$46 million loss on $83.6 million in revenue = $1 billion valuation?

Posted on September 13, 2016


I have heard of the new math, but based on the company’s 2015 financial performance, I must admit that I cannot understand Coupa’s $1 billion valuation.

Am I missing something?

Of course it doesn’t look like I am entirely alone on this one.


In his recent Business Insider article, Eugene Kim couldn’t seem to fully explain the Coupa valuation either.

Kim, who is a tech writer with BI, wrote that the valuation “makes Coupa’s IPO an interesting case to watch as its annual revenue is much smaller than that of some of the other tech companies with similar valuations.”

He then went on to list the companies who had also achieved the coveted unicorn status, but had notably higher revenues.

So what’s up with Coupa? Are they a diamond in the rough with solid revenue prospects or, are they going to go down the same road of say a Nortel or Uniphase? You remember these one time industry giants?

When it was a high flyer, JDS Uniphase’s (now known as JDSU)  stock traded at $153 a share. When everything blew up during the dot.com bust, the same shares dropped to less than $2.

At least JDSU is still around.

Nortel  on the other hand . . . well, that is another story.


In September 2000, the company had a market capitalization of $398 billion Canadian. Even with the exchange rate, that is still a hefty sum.

However by August 2002, Nortel’s market cap fell to $5 billion, as it’s stock price plummeted from $124 to $0.47. A significant number of private investors as well as pension funds, were decimated by the company’s steep decline. By the time Nortel had mercifully ceased operations, 60,000 employees in total had lost their jobs.

Of course not everyone was affected by Nortel’s demise – at least not in the same way. CEO John Roth was able to cash in his own stock options “for a personal gain of C$135 million in 2000 alone.”

This brings us back to the Kim article, which raises the following question; who are ultimately the real winners with the Coupa IPO?

According to Kim, “Coupa’s IPO should be a nice pay day for Battery Ventures, who owns over 16% of the company,” and its CEO Robert Bernshteyn, who owns a “5.8% share of the company.”

Now I personally at this stage, would not group Bernshteyn in the same category as Roth. While it has been some time since I have talked with him, the Coupa CEO – at least in the past – as come across as being both a sincere and earnest individual, who has a genuine passion for his company. Only time will tell if the big bucks will change him.

In the meantime, Kim is right when he says that Coupa’s IPO is an interesting case to watch. I know that I will be watching Coupa closely.


Posted in: Commentary