19 and potential changes in our pricing policies, customer mix or rate of 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 as
incurred, while subscription revenues are recognized over the life of the customer agreement. As a result, increased growth in the number of our customers,
particularly large enterprise customers which tend to require larger upfront investment during the sales and implementation processes, could 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 difficult for us to
rapidly increase our revenues through additional sales in any period, as revenues from new customers must be recognized over the applicable subscription
term.
We have a history of cumulative losses, and we do not expect to be profitable for the foreseeable future.
We incurred net losses attributable to Coupa Software Incorporated of $379.0 million, $180.1 million, and $90.8 million in the fiscal years ended
January 31, 2022, 2021 and 2020, respectively. We had an accumulated deficit of $894.9 million at January 31, 2022. Our losses and accumulated deficit
reflect the substantial investments we made to acquire new customers, maintain existing customers and develop our platform. We expect our operating
expenses to increase in the future due to anticipated increases in sales and marketing expenses, research and development expenses, operations costs and
general and administrative costs, and, therefore, we expect our losses to continue for the foreseeable future. A significant contributor to each of these
categories of expense is stock compensation expense associated with equity awards that we grant to many of our employees at the time of hire and
thereafter on an annual basis. If we continue to grow at or near the pace at which our headcount increased during our 2022 fiscal year, we would expect our
stock compensation expenses likewise to increase at a similar pace in future periods. Furthermore, to the extent we are successful in gaining new
customers, we will also incur increased losses because many costs associated with acquiring new customers are generally incurred up front, while
subscription revenues are generally recognized ratably over the terms of the agreements (typically three years, although some customers commit for longer
or shorter periods). If we are unable to maintain consistent or increasing revenue or revenue growth or if our growth or growth forecasts fail to meet the
expectations of investors or securities analysts, the market price of our common stock could be volatile, and it may be difficult for us to achieve and
maintain profitability or maintain or increase cash flow on a consistent basis. Accordingly, we cannot assure you that we will achieve profitability in the
future, or that, if we do become profitable, we will sustain profitability or achieve our target margins on a mid-term or long-term basis.
If we are unable to maintain effective internal controls over financial reporting in the future, investors may lose confidence in the accuracy and
completeness 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 internal
controls. Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”) requires that we evaluate and determine the effectiveness of our internal
controls over financial reporting and provide a management report on the internal controls over financial reporting, which must be attested to by our
independent registered public accounting firm. If we have a material weakness in our internal controls over financial reporting (including in the control
environment of our acquired companies), we may not detect errors on a timely basis and our financial statements may be materially misstated. 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 are
effective, and additionally, our independent registered public accounting firm may not be able to formally attest to the effectiveness of our internal controls
over financial reporting.
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If in the future we identify material weaknesses in our internal controls over financial reporting (including in the control environment of our acquired
companies), 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 over
financial reporting are effective or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our
internal controls over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of
our common stock could be negatively affected, and we could become subject to investigations by the Securities and Exchange Commission (“SEC”),
Nasdaq or other regulatory authorities, which could require additional financial and management resources to address.
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. Accounting for revenue from sales of subscriptions to
software is particularly complex, is often the subject of intense scrutiny by the SEC and will evolve as FASB continues to consider applicable accounting
standards in this area. A change in accounting principles or interpretations could have a significant effect on our reported financial results for periods prior
and subsequent to such change. We may adopt new accounting standards retrospectively to prior periods and the adoption may result in an adverse change
to previously reported results. Additionally, the adoption of these standards may potentially require enhancements or changes in our systems and will
require significant time and cost on behalf of our financial management.
Government, Regulatory and Tax-Related Risks
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 and
suppliers. Federal, state and foreign government bodies and agencies have adopted, are considering adopting or may adopt laws and regulations regarding
the collection, use, storage and disclosure of personal information obtained from consumers and individuals, such as compliance with the Health Insurance
Portability and Accountability Act in the US and General Data Protection Regulation (“GDPR”) in the European Union (“EU”). The costs of compliance
with, and other burdens imposed by, such laws and 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 to significant fines, penalties or liabilities for any noncompliance with such privacy laws. Furthermore, privacy
concerns may cause our customers’ employees to resist providing the personal data necessary to allow our customers to use our platform effectively. Even
the perception of privacy concerns, whether or not valid, 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,
use and transmit demographic and personal information from their employees, customers and suppliers, which could reduce demand for our platform. For
example, the EU and many countries in Europe have stringent privacy laws and regulations, which may affect our ability to operate cost effectively in
certain European countries. In particular, the EU's GDPR contains numerous requirements , including robust obligations on data processors and heavier
documentation requirements for data protection compliance programs by companies. The GDPR also includes numerous privacy-related obligations for
companies operating in the EU, including greater control for data subjects (e.g., the “right to be forgotten”), data portability for EU consumers, data breach
notification requirements, and substantial fines. In particular, under the GDPR, fines of up to 20 million Euros or up to 4% of the annual global revenue of
the noncompliant company, whichever is greater, could be imposed for violations of certain of the GDPR’s requirements. Complying with the GDPR may
cause us 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-
compliance could result in proceedings against us by governmental entities, customers, data subjects or others. We may also experience difficulty retaining
or obtaining new European or multi-national customers due to the compliance cost, potential risk exposure, and uncertainty for these entities, and we may
experience significantly increased liability with respect to these customers pursuant to the terms set forth in our engagements with them. We may find it
necessary to establish systems in the EU to maintain personal data originating from the EU, which may involve substantial expense and distraction from
other aspects of our business. In the meantime, there could be uncertainty as to how to comply with EU privacy law, including with respect to transfers of
personal data from the EU. Many other countries around the world also continue expanding and strengthening their data protection laws.
33

In addition, California enacted the California Consumer Privacy Act of 2018 (“CCPA”), which took effect on January 1, 2020, and the California
Privacy Rights Act (“CPRA”), which expands upon the CCPA, was passed in the recent California election in November 2020 and comes into effect on
January 1, 2023, with a “lookback” period to January 1, 2022. This legislation broadly defines personal information, gives California residents expanded
privacy rights and protections, and provides for civil penalties for violations. Further, other U.S. states and federal lawmakers have adopted or are
considering adopting similar privacy laws that may have broad applicability. The effects of the CCPA and CPRA are, and any similar laws enacted may be,
potentially 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 are
uncertain, it is possible that these laws may be interpreted and applied in a manner that is inconsistent with our existing data management practices or the
features of our products and platform capabilities. If so, in addition to the possibility of fines, lawsuits, and other claims and penalties, we could be required
to fundamentally change our business activities and practices or modify our products and platform capabilities, which could have an adverse effect on our
business. 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 our
customers 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 are subject to the tax laws of various jurisdictions, which are subject to unanticipated changes and to interpretation, which could harm our future
results.
We are subject to income taxes in the United States and foreign jurisdictions, and our domestic and international tax liabilities are subject to the
allocation of expenses in differing jurisdictions. Our effective tax rate could be adversely affected by changes in the mix of earnings and losses in countries
with differing statutory tax rates, certain non-deductible expenses as a result of acquisitions, the valuation of deferred tax assets and liabilities, and changes
in 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 regulations
are subject to varying interpretations that change over time. Certain jurisdictions in which we did not collect such taxes may assert that such taxes are
applicable, 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 be
subject to income tax audits by many tax jurisdictions throughout the world, many of which have not established clear guidance on the tax treatment of
cloud-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 to
retain 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 to
interpretation and depends on our ability to operate our business in a manner consistent with our corporate structure. As we operate in numerous taxing
jurisdictions, the application of tax laws can also be subject to diverging and sometimes conflicting interpretations by tax authorities of these jurisdictions.
Our determination of our tax liability is subject to review by applicable United States and foreign tax authorities. Any adverse outcome of such a review
could harm our operating results and financial condition.
We may not be able to utilize a significant portion of our net operating loss or research tax credit carryforwards, which could adversely affect our
potential 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 for
federal 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 loss
carryforwards 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 by
more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws. As
of our initial public offering and our subsequent follow-on offering we have not had an ownership change that has triggered any material limitation on the
use of our tax attributes for purposes of Section 382 of the Code. Subsequent changes in our stock ownership, however, could cause an “ownership
change.” It is possible 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 tax attributes, which could adversely affect our potential profitability.
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Our customers include governmental agencies and entities (at both the federal, state and local level), and as a result we are subject to risks related to
government contracts and procurement regulations, as well as other challenges unique to governmental customers.
We derive a portion of our revenue from contracts with government organizations, and we believe the success and growth of our business will in
part depend on adding additional public sector customers. On March 10, 2022, we obtained authorization under the Federal Risk and Authorization
Management Program (“FedRAMP”), which promotes the adoption of secure cloud services across the federal government by providing a standardized
approach to security and risk assessment for cloud technologies and federal agencies. We believe this FedRAMP authorization will help us increase the
number of U.S. public sector customers we work with. Therefore, the loss of FedRAMP authorization could inhibit or preclude our ability to contract with
certain U.S. public sector customers. In addition, some customers may rely on our authorization under FedRAMP to help satisfy their own legal and
regulatory compliance requirements and our failure to maintain FedRAMP authorization would result in a breach under public sector contracts obtained on
the basis of such authorization, which could subject us to liability and result in reputational harm and/or adversely impact our results of operations and
financial condition.
Demand from government organizations is often unpredictable, and we cannot assure you that we will be able to maintain or grow our revenue
from the public sector. Sales to government entities are subject to substantial additional risks that may not be present in sales to other customers, including,
but not limited to, the following:
•
it can be more competitive, expensive and time consuming to sell to public sector customers as compared to other customer segments, often
requiring substantial upfront investment of time and resources without any assurance that such activities will result in a sale;
•
sales to the U.S. and other national governments, as well as state and local governments, may entail compliance with applicable certification and
audit requirements, including FedRAMP in the U.S., which are often difficult and costly to obtain and maintain, and failure to comply with such
requirements will limit or restrict the public sector customers we can engage with;
•
demand and payment for our services by public sector customers may be adversely impacted by public sector budgetary cycles, funding
authorizations and/or government shutdowns;
•
public sector contracts may be subject to challenge by other interested parties and such challenges, even if unsuccessful, can increase costs, cause
delays and defer implementation and revenue recognition;
•
public sector customers frequently engage in routine investigations and audits of government contractors’ administrative and operational
processes, and any adverse findings resulting from such could result in fines, civil or criminal liability, additional investigations or administrative
proceedings, damage to our reputation or restrictions on our ability to transact with public sector customers in the future; and
•
contracts with public sector customers can be difficult to negotiate and frequently require extension of terms that differ from our typical customer
arrangements, in some cases such terms may be more favorable than customarily provided under our standard commercial contracts (e.g.,
permitting early termination, pricing concessions or extended payment terms, public disclosure of sensitive information (such as pricing terms) or
inclusion of high liability in case of breaches).
In addition, we must comply with laws and regulations relating to the formation, administration, and performance of contracts with public sector
customers, including U.S. federal, state, and local governmental organizations, as well as foreign governmental organizations, which affect how we do
business with governmental agencies. Contracts with the U.S. government also subject us to certain regulatory and contractual requirements, including
expanded compliance obligations under the Federal Acquisition Regulations (“FARs”). Failure to comply with these requirements could subject us to
investigations, fines, and other penalties, which could have an adverse effect on our business, results of operations, and financial condition. For example,
the U.S. Department of Justice (the “DOJ”) and the General Services Administration (the “GSA”) have in the past pursued claims against and financial
settlements with vendors under the False Claims Act and other statutes related to pricing and discount practices and compliance with certain provisions of
GSA contracts for sales to the federal government. The DOJ and GSA continue to actively pursue such claims. Violations of certain regulatory and
contractual requirements could also result in us being suspended or debarred from future government contracting. Any of these outcomes could have a
material adverse effect on our reputation, revenue, results of operations, and financial condition. Any inability to address these risks and challenges could
reduce the commercial benefit to us or otherwise preclude us from conducting business with public sector customers.
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Risks Related to our Indebtedness
We have incurred substantial indebtedness that may decrease our business flexibility, access to capital, and/or increase our borrowing costs, and we
may still 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, which we refer to as the 2023
Notes, in June 2019, we issued $805 million aggregate principal amount of our 0.125% Convertible Senior Notes due 2025, which we refer to as the 2025
Notes, and in June 2020, we issued $1,380 million aggregate principal amount of our 0.375% Convertible Senior Notes due 2026, which we refer to as the
2026 Notes, which we collectively refer to as the Convertible Notes. As of January 31, 2022, we had $1,720.6 million in total long-term liabilities,
comprised primarily of $1,614.3 million related to the carrying amount of the 2025 Notes and 2026 Notes. Our indebtedness 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 other
general 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 indentures governing the Convertible Notes do not restrict our ability to incur additional indebtedness and we and our subsidiaries may
incur substantial additional indebtedness in the future, subject to the restrictions contained in any future debt instruments existing at the time, some of
which may 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
we may 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 a fundamental 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 under
the Convertible Notes, depends on our future performance, which is subject to economic, financial, competitive, and other factors beyond our control. Our
business 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 obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital
markets and our financial condition at such time. For example, the Federal Reserve’s discount rate may increase, and/or other monetary policy may change,
which could ultimately result in higher short-term and/or long-term interest rates and could otherwise impact the general availability of credit. Higher
prevailing interest rates and/or a tightening supply of credit would adversely affect the terms upon which we would be able to refinance our indebtedness, if
at all. As a result, we may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on
our debt obligations.
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 of
a “fundamental change” (as defined in the indentures governing the Convertible Notes (the “indentures”)) before the maturity date at a repurchase price
equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest, if any. In addition, upon conversion of
the Convertible Notes, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering
any fractional share), we will be required to make cash payments in respect of the Convertible Notes being converted. However, we may not have enough
available cash or be able to obtain financing at the time we are required to make repurchases of Convertible Notes surrendered therefor or pay cash with
respect to Convertible Notes being converted.
36

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 their
Convertible Notes at any time during specified periods at their option. If one or more holders elect to convert their Convertible Notes, unless we elect to
satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we
would be required to settle a portion or all of our conversion obligation in cash, which could adversely affect our liquidity. As disclosed in Note 10,
“Convertible Senior Notes” in the notes to our consolidated financial statements, the conditional conversion feature of the 2023 Notes and the 2025 Notes
was triggered as of January 31, 2022.
In addition, even if certain holders of Convertible Notes do not elect to convert their Convertible Notes, we could be required under applicable
accounting rules 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 a material reduction of our net working capital.
The accounting method for convertible debt securities that may be settled in cash, such as the Convertible Notes, could have a material effect on our
reported financial results.
Under Accounting Standards Codification 470-20, Debt with Conversion and Other Options (“ASC 470-20”), an entity must separately account
for the liability and equity components of the convertible debt instruments (such as the Convertible Notes) that may be settled entirely or partially in cash
upon conversion 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
the equity component is required to be included in the additional paid-in capital section of stockholders’ equity on our consolidated balance sheet at the
issuance date and the value of the equity component would be treated as debt discount for purposes of accounting for the debt component of the
Convertible Notes. 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 value of 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 financial results because ASC 470-20 will require interest to include the amortization of the debt discount, which could adversely affect our reported
or future financial results, the trading price of our common stock and the trading price of the Convertible Notes.
In addition, under certain circumstances, convertible debt instruments (such as the Convertible Notes) that may be settled entirely or partly in cash
may be accounted for utilizing the treasury stock method, the effect of which is that the shares issuable upon conversion of such Convertible Notes are not
included in the calculation of diluted earnings per share except to the extent that the conversion value of such Convertible Notes exceeds their principal
amount. Under the treasury stock method, for diluted earnings per share purposes, the transaction is accounted for as if the number of shares of common
stock that would be necessary to settle such excess, if we elected to settle such excess in shares, are issued. In August 2020, the Financial Accounting
Standards Board issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in
Entity’s Own Equity (Subtopic 815-40) to amend current accounting standards to eliminate the treasury stock method for convertible instruments and
instead require application of the “if-converted” method. Under that method, diluted earnings per share will generally be calculated assuming that all the
Convertible Notes are converted solely into shares of common stock at the beginning of the reporting period, unless the result would be anti-dilutive. The
application of the if-converted method may change previously reported per share results. See Note 2 “Significant Accounting Policies — Recent
Accounting Guidance” in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
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 call
transactions are expected generally to reduce or offset the potential dilution upon conversion of the Convertible Notes and/or offset any cash payments we
are 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 likely
purchased shares of our common stock and/or entered into various derivative transactions with respect to our common stock concurrently with or shortly
after the pricing of the Convertible Notes. These financial institutions or their respective affiliates may modify their hedge positions by entering into or
unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary
market transactions following the pricing of the Convertible Notes and prior to the maturity of the Convertible Notes (and are likely to do so during any
observation period 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
common stock or the Convertible Notes.
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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 on
market 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 their
Convertible 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 of
our common stock upon conversion of any of the Convertible Notes. The Convertible Notes are currently convertible and may from time to time in the
future be convertible at the option of their holders prior to their scheduled terms under certain circumstances. Any sales in the public market of the common
stock issuable upon such conversion could adversely affect prevailing market prices of our common stock. In addition, the existence of the Convertible
Notes may encourage short selling by market participants because the conversion of the Convertible Notes could be used to satisfy short positions, or
anticipated conversion 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 Stock
Our stock price has been subject to fluctuations, and will likely continue to be subject to fluctuations and decline, due to factors beyond our control and
you 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. These
factors, as well as the volatility of our common stock, could affect the price at which our convertible noteholders could sell the common stock received
upon conversion of the Convertible Notes and could also impact the trading price of the Convertible Notes. Since shares of our common stock were sold in
our initial public offering in October 2016 at a price of $18.00 per share, the reported high and low sales prices of our common stock have ranged from
$22.50 to $377.04 through January 31, 2022. The market price of our common stock may fluctuate significantly in response to numerous factors, many of
which are beyond our control, including:
•
price and volume fluctuations in the overall stock market from time to time, including fluctuations due to general economic uncertainty and
negative market sentiment;
•
our operating performance and the performance of other similar companies;
•
announcements of new and changes in our existing projected or target operating results and key metrics that we provide to the public, as well
as those published by research analysts that follow our stock, our failure to meet or exceed these projections or targets or changes in
recommendations by securities analysts;
•
changes in our financial, operating or other metrics, regardless of whether we consider those metrics as reflective of the current state or long-
term prospects of our business, and how those results compare to securities analyst and investor expectations, including whether those results
fail to meet, exceed, or significantly exceed such expectations;
•
failure of security analysts to initiate or maintain coverage of our company;
•
announcements of technological innovations, pricing changes, new software or enhancements to services, acquisitions, strategic alliances or
significant agreements by us or by our competitors;
•
announcements of our intent to conduct debt or equity financings or repurchases, redemptions, conversions or the like;
•
the sale or availability for sale of a large number of shares of our common stock in the public market;
•
disruptions in our services due to computer hardware, software or network problems, including significant security breaches;
•
announcements of customer additions and customer cancellations or delays in customer purchases;
•
the level of success achieved with respect to international expansion and expected timeframes for realization of the related beneficial impact
on operating results;
•
the impact of integrated acquired businesses and technologies on our operating results in the short-term and the expected impact in the
medium- and long-term;
•
recruitment or departure of key personnel;
38

•
the economy as a whole, including changes to fiscal and monetary policy of the Federal Reserve, market conditions in our industry and the
industries of our customers;
•
extraordinary expenses such as litigation or other dispute-related expenses or settlement payments;
•
developments with respect to patent and proprietary rights;
•
conversion of the Convertible Notes;
•
the impact of the COVID-19 pandemic, including on the global economy, our results of operations, enterprise software spending and
business continuity;
•
the size of our market float;
•
environmental, social, governance, ethical, and other issues impacting our brand; and
•
any other factors discussed in this Annual Report.
The stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity
securities of many technology companies. Stock prices of many technology companies have fluctuated in a manner unrelated or disproportionate to the
operating performance of those companies. In the past, stockholders have filed securities class action litigation following periods of market volatility. If we
were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business
and adversely affect our business. In addition, because we award restricted stock units (RSUs) to many of our employees as part of their total compensation
package, and the value of those RSUs depends directly on our stock price, a sharp or prolonged decline in our stock price may make it more difficult for us
to retain our employees or result in us granting more awards in the aggregate to retain our employees.
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 our
common 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
the United 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
which they 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, including as a result of the conversion of the outstanding Convertible Notes, could cause the market price of our common stock to decline or make
it more difficult for our stockholders to sell 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 or equity 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 volume restrictions of Rule 144, the shares issued upon exercise of outstanding stock options, settlement of
outstanding restricted stock units, or conversion of the Convertible 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 and
upon conversion of the Convertible Notes, the issuance of which will dilute the ownership interests of existing stockholders. Any sales in the public market
of 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 of
our common stock and the trading price of the Convertible Notes.
39

If securities or industry analysts do not continue to publish research or publish inaccurate or unfavorable research about our business, our stock price
and trading 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 our
business. If industry analysts cease coverage of us, the trading price for our common stock and the trading price of the Convertible Notes will be negatively
affected. If one or more of the analysts who cover us downgrade our common stock or publish inaccurate or unfavorable research about our business or if
our results fall short of the projected results published by one or more research analyst, our common stock price and the trading price of the Convertible
Notes will likely decline. If one or more of these analysts ceases coverage of us or fail to publish reports on us regularly, demand for our common stock
could decrease, which might cause our common stock price and trading volume, and the trading price of 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 as
those of our competitors, and perception of our offerings in the marketplace may be significantly influenced by these reviews. We have no control over
what these industry analysts report, and because industry analysts may influence current and potential customers, our brand could be harmed if they do not
provide a 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 and
expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. Consequently, stockholders, including holders of
our Convertible Notes who receive shares of our common stock upon conversion of the Convertible Notes, must rely on sales of their common stock after
price 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 (“Restated
Bylaws”), and provisions in the indentures for our Convertible Notes could make a merger, tender offer or proxy contest difficult, thereby depressing
the trading 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 a
change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person
becomes an interested stockholder, even if a change of control would be beneficial to our existing stockholders. In addition, our Restated Certificate and
Restated 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 the
membership 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, including
preferences 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 the
resignation, 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 our
stockholders;
•
the requirement that a special meeting of stockholders be called only by a majority vote of our entire board of directors, the chairman of our
board of directors or our chief executive officer, which could delay the ability of our stockholders to force consideration of a proposal or to
take action, including to remove directors;
•
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 voting
stock, voting together as a single class, to amend the provisions of our Restated Certificate relating to the management of our business or our
Restated Bylaws, which may inhibit the ability of an acquiror to effect such amendments to facilitate an unsolicited takeover attempt; and
40

