May 11, 2023

Goodbye Mr Bernshteyn, what Coupa will be like tomorrow?

By Patrick Chabannes

On May 1, 2023, a thunderclap sounded in the small world of purchasing information systems. Mr. Rob Bernshteyn, Chairman and CEO, announced his departure from Coupa only four months after the announcement of the acquisition of the vendor, world leader in Source to Pay solutions, by Thoma Bravo. How can one not wonder when in December 2022, Holden Spaht, Managing Partner of the investment firm proudly announced: “We look forward to working with Rob and the rest of the management team to continue to invest in the company’s product strategy while driving growth both organically and through M&A”.

The first question is: Why so quickly and without a plan B

Since 2009, Rob Bernshteyn has built a vision, surrounded himself with quality people, and most importantly built a Coupa spirit over those fourteen years. Because, yes, there is a Coupa spirit, a spirit that is unanimously shared by my acquaintances who have been involved in the company’s success for many years: freedom, work and responsibility.

Of course Rob was not going to stay for more than a year or two, but such a personality cannot be replaced at the drop of a hat by a Thoma Bravo’s boy. It would have been necessary to present a leader and a vision at the same time in order to get the whole community of customers, partners and employees on board. 

The second question: What short-term action plan with Thoma Bravo? 

One only has to look on the internet to see that this investor does not accompany the growth of its acquisitions in the Tech sector, as it seems that its objective is the maximization of the profit to be realized by an exit in 3 to 5 years. In my opinion, Rob’s hasty departure weakens the situation by waving the lever of payroll reduction, a classic and easily justifiable tool in a 2023 Tech in operating cost reduction mode since the magic money has somewhat disappeared. 

The third question: What about the Coupa of tomorrow: Purchasing, Finance or Supply Chain? 

The latest vision shared by Rob Bernshteyn at the time of the acquisition announcement is “Accelerating our vision to digitally transform the Office of the CFO”. Since 2013, Coupa has acquired, to my knowledge, 20 companies in the areas of travel and expense, purchasing and procurement, finance and supply chain. While the synergy of P2P with Travel & Expenses, Coupa Pay and cash management (Bellin) is very clear and aligned with the vision delivered above, the $1.5 billion investment in Supply Chain with the purchase of Llamasoft and its 650 employees raises a question. An insistent question when we compare this asset with the 8 billion dollars put on the table by Thoma Bravo, we start to imagine, to guess that even with a valuation reduced by a third…. 

The fourth question: $8 billion? 

At $81 a share, which was priced at $42 in November 2022, Thoma Bravo is putting $8 billion on the table, which is more than 12 times the revenue from subscriptions in 2022 ($725 million in sales, including $634 million from subscriptions). If the figure is already high, the calculation of the PER seems to make the investor dizzy. The value of the share is a return to 2019, following the general trends of the Tech industry. 

The answer to the future valuation question lies

  • either in the company’s strategic plan in a growing market supported by the business vision expressed by Rob: accelerating our vision to digitally transform the Office of the CFO,
  • or in a search for financial value with a decrease in the HR item, divestment of assets such as Llamasoft and a commercial growth policy in the continuity of the remarkable +34% both on new market segments such as ETIs and maximizing revenues from current customers.

In the end, what to think about it ?

In spite of unfavorable indices, I like to think, against all odds, that the COUPA spirit will remain for the benefit of its employees and customers and that the company will continue to innovate, certainly for the digital transformation of the CFO’s office, but also and above all for the Procurement Function and the Supply Chain to enable them to take up the challenges of this beginning of the century marked by the return to a Westphalian world.

Lectori salutem, Patrick