BRAZIL - 2019/12/05: In this photo illustration the Coupa Software logo is seen displayed on a ... [+]
Coupa Software’s stock (NASDAQ: COUP) is up by over 255% since December 2018. On the other hand, peer Smartsheet’s stock (NYSE: SMAR) is up a good 84% during the same period. This, despite the fact that Smartsheet’s revenue growth for FY 2020 (ended January 2020) stood at 52% similar to 50% for Coupa Software in the same period. Does that make sense? We don’t think it does, and believe Smartsheet is likely a strong investment right now. Our dashboard Smartsheet vs. Coupa Software: Does The Stock Price Movement Make Sense?, has the underlying numbers.
Sure, Coupa Software’s profit margins (net income as a percentage of sales), are better at -23.3% versus -35.4% for Smartsheet, but we believe the difference doesn’t explain the 2.5x growth in Coupa Software’s stock when compared to Smartsheet.
How Do The Core Businesses For Smartsheet And Coupa Software Compare?
Let’s look at the core business prospects a bit more closely. Smartsheet offers a software as a service (SaaS) offering for organizations to collaborate on project timelines, documents, calendars, tasks, and other works. The motive behind the offering is to have a universal application for work execution that does not require coding capabilities and is an alternative to rigid and structured applications. As of January 2020, the company had 99K customers which included Fortune 100 and Fortune 500 companies.
Coupa Software also has a SaaS offering with a focus on helping companies gain visibility and control over the money and resources spent. The core platform consists of procurement, invoicing, expense management, and payment modules that form the transactional engine for managing a company’s business spend. As of January 2020 the company had 1.3K customers with a cumulative spend under management of $1,655 billion.
In the current world where more companies are preferring remote work, unstructured and dynamic applications like Smartsheet can prove to be very useful. To distill, we believe that Smartsheet is likely to outperform Coupa Software, if not near-term, at least in the medium- to long-run.
While Smartsheet looks like a better investment option compared to Coupa Software in the long run, which S&P 500 component stocks have the best chance of outperforming the benchmark index? Our 5 In the S&P 500 That’ll Beat The Index: TWTR, ISRG, NFLX, NOW, V look promising.
See all Trefis Price Estimates and Download Trefis Data here
What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For CFOs and Finance Teams | Product, R&D, and Marketing Teams