•
advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be
acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect
the 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 large
stockholders, 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 its certificate 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 applicable
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 its Convertible Notes in connection with such make-whole fundamental change. These features of the Convertible Notes may make a potential
acquisition more expensive for a potential acquiror, which may in turn make it less likely for a potential acquiror to offer to purchase our company, or
reduce the amount of consideration offered for each share of our common stock in a potential acquisition. Furthermore, the indentures prohibit us from
engaging in certain mergers or acquisitions 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, indentures and in Delaware law could deter or prevent a
third party from acquiring us or could make it more difficult for stockholders or potential acquirors to obtain control of our board of directors or initiate
actions 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 limit
opportunities 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
and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or
employees.
Our Restated Certificate provides that the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or
proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the Delaware
General Corporation 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
our directors, officers or other employees and may discourage these types of lawsuits. Alternatively, if a court were to find the choice of forum provision
contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we might incur additional costs
associated with resolving such action in other jurisdictions. For the avoidance of doubt, these choice of forum provisions may not apply to suits brought to
enforce a duty or liability created by the Securities Act, the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
We are subject to state laws in California that impose gender and diversity requirements for boards of directors of public companies headquartered in
California.
In September 2018, California enacted Senate Bill No. 826 (“SB 826”), requiring public companies with principal executive offices in California
to maintain certain female representation on their boards of directors. Additionally, on September 30, 2020, California enacted Assembly Bill No. 979
(“AB 979”), requiring public companies with principal executive offices in California to maintain board membership with members from an
underrepresented community based on ethnicity and sexual orientation.
As of January 31, 2022, we were not in full compliance with SB 826 or AB 979. While we are working diligently to remediate this non-
compliance, we cannot assure that we will be successful in recruiting and/or retaining members of the board and meet the requirements of SB 826 or AB
979. Non-compliance with either SB 826 or AB 979 may cause certain investors to divert their holdings in our securities and expose us to financial
penalties and/or reputational harm, and could result in fines imposed by the California Secretary of State.
41

General Risks
We have incurred and will continue to incur significantly increased costs and devote substantial management time as a result of operating as a public
company.
As a public company, we have incurred and will continue to incur significant legal, accounting and other expenses. For example, we are subject to
the reporting requirements of the Securities Exchange Act of 1934, as amended, and are required to comply with the applicable requirements of the
Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules and regulations subsequently implemented by
the SEC and the Nasdaq Global Select Market, including the establishment and maintenance of effective disclosure and financial controls and changes in
corporate governance practices. Compliance with these requirements has increased our legal and financial compliance costs and made some activities more
time consuming and costly. In addition, our management and other personnel need to divert attention from operational and other business matters to devote
substantial time to these public company requirements. In particular, we are incurring significant expenses and devoting substantial management effort
toward ensuring ongoing compliance with the requirements of Section 404 of the Sarbanes-Oxley Act. We have hired and may need to continue to hire
additional accounting and financial staff with appropriate public company experience and technical accounting knowledge and maintain an internal audit
function. We cannot predict or estimate the amount of additional costs we may incur as a result of being a public company.
The rules and regulations applicable to public companies make it more expensive for us to obtain and maintain director and officer liability
insurance and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more
difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee,
and qualified executive officers.
Climate change may have a long-term negative impact on our business.
Risks related to rapid climate change and increased regulation regarding environmental, social and governance (“ESG”) matters may have an
increasingly adverse impact on our business. While we seek to mitigate our business risks associated with climate change (such as drought, wildfires,
hurricanes, increased storm severity and sea level rise), we recognize that there are inherent climate-related risks wherever business is conducted. The
frequency and impact of climate-related events have the potential to disrupt our business, the business of our customers and third-party suppliers, and may
increase our costs or cause us to experience losses in order to operate the business. Additionally, we may be subject to increased regulations, reporting
requirements, standards or expectations regarding the environmental impacts of our business, including, for example with respect to greenhouse gas
emissions and/or water and waste management.
Coupa is committed to sustainable business practices and strives for positive impacts in not just environmental matters, but also social and
governance practices. For a discussion of Coupa’s ESG impact, please see the Environmental, Social, and Governance (“ESG”) Impact section.
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
in April 2024.
We have additional domestic offices in Ann Arbor, Boca Raton, Boston, Chicago, Cincinnati, Denver, New York, Pittsburgh, Reno, San Diego,
Seattle, St. Louis and Somerville. We also have international offices in Australia, Canada, China, France, Germany, India, Ireland, Japan, Singapore,
Sweden, Switzerland, United Arab Emirates and the United Kingdom. We may further expand 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.
Please refer to Note 11, “Commitments and Contingencies” to the Company’s consolidated financial statements for the disclosure of the Company’s
legal proceedings.
Item 4. Mine Safety Disclosures.
Not applicable.
42

PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information for
Common Stock
Our common stock is traded on the Nasdaq Global Select Market under the symbol “COUP.”
Holders
As of January 31, 2022 there were 72 registered stockholders of record of our common stock and we believe a substantially greater number of
beneficial owners who hold shares through brokers, banks or other nominees.
Dividends
We 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 capital
stock in the foreseeable future. We currently intend to retain all available funds and any future earnings to support operations and to finance the growth and
development of our business. Any future determination to pay dividends will be made at the discretion of our board of directors subject to applicable laws
and will depend upon, among other factors, our results of operations, financial condition, contractual restrictions and capital requirements. Our future
ability to 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 Securities
(a) Sales of Unregistered Securities
In connection with our acquisition of Pana Industries Inc. (“Pana”) in February 2021, we issued a total of 23,822 shares of common stock to two
Pana shareholders that are subject to service-based vesting conditions, including continued employment. The issuance of these shares was made pursuant to
an exemption from registration under the Securities Act of 1933, as amended, available under Section 4(a)(2), in privately negotiated transactions not
involving any public offering or solicitation.
Performance Graph
The following shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by
reference 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
Composite Index 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, in our common stock. Data for the Nasdaq Composite Index and the Nasdaq Computer Index assume reinvestment of dividends. Our offering
price of our common stock in our IPO, which had a closing stock price of $33.28 on October 6, 2016, was $18.00 per share.
The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our
common stock.
43

Item 6. [Reserved]
44

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 consolidated
financial 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
assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-
looking statements. Factors that could cause or contribute to these differences include, but are not limited to, impacts on our business and general
economic conditions due to the current COVID-19 pandemic, those identified below, those discussed in “Note About Forward-Looking Statements” and
those discussed in the section titled “Risk Factors” under Part I, Item 1A in this Annual Report on Form 10-K.
This section of this Form 10-K generally discusses fiscal 2022 and 2021 items and year-to-year comparisons between fiscal 2022 and 2021.
Discussions of fiscal 2020 items and year-to-year comparisons between fiscal 2021 and fiscal 2020 that are not included in this Form 10-K can be found in
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form
10-K for the fiscal year ended January 31, 2021.
Overview
We are a leading provider of Business Spend Management (“BSM”) solutions. We offer a comprehensive, cloud-based BSM platform that has
connected our customers with more than seven million suppliers globally. Our platform provides greater visibility into and control over how companies
spend money, optimize supply chains, and manage liquidity. Using our platform, businesses are able to achieve real, measurable value and savings that
drive their profitability.
We refer to the process companies use to purchase goods and services as business spend management and to the money that they manage with this
process as spend under management. Our BSM platform delivers a broad range of capabilities that would typically require the purchase and use of multiple
disparate point applications. The core of our platform consists of procurement, invoicing, expense management, and payment solutions that form the
transactional engine for managing a company’s business spend. In addition, our platform offers specialized solutions targeted for power users, to help
companies manage more technical and strategic areas of BSM, including areas such as strategic sourcing, contract management, contingent workforce,
supplier risk management, supply chain design and planning, treasury management, and spend analysis.
We also provide purchasing programs, such as Coupa Advantage, which offers access to pre-negotiated discounts from various suppliers, and
Source Together, which connects community members to engage in group sourcing events, allowing them to leverage pooled buying power to achieve
better contracting terms and capture greater savings. Moreover, through our Coupa Open Business Network, suppliers of all sizes can list their goods and
services, establish pricing, and interact 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 a set of common functions available to the majority of their licensed employees, as well as incremental solutions for select employees and
procurement specialists, whom we refer to as power users. Therefore, we are typically able to capture a majority of the expected annual recurring revenue
opportunity at the inception of our customer relationships, rather than targeting specific power users at the outset of the customer relationship with the
intention of expanding and capturing more annual recurring revenue at later stages of the customer relationship. Customers can rapidly implement our
platform, with implementation periods 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
sizes and industries and no significant customer concentration. No single customer accounted for more than 10% of our total revenues for the years ended
January 31, 2022, 2021 and 2020, respectively.
We market our platform primarily through a direct sales force and also benefit from leveraging the referral resources of our partner ecosystem. Our
initial contract terms are typically three years, although some customers commit for longer or shorter periods. The large majority of our customers pay
annually, one year in advance. Our subscription fee includes access to our service, technical support and management of the hosting infrastructure. We
generally recognize revenues from our subscription fees ratably over the contractual term of the arrangement. We do not charge suppliers who are on our
platform to transact with our customers. We believe this approach helps attract more suppliers to our platform and increases the value of our platform to
customers.
45

We have continued to make significant expenditures and investments for long-term growth, including investment in our platform and
infrastructure to deliver new functionality and solutions to meet the evolving needs of our customers and to take advantage of our market opportunity. We
intend to continue to increase our investment in sales and marketing, as we further expand our sales teams, increase our marketing activities, and grow our
international operations. Internationally, we currently offer our platform in Europe, the Middle East and Africa, Latin America and Asia-Pacific, including
Japan. The combined revenues from non-U.S. regions, as determined based on the billing address of our customers, constituted 40%, 38% and 36%,
respectively, of our total revenues for the years ended January 31, 2022, 2021 and 2020. We believe there is further opportunity to increase our international
revenues in absolute dollars and as a percentage of our total revenues. As a result, we are increasingly investing in our international operations 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
political risks that are different from those in the United States. While we are gaining additional experience with international operations, our international
expansion efforts may not be successful in creating additional demand for our platform outside of the United States or in effectively selling subscriptions to
our platform in any or all of the international markets we enter.
The extent to which the COVID-19 pandemic may impact our financial condition or results of operations in future periods remains uncertain. The
effect of the COVID-19 pandemic may not be fully reflected in our results of operations and overall financial performance until future periods. We may
experience decreased customer demand, reduced customer spend, customer bankruptcies and other non-payment situations, shorter contract duration,
longer sales cycles and extended payment terms, any of which could materially adversely impact our business, results of operations and overall financial
performance in future periods. The extent and continued impact of the COVID-19 pandemic on our operational and financial performance will depend in
part on future developments and conditions, including the duration and spread of the outbreak and ongoing variants; government responses to the
pandemic; the impact on our customers and our sales cycles; extent of delays in hiring and onboarding new employees; and effect on our partners, vendors
and supply chains, all of which are uncertain and difficult to predict. The spread of COVID-19 has also caused us to modify our business practices.
Working remotely has made our workforce more reliant on certain cloud-based communication and collaboration services, and any disruption to these
services would likely have an adverse impact on employee productivity. The impact, if any, of these and any additional operational changes we may
implement is uncertain, but changes we have implemented to date have not materially impaired and are not expected to materially impair our ability to
maintain operations, including financial reporting systems, internal control over financial reporting and disclosure controls and procedures. See the section
“Risk Factors” for further discussion of the possible impact of the COVID-19 pandemic on our business.
Recent Business Developments
In February 2021, we acquired all of the equity interest in Pana Industries, Inc. (“Pana”), a corporate travel booking solution company. The
purchase consideration was approximately $48.5 million in cash (of which $7.1 million is being held in escrow for fifteen months after the transaction
closing date). In addition, we issued 23,822 shares of unvested common stock with an approximate fair value of $7.6 million to two of Pana's shareholders.
These shares are subject to service-based vesting conditions including continued employment with us.
In March 2021, we established a joint venture with Japan Cloud Computing L.P. and M30 LLC in Japan (“Coupa K.K.”). This joint venture is
intended to enable us to support the growing number of Japanese companies looking to gain greater efficiency and agility through BSM. As of January 31,
2022, we had a 51% controlling ownership interest in the joint venture.
In fiscal 2022, we announced the launch of Coupa Ventures, a fund to foster innovation in BSM. Coupa Ventures will invest in early and growth-
stage companies that we believe are breaking down inefficiencies in how businesses manage their spend, aligning processes and decisions across supply
chain, procurement, and finance. As of January 31, 2022, we have invested a total of approximately $10.0 million principal amount in portfolio companies.
46

Our Business Model
Our business model focuses on maximizing the lifetime value of a customer relationship, and we continue to make significant investments in order
to grow our customer base. Due to our subscription model, we recognize subscription revenues ratably over the term of the subscription period. As a result,
the profitability 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. In
general, the associated upfront costs with respect to new customers are higher in the first year than the aggregate revenues we recognize from those new
customers in the first year. We believe that, over time, as our customer base grows and a relatively higher percentage of our subscription revenues are
attributable to renewals versus new customers or upsells to existing customers, associated sales and marketing expenses and other allocated upfront costs as
a percentage of revenues will decrease, subject to investments we plan to make in our business. Over the lifetime of the customer relationship, we also
incur sales and marketing costs to manage the account, renew or upsell the customer to more solutions and more users. However, these costs are
significantly less than the costs initially incurred to acquire the customer. We calculate the lifetime value of our customers and associated customer
acquisition costs for a particular year by comparing (i) gross profit from net new subscription revenues for the year multiplied by the inverse of the
estimated subscription renewal rate to (ii) total sales and marketing expense incurred in the preceding year. On this basis, we estimate that for each of fiscal
2022 and 2021, the calculated lifetime value of our customers has exceeded six times the associated cost of acquiring them. Other companies may calculate
lifetime value and customer acquisition costs differently than our chosen method and, therefore, may not be directly comparable.
Key Metrics
We review the following key metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business
plans and make strategic decisions:
As of January 31,
2022
2021
2020
Cumulative spend under management (in billions)
$
3,340.2 
$
2,359.3 
$
1,655.2 
Remaining performance obligations (in millions)
$
1,283.7 
$
952.3 
$
724.9 
Deferred revenue (in millions)
$
491.4 
$
361.9 
$
261.8 
Trailing twelve months calculated billings (in millions)
$
854.8 
$
641.7 
$
468.9 
Customers with annualized subscription revenue above $100,000
1,370
1,082
813
Cumulative Spend Under Management
Cumulative spend under management represents the aggregate dollar value of transactions through our core platform for all of our customers
collectively since we launched our core platform. We define our core platform for purposes of this metric as our procurement, invoicing and expense
management modules. We calculate this metric by aggregating the actual transaction data for purchase orders, invoices and expenses from customers using
our core platform. Cumulative spend under management does not include spending data or transactions associated with modules from acquired companies.
We regularly review our process for calculating this metric and periodically make adjustments to improve its accuracy. We believe that any such
adjustments are immaterial unless otherwise stated.
 
The cumulative spend under management metric presented above does not directly correlate to our revenue or results of operations because we do
not generally charge our customers based on actual usage of our core platform. However, we believe the cumulative spend under management metric does
illustrate the adoption, scale and value of our platform, which we believe enhances our ability to maintain existing customers and attract new customers.
Remaining Performance Obligations and Deferred Revenue
Remaining performance obligations represent the amount of consideration allocated to unsatisfied performance obligations related to non-
cancelable contracts, which includes both the deferred revenue balance and amounts that will be invoiced and recognized as revenue in future periods. In
calculating the remaining performance obligation amount, we elected to apply the two expedients under the revenue standard to exclude remaining
performance obligations amounts related to contracts that are twelve months or less and contracts where revenue is being recognized under the as-invoiced
method.
We generally execute multiple year subscription contracts for our platform and invoice an initial amount at contract signing followed by
subsequent annual invoices. At any point in the contract term, there might be amounts that are not due for billing yet. These amounts are not recorded in
our consolidated financial statements, and are considered to be part of the remaining performance obligations amount.
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The remaining performance obligations amount is intended to provide visibility into future revenue streams. We expect remaining performance
obligations to fluctuate up or down from period to period for several possible reasons, including amounts, timing, and duration of customer contracts
(including changes that we may see to customer contracts as a result of the COVID-19 pandemic), as well as the timing of billing cycles for each order.
Our deferred revenue consists of non-cancelable amounts that have been invoiced but not yet recognized as revenues as of the end of a reporting
period. The majority of our deferred revenue balance consists of subscription revenues that are recognized ratably over the related contractual period. 
Trailing Twelve Months Calculated Billings
Trailing twelve months calculated billings represents total revenues recognized during the period of consecutive twelve months ended January 31,
2022 and 2021 plus the change in deferred revenue for each of those same periods. Trailing twelve month calculated billings is comprised of subscription
contracts with existing customers (including renewal contracts and add-on contracts), subscription contracts with new customers, term-based license
contracts, and contracts for professional services, training and other revenues.
The trailing twelve months calculated billings is intended to provide information about our subscription revenue growth over time, and can
typically be seen as an early indicator of trends in revenue growth. While trailing twelve months calculated billings can increase as our revenues grow, it
may fluctuate up or down from period to period for several reasons, including amounts, timing, and duration of customer contracts, as well as the timing of
billing cycles for each order.
Customers with Annualized Subscription Revenue Above $100,000
We define customers with annualized subscription revenue above $100,000 as the total number of customers that contributed subscription
revenues in excess of $25,000 during the relevant fiscal quarter, which corresponds to $100,000 on an annualized basis. For purposes of this metric, we
generally define a customer as a separate and distinct entity (such as a company or an educational or government institution), a distinct business unit of a
large corporation or a partner organization, in each case that has a distinctive active contract with us to access our services. Most of the subscription
revenue we recognize each quarter is attributable to customers that accounted for more than $25,000 of that revenue during the quarter, and our sales and
marketing strategy focuses heavily on the acquisition of customers that have the potential to contribute at least $100,000 in subscription revenues
annually. Accordingly, we believe that this metric is a useful tool to aid investors in understanding a key factor that drives changes in our subscription
revenues from period to period and in assessing trends in our growth, penetration of our core customer market, and our overall performance. Because the
dollar threshold is tied to the actual revenue recognized during a particular quarter, customers that we acquired midway through or at the end of the quarter
may not yet be included in this count, even if they have placed orders representing more than $100,000 in annual subscription revenue. 
Components of Results of Operations
Revenues
We primarily offer subscriptions to our cloud-based BSM platform, including procurement, invoicing and expense management and pay. We
derive our revenues primarily from subscription fees, professional services fees and other.
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. Term-based licenses are sold as bundled arrangements that include the rights to a term license and post-contract customer
support (“PCS”). Accordingly, we allocate the transaction price to each performance obligation. The revenues related to the amount allocated to PCS are
included in subscription revenue, which are recognized ratably over the contract term beginning on the license delivery date. Professional services fees and
other include deployment services, optimization services, training, and revenues allocated to license component for the sales of term-based licenses.
Subscription revenues are a function of renewal rates, the number of customers, the number of users at each customer, the number of solutions subscribed
to by each customer, and the price of our solutions.
Generally, subscription fees are recognized ratably as revenues over the contract term beginning on the date the application is made available to
the customer. Our new business subscriptions typically have a term of three years, although some customers commit for longer or shorter periods. We
generally invoice our customers in annual installments at the beginning of each year in the subscription period. Amounts that have been invoiced are
initially recorded as deferred revenue and are recognized ratably over the subscription period. Amounts that will be invoiced and recognized as revenue in
future periods are reflected as remaining performance obligations within the notes to our consolidated financial statements.
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Professional services revenues and other consist primarily of fees associated with the implementation and configuration of our subscription service
and revenues allocated to the license component for sales of term-based licenses. Professional services are generally sold on a time-and-materials or fixed-
fee basis. Revenue for both time-and-material and fixed-fee arrangements are recognized over-time as the services are performed. We have the ability to
reasonably measure progress towards completion of the professional services arrangements. For fixed-fee and time-and-material arrangements, we
recognize revenue on the basis of performed hours relative to the total estimated hours to complete satisfaction of the professional service arrangement. For
the license component from the sales of term-based licenses, we recognize revenues at the start of the license term when delivery is complete.
Our professional services engagements typically span from a few weeks to several months. For this reason, our professional services revenues may
fluctuate significantly from period to period. The terms of our typical professional services arrangements provide that our customers pay us within 30 days
from the invoice date. Fixed-fee services arrangements are generally invoiced in advance. We have made significant investments in our professional
services business that are designed to ensure customer success and adoption of our platform. We are continuing to invest in expanding our professional
services partner ecosystem to further support our customers. As the professional services practices of our partner firms continue to develop, we expect them
to increasingly contract directly with our subscription customers and we incentivize our sales force to further this objective.
Cost of Revenues
Subscription
Cost of subscription consists primarily of expenses related to hosting our service and providing customer support. Significant expenses are
comprised 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; and amortization of acquired developed technology and capitalized software
development costs.
Professional Services and Other Cost of Revenues
Cost of professional services and other cost of revenues consist primarily of personnel and related costs directly associated with our professional
services and training departments, including salaries, benefits, bonuses and stock-based compensation; the costs of contracted third-party vendors,
amortization of acquired developed technology; and allocated 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
accrued over the requisite service period.
Operating Expenses
Research and Development
Research and development expenses consist primarily of personnel costs of our development team, including salaries, benefits, bonuses, stock-
based compensation expense and allocated overhead costs. Our cycle of frequent updates has facilitated rapid innovation and the introduction of new
solutions throughout our history. We have aggressively invested, and intend to continue to invest, in developing technology to support our growth. We
capitalize certain software development costs that are attributable to developing new solutions and features and adding incremental functionality to our
platform, and we amortize such costs as costs of subscription revenues over the estimated life of the new application or incremental functionality, which is
typically three years.
Sales and Marketing
Sales and marketing expenses consist primarily of personnel and related costs directly associated with our sales and marketing staff, including
salaries, benefits, bonuses, commissions and stock-based compensation. Commissions earned by our sales force that are considered incremental costs for
obtaining a non-cancelable subscription contract are deferred and amortized over a period of benefit that we have determined to be five years. For
commissions earned from the sale of term-based license contracts, we allocate the costs of commission in proportion to the allocation of the transaction
price of license and PCS performance obligations. Commissions associated with the license component are expensed at the time the related revenue is
recognized. Commissions allocated to PCS are deferred and then amortized over five years. Other sales and marketing costs include promotional events to
promote our brand, including our Inspire conferences, web advertising, television media, events, allocated overhead and amortization of customer
relationships and trademark.
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General and Administrative
General and administrative expenses consist of personnel costs and related expenses for executive, finance, legal, human resources, recruiting, and
administrative personnel, including salaries, benefits, bonuses and stock-based compensation expense; professional fees for external legal, accounting,
recruiting and other consulting services and allocated overhead costs. During fiscal 2021, general and administrative expenses included a benefit of $12.5
million related to the reversal of the Yapta contingent consideration payable. Refer to the Company’s consolidated financial statements for the year ended
January 31, 2021 for details of the contingent consideration payable.
Interest Expense
Interest expense consists primarily of interest expense associated with our outstanding convertible senior notes.
Other Income (Expense), Net
Other income (expense), net consists primarily of interest income earned on our investments in marketable securities and cash and cash
equivalents, and gain or loss on conversion of convertible senior notes, in addition to the effects of exchange rates on our foreign currency-denominated
asset and liability balances which are recorded as foreign currency gains (losses) in the consolidated statements of operations. 
Benefit From Income Taxes
Benefit from income taxes is primarily related to the reversal of U.S. and foreign deferred tax liabilities as a result of current year intangible and
convertible note original issue discount amortization, foreign excess tax benefits related to stock-based compensation, and remeasurement of deferred tax
assets due to tax rate changes in the UK, partially offset by income taxes related to foreign and state jurisdictions in which we conduct business. We
maintain a full valuation allowance on net deferred tax assets of our U.S. entities as we have concluded that it is not more likely than not that the deferred
assets will be utilized.
50

