Q2 2021 Coupa Software Inc Earnings Call

September 8, 2020

Yes.

Good day, ladies and gentlemen, and welcome to the Cuba software second quarter fiscal year 2021 earnings release Conference call.

At this time all participants are in a listen only mode at the conclusion of our prepared remarks, we will conduct a question and answer session. If you'd like to answer a question you May press star one on your Touchtone pad at anytime if anyone should require assistance during the conference. Please press the star zero on your Touchtone pad at any time as a reminder, this call.

Is being recorded.

I would now like to introduce your host for today's conference call Mr., Stephen Horwitz VP of Investor Relations Mr. Jorge you May begin your conference.

Thank you good afternoon, and welcome to Cook with of course second quarter Conference call. Joining me today, our Robert as being the CEO and Todd Board Cupet CFO.

Our remarks today include forward looking statements about guidance and future results of operations strategies market size products competitive position and potential growth opportunities or actual results may differ materially be materially different forward looking statements involve risks and uncertainties and assumptions that are describing our most recently filed 10 to.

These forward looking statements are based on our beliefs and assumptions today, and we disclaim any obligation to update any forward looking statements.

If this call is replayed after today the information presented may not contain current are accurate information. We also present, both GAAP and non-GAAP financial measures reconciliation of certain of these measures is included in today's earnings release, which you can find on our Investor Relations website.

Replay of this call will also be available unless otherwise stated growth comparisons are against the same period of the prior year with that I will now turn the call over.

All right well, thank you Steven Hello, everyone and thank you for joining us.

When we started this journey more than a decade ago, we had a very clear vision to forever changed the way things were done in what was the procurement space and solve the broader challenges and how businesses managed their spending with the support of innovative and re imagined information technology solutions.

We sought to achieve this by delivering 100% cloud based comprehensive business spend management platform that would scale for virtually every company in the world unlocking massive amounts of untapped value.

Our platform would provide real time visibility control automation spend compliance and so much more.

We set out to help our customers be more more agile to flourish and great times and be more resilient in difficult times.

And most importantly, we wanted these customers to be smarter together with something completely unprecedented in our industry. The concept of the community and the power of community intelligence. We've made some very significant strides towards fulfilling our objectives as evidenced by the nearly two trillion dollars in Cumulus.

Of spend under management that has now flowed through Cooper's transactional core.

Looking at our financials for this quarter, we once again still there we once again again delivered record revenue of 126 million. Despite the global macroeconomic headwinds present today.

It's important to note. The while we are largely focused on growth. We're also focused on profitability and cash flows to that end Q2 was our ninth consecutive quarter of profitability on a non-GAAP basis.

We also reached a new milestone this quarter, having generated more than $100 million in adjusted free cash flow over the trailing 12 months.

Our financial results clearly illustrate the leverage in our model not to mentioned the strength in our balance sheet.

We delivered strong solid results across the board, but make no mistake, we are playing to win the market over the long term.

Let me share some additional updates about our business sales cycles have not surprisingly extended somewhat from what we were seeing last year. However, many customer prospects quest pause in the March and April timeframe, Reengaged and became the newest members of our could become indeed.

We're also seeing strong pipeline build and an increase in RFP activity, our new customers and prospects are focused on business really resilience and they are seeing Cooper's platform as mission critical for today's new realities.

Many of these customers of testify art, our testifying to the importance of our value as a service platform. A Prime example of this is trans Union, who spoke about Kupol on their June earnings call. They discussed their strategic initiative to transform global operations by creating consistent standards around the world.

They specifically highlighted that they are implementing a full lifecycle of procure to pay system from Cooper, allowing complete business spend visibility globally.

Snyder Electrics global director of PDP transformation shared comments about their recent successful golub. She said I'm extremely proud of my team and deploying Cooper software harmonizing processes and centralizing our people across France, U.S. and Mexico, we're bringing simplification compliance and.

