Coupa decides to increase equity for employees
Coupa awards employees an off-cycle pay rise in lieu of additional equity as the procurement software provider’s stock, down 83% from its 2021 high, continues to slide amid deterioration economic conditions and rising inflation.
The price will affect about 90% of the company, a spokesperson told Protocol, declining to disclose the amount of the increases. The remaining 10% are largely the management team, the spokesperson added. Employees will also still be eligible to receive regular year-end raises.
While the company has touted the decision to do cash bonuses instead of issuing additional RSUs as a move that will bring immediate benefit to employees struggling with rising prices for everything from baby formula to plane tickets. , the pick also perhaps reflects the reality that it could be a while before Coupa’s stock recoups lost ground.
“Our immediate goal is to help people immediately, and raising wages is the fastest way to respond to the crisis people are feeling from rising prices and volatile stock markets,” he said. said Coupa’s spokesman when asked about the optics.
While struggling tech companies like DoorDash and Robinhood have given their employees more equity amid the market decline, software companies don’t seem to be advertising such bonuses with the same fervor, instead. opting for immediate fundraising.
But Coupa has been hit harder than other enterprise technology providers, many of which suffered a major bump during the pandemic and are now suffering from a broader tech stock sell-off. Coupa shares have been in near-constant decline since February 2021, falling to $63 as of Thursday’s market close.
While Coupa has had a bit of a recovery, the road ahead looks just as rocky as the past two years. Sales rose 18% better than expected in the three months of March to $196 million. And the company expects 2023 sales to be in line with Wall Street forecasts.
But if economic conditions were to deteriorate and force businesses to cut back on IT spending — which, although it doesn’t appear to have happened yet, is expected to happen by the end of the year — many might consider postponing or stopping major ERP revisions, such as moving Ariba from SAP to Coupa. As of now, however, CEO Rob Bernshteyn sees these types of large-scale projects “slowly coming back online.”
And despite the pandemic wreaking havoc on supply chains, many companies are still in the early stages of overhauling this part of their business, according to Bernshteyn. This is bad news for Coupa, which now has to wait even longer to reap the rewards of such a change. A bright spot could be mid-sized businesses, which Coupa sees as a key avenue to increase sales.
“It’s certainly promising” Bernshteyn told investors during the recent outlook conference call.