Results of Operations
The following tables set forth selected consolidated statements of operations data and such data as a percentage of total revenues for each of the
periods indicated:
For the year ended January 31,
2022
2021
2020
(in thousands, except percentages)
Revenues:
Subscription
$
634,034 
87 % $
470,341 
87 % $
345,261 
89 %
Professional services and other
91,255 
13 
71,302 
13 
44,458 
11 
Total revenues
725,289 
100 
541,643 
100 
389,719 
100 
Cost of revenues:
Subscription
209,799 
29 
147,374 
27 
89,452 
23 
Professional services and other
103,437 
14 
74,327 
14 
49,764 
13 
Total cost of revenues
313,236 
43 
221,701 
41 
139,216 
36 
Gross profit
412,053 
57 
319,942 
59 
250,503 
64 
Operating expenses:
Research and development
166,486 
23 
133,842 
25 
93,089 
24 
Sales and marketing
327,786 
45 
236,312 
44 
155,216 
40 
General and administrative
161,865 
22 
116,341 
21 
75,623 
19 
Total operating expenses
656,137 
90 
486,495 
90 
323,928 
83 
Loss from operations
(244,084)
(34)
(166,553)
(31)
(73,425)
(19)
Interest expense
(122,741)
(16)
(91,271)
(17)
(37,658)
(10)
Other income (expense), net
(4,883)
(1)
13,321 
2 
9,316 
2 
Loss before benefit from income taxes
(371,708)
(51)
(244,503)
(46)
(101,767)
(27)
Benefit from income taxes
(2,602)
— 
(64,386)
(12)
(10,935)
(3)
Net loss
(369,106)
(51)
(180,117)
(34)
(90,832)
(24)
Net loss attributable to redeemable non-controlling interests
(1,063)
— 
— 
— 
— 
— 
Adjustment attributable to redeemable non-controlling interests
10,996 
1 
— 
— 
— 
— 
Net loss attributable to Coupa Software Incorporated
$
(379,039)
(52)% $
(180,117)
(34)% $
(90,832)
(24)%
Fiscal Years Ended January 31, 2022 and 2021
Revenues
For the year ended
January 31,
% Change
2022
2021
(in thousands)
Subscription
$
634,034 
$
470,341 
35 %
Professional services and other
91,255 
71,302 
28 %
Total revenues
$
725,289 
$
541,643 
34 %
Total revenues were $725.3 million for the fiscal year ended January 31, 2022 compared to $541.6 million for the fiscal year ended January 31,
2021, an increase of $183.6 million, or 34%. Subscription revenues were $634.0 million, or 87% of total revenues, for the fiscal year ended January 31,
2022, compared to $470.3 million, or 87% of total revenues, for the fiscal year ended January 31, 2021. This increase in absolute dollars was
predominantly driven by the increase in the number of customers with annualized subscription revenue above $100,000, which was 1,370 as of January 31,
2022, compared to 1,082 as of January 31, 2021. Professional services and other revenues were $91.3 million for the fiscal year ended January 31, 2022
compared to $71.3 million for the fiscal year ended January 31, 2021. The increase of $20.0 million, or 28%, was primarily due to increases in
implementation services provided to our customers.
We will continue to monitor the COVID-19 pandemic carefully and its impact on our customers and customer acquisitions.
51

Cost of Revenues
For the year ended
January 31,
% Change
2022
2021
(in thousands)
Subscription
$
209,799 
$
147,374 
42 %
Professional services and other
103,437 
74,327 
39 %
Total cost of revenues
$
313,236 
$
221,701 
41 %
Cost of subscription was $209.8 million for the fiscal year ended January 31, 2022 compared to $147.4 million for the fiscal year ended
January 31, 2021, an increase of $62.4 million, or 42%. The increase in cost of subscription was primarily due to an increase of $27.7 million in
amortization of developed technology assets related to acquisitions, an increase of $12.5 million in employee compensation costs related to higher
headcount, including stock-based compensation costs, an increase of $8.9 million in hosting fees to accommodate increased customer spend, an increase of
$6.2 million in software costs to manage our platform, an increase of $2.7 million in amortization of capitalized development costs, and an increase of $4.4
million in third party services and other costs driven by our overall growth.
Cost of professional services was $103.4 million for the fiscal year ended January 31, 2022, compared to $74.3 million for the fiscal year ended
January 31, 2021, an increase of $29.1 million, or 39%. The increase in cost of professional services was primarily due to an increase of $16.7 million in
employee compensation costs related to higher headcount, including stock-based compensation costs, an increase of $11.1 million in amortization of
developed technology assets related to acquisitions, an increase of $2.8 million in other costs driven by our overall growth, partially offset by a decrease of
$1.5 million in third party implementation services.
We will continue to monitor the COVID-19 pandemic carefully and its impact on our cost profile in providing hosting solutions and services to
our customers.
Gross Profit
For the year ended
January 31,
% Change
2022
2021
(in thousands)
Gross profit
$
412,053 
$
319,942 
29 %
Gross profit was $412.1 million for the fiscal year ended January 31, 2022, compared to $319.9 million for the fiscal year ended January 31, 2021,
an increase of $92.1 million, or 29%. Gross margin was 57% for the fiscal year ended January 31, 2022, compared to 59% for the fiscal year ended
January 31, 2021. The decrease in gross margin was primarily due to the increase in amortization of developed technology assets related to acquisitions.
Operating Expenses
Research and Development
For the year ended
January 31,
% Change
2022
2021
(in thousands)
Research and development
$
166,486 
$
133,842 
24 %
Research and development expenses were $166.5 million for the fiscal year ended January 31, 2022 compared to $133.8 million for the fiscal year
ended January 31, 2021, an increase of $32.6 million, or 24%. The increase was primarily due to an increase of $27.3 million in employee compensation
costs related to higher headcount, including stock-based compensation costs, an increase of $2.8 million in hosting fees, and an increase of $2.5 million in
other costs driven by our overall growth.
52

Sales and Marketing
For the year ended
January 31,
% Change
2022
2021
(in thousands)
Sales and marketing
$
327,786 
$
236,312 
39 %
Sales and marketing expenses were $327.8 million for the fiscal year ended January 31, 2022, compared to $236.3 million for the fiscal year
ended January 31, 2021, an increase of $91.5 million, or 39%. The increase was primarily due to an increase of $40.3 million in employee compensation
costs related to higher headcount, including stock-based compensation costs, an increase of $31.9 million in amortization of customer relationship assets
related to acquisitions, an increase of $12.5 million primarily related to advertising campaigns and marketing events, and an increase of $6.8 million in
other costs driven by our overall growth.
General and Administrative
For the year ended
January 31,
% Change
2022
2021
(in thousands)
General and administrative
$
161,865 
$
116,341 
39 %
General and administrative expenses were $161.9 million for the fiscal year ended January 31, 2022 compared to $116.3 million for the fiscal year
ended January 31, 2021, an increase of $45.5 million, or 39%. The increase was primarily due to an increase of $29.9 million in employee compensation
costs related to higher headcount, including stock-based compensation costs, a non-recurring prior year benefit of $12.5 million arising from the reversal of
the Yapta contingent consideration liability, an increase of $4.4 million in third party services, such as recruiting expenses and legal service fees, an
increase of $2.0 million in other costs driven by our overall growth, partially offset by a release of allowances for credit losses of $3.3 million.
Interest Expense
For the year ended
January 31,
% Change
2022
2021
(in thousands)
Interest expense
$
122,741 
$
91,271 
34 %
Interest expense was $122.7 million for the fiscal year ended January 31, 2022, compared to $91.3 million for the fiscal year ended January 31,
2021. The $31.5 million increase in interest expense was primarily due to amortization of the debt discount and issuance costs on the 2026 Notes issued in
the middle of the second quarter of fiscal 2021.
Other Income (Expense), Net
For the year ended
January 31,
% Change
2022
2021
(in thousands)
Other income (expense), net
$
(4,883)
$
13,321 
N/M
Other expense, net was $4.9 million for the fiscal year ended January 31, 2022 compared to other income, net of $13.3 million for the fiscal year
ended January 31, 2021. The fluctuation of $18.2 million was primarily due to $9.2 million in unfavorable fluctuations related to foreign currency
exchange rates, a decrease of $5.5 million in income earned from our investments in marketable securities and money market funds primarily as a result of
a lower market yield and reduced amount of investments, a decrease of $3.5 million in gains from early conversions on the 2023 Notes.
53

Benefit From Income Taxes
For the year ended
January 31,
% Change
2022
2021
(in thousands)
Benefit from income taxes
$
(2,602)
$
(64,386)
(96)%
The benefit from income taxes was $2.6 million for the fiscal year ended January 31, 2022, compared to a tax benefit of $64.4 million for the
fiscal year ended January 31, 2021. The $61.8 million decrease in benefit from income taxes was primarily due to the significant income tax benefits
recorded in fiscal 2021 related to acquisitions completed during the year. We maintain a full valuation allowance on net deferred tax assets of our U.S.
entity as we have concluded that it is not more likely than not that the deferred tax assets will be utilized.
Fiscal Years Ended January 31, 2021 and 2020
For a comparison of our results of operations for the fiscal years ended January 31, 2021 and 2020, see Item 7, Management’s Discussion and
Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the fiscal year ended January 31, 2021, filed with the
SEC on March 18, 2021.
Liquidity and Capital Resources
Our principal sources of liquidity are cash, cash equivalents, marketable securities, and cash generated from operations. As of January 31, 2022,
we had cash and cash equivalents of $506.5 million, and marketable securities of $223.0 million.
Our cash equivalents are comprised primarily of bank deposits and money market funds. Cash from operations could be affected by various risks
and uncertainties, including, but not limited to, the effects of the COVID-19 pandemic and other risks detailed in Part I, Item 1A titled “Risk Factors.”
However, we believe our existing cash and cash equivalents and marketable securities will be sufficient to meet our projected operating requirements for at
least the next 12 months from the filing of this Annual Report.
Our material cash requirements from known contractual and other obligations consists of our Convertible Notes, obligations under operating
leases for office space, and contractual purchase obligations for hosting services and other services to support the Company's business operations.
We had outstanding 2023 Notes, 2025 Notes and 2026 Notes with principal amounts of $1.8 million, $805.0 million and $1,380.0 million,
respectively, as of January 31, 2022. We have the ability to settle the Convertible Notes in cash, shares of our common stock, or a combination of cash and
shares of our common stock at our own election. As of January 31, 2022, there were no unsettled conversion requests. It is our current intent to settle
conversions of the remaining 2023 Notes, 2025 Notes and 2026 Notes through combination settlement, which involves repayment of the principal portion
in cash and any excess of the conversion value over the principal amount in shares of our common stock.
In conjunction with the issuance of the Convertible Notes, we entered into capped call transactions that reduce our exposure to additional cash
payments above principal balances in the event of a cash conversion of the Convertible Notes. We may owe additional cash to the noteholders upon early
conversion if our stock price exceeds $63.821 per share for the 2023 Notes, $295.550 for the 2025 Notes, or $503.415 for the 2026 Notes. Although our
incremental exposure to the additional cash payment above the principal amount of the Convertible Notes is reduced by the capped calls, conversion of the
Convertible Notes by noteholders and our related settlement of any portion thereof in shares of our common stock may cause dilution to the ownership
interests of existing stockholders. As of January 31, 2022, all the capped calls for the 2023 Notes, 2025 Notes and 2026 Notes remained outstanding.
We lease office space under non-cancelable operating leases with various expiration dates through February 2030. As of January 31, 2022, the
value of our current and noncurrent operating lease obligations was approximately $15.7 million and $34.9 million, respectively. Our non-cancelable
purchase obligations consists of hosting services and other services that support our business operations. As of January 31, 2022, the value of our current
and noncurrent purchase obligations was approximately $44.5 million and $160.7 million, respectively. Information regarding our operating lease
obligations and contractual purchase obligations can be found in Note 11, “Commitments and Contingencies” in the notes to consolidated financial
statements included elsewhere in this Annual Report on Form 10-K.
54

Our future capital requirements will depend on many factors, including our pace of growth, subscription renewal activity, the timing and extent of
spend to support development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced services offerings and the
continuing market acceptance of our services. We continually assess potential acquisitions and expect to continue to pursue acquisitions of or investments
in complementary businesses, services and technologies and intellectual property rights. We may be required to seek additional equity or debt financing. In
the event that additional financing is required 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, our business, operating results and financial condition would be adversely affected.
Operating Activities
Cash provided by operating activities for the fiscal year ended January 31, 2022 was $168.1 million compared to $78.2 million for the year ended
January 31, 2021. This increase was primarily driven by cash collections from customers.
Investing Activities
Cash used in investing activities for the fiscal year ended January 31, 2022 of $12.7 million was primarily related to $47.3 million in cash used for
acquisitions, $13.9 million for the purchases of property and equipment, and $10.0 million for other investments, partially offset by $58.5 million of net
cash receipts from purchases, maturities and sales of short-term marketable securities.
Financing Activities
Cash provided by financing activities for the fiscal year ended January 31, 2022 of $27.5 million was primarily due to approximately $31.1
million of proceeds from the issuance of common stock under the ESPP and exercise of stock options, and $2.2 million of cash received from the non-
controlling shareholder of Coupa K.K., partially offset by $5.8 million of repayments for the conversions of the 2023 Notes.
Critical Accounting Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have
been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported
revenues generated and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors
that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and
liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are more fully described in Note 2 “Significant Accounting Policies” to our consolidated financial
statements, we believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies
relate to the more significant areas involving management’s judgments and estimates and therefore involve a greater degree of estimation uncertainty.
Revenue Recognition
We derive our revenues primarily from subscription fees, professional services fees and other. Revenues are recognized when control of these
services are transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those services. Revenues
are recognized net of applicable taxes imposed on the related transaction.
Subscription Revenues
We offer subscriptions to our cloud-based business spend management platform, including procurement, invoicing, and expense management.
Subscription revenues consist primarily of fees to provide our customers access to our cloud-based platform, which includes routine customer support.
Subscription contracts do not provide customers with the right to take possession of the software, are in general, non-cancelable, and do not contain general
rights of return. Generally, subscription revenues are recognized ratably over the contractual term of the arrangement, beginning on the date that the service
is made available to the customer. Subscription contracts typically have a term of three years with invoicing occurring in annual installments at the
beginning of each year in the subscription period.
Term-based licenses are sold as bundled arrangements that include the rights to a term license and post-contract customer support (“PCS”).
Accordingly, we allocate the transaction price to each performance obligation. The revenues related to the amount allocated to PCS are included in
subscription revenue, which are recognized ratably over the contract term beginning on the license delivery date.
55

Professional Services Revenues and Other
We offer professional services which primarily include deployment services, optimization services, and training. Professional services are
generally sold on a fixed-fee or time-and-materials basis. For services billed on a fixed-fee basis, invoicing typically occurs in advance, and revenue is
recognized over time based on the proportion performed. For services billed on a time-and-materials basis, revenue is recognized over time as services are
performed.
Term-based licenses are sold as bundled arrangements that include the rights to a term license and PCS. Accordingly, we allocates the transaction
price to each performance obligation. The revenues related to the amount allocated to term-based licenses are included in other revenue, which is
recognized at the start of the license term when delivery is complete.
Our contracts with customers often include promises to transfer multiple products and services to a customer. For these contracts, we account for
individual performance obligations separately if they are distinct. Subscription services, professional services, term-based licenses, and related post-
contract customer support are distinct performance obligations that are accounted for separately. In contracts with multiple performance obligations, we
assess each promise separately and allocate the transaction price on a relative standalone selling price (“SSP”) basis. Evaluating the terms and conditions
included within our customer contracts for appropriate revenue recognition and determining whether products and services are considered distinct
performance obligations that should be accounted for separately versus together may require significant judgement.
The determination of standalone selling price for each distinct performance obligation requires judgment. We determine SSP for performance
obligations based on overall pricing objectives, which take into consideration market conditions and entity-specific factors. This includes a review of
historical data related to the size of arrangements, the applications being sold, customer demographics and the numbers and types of users within the
arrangements. We use a range of amounts to estimate SSP for performance obligations. There is typically more than one SSP for individual products and
services due to the stratification of those products and services by considerations such as size and sales regions.
Deferred Commissions
Commissions are earned by sales personnel upon the execution of the sales contract by the customer, and commission payments are made shortly
after they are earned. Commission costs can be associated specifically with subscription, professional services, and license arrangements. Commissions
earned by our sales personnel are considered incremental and recoverable costs of obtaining a contract with a customer. These costs are deferred and then
amortized over a period of benefit of five years. Determining the period of benefit requires judgement for which we take into consideration our past
experience with customers, future cash flows expected from customers, industry peers and other available information.
Business Combinations
Accounting for business combinations requires our management to make significant estimates and assumptions at the acquisition date, including
estimated 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, expected costs to reproduce an asset or the determination of the useful life of finite-live
intangible assets. Although we believe the assumptions and estimates we have made in the past have been reasonable and appropriate, these estimates are
based on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. During the
measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with
the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities
assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements of operations.
Convertible Notes
We account for the issued convertible senior notes (“Convertible Notes”) as separate liability and equity components associated with the
conversion feature. The valuation of the conversion feature in the Convertible Notes involves estimation of the fair value of the liability component of the
Convertible Notes on a stand-alone basis. The fair value of the liability component is calculated by measuring the fair value of a similar liability that does
not have an associated convertible feature using a discounted cash flow model with a discount rate associated with each convertible note. In addition, for
the 2026 Notes, the Company also used lattice models to determine the discount rate. Determining discount rates require judgement, and the fair value of
the liability component is sensitive to changes in the discount rate.
Recent Accounting Pronouncements
Refer to Note 2, “Significant Accounting Policies” in the notes to consolidated financial statements included elsewhere in this Annual Report for
analysis of recent accounting pronouncements that are applicable to our business.
56

Non‑GAAP Financial Measures
In addition to our results determined in accordance with U.S. generally accepted accounting principles, or GAAP, we believe the following
non‑GAAP measures are useful in evaluating our operating performance:
•
Non-GAAP operating income;
•
Non-GAAP net income attributable to Coupa Software Incorporated; and
•
Adjusted free cash flows.
We regularly review and consider these measures when we evaluate our business and for internal planning and forecasting purposes.
The following tables provide a reconciliation of loss from operations to non‑GAAP operating income, from net loss attributable to Coupa
Software Incorporated to non-GAAP net income attributable to Coupa Software Incorporated, and from net cash provided by operating activities to
adjusted free cash flows (in thousands):
For the year ended January 31,
2022
2021
2020
(in thousands)
Loss from operations
$
(244,084)
$
(166,553)
$
(73,425)
Stock-based compensation
199,895 
168,850 
81,376 
Amortization of acquired intangible assets
133,542 
62,897 
23,976 
Change in fair value of contingent consideration payable
— 
(12,500)
— 
Non-GAAP operating income
$
89,353 
$
52,694 
$
31,927 
For the year ended January 31
2022
2021
2020
(in thousands)
Net loss attributable to Coupa Software Incorporated
$
(379,039)
$
(180,117)
$
(90,832)
Stock-based compensation
199,895 
168,850 
81,376 
Amortization of acquired intangible assets
133,542 
62,897 
23,976 
Change in fair value of contingent consideration payable
— 
(12,500)
— 
Amortization of debt discount and issuance costs
115,688 
86,541 
35,922 
Loss (gain) on conversion of convertible senior notes
357 
(3,154)
— 
Income tax effects and adjustments 
(18,245)
(66,792)
(13,826)
Adjustment attributable to redeemable non-controlling interests
10,996 
— 
— 
Non-GAAP net income attributable to Coupa Software Incorporated
$
63,194 
$
55,725 
$
36,616 
For the year ended January 31
2022
2021
2020
(in thousands)
Net cash provided by operating activities
$
168,090 
$
78,202 
$
68,156 
Less: purchases of property and equipment
(13,853)
(11,492)
(11,970)
Add: repayments of convertible senior notes attributable to debt discount
1,338 
27,409 
— 
Add: one-time payout of legacy unvested equity awards accelerated in conjunction with a business
combination
— 
19,428 
— 
Adjusted free cash flows
$
155,575 
$
113,547 
$
56,186 
(1)
During the fourth quarter of fiscal 2022, the Company identified that it had incorrectly calculated its quarterly non-GAAP income tax adjustment associated with the amortization of
acquired intangible assets. In the consolidated financial statements for the year ended January 31, 2022, the Company corrected the $2.3 million cumulative impact of such prior-period
error as an out-of-period adjustment.
(1)
57