Organizational efficiency around the world Delighting our stakeholders.

Another mentioned came from Westpac Bank.

Theres CPL said amazing that someone can access a procurement business application and make purchases within 15 seconds without any manual instructions of training.

We're excited to be implementing this at Westpac. Thank you Cooper and Deloitte for being on this journey with US clearly there CPL quickly discovered the user centric aspect of our platform also known as the EU in Cuba.

Now this quarter, we completed 100% of our go lives remotely and did so with great efficiency, we have reduced implementation times by roughly one month as customers are relying more heavily on our prescriptive approach around best practices.

Now let me highlight a few of the many customers that have gone live across more than a dozen industries during the quarter.

Representing the consumer products industry ATM, a fortune 50 global leader in human and animal nutrition as recently gone live with Cooper.

Even with project teams working remotely the implementation was completed on schedule.

Joe candidate VP Global procurement said, the pandemic certainly added challenges, but I'm extremely proud of our ATM team coop and our business partners for their relentless engagement and focus which allowed us to deliver this go live as planned.

Using Cooper ATM enhances end to end processes improve data insights establishes a common platform for spot bids and standardizes and automates core processes.

This is done through a business spend management platform that makes it easy for colleagues to request the goods and services they need and for business partners to engage with ATM.

[noise], representing the process manufacturing industry Grupo cement those that you, our and leading supplier and producer of cement and concrete across Mexico, United States in Canada has gone live on Cooper.

The focus of GCC was to automate supplier management increased spend control and generate savings.

With Cooper GCC has gone from disconnected purchasing processes to a single digitized platform and has procured millions of dollars in Peel back spend in just the first few weeks of being life.

Such accelerated user adoption has helped GCC to increase spend under management and elevate cost savings through contract compliance.

In the oil and gas industry Pro Petro holdings completed its implementation of Cooper to enable process improvements for greater efficiency and enhanced spend control using Cooper propetro established best practices across procure to pay including the use of online catalogs to ensure spend compliance and dynamic approval chains for spend visit.

Realty and improved financial controls within the first 12 days that process millions of dollars in pre approved spend through Cooper.

And then the relatively hard hit retail industry Canadian Tire Corporation went live with Cooper to standardize and automate non merchandise procure to pay purchases leveraging Cooper Canadian tire has replaced multiple this integrated systems across us retail locations with a unified enterprise wide platform or.

Already more than $1 billion of spend has flowed through the platform.

Our cross industry impact doesn't end with these examples we also completed implementations in the banking business services industrial manufacturing insurance life Sciences nonprofit technology and transportation industries during the quarter.

Now let me welcome some of our new customers representing companies of all industries and sizes as well first let me highlight some up and coming companies such as confluent Delhi's GAAP materials sales loft.

Sankar chrome shoreline education, well top and many others. We also welcome to mid sized organizations, including CSC Service works strategic Education, Toyota Financial Australia, and others and of course, we welcomed large enterprise companies, such as Ken for cycle and carriage and Gen petroleum.

Them, one main financial shape LER.

Second Sui chemical Westpac banking and numerous others.

Not only are companies of all sizes, joining our community, but also across nearly 20 different industries.

Now as you've heard me say many times before our continued progress in providing customers with prescriptive insights to pin Cooper is a major reason our prospects and customers are in lock step with our vision.

There was a revolution happening in business, where companies are cognitively, they're with us and that they will have a strategic advantage if they can leverage insights from our growing customer community.

On a side note I'm humbled to have the opportunity to share personal thoughts on the subject in our new book smarter together, which is being released this week.

This new book is essentially a position paper that builds upon our first book value as a service.

Let me share. An example of how community intelligence help the brought group a company who provides specialty craft a maintenance services to diverse industries across the United States and Canada and employs more than 13000 employees in over 400 facilities reduce fraudulent spend.