We define non-GAAP operating income as loss from operations before stock-based compensation, amortization of acquired intangible assets, and
the change in fair value of contingent consideration related to an acquisition. We define non-GAAP net income attributable to Coupa Software Incorporated
as net loss attributable to Coupa Software Incorporated before stock-based compensation, amortization of acquired intangible assets, the change in fair
value of contingent consideration related to an acquisition, amortization of debt discount and issuance costs, gain or loss on conversion of convertible
senior notes, the adjustment attributable to redeemable non-controlling interests, and related tax effects, including non-recurring income tax adjustments.
We define adjusted free cash flows as net cash provided by operating activities, less purchases of property and equipment, plus repayments of convertible
senior notes attributable to debt discount, plus one-time payout of legacy unvested equity awards accelerated in conjunction with a business combination.
We believe non-GAAP operating income and non-GAAP net income attributable to Coupa Software Incorporated provide investors and other
users of our financial information consistency and comparability with our past financial performance and facilitate period to period comparisons of
operations. We believe non-GAAP operating income and non-GAAP net income attributable to Coupa Software Incorporated are also 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 between companies for reasons unrelated to overall operating performance.
We believe adjusted free cash flows provides useful information to investors because it is an indicator of our capital strength and liquidity, and we
also use it to measure performance of our business operations. We exclude repayment of convertible senior notes attributable to debt discount in calculating
this measure in part because our use of cash to satisfy this obligation (relating to the Convertible Notes) was discretionary, and we have the ability to satisfy
similar obligations in the near future through shares of our common stock, or a combination of cash and shares of our common stock, at our election.
However, you should bear in mind that this measure does not reflect any reduction for cash settlements of our debt obligations, nor does it represent our
residual cash flow available for discretionary expenditures. In calculating this metric, we also excluded one-time payout of legacy unvested equity awards
accelerated in conjunction with a business combination that occurred in November 2020, primarily because it was not a normal recurring cash operating
activity necessary for our business operations. In addition, other companies in our industry may calculate similarly titled measures differently than we do,
limiting their usefulness as comparative measures. Due to these and other limitations, you should not consider this non-GAAP measure in isolation or as a
substitute for analysis of other GAAP financial measures, such as net cash provided by operating activities.
We use non-GAAP operating income, non-GAAP net income attributable to Coupa Software Incorporated and adjusted free cash flows in
conjunction with traditional GAAP measures as part of our overall assessment of our performance and liquidity, including the preparation of our annual
operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning
our financial performance and liquidity. Our definitions may differ from the definitions used by other companies and therefore comparability may be
limited. In addition, other companies may not publish these or similar metrics. Thus, our non-GAAP operating income, non-GAAP net income attributable
to Coupa Software Incorporated and adjusted free cash flows should be considered in addition to, not as substitutes for, or in isolation from, 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 operating
income to loss from operations, non-GAAP net income attributable to Coupa Software Incorporated to net loss attributable to Coupa Software
Incorporated, and adjusted free cash flows to net cash provided by operating activities. We encourage investors and others to review our financial
information in its entirety, not to rely on any single financial measure and to view non-GAAP operating income, non-GAAP net income attributable to
Coupa Software Incorporated, and adjusted free cash flows in conjunction with loss from operations, net loss attributable to Coupa Software Incorporated,
and the consolidated statements of cash flows.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Foreign Currency Exchange Risk
Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the
Euro, British Pound Sterling, and Australian Dollar. We expect our international operations to continue to grow in the future and we are continually
monitoring our foreign currency exposure to determine whether and when we should begin a formal hedging program.
58

We performed a sensitivity analysis and determined that if an adverse 10% foreign currency exchange rate change was applied to total monetary
assets and liabilities denominated in currencies other than the functional currency at the balance sheet dates, it would have resulted in an adverse effect on
our net losses attributable to Coupa Software Incorporated of approximately $12.4 million and $7.8 million as of January 31, 2022 and 2021, respectively.
We expect our international operations to continue to grow in the near term and the effects of movements in currency exchange rates will increase as our
transaction volume outside of the United States increases. In addition, we will continue to monitor the COVID-19 pandemic carefully and its impact on our
foreign currencies. The majority of our agreements have been and we expect will continue to be denominated in U.S. dollars.
Market Risk and Market Interest Risk
In June 2020, we issued $1,380.0 million aggregate principal amount of 0.375% convertible senior notes due 2026. In June 2019, we issued
$805.0 million aggregate principal amount of 0.125% convertible senior notes due 2025. In January 2018, we issued $230.0 million aggregate principal
amount of 0.375% convertible senior notes due 2023, of which approximately $228.2 million aggregate principal amount had been settled by January 31,
2022. The 2026 Notes, 2025 Notes and 2023 Notes have fixed annual interest rates at 0.375%, 0.125% and 0.375%, respectively, and, therefore, we do not
have economic interest rate exposure on our Convertible Notes. However, the values of the Convertible Notes are exposed to interest rate risk. Generally,
the fair market value of our fixed interest rate Convertible Notes will increase as interest rates fall 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 convertible senior 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 Notes at face value less
unamortized discount and issuance costs on our balance sheet, and we present the fair value for disclosure purposes only.
Our exposure to interest rate risk also is related to our interest-bearing assets, primarily our cash and cash equivalents. Fluctuations in interest rates
impact the yield of the investment. A hypothetical 100 basis points increase in interest rates would have impacted interest income by $2.2 million and $3.1
million for the years ended January 31, 2022 and 2021, respectively.
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 and
notes 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 principal executive officer and our principal financial officer, evaluated the effectiveness of our
disclosure controls and procedures as of January 31, 2022. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e)
under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a
company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified
in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information
required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management,
including its 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, 2022, our principal executive officer and principal financial
officer concluded 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 Reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in
Exchange Act Rule 13a-15(f). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
59

Our management, including the principal executive officer and principal financial officer, conducted an evaluation of the effectiveness of our
internal control over financial reporting based on the Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework). Based on the results of this evaluation, our management concluded that our internal control over financial
reporting was effective as of January 31, 2022.
The effectiveness of our internal control over financial reporting as of January 31, 2022 has been audited by Ernst & Young LLP, an independent
registered 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, 2022 that has materially
affected, or is reasonably likely to materially affect, our internal control over financial reporting. We have not experienced any material impact to our
internal controls over financial reporting despite the fact that most of our employees are working remotely due to the COVID-19 pandemic.
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 internal
control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only
reasonable, 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
are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations
include 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. The
design 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 any
design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in
conditions, 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.
60

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
None.
61

PART III
Item 10. Directors, Executive Officers and Corporate Governance.
The information called for by this item will be set forth in our Proxy Statement for the 2022 Annual Meeting of Stockholders to be filed with the
SEC within 120 days of the fiscal year ended January 31, 2022 (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.
62

PART IV
Item 15. Exhibits, Financial Statement Schedules.
(a) Documents Filed with Report
(1) Financial Statements.
Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42)
F-2
Consolidated Balance Sheets as of January 31, 2022 and 2021
F-5
Consolidated Statements of Operations for the Years ended January 31, 2022, 2021 and 2020
F-6
Consolidated Statements of Comprehensive Loss for the Years ended January 31, 2022, 2021 and 2020
F-7
Consolidated Statements of Stockholders’ Equity for the Years ended January 31, 2022, 2021 and 2020
F-8
Consolidated Statements of Cash Flows for the Years ended January 31, 2022, 2021 and 2020
F-9
Notes to Consolidated Financial Statements
F-11
(2) Financial Statement Schedules.
Schedule II – Valuation and Qualifying Accounts
(in thousands)
Balance as of
beginning of year
Additions
Deductions
Balance as of end of
year
Year ended January 31, 2022
Allowance for credit losses
$
3,447 
$
552 
$
(3,780)
$
219 
Year ended January 31, 2021
Allowance for credit losses
$
61 
$
3,448 
$
(62)
$
3,447 
Year ended January 31, 2020
Allowance for credit losses
$
70 
$
76 
$
(85)
$
61 
Schedules not listed above have been omitted because the information required to be set forth therein is not applicable or is shown in the financial
statements or notes herein.
63

(3) Exhibits.
Incorporated by Reference
Exhibit No.
Description
Form
File No.
Exhibit
Filing Date
Filed
Herewith
2.1
Agreement and Plan of Merger by and among the Registrant,
Epic Merger Sub, Inc., Exari Group, Inc., and Beacon Equity
Partners, LLC, as stockholder representative.
8-K
001-37901
2.1
4/16/2019
2.2
Agreement and Plan of Merger and Reorganization, dated
November 2, 2020, by and among Coupa Software Incorporated,
Lloyd Merger Sub, Inc., Lloyd Merger Sub, LLC, Laurel Parent
Holdings, Inc. and TPG VII Laurel Holdings, L.P., as stockholder
representative.
8-K
001-37901
2.1
11/2/2020
3.1
Amended and Restated Certificate of Incorporation 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’ Rights Agreement, dated May
26, 2015, by and among the Registrant and the parties thereto.
S-1
333-213546
4.1
9/8/2016
4.2
Waiver of Notice and Registration Rights and Amendment to
Amended and Restated Investors Rights Agreement.
S-1/A
333-217105
4.1.2
4/10/2017
4.3
Indenture with respect to the Company’s 0.375% Convertible
Senior Notes due 2023, dated as of January 17, 2018, between
the Registrant and Wilmington Trust, National Association, as
trustee.
8-K
001-37901
4.1
1/18/2018
4.4
Indenture (including form of Note) with respect to the Company’s
0.125% Convertible Senior Notes due 2025, dated as of June 11,
2019, between the Registrant and Wilmington Trust, National
Association, as trustee.
8-K
001-37901
4.1
6/11/2019
4.5
Indenture (including form of Note) with respect to the Company’s
0.375% Convertible Senior Notes due 2026, dated as of June 15,
2020, between the Company and Wilmington Trust, National
Association, as trustee.
8-K
001-37901
4.1
6/16/2020
4.6
Registration Rights Agreement, dated November 2, 2020, by and
among Coupa Software Incorporated and certain equityholders of
Laurel Parent Holdings, Inc.
8-K
001-37901
2.2
11/2/2020
4.7
Description of the Registrant’s Securities Registered
Pursuant to Section 12 of the Securities Exchange Act of
1934.
10-K
001-37901
4.5
3/20/2020
10.1*
Form of Indemnification Agreement between the Registrant and
each of its directors and executive officers.
S-1/A
333-213546
10.1
9/23/2016
10.2*
2006 Stock Plan, as amended, and forms of agreements
thereunder.
S-1/A
333-213546
10.2
9/23/2016
10.3*
Registrant’s 2016 Equity Incentive Plan and forms of agreements
thereunder.
S-1/A
333-213546
10.3
9/23/2016
10.4*
Registrant’s 2016 Employee Stock Purchase Plan and 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
64

Incorporated by Reference
Exhibit No.
Description
Form
File No.
Exhibit
Filing Date
Filed
Herewith
10.6*
Offer Letter, dated May 19, 2016, and Severance and Change in
Control Agreement, between the Registrant and Robert
Bernshteyn.
S-1
333-213546
10.6
9/8/2016
10.6.1*
Amended and Restated Severance and Change of
Control Agreement, dated September 24, 2019, between
the Registrant and Robert Bernshteyn.
10-Q
001-37901
10.1
12/3/2019
10.7*
Offer Letter, dated May 19, 2016, and Severance and Change in
Control Agreement, between the Registrant and Todd Ford.
S-1
333-213546
10.8
9/8/2016
10.7.1*
Amended and Restated Severance and Change of Control
Agreement, dated September 30, 2019, between the Registrant
and Todd Ford.
10-Q
001-37901
10.4
12/3/2019
10.8*
Offer Letter, dated September 27, 2017, and Severance and
Change in Control Agreement, between the Registrant and Mark
Riggs.
10-K
001-37901
10.8
3/27/2019
10.8.1*
Amended and Restated Severance and Change of Control
Agreement, dated September 27, 2019, between the Registrant
and Mark Riggs.
10-Q
001-37901
10.2
12/3/2019
10.9*
Amended and Restated Offer Letter, dated April 26, 2021,
between the Registrant and Robert Glenn.
10-Q
001-37901
10.1
6/8/2021
10.9.1*
Severance and Change of Control Agreement, dated February 1,
2021, between the Registrant and Robert Glenn.
10-Q
001-37901
10.1.1
6/8/2021
10.10*
Amended and Restated Offer Letter, dated June 4, 2021, between
the Registrant and Anthony Tiscornia.
10-Q
001-37901
10.1
9/8/2021
10.10.1*
Severance and Change of Control Agreement, dated June 4, 2021,
between the Registrant and Anthony Tiscornia.
10-Q
001-37901
10.1.1
9/8/2021
10.11
Lease Agreement, dated March 20, 2014, among the
Registrant and Crossroads Associates and Clocktower
Associates, as amended.
S-1
333-213546
10.11
9/8/2016
10.11.1
Third Amendment, dated May 1, 2017, to the Lease Agreement
by and between the Registrant and BCSP Crossroads Property
LLC.
10-Q
001-37901
10.1
9/8/2017
10.12*
Compensation Program for Non-Employee Directors.
10-Q
001-37901
10.1
9/6/2018
10.13*
Revised Compensation Program for Non-Employee Directors.
10-Q
001-37901
10.1
12/8/2020
10.14
Form of Base Capped Call Confirmation with respect to the 2023
Notes.
8-K
001-37901
99.1
1/18/2018
10.15
Form of Additional Capped Call Confirmation with respect to the
2023 Notes.
8-K
001-37901
99.2
1/18/2018
10.16
Form of Base Capped Call Confirmation with respect to the 2025
Notes.
8-K
001-37901
99.1
6/11/2019
10.17
Form of Additional Capped Call Confirmation with respect to the
2025 Notes.
8-K
001-37901
99.2
6/11/2019
10.18
Form of Base Capped Call Confirmation with respect to the 2026
Notes.
8-K
001-37901
99.1
6/16/2020
10.19
Form of Additional Capped Call Confirmation with respect to the
2026 Notes.
8-K
001-37901
99.2
6/16/2020
10.20
Form of Director Confidentiality Agreement.
10-K
001-37901
10.14
3/28/2018
65

Incorporated by Reference
Exhibit No.
Description
Form
File No.
Exhibit
Filing Date
Filed
Herewith
21.1
List of Subsidiaries of Registrant.
X
23.1
Consent of Independent Registered Public Accounting Firm.
X
24.1
Power of Attorney (contained in the signature page to this
Annual Report on Form 10-K).
31.1
Certification of Principal Executive Officer Pursuant to Rules
13a-14(a) and 15d-14(a) under the Securities Exchange Act of
1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
X
31.2
Certification of Principal Financial Officer Pursuant to Rules 13a-
14(a) and 15d-14(a) under the Securities Exchange Act of 1934,
as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
X
32.1
Certification of Principal Executive Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
X
32.2
Certification of Principal Financial Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
X
101.INS
Inline XBRL Instance Document - the instance document does
not appear in the Interactive Data File because its XBRL tags are
embedded within the Inline XBRL document.
X
101.SCH
Inline XBRL Taxonomy Extension Schema Document.
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase
Document
X
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase
Document.
X
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document.
X
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase
Document
X
104
The cover page for the Company’s Annual Report on Form 10-
K for the year ended January 31, 2022, has been formatted in
Inline XBRL.
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.
66

SIGNATURES
Pursuant 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
on its behalf by the undersigned, thereunto duly authorized.
Coupa Software Incorporated
Date: March 16, 2022
By:
/s/ Robert Bernshteyn
Robert Bernshteyn
Chief Executive Officer, Director
and Chairman of the Board
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Robert
Bernshteyn and Anthony Tiscornia, 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 all capacities, 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 in connection 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 thing requisite 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 and confirming 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 the
Registrant in the capacities and on the dates indicated.
Name
Title
Date
/s/ Robert Bernshteyn
Chief Executive Officer and Director and
Chairman of the Board
March 16, 2022
Robert Bernshteyn
(Principal Executive Officer)
/s/ Anthony Tiscornia
Chief Financial Officer
March 16, 2022
Anthony Tiscornia
(Principal Financial Officer)
/s/ Maurizio Baratta
Chief Accounting Officer
March 16, 2022
Maurizio Baratta
(Principal Accounting Officer)
/s/ Michelle Brennan
Director
March 16, 2022
Michelle Brennan
/s/ Leslie Campbell
Director
March 16, 2022
Leslie Campbell
/s/ Roger Siboni
Director
March 16, 2022
Roger Siboni
/s/ Tayloe Stansbury
Director
March 16, 2022
Tayloe Stansbury
/s/ Scott Thompson
Director
March 16, 2022
Scott Thompson
/s/ Frank van Veenendaal
Director
March 16, 2022
Frank van Veenendaal
67

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42)
F-2
Consolidated Balance Sheets as of January 31, 2022 and 2021
F-5
Consolidated Statements of Operations for the Years ended January 31, 2022, 2021 and 2020
F-6
Consolidated Statements of Comprehensive Loss for the Years ended January 31, 2022, 2021 and 2020
F-7
Consolidated Statements of Stockholders’ Equity for the Years ended January 31, 2022, 2021 and 2020
F-8
Consolidated Statements of Cash Flows for the Years ended January 31, 2022, 2021 and 2020
F-9
Notes to Consolidated Financial Statements
F-11
F-1

Report of Independent Registered Public Accounting Firm
The Stockholders and Board of Directors of Coupa Software Incorporated
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Coupa Software Incorporated (the Company) as of January 31, 2022 and 2021, the
related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended
January 31, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated
financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as
of January 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2022, 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's
internal control over financial reporting as of January 31, 2022, based on criteria established in Internal Control - Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 16, 2022 expressed an unqualified
opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial
statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in 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 reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing
procedures to 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 included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or
required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2)
involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion
on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion
on the critical audit matter or on the account or disclosure to which it relates.
F-2

Revenue recognition - Identifying and evaluating terms and conditions in contracts
Description of the Matter
As discussed in Note 2 to the consolidated financial statements, the Company derives its revenues primarily from
subscription services fees, professional services fees and term-based licenses. The Company determines revenue
recognition following a five-step framework in line with ASC 606, Revenue from Contracts with Customers (Topic 606)
“ASC 606”. Management applies significant effort and judgment in identifying and evaluating any non-standard terms and
conditions in contracts which may impact revenue recognition.
Auditing revenue recognition was complex due to the significant amount of effort and judgment required in the
identification and evaluation of terms and conditions in contracts that impact revenue recognition.
How We Addressed the Matter
in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company's controls over
the internal review and assessment of terms and conditions within contracts that would impact revenue recognition in
accordance with ASC 606.
Our substantive procedures included, among others, testing the completeness and accuracy of management’s identification
and evaluation of terms and conditions within contracts, reading executed contracts for a sample of revenue transactions
and evaluating whether the Company appropriately applied its revenue recognition policy to the arrangements based on the
terms and conditions therein. We additionally assessed the appropriateness of the related disclosures in the consolidated
financial statements.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2015.
Redwood City, California
March 16, 2022
F-3

Report of Independent Registered Public Accounting Firm
The Stockholders and Board of Directors of Coupa Software Incorporated
Opinion on Internal Control over Financial Reporting
We have audited Coupa Software Incorporated’s internal control over financial reporting as of January 31, 2022, based on criteria established in Internal
Control - 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 of January 31, 2022, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2022
consolidated balance sheets of the Company as of January 31, 2022 and 2021, the related consolidated statements of operations, comprehensive loss,
stockholders’ equity and cash flows for each of the three years in the period ended January 31, 2022 and the related notes and schedule and our report dated
March 16, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our
responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance 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 and
evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control
over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Redwood City, California
March 16, 2022
F-4

COUPA SOFTWARE INCORPORATED
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
As of January 31,
2022
2021
Assets
Current assets:
Cash and cash equivalents
$
506,459 
$
323,284 
Marketable securities
223,032 
283,036 
Accounts receivable, net of allowances
226,191 
196,009 
Prepaid expenses and other current assets
38,270 
36,381 
Deferred commissions, current portion
21,096 
15,541 
Total current assets
1,015,048 
854,251 
Property and equipment, net
30,576 
28,266 
Deferred commissions, net of current portion
48,562 
36,832 
Goodwill
1,514,550 
1,480,847 
Intangible assets, net
510,663 
632,173 
Operating lease right-of-use assets
42,659 
41,305 
Other assets
31,121 
31,491 
Total assets
$
3,193,179 
$
3,105,165 
Liabilities, Redeemable Non-Controlling Interests, Other Temporary Equity and Stockholders’ Equity
Current liabilities:
Accounts payable
$
4,610 
$
4,831 
Accrued expenses and other current liabilities
79,160 
80,271 
Deferred revenue, current portion
468,783 
356,115 
Current portion of convertible senior notes, net (Note 10)
1,639 
609,068 
Operating lease liabilities, current portion
12,760 
11,222 
Total current liabilities
566,952 
1,061,507 
Convertible senior notes, net (Note 10)
1,614,257 
897,525 
Deferred revenue, net of current portion
22,655 
5,773 
Operating lease liabilities, net of current portion
31,172 
31,845 
Other liabilities
52,481 
67,915 
Total liabilities
2,287,517 
2,064,565 
Commitments and contingencies (Note 11)
Redeemable non-controlling interests (Note 3)
12,084 
— 
Other temporary equity (Note 10)
— 
369 
Stockholders’ equity:
Preferred stock, $0.0001 par value per share; 25,000,000 shares authorized at January 31, 2022 and 2021; zero
shares issued and outstanding at January 31, 2022 and 2021
— 
— 
Common stock, $0.0001 par value per share; 625,000,000 shares authorized at January 31, 2022 and 2021;
75,060,139 and 72,753,659 shares issued and outstanding as of January 31, 2022 and 2021, respectively
7 
7 
Additional paid-in capital
1,778,840 
1,556,865 
Accumulated other comprehensive income
9,643 
9,165 
Accumulated deficit
(894,912)
(525,806)
Total stockholders’ equity
893,578 
1,040,231 
Total liabilities, redeemable non-controlling interests, other temporary equity and stockholders’ equity
$
3,193,179 
$
3,105,165 
See Notes to Consolidated Financial Statements.
F-5

COUPA SOFTWARE INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
For the year ended
January 31,
2022
2021
2020
Revenues:
Subscription
$
634,034 
$
470,341 
$
345,261 
Professional services and other
91,255 
71,302 
44,458 
Total revenues
725,289 
541,643 
389,719 
Cost of revenues:
Subscription
209,799 
147,374 
89,452 
Professional services and other
103,437 
74,327 
49,764 
Total cost of revenues
313,236 
221,701 
139,216 
Gross profit
412,053 
319,942 
250,503 
Operating expenses:
Research and development
166,486 
133,842 
93,089 
Sales and marketing
327,786 
236,312 
155,216 
General and administrative
161,865 
116,341 
75,623 
Total operating expenses
656,137 
486,495 
323,928 
Loss from operations
(244,084)
(166,553)
(73,425)
Interest expense
(122,741)
(91,271)
(37,658)
Other income (expense), net
(4,883)
13,321 
9,316 
Loss before benefit from income taxes
(371,708)
(244,503)
(101,767)
Benefit from income taxes
(2,602)
(64,386)
(10,935)
Net loss
(369,106)
(180,117)
(90,832)
Net loss attributable to redeemable non-controlling interests
(1,063)
— 
— 
Adjustment attributable to redeemable non-controlling interests
10,996 
— 
— 
Net loss attributable to Coupa Software Incorporated
$
(379,039)
$
(180,117)
$
(90,832)
Net loss per share, basic and diluted, attributable to Coupa Software Incorporated
$
(5.13)
$
(2.63)
$
(1.45)
Weighted-average number of shares used in computing net loss per share, basic and diluted
73,816 
68,559 
62,484 
See Notes to Consolidated Financial Statements.
F-6

COUPA SOFTWARE INCORPORATED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
For the year ended
January 31,
2022
2021
2020
Net loss
$
(369,106)
$
(180,117)
$
(90,832)
Other comprehensive gain in relation to defined benefit plans, net of tax
693 
287 
119 
Changes in unrealized gain (loss) on marketable securities and non-marketable debt securities, net
of tax
241 
(484)
417 
Foreign currency translation adjustments, net of tax
(528)
8,491 
— 
Comprehensive loss
$
(368,700)
$
(171,823)
$
(90,296)
Less comprehensive loss attributable to redeemable non-controlling interests:
Net loss attributable to redeemable non-controlling interests
(1,063)
— 
— 
Foreign currency translation adjustments, net of tax, attributable to redeemable non-controlling
interests
(72)
— 
— 
Comprehensive loss attributable to redeemable non-controlling interests
(1,135)
— 
— 
Comprehensive loss attributable to Coupa Software Incorporated
$
(367,565)
$
(171,823)
$
(90,296)
See Notes to Consolidated Financial Statements.
F-7

COUPA SOFTWARE INCORPORATED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share amounts)
Common Stock
Additional Paid-
In Capital
Accumulated
Other
Comprehensive
Income
Accumulated
Deficit
Total
Stockholders'
Equity
Shares
Amount
Balance at January 31, 2019
60,455,381 $
6 $
567,797 $
335 $
(254,857) $
313,281 
Equity component of 2025 Notes, net of issuance costs
— 
— 
246,967 
— 
— 
246,967 
Purchase of capped calls
— 
— 
(118,738)
— 
— 
(118,738)
Cancellation of common stock issued from acquisitions
(7,784)
— 
— 
— 
— 
— 
Issuance of common stock for employee share purchase
plan
215,472 
— 
11,455 
— 
— 
11,455 
Exercise of stock options
2,712,063 
1 
17,419 
— 
— 
17,420 
Stock-based compensation expense
— 
— 
82,403 
— 
— 
82,403 
Vested restricted stock units
1,153,838 
— 
— 
— 
— 
— 
Temporary equity reclassification
— 
— 
(16,835)
— 
— 
(16,835)
Other comprehensive income
— 
— 
— 
536 
— 
536 
Net loss
— 
— 
— 
— 
(90,832)
(90,832)
Balance at January 31, 2020
64,528,970 
7 
790,468 
871 
(345,689)
445,657 
Issuance of common stock for acquisitions
2,849,537 
— 
668,026 
— 
— 
668,026 
Issuance of common stock for employee share purchase
plan
209,306 
— 
15,631 
— 
— 
15,631 
Exercise of stock options
1,615,784 
— 
19,245 
— 
— 
19,245 
Stock-based compensation expense
— 
— 
150,578 
— 
— 
150,578 
Vested restricted stock units
1,348,975 
— 
— 
— 
— 
— 
Equity component of 2026 Notes, net of issuance costs
— 
— 
501,053 
— 
— 
501,053 
Purchase of capped calls in relation to 2026 Notes
— 
— 
(192,786)
— 
— 
(192,786)
Settlement of 2023 Notes
2,201,087 
— 
(385,393)
— 
— 
(385,393)
Deferred tax related to convertible senior notes
— 
— 
(9,588)
— 
— 
(9,588)
Temporary equity reclassification
— 
— 
(369)
— 
— 
(369)
Other comprehensive income
— 
— 
— 
8,294 
— 
8,294 
Net loss
— 
— 
— 
— 
(180,117)
(180,117)
Balance at January 31, 2021
72,753,659 
7 
1,556,865 
9,165 
(525,806)
1,040,231 
Issuance of common stock for acquisitions
22,370 
— 
— 
— 
— 
— 
Issuance of common stock for employee share purchase
plan
156,810 
— 
21,626 
— 
— 
21,626 
Exercise of stock options
759,390 
— 
9,431 
— 
— 
9,431 
Stock-based compensation expense
— 
— 
200,830 
— 
— 
200,830 
Vested restricted stock units
1,235,810 
— 
— 
— 
— 
— 
Settlement of convertible senior notes (Note 10)
132,100 
— 
(348)
— 
— 
(348)
Temporary equity reclassification
— 
— 
369 
— 
— 
369 
Other comprehensive loss
— 
— 
— 
478 
— 
478 
Net loss attributable to Coupa Software Incorporated,
including adjustment to redeemable non-controlling
interests
— 
— 
(9,933)
— 
(369,106)
(379,039)
Balance at January 31, 2022
75,060,139 $
7 $
1,778,840 $
9,643 $
(894,912) $
893,578 
See Notes to Consolidated Financial Statements.
F-8

COUPA SOFTWARE INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the year ended
January 31,
2022
2021
2020
Cash flows from operating activities
Net loss attributable to Coupa Software Incorporated
$
(379,039)
$
(180,117)
$
(90,832)
Net loss and adjustment attributable to redeemable non-controlling interests (Note 3)
9,933 
— 
— 
Net loss
(369,106)
(180,117)
(90,832)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization
146,392 
72,105 
28,553 
Amortization of premium on marketable securities, net
377 
1,038 
325 
Amortization of deferred commissions
18,600 
14,704 
9,556 
Amortization of debt discount and issuance costs
115,688 
86,541 
35,922 
Stock-based compensation
199,895 
149,423 
81,376 
Loss (gain) on conversion of convertible senior notes
357 
(3,154)
— 
Repayments of convertible senior notes attributable to debt discount (Note 10)
(1,338)
(27,409)
— 
Other
(2,876)
3,761 
(1,381)
Changes in operating assets and liabilities net of effects from acquisitions:
Accounts receivable
(25,752)
(36,757)
(11,154)
Prepaid expenses and other current assets
(1,447)
2,954 
(16,380)
Other assets
23,266 
6,786 
9,176 
Deferred commissions
(35,906)
(24,157)
(26,231)
Accounts payable
(326)
(851)
(3,720)
Accrued expenses and other liabilities
(28,569)
(65,995)
(20,727)
Deferred revenue
128,835 
79,330 
73,673 
Net cash provided by operating activities
168,090 
78,202 
68,156 
Cash flows from investing activities
Purchases of marketable securities
(176,716)
(1,017,751)
(583,151)
Maturities of marketable securities
140,300 
396,595 
66,363 
Sale of marketable securities
94,916 
835,123 
199,314 
Acquisitions, net of cash acquired
(47,312)
(863,597)
(308,406)
Purchases of other investments
(10,000)
— 
— 
Purchases of property and equipment
(13,853)
(11,492)
(11,970)
Net cash used in investing activities
(12,665)
(661,122)
(637,850)
Cash flows from financing activities
Investment from redeemable non-controlling interests
2,223 
— 
— 
Proceeds from issuance of convertible senior notes, net of issuance costs
— 
1,355,066 
786,157 
Purchase of capped calls
— 
(192,786)
(118,738)
Repayments of convertible senior notes
(5,751)
(555,352)
— 
Proceeds from the exercise of common stock options
9,446 
19,232 
17,781 
Proceeds from issuance of common stock for employee stock purchase plan
21,626 
15,631 
11,455 
Net cash provided by financing activities
27,544 
641,791 
696,655 
Effects of foreign currency exchange rates on cash, cash equivalents, and restricted cash
(219)
438 
— 
Net increase in cash, cash equivalents, and restricted cash
182,750 
59,309 
126,961 
Cash, cash equivalents, and restricted cash at beginning of year
327,589 
268,280 
141,319 
Cash, cash equivalents, and restricted cash at end of period
$
510,339 
$
327,589 
$
268,280 
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets
Cash and cash equivalents
$
506,459 
$
323,284 
$
268,045 
Restricted cash included in other assets
3,880 
4,305 
235 
Total cash, cash equivalents, and restricted cash
$
510,339 
$
327,589 
$
268,280 
See Notes to Consolidated Financial Statements.
F-9

COUPA SOFTWARE INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the year ended
January 31,
2022
2021
2020
Supplemental disclosure of cash flow data
Cash paid for income taxes
$
5,006 
$
3,328 
$
2,294 
Cash paid for interest
$
6,195 
$
3,640 
$
1,489 
Supplemental disclosure of non-cash investing and financing activities
Issuance of common stock in connection with acquisitions
$
— 
$
668,026 
$
— 
Property and equipment included in accounts payable and accrued expenses and other current liabilities
$
632 
$
321 
$
337 
See Notes to Consolidated Financial Statements.
F-10

COUPA SOFTWARE INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Organization and Description of Business
The Company
Coupa 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 provides greater visibility into and control over how companies spend money. The BSM
platform enables 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 Policies
Basis of Presentation
The accompanying consolidated financial statements have been prepared using accounting principles generally accepted in the United States of
America (“GAAP”). The consolidated financial statements include the results of the Company and its wholly owned subsidiaries. All significant
intercompany transactions and balances have been eliminated during consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements
and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, management evaluates its significant estimates
including, but not limited to, the valuation of accounts receivable, the lives of tangible and intangible assets, the fair value of certain equity awards, the fair
value of contingent purchase consideration, the valuation of acquired intangible assets and the recoverability or impairment of intangible assets, including
goodwill, revenue recognition, redemption value of redeemable non-controlling interests, 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 that management believes to be reasonable under the circumstances. Actual results could differ from those estimates and such
differences could be material to the financial position and results of operations.
    
Foreign Currency Translation
The functional currency for the large majority of the Company's foreign operations is the U.S. dollar, while a few of its subsidiaries use the local
currency as their functional currency for the year ended January 31, 2022. In cases where the Company uses a foreign functional currency, the Company
translates the foreign functional currency financial statements to U.S. dollars using the exchange rates at the balance sheet date for assets and liabilities, the
period average exchange rates for revenues and expenses, and the historical exchange rates for equity. The effects of foreign currency translation
adjustments are recorded in other comprehensive income as a component of stockholders' equity and the related periodic movements are presented in the
consolidated statements of comprehensive loss. Foreign currency transaction gains and losses are included in other income (expense), net, in the
consolidated statements of operations for the period. For the years ended January 31, 2022, 2021 and 2020, realized foreign currency transaction gains and
losses were comprised of a net loss of $1.0 million, a net gain of $568,000, and a net loss of $523,000, respectively.
Risks and Uncertainties
The Company’s services are concentrated in an industry which is characterized by significant competition, rapid technological advances and
changes in customer requirements and industry standards. The success of the Company depends on management’s ability to anticipate and respond quickly
and adequately to technological developments in the industry and changes in customer requirements and industry standards. Any significant delays in the
development or introduction of services could have a material adverse effect on the Company’s business and operating results. Furthermore, the effects of
potential legal activity that could be brought against the Company, including costs incurred to defend legal cases, relationships with customers and market
perception, and the financial impact of any judicial decisions, could have 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
and Asia-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 the
current data center facilities. Even with these procedures for disaster recovery in place, cloud applications could be significantly interrupted during the
procedures to restore services.
F-11

Concentration of Risk and Significant Customers
Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents, marketable
securities, and accounts receivable. Cash deposits may, at times, exceed amounts insured by the Federal Deposit Insurance Corporation (“FDIC”) and the
Securities Investor Protection Corporation (“SIPC”). Marketable securities balances may, at times, also exceed SIPC limits. 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, 2022 or 2021.
During the years ended January 31, 2022, 2021 and 2020, revenues by geographic area, based on billing addresses of the customers, was as
follows (in thousands):
For the year ended
January 31,
2022
2021
2020
United States
$
436,079 
$
338,084 
$
248,107 
Foreign countries
289,210 
203,559 
141,612 
Total revenues
$
725,289 
$
541,643 
$
389,719 
No single foreign country represented more than 10% of the Company’s revenues in any of the periods presented.
Additionally, no single customer represented more than 10% of the Company’s revenues in any of the periods presented.
Fair Value Measurements
Fair 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
advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Subsequent changes in fair
value of these financial assets and liabilities are recognized in earnings or other comprehensive loss when they occur. When determining the fair value
measurements for assets and liabilities which are required to be recorded at fair value, the Company considers the principal or most advantageous market in
which the Company would transact and the market-based risk measurement or assumptions that market participants would use in pricing the assets or
liabilities, such as inherent 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 the
categorization 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, or
other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
•
Level 3 - Inputs that are generally unobservable and typically reflect management’s estimates of assumptions that market participants would
use in pricing the assets or liabilities.
Fair Value of Financial Instruments
The Company’s financial instruments primarily include cash and cash equivalents, marketable securities, trade receivables, accounts payable,
accrued liabilities, and convertible senior notes. Cash and cash equivalents, marketable securities, and contingent cash consideration payable are reported at
fair value. The recorded carrying amount of trade receivables, accounts payable, and accrued liabilities approximate their fair value due to their short-term
nature. The Company carries convertible senior notes at the allocated liability value less unamortized debt discount and issuance costs on its consolidated
balance sheet, and it presents the fair value of the convertible senior notes for disclosure purposes only.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with original maturities of less than three months from the date of purchase to be
cash equivalents. The Company’s cash and cash equivalents consist of monies held in bank demand deposits and money market funds and are presented at
fair market value based on quoted market prices.
F-12

Marketable Securities
Marketable securities consist of financial instruments such as U.S. treasury securities, U.S. agency obligations, corporate notes and bonds,
commercial paper, asset backed securities and certificates of deposit. The Company classifies marketable securities as available-for-sale at the time of
purchase and reevaluates such classification as of each balance sheet date. All marketable securities are recorded at estimated fair value. Credit losses
related to the marketable securities are recorded in other income (expense), net in the consolidated statements of operations through an allowance for credit
losses rather than as a reduction in the amortized cost basis of the securities. No credit losses related to marketable securities were recorded by the
Company during the years ended January 31, 2022 and 2021. Any remaining unrealized gains or losses for marketable securities are included in
accumulated other comprehensive income, a component of stockholders’ equity.
If quoted prices for identical instruments are available in an active market, marketable securities are classified within Level 1 of the fair value
hierarchy. If quoted prices for identical instruments in active markets are not available, fair values are estimated using quoted prices of similar instruments
and are classified within Level 2 of the fair value hierarchy.
Other Investments
Other investments consist of non-marketable debt and equity investments in privately-held companies without readily determinable fair values in
which the Company does not have a controlling interest or significant influence.
The Company records non-marketable debt investments at their estimated fair value on a recurring basis with changes in fair value recorded in
accumulated other comprehensive income, a component of stockholders’ equity.
The Company elected to apply the measurement alternative for non-marketable equity securities, measuring them at cost, less any impairment, and
adjustments resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.
These non-marketable debt and equity investments are included in other assets on the Company's consolidated balance sheets.
Research and Development Costs
Research and development costs are expensed as incurred. Research and development costs consist primarily of compensation related costs
incurred for the maintenance and bug fixing of the Company’s software platform, as well as planning, predevelopment and post implementation costs
associated with the development of enhancements to the Company’s software platform.
Capitalized Software Development Costs
The Company capitalizes certain development costs incurred in connection with software development for its cloud-based platform and software
used in operations. Costs incurred in the preliminary stages of development are expensed as incurred. Once the software has reached the development
stage, internal and external costs, if direct and incurred for adding incremental functionality to the Company’s platform, are capitalized until the software is
substantially complete and ready for its intended use. Capitalization ceases upon completion of all substantial testing. These software development costs
are recorded as part of property and equipment.
Capitalized software development costs are amortized on a straight-line basis to cost of revenues—subscription services over the technology’s
estimated useful life, which is generally three years. During the years ended January 31, 2022, 2021 and 2020, the Company capitalized $11.9 million,
$10.5 million and $8.4 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
functionality are expensed as incurred.
Advertising Costs
Advertising costs are expensed as incurred and are primarily included in sales and marketing expense in the accompanying consolidated
statements of operations. Advertising expense totaled $15.4 million, $7.7 million and $2.9 million for the years ended January 31, 2022, 2021 and 2020,
respectively.
F-13

Property and Equipment
Property and equipment are stated at cost net of accumulated depreciation and amortization. Depreciation is calculated using the straight-line
method over the estimated useful lives of the assets. Furniture and equipment is amortized over an estimated useful life of three to five years. Leasehold
improvements 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 in the consolidated statement of operations. Maintenance and repair costs are expensed as incurred.
Goodwill and Other Intangible Assets
Goodwill is the excess of costs over fair value of net assets of the business acquired. Goodwill and other intangible assets acquired that are
determined 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 of
accumulated amortization, and are amortized using the straight-line method. The Company assesses the impairment of long-lived intangible assets
whenever events 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
financial statements.
Revenue Recognition
The Company derives its revenues primarily from subscription fees, professional services fees and other. Revenues are recognized when control of
these services are transferred to the Company’s customers in an amount that reflects the consideration expected to be entitled to in exchange for those
services. Revenues are recognized net of applicable taxes imposed on the related transaction. The Company’s revenue recognition policy follows guidance
from 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 Revenues
The Company offers subscriptions to its cloud-based business spend management platform, including procurement, invoicing, expense
management and payment solutions. Subscription revenues consist primarily of fees to provide the Company’s customers access to its cloud-based
platform, which includes routine customer support. Subscription contracts do not provide customers with the right to take possession of the software, are in
general non-cancelable, and do not contain general rights of return. Generally, subscription revenues are recognized ratably over the contractual term of the
arrangement, beginning on the date that the service is made available to the customer. Subscription contracts typically have a term of three years with
invoicing occurring in annual installments at the beginning of each year in the subscription period.
Term-based licenses are sold as bundled arrangements that include the rights to a term license and post-contract customer support (“PCS”).
Accordingly, the Company allocates the transaction price to each performance obligation. The revenues related to the amount allocated to PCS are included
in subscription revenue, which are recognized ratably over the contract term beginning on the license delivery date.
F-14

Professional Services Revenues and Other
The Company offers professional services which primarily include deployment services, optimization services, and training. Professional services
are generally sold on a fixed-fee or time-and-materials basis. For services billed on a fixed-fee basis, invoicing typically occurs in advance, and revenue is
recognized over time based on the proportion performed. For services billed on a time-and-materials basis, revenue is recognized over time as services are
performed.
Term-based licenses are sold as bundled arrangements that include the rights to a term license and PCS. Accordingly, the Company allocates the
transaction price to each performance obligation. The revenues related to the amount allocated to term-based licenses are included in other revenue, which
is recognized at the start of the license term when delivery is complete.
Significant Judgments
The Company’s contracts with customers often include promises to transfer multiple products and services to a customer. For these contracts, the
Company accounts for individual performance obligations separately if they are distinct. Subscription services, professional services, term-based licenses,
and related PCS are distinct performance obligations that are accounted for separately. In contracts with multiple performance obligations, the transaction
price is allocated to separate performance obligations on a relative standalone selling price (“SSP”) basis.
The determination of SSP for each distinct performance obligation requires judgment. The Company determines SSP for performance obligations
based on overall pricing objectives, which take into consideration market conditions and entity-specific factors. This includes a review of historical data
related to the size of arrangements, the applications being sold, customer demographics and the numbers and types of users within the arrangements. The
Company uses a range of amounts to estimate SSP for performance obligations. There is typically more than one SSP for individual products and services
due to the stratification of those products and services by considerations such as size and sales regions.
Contract Balances
The timing of revenue recognition may differ from the timing of invoicing for contracts with customers. The Company records a receivable when
revenue is recognized prior to invoicing. Deferred revenue primarily consists of billings or payments received in advance of revenue recognition.
Subscription and fixed-fee professional services arrangements are commonly billed in advance, recognized as deferred revenue, and then amortized into
revenue over time. The Company's term-based license contracts are billed annually in advance, recognized as deferred revenue, and then recognized as
revenues upfront for the license component and ratably over the term license for the PCS component. However, other professional services arrangements,
primarily those recognized on a time-and-materials basis, are billed in arrears following services that have been rendered. In addition, for multi-year term-
based license contracts, the revenue allocated to license component is recognized upfront while the billing is on annual basis. This may result in revenue
recognition greater than invoiced amounts which results in a receivable balance. Receivables represent an unconditional right to payment. As of January 31,
2022 and 2021, the balance of accounts receivable, net of the allowance for credit losses, was $226.2 million and $196.0 million, respectively. Of these
balances, $13.9 million and $24.2 million represent unbilled receivable amounts as of January 31, 2022 and 2021, respectively. In addition, as of
January 31, 2022 and 2021, the balance of long-term unbilled receivables was approximately $1.9 million and $7.1 million, respectively, which are
included in other assets on the Company's consolidated balance sheet.
When the timing of revenue recognition differs from the timing of invoicing, the Company uses judgment to determine whether the contract
includes a significant financing component requiring adjustment to the transaction price. Various factors are considered in this determination including the
duration of the contract, payment terms, and other circumstances. Generally, the Company determined that contracts do not include a significant financing
component. The Company applies the practical expedient for instances where, at contract inception, the expected timing difference between when promised
goods or services are transferred and associated payment will be one year or less. Payment terms vary by contract type, however arrangements typically
stipulate 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 that
will be invoiced and recognized as revenue in future periods. As of January 31, 2022, approximately $1,283.7 million of the transaction price from
contracts with customers is allocated to the remaining performance obligations. The Company expects to recognize revenue on approximately three-fourths
of these remaining performance obligations within the next 24 months and the remainder thereafter. The Company applies the practical expedient to
exclude remaining performance obligations that are part of contracts with an original expected duration of one year or less and contracts where revenue is
being recognized under the as-invoiced method. During the year ended January 31, 2022, the revenue recognized from performance obligations satisfied in
prior periods was approximately $1.6 million.
F-15