As construction and maintenance projects ramp up at the end of each year, the product group higher seasonal field workers with so many seasonal employed cementing expenses.

Difficult for them to review all expense reports for suspicious transactions.

This leaves opportunities for spend leakages and even fraud.

Hooper community intelligence has helped them addressed this problem by detecting suspicious transactions at scale across all of their spend.

Using artificial intelligence to detect patterns from the Cuba community spend that deviates from expected behaviors that would otherwise fly under the radar is flagged as suspicious.

In the first our at the turning on these capabilities the broad group identified tens of thousands of dollars of suspicious transactions.

Identified duplicate transactions and even discovered an employee who had submitted thousands of dollars of seemingly legitimate small dollar expenses that were fraudulent.

With community Intelligence Brock group prevented spend leakage and fraud.

The knowledge of the comes from access to data is also extremely important when strategically managing inventory.

A detailed inventory studies have shown that company inventory is inaccurate more than one third of the time in nearly half of companies either don't track inventory would do so manually.

When you consider that inventory represents approximately 15% of the total assets for public companies in the United States Theres clearly a big disconnect.

To remedy the disconnect Cooper has worked with more than 100 customers to improved visibility management and optimization in the area of inventory management.

Whether youre inventory includes a camera TV medical supplies or any direct components that are part of your manufacturing process by linking inventory directly with procurement customers can optimize their spend.

One of our enterprise customers Amazon takes advantage of this real time visibility with all their packing materials, such as boxes and labels to ensure that theyre fulfillment centers around the world always have the materials necessary to quickly ship packages the customers.

By having a single system of record.

Orders receipts and inventory they can ensure that they aren't placing duplicate orders and then employees are making purchases from approved suppliers.

With hundreds of thousands of transactions every month the optimization of this inventory process saves the companies see significant amounts of money.

Moving on.

The pandemic induced focus on cost reduction and risk mitigation has led to higher demand for quick ROI solutions, such as coop advantage Cooper risk assess cooper's strategic sourcing and Cooper source together.

An example of how our customers address this focus while Simon simultaneously continue to tap into our open platform. The owing Cooper can be seen with strategic sourcing.

A great example, as illustrated by the quote by a quote from Procter and Gamble's associate director of purchasing.

He said with the help of Cooper's sourcing tools, Procter and gamble significantly optimized several hygiene raw materials purchases with Cooper. The team was able to manage the intense sourcing process more efficiently collecting bids and running numerous complex scenarios to optimize awards in a short period of time.

The process is now more robust and we're better able to achieve our stewardship goals.

Another area, where our customers are extracting meaningful value is cooper pay.

As most of you know by now our pain module has strong value propositions for both large enterprises and midsize customers apart from the efficiency that accompany of Eneas any size can extract from integrating payments into their spend platform enterprise customers are able to save hundreds of thousands of dollars per year by eliminating the need for back.

Okay integrations at the same time midsize companies can mitigate it can migrate from manual digitized processes.

One example of a mid sized company that has digitize their payments approach is samba Nova a next generation AI company that takes innovations from advanced research organizations around the world and make them available to everyone everywhere.

One of our earliest Cooper pay customers. Some inova uses the entire pay module and platform to consolidate technology and banking scaled payment processes and significantly improved compliance and control implementing Cooper pay that we're running a solid process using spreadsheets.

Before implementing copay, they were running a salad process using spreadsheets hundreds of invoices covering millions of dollars per month were being handled manually. These manual processes not only increased the potential for error, but they were far from optimal for internal process purposes. They also had an inefficient working capital approach often paying bills.

By paper check in 15 days in fear of having late payments.

Scalability was added the question.

To fix these issues saumen over wanted a unified process and integrated platform working closely with our customer success team, who pay was implemented in less than three months, a great example of accelerated or the a and Cooper within 90 days of being live.