Accounts Receivable and Allowances for Credit Losses
The Company extends credit to its customers in the normal course of business and does not require cash collateral or other security to support the
collection of customer receivables. The Company estimates the amount of uncollectible accounts receivable at the end of each reporting period and
provides a reserve when needed based on an assessment of various factors including the aging of the receivable balance, historical experience, and
expectations of forward-looking loss estimates. When developing the expectations of forward-looking loss estimates, the Company takes into consideration
forecasts of future economic conditions, information about past events, such as historical trends of write-offs, and customer-specific circumstances, such as
bankruptcies and disputes. Accounts receivable are written off when deemed uncollectible. The allowances for credit losses were not material at
January 31, 2022 and 2021.
Deferred Revenue
Deferred revenue consists of non-cancelable customer billings or payments received in advance of the recognition of revenue and is recognized as
revenue as the revenue recognition criteria are met. The Company generally invoices its customers annually for the forthcoming year of service.
Accordingly, the Company’s deferred revenue balance does not include revenue for future years of multiple year non-cancelable contracts that have not yet
been billed. During the years ended January 31, 2022 and 2021, the Company recognized revenue of $352.9 million and $253.2 million that was included
in the deferred revenue balance as of January 31, 2021 and 2020, respectively.
Deferred Commissions
Commissions are earned by sales personnel upon the execution of the sales contract by the customer, and commission payments are made shortly
after they are earned. Commission costs can be associated specifically with subscription, professional services and license arrangements. Commissions
earned by the Company’s sales personnel are considered incremental and recoverable costs of obtaining a contract with a customer. These costs are
deferred and then amortized over a period of benefit of five years. The Company determined the period of benefit by taking into consideration its past
experience with customers, future cash flows expected from customers, industry peers and other available information.
For commissions earned from the sale of term-based license contracts, the Company allocates the costs of commission in proportion to the
allocation of transaction price of license and PCS performance obligations. Commissions associated with the license component are expensed at the time
the related revenue is recognized. Commissions allocated to PCS are deferred and then amortized over five years.
The Company capitalized commission costs of $35.9 million, $24.2 million and $26.2 million and amortized $18.6 million, $14.7 million and $9.6
million to sales and marketing expense in the accompanying consolidated statements of operations during the years ended January 31, 2022, 2021 and
2020, respectively.
Redeemable Non-Controlling Interests
During the quarter ended April 30, 2021, the Company established a joint venture in Japan (“Coupa K.K.”), which is a variable interest entity,
obtaining a 51% controlling interest. Accordingly, the Company consolidated the financial results of the joint venture.
The agreements with the minority investors of Coupa K.K. contain redemption features whereby the interest held by the minority investors is
redeemable either (i) at the option of the minority investors or (ii) at the option of the Company, both beginning on the tenth anniversary of the initial
capital contribution. The balance of the redeemable non-controlling interest is reported at the greater of the initial carrying amount adjusted for the
redeemable non-controlling interest's share of earnings or losses and other comprehensive income or loss, or its estimated redemption value. The resulting
changes in the estimated redemption amount are recorded with corresponding adjustments against additional paid-in-capital due to the absence of retained
earnings. The carrying amount of the redeemable non-controlling interests is recorded on the Company's consolidated balance sheets as temporary equity.
Income Taxes
The Company accounts for income taxes under the asset and liability method, which requires that deferred income taxes be provided for
temporary differences between the financial reporting and tax basis of the Company’s assets and liabilities. In addition, deferred tax assets are recorded for
the future benefit from the utilization of net operating losses and research and development credit carryforwards. A valuation allowance is provided against
deferred tax assets unless it is more likely than not that they will be realized.
F-16

The Company’s policy for accounting for uncertainty in income taxes requires the evaluation of tax positions taken or expected to be taken in the
course of the preparation of tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained on examination by the
applicable tax authorities based on the technical merits of the position. Tax positions not deemed to meet the more-likely-than-not threshold would be
recorded 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 with
unrecognized tax benefits for all periods presented.
Stock-Based Compensation
The Company measures and recognizes stock-based compensation expense for all stock-based awards, including grants of stock, restricted stock
units (“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 Company
recognizes stock-based compensation expense for grants that vest based on only a service condition using the straight-line single-option approach. The
Company 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 service
condition. The fair value of an RSU is measured using the market price 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 such
awards is determined using a Monte Carlo simulation approach.
The Company recognizes stock-based compensation expense based on actual forfeitures.
Convertible Senior Notes
The Company accounts for the issued Convertible Senior Notes (“Convertible Notes”) as separate liability and equity components. The carrying
amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature using
a discounted cash flow model with a discount rate associated with each convertible note. The discount rates were determined primarily using observable
yields for stand-alone debt instruments with a comparable credit rating and term. In addition, for the 2026 Notes, the Company also used lattice models to
determine the discount rate. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value
of the liability component from the par 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 Convertible Notes using the effective interest rate method. The equity component is not remeasured as long as it continues to
meet the conditions for equity classification. The Company has allocated issuance costs incurred to the liability and equity components. Issuance costs
attributable to the liability component are being amortized to expense over the respective term of the Convertible Notes, and issuance costs attributable to
the equity components were netted with the respective equity component in additional paid in capital.
To the extent that the Company receives note conversion requests prior to the maturity of the Convertible Notes, a portion of the equity component
is classified as temporary equity, which is measured as the difference between the principal and net carrying amount of the notes requested for conversion.
Upon settlement of the conversion requests, the difference between the fair value and the amortized book value of the liability component of the
Convertible Notes requested for conversion is recorded as a gain or loss on early note conversion. The fair value of the Convertible Notes are measured
based on a similar liability that does not have an associated convertible feature based on the remaining term of the Convertible Notes.
Leases
Leases arise from contracts that convey the right to control the use of identified property or equipment for a period of time in exchange for
consideration. The Company’s leasing arrangements are primarily for office space used to conduct operations.
Leases are classified at commencement as either operating or finance leases. As of January 31, 2022, all of the Company’s leases were classified
as operating leases. Rent expense for operating leases is recognized using the straight-line method over the term of the agreement beginning on the lease
commencement date.
F-17

At commencement, the Company records a lease liability at the present value of future lease payments, net of any future lease incentives to be
received. Lease agreements may include options to renew the lease term, which is not included in the lease periods to calculate future lease payments
unless it is reasonably certain the Company will renew the lease. The Company estimates its incremental borrowing rate (“IBR”) based on the information
available at the lease commencement date in determining the present value of lease payments. In determining the appropriate IBR, the Company considers
information including, but not limited to, the lease term and the currency in which the arrangement is denominated.
At commencement, the Company also records a corresponding right-of-use asset, which is calculated based on the amount of the lease liability,
adjusted for any advance lease payments made and initial direct costs incurred. Right-of-use assets are subject to evaluation for impairment or disposal on a
basis consistent with other long-lived assets.
As of January 31, 2022, the Company was not a material lessor in leasing arrangements or a party to material sublease arrangements.
Comprehensive Loss
Comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions and other events and
circumstances from non-owner sources. The Company’s comprehensive loss consists of net loss, other comprehensive gain (loss) in relation to defined
benefits plans, net of tax, changes in unrealized gain (loss) on marketable debt securities, net of tax, and foreign currency translation adjustments, net of
tax. The other comprehensive gain (loss) in relation to defined benefits plans represents net deferred gains and losses and prior service costs and credits for
the defined benefit pension plans. 
Recent Accounting Guidance
New Accounting Pronouncements Not Yet Adopted
In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and
Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for convertible instruments. The guidance removes certain
accounting models that separate the embedded conversion features from the host contract for convertible instruments, requiring bifurcation only if the
convertible debt feature qualifies as a derivative under ASC 815 or for convertible debt issued at a substantial premium. The ASU removes certain
settlement conditions required for equity contracts to qualify for the derivative scope exception, permitting more contracts to qualify for it. In addition, the
guidance eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted
method. The ASU is effective for annual reporting periods beginning after December 15, 2021, including interim reporting periods within those annual
periods. The ASU allows entities to use a modified or full retrospective transition method. Under the modified approach, entities will apply the guidance to
all financial instruments that are outstanding as of the beginning of the year of adoption.
The Company will adopt the new guidance for the fiscal year beginning February 1, 2022, using the modified retrospective approach with the
cumulative effect of adoption recognized at the date of initial application through an adjustment to the opening balance of accumulated deficit, which will
result in reduced interest expense in future periods. In the consolidated balance sheets as of February 1, 2022, the adoption of this new guidance is
estimated to result in an increase of approximately $541.9 million to the total carrying value of the Convertible Notes to reflect the full principal amount of
the Convertible Notes outstanding net of unamortized issuance costs, a decrease of approximately $738.9 million to additional paid-in capital to remove the
equity component separately recorded for the conversion features associated with the convertible notes, a decrease of approximately $201.8 million to
accumulated deficit, and a decrease of approximately $4.8 million to deferred tax liabilities, as of February 1, 2022.
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations: Accounting for Contract Assets and Contract Liabilities from
Contracts with Customers (Topic 805). The amendments in this ASU require that an acquirer recognizes and measures contract assets and contract
liabilities acquired in a business combination in accordance with Topic 606. The ASU is effective for fiscal years beginning after December 15, 2022,
including interim periods within those fiscal years and should be applied prospectively to business combinations occurring on or after the effective date of
the amendments. Early adoption is permitted. The Company intends to adopt this new guidance in the first quarter of fiscal year 2023 with no expected
material impact on the Company's historical consolidated financial statements.
F-18

Note 3. Redeemable Non-Controlling Interests
In March 2021, the Company established a joint venture with Japan Cloud Computing L.P. and M30 LLC (the “Investors”) in Japan (“Coupa
K.K.”), which is a variable interest entity. This joint venture is intended to enable the Company to support the growing number of Japanese companies
looking to gain greater efficiency and agility through BSM. On March 15, 2021, the Company initially contributed approximately $2.4 million in cash in
exchange for a 51% controlling interest, and the Investors initially contributed approximately $2.2 million. Accordingly, the Company consolidated the
financial results of the joint venture. The share of the loss in the joint venture attributable to the redeemable non-controlling interests was approximately
$1.1 million during the year ended January 31, 2022.
The following table summarizes the activity in the redeemable non-controlling interest for the period indicated below (in thousands):
January 31,
2022
Balance at beginning of period
$
— 
Investment by redeemable non-controlling interests
2,223 
Net loss attributable to redeemable non-controlling interests
(1,063)
Foreign currency translation adjustments, net of tax
(72)
Adjustment to redeemable non-controlling interest
10,996 
Balance at end of period
$
12,084 
F-19

Note 4. Marketable Securities
The following is a summary of available-for-sale marketable securities, excluding those securities classified within cash and cash equivalents on
the consolidated balance sheets (in thousands):
January 31, 2022
Amortized Costs
Unrealized Gains
Unrealized Losses
Fair Value
U.S. treasury securities
$
223,950 
$
23 
$
(941)
$
223,032 
Total marketable securities
$
223,950 
$
23 
$
(941)
$
223,032 
January 31, 2021
Amortized Costs
Unrealized Gains
Unrealized Losses
Fair Value
U.S. treasury securities
$
268,141 
$
29 
$
(1)
$
268,169 
Corporate notes and bonds
14,487 
100 
— 
14,587 
Certificates of deposit
280 
— 
— 
280 
Total marketable securities
$
282,908 
$
129 
$
(1)
$
283,036 
As of January 31, 2022, the fair values of available-for-sale marketable securities, by remaining contractual maturity, were as follows (in
thousands):
Due within one year
$
120,093 
Due in one year through five years
102,939 
Total
$
223,032 
The Company's marketable securities consist primarily of U.S. treasury securities. The Company views its marketable securities as available to
support its current operations, therefore these marketable securities have been classified as short-term available for sale securities.
During the years ended January 31, 2022, 2021 and 2020, there were no material gains or losses from the sale of available-for-sale marketable
securities that were reclassified out of accumulated other comprehensive loss.
The Company regularly reviews the changes to the rating of its debt securities by rating agencies as well as reasonably monitors the surrounding
economic conditions to assess the risk of expected credit losses. As of January 31, 2022, the unrealized losses and the related risk of expected credit losses
were insignificant.
F-20

Note 5. Fair Value Measurements
The following table summarizes the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring
basis at January 31, 2022 (in thousands):
Level 1
Level 2
Level 3
Total
Cash equivalents: 
Money market funds
$
233,705 
$
— 
$
— 
$
233,705 
Marketable securities:
U.S. treasury securities
— 
223,032 
— 
223,032 
Other investments:
Non-marketable debt investments
— 
— 
6,434 
6,434 
Total assets
$
233,705 
$
223,032 
$
6,434 
$
463,171 
(1)
Included in cash and cash equivalents.
The following table summarizes the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring
basis at January 31, 2021 (in thousands):
Level 1
Level 2
Level 3
Total
Cash equivalents: 
Money market funds
$
90,437 
$
— 
$
— 
$
90,437 
Marketable securities:
U.S. treasury securities
— 
268,169 
— 
268,169 
Corporate notes and bonds
— 
14,587 
— 
14,587 
Certificates of deposit
— 
280 
— 
280 
Total assets
$
90,437 
$
283,036 
$
— 
$
373,473 
Derivative liabilities:
Foreign currency forward contracts not designated as hedges
$
— 
$
47 
$
— 
$
47 
Total liabilities
$
— 
$
47 
$
— 
$
47 
(1)    Included in cash and cash equivalents.
(2)
The derivative liabilities were related to foreign currency forward contracts at a notional amount of $2.9 million. The derivative liabilities were included in accrued expenses and other
current liabilities on the Company’s consolidated balance sheets at January 31, 2021. The foreign currency forward contracts matured during the three months ended April 30, 2021
and were not renewed.
Other Investments
The non-marketable debt investments are recorded at fair value on a recurring basis. The estimation of fair value for non-marketable debt
investments is based on valuation methods using an observable transaction price, if available and other unobservable inputs including the volatility, rights,
and obligations of the securities the Company holds; as a result, the Company classifies these assets as Level 3 within the fair value hierarchy.
As of January 31, 2022, the balance of non-marketable debt investments was $6.4 million, which includes an unrealized gain of $1.3 million.
There have been no impairments to the amortized cost of the non-marketable debt investments during the year ended January 31, 2022.
The table above does not include the Company's non-marketable equity investments. The non-marketable equity investments are measured under
the measurement alternative on a non-recurring basis. As of January 31, 2022, the carrying value of non-marketable equity investments was $5.0 million.
There have been no impairments or adjustments to the carrying amount of the equity investments during the year ended January 31, 2022.
(1)
(1)
(2)
F-21

Convertible Senior Notes
The Company has $1,380.0 million in aggregate principal amount of 0.375% convertible senior notes due in 2026 (the “2026 Notes”), $805.0
million in aggregate principal amount of 0.125% convertible senior notes due in 2025 (the “2025 Notes”) and $1.8 million in aggregate principal amount of
0.375% convertible senior notes due in 2023 (the “2023 Notes” and together with the 2025 Notes and 2026 Notes, the “Convertible Notes”), outstanding as
of January 31, 2022. Refer to Note 10, “Convertible Senior Notes” for further details on the Convertible Notes.
The Company carries the Convertible Notes at par value less the portion allocated to equity and the related unamortized discount and issuance
costs on its consolidated balance sheets and presents the fair value for disclosure purposes only. The estimated fair value of the 2026 Notes, 2025 Notes and
2023 Notes, based on a market approach as of January 31, 2022 was approximately $1,227.1 million, $895.0 million and $5.3 million, respectively, which
represents a Level 2 valuation estimate. The estimated fair value of the 2026 Notes, 2025 Notes and 2023 Notes, based on a market approach as of
January 31, 2021 was approximately $1,775.0 million, $1,617.5 million and $61.2 million, respectively, which represents a Level 2 valuation estimate. The
estimated fair value was determined based on the estimated or actual bids and offers of the Convertible Notes in an over-the-counter market on the last
trade completed prior to the end of the period.
Note 6. Business Combinations
Acquisitions in Fiscal Year Ended January 31, 2022
Pana Industries, Inc.
On February 1, 2021, the Company acquired all of the equity interest in Pana Industries, Inc. (“Pana”), a corporate travel booking solution company.
The purchase consideration was approximately $48.5 million in cash (of which $7.1 million is being held in escrow for fifteen months after the transaction
closing date).
In addition, the Company issued 23,822 shares of unvested common stock with an approximate fair value of $7.6 million to two of Pana's
shareholders. These shares are subject to service-based vesting conditions including continued employment with the Company. The value assigned to the
unvested common stock will be recorded as post-acquisition compensation expense as the shares vest and has been excluded from the purchase
consideration.
The acquisition was accounted for as a business combination and, accordingly, the total fair value of purchase consideration was allocated to the
tangible and intangible assets acquired and liabilities assumed based on their fair values on the acquisition date. The major classes of assets and liabilities to
which the Company has allocated the total fair value of purchase consideration were as follows (in thousands):
 
February 1, 2021
Cash and cash equivalents
$
3,413 
Intangible assets
12,200 
Other assets
772 
Goodwill
33,817 
Accounts payable and other liabilities
(1,662)
Total consideration
$
48,540 
The goodwill recognized was primarily attributed to the assembled workforce and increased synergies that are expected to be achieved from the
integration of Pana and is not deductible for income tax purposes. The Company determined the fair values of intangible assets acquired and liabilities
assumed. The identifiable intangible assets acquired were as follows (in thousands):
Fair Value
Useful life
(in Years)
Developed technology
$
10,500 
4
Customer relationships
1,700 
4
Total
$
12,200 
The Company incurred costs related to this acquisition of approximately $440,000 for the year ended January 31, 2022. All acquisition related costs
were expensed as incurred and have been recorded in general and administrative expenses in the consolidated statements of operations.
F-22

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 the
Company’s consolidated financial results. Pro forma results of operations for this acquisition have not been presented as the financial impact on the
Company’s consolidated financial statements would be immaterial.
Acquisitions in Fiscal Year Ended January 31, 2021
LLamasoft, Inc.
On November 2, 2020, the Company completed the acquisition of Laurel Parent Holdings, Inc. and its subsidiaries (“LLamasoft”), a supply chain
design and analysis software and solutions company. The acquisition strengthens Coupa’s supply chain capabilities, enabling businesses to drive greater
value through Business Spend Management. In connection with the acquisition, all outstanding equity securities of LLamasoft were cancelled with the
payment by the Company of approximately $1.4 billion, of which approximately $792.2 million was paid in cash, and the remainder was paid in the form
of 2,371,014 shares of the Company's common stock with a fair value of approximately $634.5 million. Approximately $15.0 million of the cash paid is
being held in escrow for fifteen months after the transaction closing date as security for the former LLamasoft stockholders' indemnification obligations.
Out of the total payment, approximately $27.8 million, comprised of $19.4 million of cash and 31,098 shares of the Company's common stock
issued with a fair value of $8.3 million, was accounted for as a one-time post acquisition stock-based compensation expense. This stock-based
compensation expense was due to accelerated vesting of legacy LLamasoft employee stock awards in connection with the acquisition.
The total purchase consideration as of November 2, 2020 is as follows (in thousands):
Total cash paid
$
792,170 
Fair value of share consideration
634,507 
Less: One-time stock-based compensation expense
(27,750)
Total purchase consideration
$
1,398,927 
In addition, the Company issued 45,889 shares of common stock subject to vesting restrictions with an approximate fair value of $12.3 million to
certain employee-shareholders of LLamasoft. These shares are subject to service-based vesting conditions including continued employment with the
Company. The value assigned to these shares will be recorded as post-acquisition compensation expense as the shares vest and has been excluded from the
purchase consideration.
The acquisition was accounted for as a business combination and, accordingly, the total fair value of purchase consideration was allocated to the
tangible and intangible assets acquired and liabilities assumed based on their fair values on the acquisition date. The major classes of assets and liabilities to
which the Company has allocated the total fair value of purchase consideration were as follows (in thousands):
November 2, 2020
Cash and cash equivalents
$
1,389 
Accounts receivable
39,564 
Goodwill
931,815 
Intangible assets
517,600 
Operating lease right-of-use assets
14,820 
Other assets
23,389 
Accounts payable and other current liabilities
(9,743)
Deferred revenue
(14,798)
Operating lease liabilities
(14,644)
Deferred tax liability, net
(76,091)
Other noncurrent liabilities
(14,374)
Total consideration
$
1,398,927 
Other assets include indemnification assets totaling approximately $2.1 million due to an assumed liability for which the seller is responsible.
F-23

The goodwill recognized was primarily attributed to the assembled workforce and increased synergies that are expected to be achieved from the
integration of LLamasoft and is not deductible for income tax purposes. The Company determined the fair values of intangible assets acquired and
liabilities assumed with the assistance of third-party valuation consultants. Based on this valuation, the intangible assets acquired were (in thousands):
Fair Value
Useful life
(in Years)
Developed technology
$
316,100 
7
Customer relationships
200,300 
5
Trademarks
1,200 
1
Total intangible assets
$
517,600 
The Company incurred costs related to this acquisition of approximately $3.2 million for the year ended January 31, 2021. All acquisition related
costs were expensed as incurred and have been recorded in general and administrative expenses in the accompanying consolidated statements of operations.
Much-Net GmbH
On September 15, 2020, the Company acquired all of the equity interest in Much-Net GmbH (“Much-Net”), a financial instrument software and
service provider that specializes in risk management. The purchase consideration was approximately $4.3 million in cash which is net of $1.8 million in
cash acquired. The acquisition was accounted for as a business combination and, accordingly, the total fair value of purchase consideration was allocated to
the tangible and intangible assets acquired and liabilities assumed based on their fair values on the acquisition date. In aggregate, the Company recorded
$1.0 million for developed technology intangible assets with an estimated useful life of four years, and $4.1 million of goodwill which is primarily
attributed to assembled workforce and expected synergies. The goodwill is not deductible for income tax purposes. The other assets acquired and liabilities
assumed were not material.
Bellin Treasury International GmbH
 
On June 9, 2020, the Company acquired all of the equity interest in Bellin Treasury International GmbH (“Bellin”), a cloud-based treasury
management software platform that improves visibility and control over cash and optimizes treasury processes. The purchase consideration was
approximately $121.0 million, comprised of $79.1 million in cash (of which $8.0 million is being held in escrow for eighteen months after the transaction
closing date) and 186,300 shares of the Company’s common stock with a fair value of approximately $41.8 million as of the transaction close date. In
addition, the Company issued 208,766 shares of common stock with an approximate fair value of $46.9 million to one of the sellers who became a Coupa
employee. These shares are subject to service-based vesting conditions including continued employment with the Company. The value assigned to the
unvested common stock will be recorded as post-acquisition compensation expense as the shares vest and has been excluded from the purchase
consideration.
The acquisition was accounted for as a business combination and, accordingly, the total fair value of purchase consideration was allocated to the
tangible and intangible assets acquired and liabilities assumed based on their fair values on the acquisition date. The major classes of assets and liabilities to
which the Company has allocated the total fair value of purchase consideration were as follows (in thousands):
June 9, 2020
Cash and cash equivalents
$
4,783 
Accounts receivable
5,345 
Intangible assets
42,745 
Other assets
4,932 
Goodwill
86,674 
Accounts payable and other current liabilities
(3,479)
Deferred revenue
(4,230)
Deferred tax liability, net
(12,946)
Other noncurrent liabilities
(2,851)
Total consideration
$
120,973 
 
F-24

The goodwill recognized was primarily attributed to the assembled workforce and increased synergies that are expected to be achieved from the
integration of Bellin and is not deductible for income tax purposes. The Company determined the fair values of intangible assets acquired and liabilities
assumed with the assistance of third-party valuation consultants. Based on this valuation, the intangible assets acquired were (in thousands):
 
Fair Value
Useful life
(in Years)
Developed technology
$
27,800 
5
Customer relationships
14,700 
5
Trademarks
245 
0.5
Total intangible assets
$
42,745 
 
The Company incurred costs related to this acquisition of approximately $1.2 million for the year ended January 31, 2021. All acquisition related
costs were expensed as incurred and have been recorded in general and administrative expenses in the accompanying consolidated statements of operations.
 
ConnXus, Inc.
On May 1, 2020, the Company acquired all of the equity interest in ConnXus, Inc. (“ConnXus”), a cloud-based supplier relationship management
platform that enables enterprises, health systems and government agencies to monitor all aspects of their supplier diversity compliance programs. The
purchase consideration was approximately $10.0 million in cash of which approximately $1.4 million was held back by the Company for fifteen months
after the transaction closing date.
The acquisition was accounted for as a business combination and, accordingly, the total fair value of purchase consideration was allocated to the
tangible and intangible assets acquired and liabilities assumed based on their fair values on the acquisition date. The major classes of assets and liabilities to
which the Company has allocated the total fair value of purchase consideration were as follows (in thousands):
May 1, 2020
Intangible assets
$
1,900 
Other assets
540 
Goodwill
8,519 
Accounts payable and other liabilities
(967)
Total consideration
$
9,992 
 
The goodwill recognized was primarily attributed to increased synergies that are expected to be achieved from the integration of ConnXus and is
not deductible for income tax purposes. The Company determined the fair values of intangible assets acquired and liabilities assumed. Based on this
valuation, the intangible assets acquired was (in thousands):
Fair Value
Useful life
(in Years)
Developed technology
$
1,900 
4
Total intangible assets
$
1,900 
 
The Company incurred costs related to this acquisition of approximately $400,000 for the year ended January 31, 2021. All acquisition related
costs were expensed as incurred and have been recorded in general and administrative expenses in the accompanying consolidated statements of operations.
F-25

Note 7. Property and Equipment, Net
Property and equipment consisted of the following (in thousands):
As of January 31,
2022
2021
Furniture and equipment
$
15,584 
$
11,955 
Software development costs
55,733 
43,857 
Leasehold improvements
7,193 
5,465 
Construction in progress
471 
848 
Total property and equipment
78,981 
62,125 
Less: accumulated depreciation and amortization
(48,405)
(33,859)
Property and equipment, net
$
30,576 
$
28,266 
Depreciation and amortization expense related to property and equipment, excluding software development costs, was approximately $5.2 million,
$3.6 million and $1.7 million for the years ended January 31, 2022, 2021 and 2020, respectively. Amortization expense related to software development
costs was approximately $9.9 million, $7.1 million and $3.6 million for the years ended January 31, 2022, 2021 and 2020, respectively.
Note 8. Goodwill and Other Intangible Assets
Goodwill
The following table represents the changes in goodwill (in thousands):
Balance at January 31, 2020
$
442,112 
Additions from acquisitions
1,030,924 
Foreign currency translation adjustments
6,784 
Adjustments
1,027 
Balance at January 31, 2021
1,480,847 
Additions from acquisitions
33,817 
Foreign currency translation adjustments
(343)
Other adjustments
229 
Balance at January 31, 2022
$
1,514,550 
Other Intangible Assets
The following table summarizes the other intangible asset balances (in thousands):
As of January 31,
2022
2021
Weighted
Average
Remaining
Useful
Lives
(in years)
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Developed technology
5.1
$
484,510 
$
(150,910)
$
333,600 
$
474,120 
$
(69,560)
$
404,560 
Customer relationships
3.7
256,082 
(79,019)
177,063 
254,437 
(27,727)
226,710 
Trademarks
0.0
2,419 
(2,419)
— 
2,419 
(1,516)
903 
Total other intangible assets
$
743,011 
$
(232,348)
$
510,663 
$
730,976 
$
(98,803)
$
632,173 
Amortization expense related to other intangible assets was approximately $133.5 million, $62.9 million and $24.0 million for the years ended
January 31, 2022, 2021 and 2020, respectively.
F-26

As of January 31, 2022, the future amortization expense of other intangible assets is as follows (in thousands):
Year Ending January 31,
2023
$
128,111 
2024
121,994 
2025
102,849 
2026
78,559 
2027
45,157 
Thereafter
33,993 
Total
$
510,663 
The Company, which has one reporting unit, performed an annual test for goodwill impairment and determined that goodwill was not impaired. In
addition, 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 or
identifiable intangible assets may be non-recoverable. As such, the Company was not required to reevaluate the recoverability of its long-lived assets.
Note 9. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
As of January 31,
2022
2021
Accrued compensation
$
43,019 $
45,120 
Accrued expenses
20,201 
17,500 
Other current liabilities
11,415 
13,238 
Income tax payable
3,930 
2,396 
Holdback payable
595 
2,017 
Total accrued expenses and other current liabilities
$
79,160 $
80,271 
Included in the accrued compensation liability caption for the years ended January 31, 2022 and 2021, the Company had accrued $9.3 million and
$8.3 million of employee stock purchase plan contributions received, respectively. For further information on the Company’s employee stock purchase plan
see Note 12, “Common Stock and Stockholders' Equity”.
Note 10. Convertible Senior Notes
2026 Notes
In June 2020, the Company issued the 2026 Notes in aggregate principal amount of $1,380.0 million in a private placement to qualified
institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The 2026 Notes are subject to the terms and conditions of an
Indenture (the “Indenture”) between the Company and Wilmington Trust, National Association, as trustee.
The net proceeds from the issuance of the 2026 Notes were $1,162.3 million, net of debt issuance costs, including the underwriting discount and
the cash used to purchase the capped call discussed below.
The 2026 Notes are senior, unsecured obligations of the Company, and interest is payable semi-annually in cash at a rate of 0.375% per annum on
June 15 and December 15 of each year, beginning on December 15, 2020. The 2026 Notes will mature on June 15, 2026 unless redeemed, repurchased or
converted prior to such date. Prior to the close of business on the business day immediately preceding March 15, 2026, the 2026 Notes are convertible at
the option of holders during certain periods, upon satisfaction of certain conditions as described below. On or after March 15, 2026, the 2026 Notes are
convertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. The 2026 Notes have an
initial conversion rate of 3.3732 shares of common stock per $1,000 principal (equivalent to an initial conversion price of approximately $296.4544 per
share of common stock). The conversion rate is subject to customary adjustments for certain events as described in the Indenture. 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 common stock, at its election. It
is the Company’s current intent to settle conversions of the 2026 Notes through combination settlement, which involves repayment of the principal portion
in cash and any excess of the conversion value over the principal amount in shares of its common stock.
F-27

Holders may convert their 2026 Notes, at their option, prior to the close of business on the business day immediately preceding March 15, 2026, in
multiples of $1,000 principal amount, only under the following circumstances:
•
during any fiscal quarter commencing after the fiscal quarter ending on October 31, 2020 (and only during such fiscal quarter), if the last
reported sale price of its common stock for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading days
ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion
price on each applicable trading day;
•
during the five business day period after any ten consecutive trading day period (the “Measurement Period”) in which the trading price
per $1,000 principal amount of the 2026 Notes for each trading day of the Measurement Period was less than 98% of the product of the last
reported sales price of the Company’s common stock and the conversion rate for the 2026 Notes 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 immediately
preceding 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 to
repurchase for cash all or any portion of their 2026 Notes. The fundamental change repurchase price is equal to 100% of the principal amount of
the 2026 Notes to be redeemed, plus any accrued and unpaid interest up to, but excluding the redemption date. If holders elect to convert their 2026 Notes
in connection with a make-whole fundamental change or during a redemption period, as described in the Indenture, the Company will, to the extent
provided in the Indenture, increase the conversion rate applicable to the 2026 Notes.
The 2026 Notes are the Company’s senior unsecured obligations and rank senior in right of payment to any of its indebtedness that is expressly
subordinated in right of payment to the 2026 Notes, and equal in right of payment to any of its indebtedness that is not so subordinated, including the 2023
Notes and the 2025 Notes. The 2026 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 securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) and any preferred
equity of its current or future subsidiaries.
The Indenture contains customary events of default with respect to the 2026 Notes and provides that upon certain events of default occurring and
continuing, the Trustee may, and at the request of holders of at least 25% in principal amount of the 2026 Notes the Trustee is required to, declare all
principal and accrued and unpaid interest, if any, of the 2026 Notes to be due and payable. In case of certain events of bankruptcy, insolvency or
reorganization, involving the Company, all of the principal of and accrued and unpaid interest on the 2026 Notes will automatically become due and
payable.
In accounting for the issuance of the 2026 Notes, the Company separated the 2026 Notes into liability and equity components. The carrying
amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature using
a discounted cash flow model with a discount rate associated with the 2026 Notes. The discount rate was determined primarily using observable yields for
stand-alone debt instruments with a comparable credit rating and term. In addition, the Company also used lattice models to determine the discount rate.
The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component
from the par value of the 2026 Notes as a whole. The difference between the principal amount of the 2026 Notes and the liability component, equal to
$510.3 million (the “debt discount”), is amortized to interest expense using the effective interest method over the term of the 2026 Notes. The equity
component of the 2026 Notes will not be remeasured as long as it continues to meet the conditions for equity classification.
The Company incurred $24.9 million of transaction costs related to the issuance of the 2026 Notes. The Company allocated the total amount
incurred to the liability and equity components using the same proportions as the proceeds from the 2026 Notes. Issuance costs attributable to the liability
component are being amortized to interest expense over the term of the 2026 Notes using the effective interest method, and issuance costs attributable to
the equity component are included along with the equity component in stockholders' equity.
The 2026 Notes were not convertible at January 31, 2022, as none of the 2026 Notes conversion conditions were met.
F-28

2025 Notes
In June 2019, the Company issued the 2025 Notes in aggregate principal amount of $805.0 million in a private placement to qualified institutional
buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The net proceeds from the issuance of the 2025 Notes were $667.4 million,
net of debt issuance costs, including the underwriting discount and the cash used to purchase the capped call, discussed below. The 2025 Notes have an
initial conversion rate of 6.2658 shares of common stock per $1,000 principal (equivalent to an initial conversion price of approximately $159.5965 per
share of common stock). The interest rate is fixed at 0.125% per annum for the 2025 Notes and is payable semi-annually in arrears on June 15 and
December 15 of each year, which commenced on December 15, 2019. The accounting for 2025 Notes was substantially consistent with the accounting for
2026 Notes as disclosed above. Refer to the Company’s consolidated financial statements for the year ended January 31, 2020 for details of the issuance
and accounting of 2025 Notes.
The conversion condition for the 2025 Notes was initially met during the three months ended July 31, 2020 and it continued to be met during the
three months ended October 31, 2021. As a result, the 2025 Notes became convertible commencing on August 1, 2020 and remained convertible through
January 31, 2022. The conversion condition was not met during the three months ended January 31, 2022, and therefore will not be convertible
commencing on February 1, 2022 and for the quarter ended April 30, 2022. Accordingly, the 2025 Notes were classified as noncurrent liabilities on the
consolidated balance sheet as of January 31, 2022. For the year ended January 31, 2022, the conversions of the 2025 Notes were not material. As of
January 31, 2022, approximately $805.0 million principal amount of 2025 Notes remained outstanding.
The Company may redeem for cash all or any portion of the 2025 Notes, at its option, on or after June 20, 2022, if the last reported sale price of the
Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any
30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date
on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the 2025 Notes to be redeemed, plus
any accrued and unpaid interest to, but excluding, the redemption date.
2023 Notes
In January 2018, the Company issued the 2023 Notes in aggregate principal amount of $230.0 million in a private placement to qualified
institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The net proceeds from the issuance of the 2023 Notes were
$200.4 million, net of debt issuance costs, including the underwriting discount and the cash used to purchase the capped call, discussed below. The 2023
Notes have an initial conversion rate of 22.4685 shares of common stock per $1,000 principal (equivalent to an initial conversion price of approximately
$44.5068 per share of common stock). The interest rate is fixed at 0.375% per annum for the 2023 Notes and is payable semi-annually in arrears on July 15
and January 15 of each year, which commenced on July 15, 2018. The accounting for 2023 Notes was substantially consistent with the accounting for 2026
Notes as disclosed above. Refer to the Company’s consolidated financial statements for the year ended January 31, 2019 for details of the issuance of 2023
Notes.
The conversion condition for the 2023 Notes was initially met during the three months ended July 31, 2018, and has been met for each subsequent
fiscal quarter. As a result, the 2023 Notes were convertible at the option of the holders and remained classified as current liabilities on the consolidated
balance sheet as of January 31, 2022. For the year ended January 31, 2022, the Company settled conversion requests on the principal amount of the 2023
Notes totaling approximately $7.1 million by paying cash for the principal amount of $7.1 million and issuing approximately 132,088 shares of the
Company’s common stock, bearing a fair value of approximately $32.3 million. For the year ended January 31, 2022, the Company recognized a loss of
approximately $400,000 on the conversion and repurchase of the 2023 Notes representing the fair value in excess of the net carrying amount of the liability
component of the converted notes on the respective settlement dates. The amount is included in other income (expense), net in the Company’s consolidated
statement of operations.
As of January 31, 2022, approximately $1.8 million principal amount of 2023 Notes remained outstanding. In addition, from February 1, 2022 to
the date of this filing, the Company has not received any additional conversion requests for the 2023 Notes.
F-29

The 2026 Notes, 2025 Notes and 2023 Notes consisted of the following (in thousands):
As of January 31, 2022
As of January 31, 2021
2026 Notes
2025 Notes
2023 Notes
2026 Notes
2025 Notes
2023 Notes
Liability:
Principal
$
1,380,000 $
804,990 $
1,752 $
1,380,000 $
804,999 $
8,832 
Unamortized debt discount and issuance costs 
(408,467)
(162,266)
(113)
(482,475)
(203,638)
(1,125)
Net carrying amount
$
971,533 $
642,724 $
1,639 $
897,525 $
601,361 $
7,707 
Carrying amount of the equity component 
$
501,053 $
246,966 $
460 $
501,053 $
246,966 $
1,560 
(1)
Included in the consolidated balance sheets within Convertible senior notes, net and amortized over the remaining lives of the convertible senior notes. The 2026 Notes and 2025
Notes were classified as noncurrent liabilities, and the 2023 Notes was classified as current liabilities.
(2)
Included in the consolidated balance sheets within additional paid-in capital and temporary equity.
The effective interest rates of the liability component of the 2026 Notes, 2025 Notes and 2023 Notes, excluding each tranche of notes’ conversions
options, is 8.83%, 7.05% and 7.66%, respectively. As of January 31, 2022, the if-converted value of the 2026 Notes did not exceed the principal amount
and as of January 31, 2021 the if-converted value of the 2026 Notes exceeded the principal amount of by $62.5 million. As of January 31, 2022, the if-
converted value of the 2025 Notes did not exceed the principal amount and as of January 31, 2021 the if-converted value of the 2025 Notes exceeded the
principal amount of by $757.9 million. As of January 31, 2022 and January 31, 2021, the if-converted value of the 2023 Notes exceeded the principal
amount by $3.5 million and $52.7 million, respectively.
During the years ended January 31, 2022, 2021 and 2020, the Company recognized $115.7 million, $86.5 million and $35.9 million, respectively,
of interest expense related to the amortization of debt discount and issuance costs, and $6.2 million, $3.8 million, and $1.5 million respectively, of coupon
interest expense.
As of January 31, 2022, the remaining life of the 2026 Notes, 2025 Notes and 2023 Notes is approximately 4.4 years, 3.4 years and 1.0 years,
respectively.
Capped Calls
In conjunction with the issuance of the 2026 Notes, 2025 Notes and 2023 Notes, the Company entered into capped call transactions (the “Capped
Calls”) on the Company’s common stock with certain counterparties at a price of $192.8 million, $118.7 million and $23.3 million, respectively.
The Capped Calls exercise price is equal to the initial conversion price of each of the Convertible Notes, and the cap price is $503.415 per share
for 2026 Notes, $295.550 per share for 2025 Notes and $63.821 per share for 2023 Notes, each subject to certain adjustments under the terms of the
Capped Call transactions. If any tranche of convertible notes’ conversion option is exercised, the corresponding convertible note capped call will become
exercisable on the same date. As of the date of filing, the Company has not exercised the Capped Calls in relation to the conversion of 2023 Notes or 2025
Notes. The Capped Calls relating to the 2026 Notes were not exercisable.
By entering into the Capped Calls, the Company expects to reduce the potential dilution to its common stock (or, in the event the conversion is
settled in cash, to reduce its cash payment obligation) in the event that at the time of conversion its stock price exceeds the conversion price.
The cost of the Capped Calls is not expected to be tax-deductible as the Company did not elect to integrate the Capped Calls into the respective
convertible notes for tax purposes. The cost of the Capped Calls was recorded as a reduction of the Company’s additional paid-in capital in the
accompanying consolidated financial statements.
(1)
(2)
F-30

Note 11. Commitments and Contingencies
Commitments
The Company leases office space under non-cancelable operating leases with various expiration dates through February 2030. For the years ended
January 31, 2022, 2021 and 2020, lease costs in relation to long-term leases were approximately $14.5 million and $11.5 million, and $8.6 million
respectively. For the years ended January 31, 2022, 2021 and 2020, short-term leases costs were approximately $2.3 million, $1.6 million and $1.6 million,
respectively. Variable lease costs were immaterial for the years ended January 31, 2022, 2021 and 2020. Certain lease agreements include options to renew
or terminate the lease, which are not reasonably certain to be exercised and therefore are not factored into the determination of lease payments or the lease
right-of-use asset/lease liability.
For the years ended January 31, 2022 and January 31, 2021, cash paid for operating lease liabilities was approximately $15.2 million and $11.9
million, respectively, and right-of-use assets obtained in exchange of lease obligations was approximately $13.7 million and $18.3 million, respectively. As
of January 31, 2022, the weighted-average remaining lease term was 3.6 years, and the weighted-average discount rate was 7.5%.
As of January 31, 2022, the remaining maturities of operating lease liabilities and future purchase obligations are as follows (in thousands):
Year Ending January 31,
Operating Lease
Obligations
Future Purchase
Obligations
2023
$
15,617 
$
44,483 
2024
14,643 
48,271 
2025
9,184 
58,534 
2026
5,988 
53,883 
2027
4,587 
— 
Thereafter
489 
—
Total payments
50,508 
$
205,171 
Less: imputed interest
(6,576)
Total
$
43,932 
The Company's future purchase obligations in the table above primarily includes contractual purchase obligations for hosting services and other
services to support the Company's business operations.
Contingencies
On June 10, 2021, the Company was served with notice of a complaint filed in U.S. District Court for the Southern District of Florida by DCR
Workforce, Inc., as plaintiff, against Coupa Software Incorporated, as defendant. The complaint alleged breach of contract and other claims, and sought
various damages from the Company including 206,065 shares of the Company’s common stock. The complaint related to the Company’s purchase of
DCR’s vendor management software (VMS) business in August 2018. Under the purchase agreement, the Company agreed to issue additional stock to
DCR as contingent (earn-out) consideration if the VMS business achieved certain revenue-related milestones during three measurement periods that
continue through December 31, 2022. The VMS business met the target for the first measurement period and DCR was issued stock. It did not meet the
target for the second measurement period. After DCR was notified, it filed the complaint. 
    On August 4, 2021, pursuant to a forum selection provision in the purchase agreement, the district court granted the Company’s motion to transfer venue
to the U.S. District Court for the Northern District of California. On October 13, 2021, the court granted the Company’s motion to dismiss in its entirety
and dismissed the case with prejudice. On November 11, 2021, DCR filed a notice of appeal of the district court’s decision. Given the early stage of the
appeal, the amount of any loss or range of loss that may occur cannot be reasonably estimated as of the date of this filing.
In addition, the Company may become involved in other legal proceedings or be subject to claims arising in the ordinary course of business.
Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these current
matters will not have a material adverse effect on the Company’s business, operating results, financial condition or cash flows. The Company accrues
estimates for resolution of legal and other contingencies when losses are probable and estimable. Regardless of the outcome, litigation can have an adverse
impact on the Company because of defense and settlement costs, diversion of management resources and other factors.
F-31

Warranties and Indemnifications
The Company’s cloud-based software platform and applications are typically warranted against material decreases in functionality and to perform
in a manner consistent with general industry standards and in accordance with the Company’s online 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
the Company fails to meet those levels, customers can receive credits and, in some cases, terminate their relationship with the Company. To date, the
Company has 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 patents,
copyrights or other intellectual property rights of third parties. To date, the Company has not been required to make any payment resulting from such
infringement claims and has not recorded any related liabilities. In addition, the Company has indemnification agreements with its directors and certain of
its officers that require the Company to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers.
To date, the Company has not incurred any material costs, and not accrued any liabilities in its consolidated financial statements, as a result of these
obligations.
Note 12. Common Stock and Stockholders’ Equity
Common Stock
Each share of common stock has the right to one vote. The holders of the common stock are also entitled to receive dividends whenever funds are
legally 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
of stock outstanding having priority rights as to dividends. No dividends have been declared or paid since inception.
Preferred Stock
As of January 31, 2022, the Company had authorized 25,000,000 shares of preferred stock, par value $0.0001, of which no shares were issued and
outstanding.
2016 Equity Incentive Plan
The 2016 Equity Incentive Plan (the “2016 Plan”) was approved by the Company’s stockholders in September 2016. The 2016 Plan provides for
the grant 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 relating to the Company’s initial public
offering, October 5, 2016. The 2016 Plan replaced the Company’s 2006 Stock Plan; however, awards outstanding under the 2006 Stock Plan will continue
to be governed by their existing terms.
As of January 31, 2022, the Company had 12,682,224 shares of its common stock available for future issuance under the 2016 Plan. The number
of shares reserved for issuance under the 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 its outstanding 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 be adjusted 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,
2022 (aggregate intrinsic value in thousands):
Options Outstanding
Outstanding Stock
Options
Weighted- Average
Exercise Price
Weighted-Average
Remaining
Contractual Life
(in years)
Aggregate Intrinsic
Value
Balance, January 31, 2021
2,608,640 
$
20.65 
5.6 $
754,478 
Options exercised
(759,390)
$
12.42 
— 
— 
Options forfeited
(8,303)
$
70.45 
— 
— 
Balance, January 31, 2022
1,840,947 
$
23.82 
4.7 $
203,339 
Exercisable at January 31, 2022
1,784,435 
$
22.13 
4.7 $
200,107 
F-32