They were paying 95% of their invoices through the Cooper platform Saumen over now have confidence in their simple and track of trackable digital payments process, Dave even commented on how feedback from the suppliers is overwhelmingly positive with an appreciation that the money is in the bank and a remittance.

This is right there and Cooper.

And the ease of cross border payments has enabled them to confidently scale internationally.

Perhaps thats why they're VP of finance said in the recent Webinars Cooper pay is an absolute no brainer.

We appreciate the finance people realize the value. The Cooper pay provides in fact, it's part of our strategy to continue bringing more value to the office of the CFO as we expand our already comprehensive offering known as the C in Cuba.

To that end during the quarter, we completed the acquisition of balance a leader in Treasury management now owns offering provides real time real time transparency on cash balances.

Centralize the control of cash accounts to prevent fraud provides efficient liquidity management and supports direct bank to bank communications for money transfer Treasury is another important department within companies that Cooper is working to help and silo and make part of a strategic approach for any business.

Our intention with Cooper Treasury management is to make spend contract data and the risk risks associated with both clearly visible to an actionable by the treasury team.

As we work to synergize, our integrated offering feature capabilities of Treasury will include access to community intelligence, which will show our customers best practices for conserving cash there will also be made aware of potential contract risks if a customer has filed for bankruptcy.

These are just a few examples representing only the tip of the iceberg when it comes to the value we will be able to create by incorporating treasury management into the coupe of platform.

As I've noted before anytime we look at a potential acquisition, we're focused on adding technology components that maximize and enhance the value of our organic transactional core engine and or augmenting. This engine with key advanced power applications that optimize the value of these transactions.

This acquisition dresses both aspects of this strategy, most importantly, balanced culture and values aren't close alignment with ours, and we are already well on our way towards unifying as one.

Now, let's move onto the Cooper business spend index or be ESI.

To be ASI is a leading indicator of economic growth analyzing hundreds of billions of dollars, an aggregated and anonymized business spend before getting into the Q3 outlook I'd like to once again reiterate that that the side data is not necessarily indicative of the trends, we're seeing in Cooper's business.

I previously shared that the Q2 via DSI showed a significant decline in economic confidence likely as in response to the pandemic. The Q3 DSI indicates that business spent sentiment has modestly improved likely as a correction to the acute scenario witness during Q1.

Sector data indicates financial services retail and high Tech showed improvement quarter over quarter, although although as important to note that all sectors remain below trend for example spend sentiment in the retail sector continues to be significantly impacted by the pandemic, but more online shopping has likely can.

Attributed to the slight improvement in sentiment relative to the previous quarter.

Also given the continued impact on global supply chains spend sentiment in manufacturing decreased slightly in Q3.

For a closer look at our Q3 be OSI, where we'll share more details on each of these trends. Please visit www dot spend index dotcom.

Moving on now let me now recognize a few of my colleagues that have made outstanding contributions that clearly demonstrate kubis core values.

Let's start with Kevin Chris for George who was recently recognized by his peers for exemplifying our number one core value of ensuring customer success.

Customers consider Kevin to be a strategic resource often feeling like he is part of their company. He holds the customer accountable for their commitments and always delivers on his.

Next I'd like to mention Terry Kim was recognized for focusing on results. We when many deals because of Terry He works across teams to ensure we are as accurate as possible upfront.

This sets everyone out for success during implementation.

He always pushes projects towards the best outcomes for the customer.

And finally Srinivas canon embodies striving for Exelis excellence, three passionately pushes everyone to connect collaborate and improve and he does sell with tremendous inspiration and professionalism.

Congratulations and thank you, Kevin Terry and story.

Further to our core values, we showed great alignment across our employee base in a survey completed by Great places to work, 97% of respondents ascribed to our number one core value of ensuring customer success, 98% ascribe to our number two core value of focusing on results and 97 per.

Sent ascribe to our number three core value of striving for excellence.

My aspiration is to get all of these two 100%.