(1)
The above table includes 711,839 stock options with market and service based conditions.
The aggregate intrinsic value of options vested and exercisable as of January 31, 2022 is calculated based on the difference between the exercise
price and the fair value of the Company’s common stock as of January 31, 2022. The aggregate intrinsic value of exercised options was $172.1 million,
$375.7 million and $318.2 million for the years ended January 31, 2022, 2021 and 2020, respectively, and is calculated based on the difference between the
exercise price and the fair value of the Company’s common stock as of the exercise date.
No options were granted during the years ended January 31, 2022 and 2021. The weighted-average grant date fair value of options granted for the
year ended January 31, 2020 was $41.81 per share. The total grant date fair value of options vested during fiscal 2022, 2021 and 2020 was $3.9 million,
$8.0 million and $8.6 million, respectively.
Restricted Stock Units (“RSUs”)
The following table summarizes the activity related to the Company’s RSUs during the year ended January 31, 2022:
Number of RSUs
Outstanding
Weighted- Average
Grant Date Fair
Value
Awarded and unvested at January 31, 2021
2,530,280 
$
123.56 
Awards granted
1,153,149 
$
238.07 
Awards vested
(1,235,810)
$
109.21 
Awards forfeited
(322,970)
$
186.22 
Awarded and unvested at January 31, 2022
2,124,649 
$
184.56 
(1)
The above table includes 199,822 restricted share units with market and service based conditions.
2016 Employee Stock Purchase Plan
The Board of Directors adopted the 2016 Employee Stock Purchase Plan (the “ESPP”) in September 2016 and it has been approved by the
Company’s stockholders. The ESPP allows eligible employees to purchase shares of common stock through payroll deductions and is intended to qualify
under Section 423 of the Internal Revenue Code.
As of January 31, 2022, the Company had 2,326,540 shares of its common stock available for future issuances under the ESPP. The number of
shares reserved 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 to the 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 shares determined 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 or other 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
began on the effective date of the Company’s initial public offering, October 5, 2016, and ended on September 15, 2018, and new 24 month offering
periods will begin on each March 16 and September 16 thereafter. Currently, each offering period consists of four consecutive purchase periods, of
approximately six months duration, at the end of which payroll contributions are used to purchase shares of the Company’s common stock. Participants
may purchase the Company’s common stock through payroll deductions, up to a maximum of 15% of their eligible compensation. Participants may
withdraw from the ESPP and receive a refund of their accumulated payroll contributions at any time prior to a purchase date. Unless changed by the
administrator, the purchase price for 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 applicable offering period or the fair market value per share on the applicable purchase date.
The Company purchased 156,810 and 209,306 shares of common stock under the 2016 ESPP during the years ended January 31, 2022 and 2021,
respectively. 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, 2022, total unrecognized compensation cost related to the 2016 ESPP was $15.3 million which will be amortized over a
weighted-average period of approximately 1.6 years.
F-33

Market-based Options and Awards
In 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 capital
appreciation targets after the consummation of the initial public offering, as well as continuous service over a four-year period following the grant date. In
March 2018, the Board of Directors granted 334,742 stock options to the Chief Executive Officer (the “2018 CEO Grant”) under the 2016 Equity Plan with
an 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 as
continuous service over a four-year period following the grant date. The fair values of the 2016 and 2018 CEO Grants were determined using a Monte
Carlo simulation approach. The Company amortizes the fair value of the option awards using the graded-vesting method.
In March 2020, the Board of Directors of the Company granted market-based restricted stock unit awards (the “2020 PSU Grant”) to certain
members of management. The target number of market-based restricted stock unit awards granted was 100,178. The number of shares that could be earned
will range from 0% to 200% of the target number of shares, based on the relative growth of the per share price of the Company’s common stock as
compared to the Nasdaq Composite Index over the three-year performance period ending on the third anniversary of the date of grant and subject to
continuous employment through such date. The fair value of the 2020 PSU Grant was determined using a Monte Carlo simulation approach. The Company
amortizes the fair value of the 2020 PSU Grant using the straight-line method over the three-year performance term.
In March 2021, the Board of Directors of the Company granted market-based restricted stock unit awards (the “2021 PSU Grant”) to certain
members of management. The target number of market-based restricted stock unit awards granted was 109,249. The number of shares that could be earned
will range from 0% to 200% of the target number of shares, based on the relative growth of the per share price of the Company’s common stock as
compared to the Nasdaq Composite Index over the three-year performance period ending on the third anniversary of the date of grant and subject to
continuous employment through such date. Additionally, if necessary, the payout percentage will be decreased so that the overall value delivered to the
award holder (total payout number of shares multiplied by the stock price on the vesting date) will be capped at four times the target value (target number
of shares multiplied by the stock price on the date of grant). The fair value of the 2021 PSU Grant was determined using a Monte Carlo simulation
approach. The Company amortizes the fair value of the 2021 PSU Grant using the straight-line method over the three-year performance term.
As of January 31, 2022, all market-based milestones of the 2016 CEO Grant and 2018 CEO Grant were achieved, resulting in 544,127 shares and
320,794 shares, respectively, being vested and exercisable. As of January 31, 2022, the three-year performance period related to the 2020 PSU Grant and
2021 PSU Grant had not been completed, both resulting in no shares being vested or exercisable. Stock-based compensation expense recognized for
market-based awards was approximately $13.3 million, $6.6 million and $1.7 million for the years ended January 31, 2022, 2021 and 2020, respectively.
Stock-based Compensation
The Company’s total stock-based compensation expense was as follows (in thousands):
For the year ended
January 31,
2022
2021
2020
Cost of revenue:
Subscription
$
14,920 
$
11,438 
$
6,982 
Professional services and other
16,991 
15,563 
7,773 
Research and development
44,119 
37,685 
20,159 
Sales and marketing
52,109 
48,414 
23,352 
General and administrative
71,756 
55,750 
23,110 
Total
$
199,895 
$
168,850 
$
81,376 
Out of the total stock-based compensation expense for the year ended January 31, 2021, approximately $27.8 million was a one-time post
acquisition stock-based compensation expense resulting from the accelerated vesting of legacy employee stock awards in conjunction with the acquisition
of LLamasoft.
Stock-based compensation included in capitalized software development costs was approximately $4.2 million and $3.2 million at January 31,
2022 and 2021, respectively.
F-34

Of the total stock-based compensation expense, costs recognized for awards granted to non-employees were immaterial for all periods presented.
As of January 31, 2022, 2021 and 2020, there was approximately $1.6 million, $4.5 million and $11.5 million, respectively, of total unrecognized
compensation cost related to unvested stock options granted. This unrecognized compensation cost as of January 31, 2021, is expected to be recognized
over an estimated weighted-average amortization period of approximately 1.1 years.
As of January 31, 2022, 2021 and 2020, there was approximately $352.0 million, $319.6 million and $186.3 million, respectively, of total
unrecognized compensation cost related to unvested restricted stock units granted to employees. This unrecognized compensation cost as of January 31,
2022 is expected to be recognized over an estimated weighted-average amortization period of approximately 2.7 years.
The fair values of the Company’s stock options, ESPP and market-based awards granted during the years ended January 31, 2022, 2021 and 2020
were estimated using the following assumptions:
For the year ended
January 31,
2022
2021
2020
Employee Stock Options:
Expected term (in years)
—
—
6.0
Volatility
—
—
42.7%
Risk-free interest rate
—
—
2.4%
Dividend yield
—
—
—
Employee Stock Purchase Plan:
Expected term (in years)
0.5 - 2.0
0.5 - 2.0
0.5 - 2.0
Volatility
42.1  % - 61.2 %
48.6  % - 60.7 %
44.4  % - 65.9 %
Risk-free interest rate
0.0% - 0.2 %
0.1  % - 0.4 %
1.7  % - 2.5 %
Dividend yield
—
—
—
Market-Based Awards:
Expected term (in years)
3.0
3.0
—
Volatility
54.6%
48.4%
—
Risk-free interest rate
0.3%
0.4%
—
Dividend yield
—
—
—
These assumptions and estimates are as follows:
•
Fair Value of Common Stock. The Company used the publicly quoted price as reported on the Nasdaq Global Select Market as the fair
value of its common stock.
•
Expected Term. The expected term for the employee stock purchase plan ranges from six months, the length of one purchase period, to two
years, the length of one offering period. The market-based awards have a three-year expected term.
•
Risk-Free Interest Rate. The Company bases the risk-free interest rate on the yields of U.S. treasury securities with maturities
approximately equal to the term of employee stock option or market-based awards.
•
Expected Volatility. The Company uses its historical trading prices to calculate the expected volatility in determining the fair value of the
shares granted under the ESPP and market-based awards. In addition, beginning from the first quarter of fiscal year 2020, the Company
began using its own historical volatility in combination with publicly traded peers’ volatility to determine the expected volatility of stock
options.
F-35

Note 13. Income Taxes
The following table presents the domestic and foreign components of loss before benefit from income taxes for the periods presented (in
thousands):
For the year ended
January 31,
2022
2021
2020
United States
$
(380,337)
$
(243,435)
$
(106,743)
Foreign
8,629 
(1,068)
4,976 
Loss before benefit from income taxes
$
(371,708)
$
(244,503)
$
(101,767)
The benefit from income taxes is composed of the following (in thousands):
For the year ended
January 31,
2022
2021
2020
Current income taxes:
State
$
615 
$
216 
$
126 
Foreign
11,178 
2,891 
2,246 
Total current income taxes
11,793 
3,107 
2,372 
Deferred income taxes:
Federal
(8,727)
(52,715)
(10,125)
State
348 
(7,991)
(1,510)
Foreign
(6,016)
(6,787)
(1,672)
Total deferred income taxes
(14,395)
(67,493)
(13,307)
Total benefit from income taxes
$
(2,602)
$
(64,386)
$
(10,935)
The effective tax rate differs from the federal statutory rate as follows:
For the year ended
January 31,
2022
2021
2020
Federal statutory income tax rate
21.0 %
21.0 %
21.0 %
State tax, net of federal benefit
3.8 
3.4 
3.2 
Change in valuation allowance
(33.8)
(48.9)
(107.1)
Stock-based compensation
12.3 
45.2 
90.3 
Other non-deductible items
(3.8)
(0.1)
0.8 
Foreign rate differential
(0.6)
1.9 
(1.4)
Tax credits
1.8 
3.8 
3.9 
Total
0.7 %
26.3 %
10.7 %
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
a full 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
reporting purposes and the amounts used for income tax purposes. The following table presents the significant components of the Company’s deferred tax
assets and liabilities for the periods presented (in thousands):
As of January 31,
2022
2021
Deferred tax assets:
Net operating loss carryforwards
$
488,163 
$
412,850 
Accruals and reserves
15,773 
9,209 
Lease liabilities
11,177 
11,217 
Stock-based compensation
10,650 
8,994 
Tax credits
29,858 
23,116 
Gross deferred tax assets
555,621 
465,386 
Valuation allowance
(305,271)
(177,918)
Total deferred tax assets, net of valuation allowance
250,350 
287,468 
Deferred tax liabilities:
Fixed assets and intangibles assets
(121,854)
(146,441)
Accruals and reserves
(1,466)
(1,874)
Right-of-use assets
(10,867)
(10,743)
Discount on convertible notes
(132,657)
(158,438)
Gross deferred tax liabilities
(266,844)
(317,496)
Net deferred tax (liabilities) assets
$
(16,494)
$
(30,028)
A valuation allowance is provided for deferred tax assets where the recoverability of the assets is uncertain. The determination to provide a
valuation allowance is dependent upon the assessment of whether it is more likely than not that sufficient future taxable income will be generated to utilize
the deferred tax assets. Based on the weight of the available evidence, which includes the Company's historical operating losses, and lack of taxable
income, the Company provided a full valuation allowance against the deferred tax assets for the U.S. and some of the international entities. The valuation
allowance increased by $127.4 million, $17.4 million and $47.0 million during the years ended January 31, 2022, 2021 and 2020, respectively.
As of January 31, 2022, the Company had net operating loss carryforwards of approximately $2.0 billion and $1.2 billion available to reduce
future taxable income, if any, for federal and state income tax purposes, respectively. The U.S. federal and state net operating loss carryforwards will begin
to expire in 2028 and 2023, respectively. As of January 31, 2022, the Company had research and development credit carryforwards of approximately $24.2
million and $17.0 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 2029. California credit carryforwards have no expiration date. As of January 31, 2022, the Company has U.S.
federal foreign tax credits carryforwards of $700,000 that will begin to expire in 2025. As of January 31, 2022, the Company had foreign net operating loss
carryforwards of $45.0 million, the majority of which may be carried forward indefinitely.
Federal and state laws impose restrictions on the utilization of net operating loss carryforwards and R&D credit carryforwards in the event of a
change in ownership of the Company, which constitutes an ‘ownership change’ as defined by Internal Revenue Code Section 382 and 383. The Company
experienced an ownership change in the past that does not materially impact the availability of its net operating losses and tax credits. Should there be
ownership change in the future, the Company’s ability to utilize existing carryforwards could be substantially restricted.
As of January 31, 2022, the Company did not have unremitted earnings when evaluating the outside basis difference relating to its U.S. investment
in foreign 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 taxes that would be payable upon remittance of these lower tier earnings were not material as of
January 31, 2022.
The Company accounts for uncertainty in income taxes in accordance with ASC 740. Tax positions are evaluated in a two-step process, whereby
the Company first determines whether it is more likely than not that a tax position will be sustained upon examination by tax authorities, including
resolutions of any related appeals or litigation processes, based on technical merit. If a tax position meets the more-likely-than-not recognition threshold it
is then measured to determine the amount 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 of being realized upon ultimate settlement.
F-37

The following table summarizes the activity related to unrecognized tax benefits (in thousands):
For the year ended
January 31,
2022
2021
2020
Unrecognized tax benefit — beginning of year
$
20,592 
$
14,864 
$
20,077 
Gross increases — prior year tax positions
1,806 
52 
620 
Gross decreases — prior year tax positions
— 
(160)
(11,538)
Gross increases — acquisitions
— 
3,282 
4,174 
Gross increases — current year tax positions
3,715 
2,586 
1,531 
Foreign currency remeasurement
(679)
— 
— 
Settlements
— 
(32)
— 
Unrecognized tax benefit — end of year
$
25,434 
$
20,592 
$
14,864 
As of January 31, 2022, 2021 and 2020, $11.8 million, $10.2 million, and $6.4 million of the unrecognized tax benefits were accounted for as a
reduction in the Company’s deferred tax assets. Due to the Company’s valuation allowance, only $14.3 million of the $25.4 million of unrecognized tax
benefits would affect the Company’s effective tax rate, if recognized. The Company does not believe it is reasonably possible that its unrecognized tax
benefits will significantly change in the next twelve months, aside from $3.7 million related to ongoing audit activity which the Company expects to settle.
The Company recognizes interest and penalties related to unrecognized tax benefits as income tax expense. There was $2.0 million of accrued
interest and penalties related to unrecognized tax benefits as of January 31, 2022, and $1.4 million as of January 31, 2021.
The Company’s material income tax jurisdictions are the United States (federal) and California. As a result of net operating loss carryforwards, the
Company is subject to audits for tax years 2008 and forward for federal purposes and 2009 and forward for California purposes. There are tax years which
remain subject to examination in various other jurisdictions that are not material to the Company’s financial statements.
Note 14. Net Loss per Share
Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding during the
period, without consideration for potentially dilutive securities as they do not share in losses. During periods when the Company is in a net loss position,
basic net loss per share is the same as diluted net loss per share 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 Coupa Software Incorporated during the
years ended January 31, 2022, 2021 and 2020 (in thousands, except per share amounts):
January 31,
2022
2021
2020
Numerator:
Net loss attributable to Coupa Software Incorporated
$
(379,039)
$
(180,117)
$
(90,832)
Denominator:
Weighted-average common shares outstanding
73,816 
68,559 
62,484 
Net loss per share, basic and diluted, attributable to Coupa Software Incorporated
$
(5.13)
$
(2.63)
$
(1.45)
F-38

Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share for all periods
as the inclusion of all potential common shares outstanding would have been anti-dilutive. Potentially dilutive securities that were not included in the
diluted per share calculations because they would be anti-dilutive were as follows:
As of January 31,
2022
2021
2020
Options to purchase common stock
1,840,947
2,608,640
4,233,435
RSUs
2,124,649
2,530,280
2,830,782
Unvested common shares subject to repurchase
118,677
243,775
66,450
Shares committed under the ESPP
85,120
64,456
80,775
Contingent stock consideration for DCR acquisition
171,073
377,138
377,138
Holdback shares for Aquiire acquisition
—
—
37,570
Total
4,340,466
5,824,289
7,626,150
Additionally, approximately 4.7 million, 5.0 million and 39,000 shares underlying the conversion option in the 2026 Notes, 2025 Notes and 2023
Notes, respectively, are not considered in the calculation of diluted net loss per share as the effect would be anti-dilutive. These numbers of shares are
subject to adjustment up to approximately 6.2 million, 6.8 million and 0.1 million shares for the 2026 Notes, 2025 Notes and 2023 Notes, respectively, if
certain corporate events occur prior to the maturity date or if the Company issues a notice of redemption. The Company uses the treasury stock method for
calculating any potential dilutive effect of the conversion option on diluted net income per share attributable to Coupa Software Incorporated, if applicable.
During the year ended January 31, 2022, the average market price of the Company’s common stock exceeded the conversion price of the 2023 Notes and
2025 Notes of $44.51 per share and $159.60 per share, respectively, and did not exceed the conversion price of the 2026 Notes of $296.45 per share.
Note 15. Business Segment Information
The Company’s chief operating decision maker is the Chief Executive Officer (“CEO”). The CEO reviews the financial information presented on
a consolidated basis for purposes of allocating resources and evaluating the Company’s financial performance. Accordingly, the Company has determined
that it operates in a single reporting segment: cloud platform.
Note 16. Employee Benefit Plan
The 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 certain
percentages of employee contributions. Both employee and employer contributions vest immediately upon contribution. During the years ended
January 31, 2022, 2021 and 2020, the Company’s contributions to the 401(k) Plan amounted to approximately $5.2 million, $3.9 million and $2.9 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 not
significant.
Note 17. Related Parties
One of the Company’s customers, T. Rowe Associates, Inc., is also an investment adviser of certain of the Company’s stockholders. T. Rowe
Associates, Inc. held more than 10% of the Company’s voting common stock during the year ended January 31, 2022. The Company recognized
subscription revenue from this customer of approximately $1.0 million, $1.1 million and $700,000 for the years ended January 31, 2022, 2021 and 2020,
respectively. The Company had no receivables balance outstanding from this customer at January 31, 2022 or 2021.
F-39

Exhibit 21.1
Certain Subsidiaries as of January 31, 2022*
Name
Jurisdiction of Incorporation or Organization
ConnXus, Inc.
Delaware
Bellin GmbH
Germany
Bellin Treasury Alliance Ltd.
United Kingdom
Bellin Treasury International GmbH
Germany
Bellin Treasury Services Ltd.
Canada
Bellin Treasury Services USA, Inc.
Delaware
Coupa Colombia SAS
Colombia
Coupa Deutschland GmbH
Germany
Coupa K.K.
Japan
Coupa Operations, Inc.
Delaware
Coupa Operations, S de R.L. de C.V.
Mexico
Coupa Serviços Em Tecnologia Da Informação E Marketing Promocional
Ltda.
Brazil
Coupa Software Australia Pty Ltd.
Australia
Coupa Software Canada Inc.
Canada
Coupa Software DMCC
United Arab Emirates
Coupa Software France
France
Coupa Software Godo Kaisha
Japan
Coupa Software India Private Limited
India
Coupa Software Proprietary Limited
South Africa
Coupa Software Sweden AB
Sweden
Coupa Software Switzerland AG
Switzerland
Coupa Software UK Limited
United Kingdom
Exari Norway AS
Norway
LLamasoft Europe Holdings Limited
United Kingdom
LLamasoft, Inc.
Delaware
LLamasoft K.K.
Japan
Much-Net GmbH
Germany
Opex Analytics, LLC
Illinois
Opex Analytics Private Ltd.
India
Pana Industries, Inc.
Delaware
Yapta, 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) of Regulation 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, 333-223997, 333-230542, 333-
237294, and 333-254464) pertaining to the 2016 Equity Incentive Plan, 2006 Stock Plan, and the 2016 Employee Stock Purchase Plan of Coupa Software
Incorporated and the Registration Statements (Form S-3 Nos. 333-239190 and 333-249794) of Coupa Software Incorporated and in the related
Prospectuses of our reports dated March 16, 2022, with respect to the consolidated financial statements and schedule of Coupa Software Incorporated, and
the effectiveness of internal control over financial reporting of Coupa Software Incorporated, included in this Annual Report (Form 10-K) for the year
ended January 31, 2022.
/s/ Ernst & Young LLP
Redwood City, California
March 16, 2022

Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, 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 the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial 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 in
Exchange 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, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, 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 our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
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 the
effectiveness 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 recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’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 reasonably
likely 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 control
over financial reporting.
Date: March 16, 2022
By:
/s/ Robert Bernshteyn
 
Name:
Robert Bernshteyn
 
Title:
Chief Executive Officer, Director
 
 
and Chairman of the Board
 
 
(Principal Executive Officer)

Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Anthony Tiscornia, 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 the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial 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 in
Exchange 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, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, 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 our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
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 the
effectiveness 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 recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,
the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’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 reasonably
likely 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 control
over financial reporting.
Date: March 16, 2022
By:
/s/ Anthony Tiscornia
 
Name:
Anthony Tiscornia
 
Title:
Chief Financial Officer
 
 
(Principal Financial Officer)
 
 
 

Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Robert Bernshteyn, Chief Executive Officer of Coupa Software Incorporated (the “Company”), certify, pursuant to 18 U.S.C. Section 1350, as
adopted 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, 2022 (the “Report”) fully complies with the requirements of
Section 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 the Company.
Date: March 16, 2022
By:
/s/ Robert Bernshteyn
 
Name:
Robert Bernshteyn
 
Title:
Chief Executive Officer, Director
 
 
and Chairman of the Board
 
 
(Principal Executive Officer)

Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Anthony Tiscornia, Chief Financial Officer of Coupa Software Incorporated (the “Company”), certify, pursuant to 18 U.S.C. Section 1350, as
adopted 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, 2022 (the “Report”) fully complies with the requirements of
Section 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 the Company.
Date: March 16, 2022
By:
/s/ Anthony Tiscornia
 
Name:
Anthony Tiscornia
 
Title:
Chief Financial Officer
 
 
(Principal Financial Officer)