I also believe that having nearly all our employees ascribing to these core values is a big reason Cooper was included in the list of best Enterprise software companies to workforce by glass door, we are proud and humbled to have 95% of survey respondents recommend working at Cooper.

So in conclusion, we believed that the our cake old fashioned methods of attempting to deliver value in our industry will soon be a thing of the past frankly, those who have visits have been disappointed in the past effect fuming and they've had it up to here, we aspire to a completely different level of.

Customer value creation.

As we unleash value for our customers like never before we will continue to emphasize the importance of bill business resilience decisions made today will affect how companies persevere during difficult times and how they positioned themselves for even stronger economic conditions in the future.

In closing we are currently well into our 47th quarter of execution.

And as we guide our customers through these times as a key priority. We simultaneously remain focused on Cooper's long term success and market leadership.

With that let me now handed over to our Chief Financial Officer, Todd Ford, who will review, our Q2 financial results and provide our outlook for the third quarter and updated fiscal 2021 Todd.

Thanks, Rob and good afternoon, everyone. While the world has changed Raul adapting to the new normal our strategy accrued by has not changed we continue to manage our business to 30% annual revenue growth disciplined sales and marketing investment and demonstrating leverage at our operating model as we continue to grow specific.

Great operating cash flow margins.

As we continue to grow our business and extend our market leadership position, we'll do so from a position of operational and financial strength, where they focus on resiliency over the long term.

Now getting into some of the details starting with Q2 results.

Total revenue for Q2 grew 32% year over year to $125.9 million subscription revenue for Q2 was $111.6 million up 34% compared to Q2 blaster comprising 89% of total revenue professional services and other revenue was 14.3.

Million dollars.

Calculated billings for Q2 were $130.5 million up from $107.7 million in Q2 of last year, representing a 21% year over year increase.

For the trailing 12 month calculated billings were $518.5 million up from $378.8 million in the previous trailing 12 month period, representing a 37% increase.

Total deferred revenue at the end of Q2 was $249 million.

From $244.5 million at the end of Q1 and up from $188.9 million at the end of Q2 of last year, our year over year increase of 32%.

When considering our billing results I'd like to remind you of the comments from last quarter on the difficult compare that existed going into the quarter. There were two events from Q2 of last year that impacted the year over year compare for billings this year.

Specifically, one some of the new customer billings, which were both in Q2 of last year, where build in Q1 of this year for the terms of the contract and to a one type a onetime spike in billings related to the exemplary acquisition that we completed in Q2 of last year.

The impact to Q2 billion from these two events was approximately $15 million from a year over year compare perspective.

Let's now turn to margins are results of operations.

Our second quarter non-GAAP gross margin was 72.1%, which was above our guidance, a 70% to 71%, but down from Q1. The sequential decrease was primarily due to the impact of our acquisition of Ballan now Cooper Treasury management, we typically see a drag and gross margin for the first few quarter after.

Completing an acquisition due to immediately post acquisition, we carry the full burden of acquired businesses costs, but don't recognize 100% of the revenue because of the write down of deferred revenue in the purchase accounting and also it typically takes a few quarters to complete the full business integration to the point, where we can.

Take advantage of expense related synergies such as the benefit of combining supplier purchases, we expect to see an impact on margins this quarter and for part of Q4 normalizing for the most part by the end of the year.

Consistent with our long term strategy and disciplined approach, we continue to make investments in our business, including hiring new employees.

Even so we were yet again able to demonstrate the scale and leverage in our operating margin and adjusted free cash flow result for the quarter, we delivered non-GAAP operating income of $12.3 million as well as non-GAAP net income of $15.2 million or 21 cents per share on 73.

In diluted shares I'd also like to note that we booked a general reserve of $2 million in Q2, reflecting the uncertainty in todays macroeconomic environment.

Moving to cash and cash flows entering Q2 cash collection expectations were difficult to predict due to the extended cobot 19 pandemic environment, but the strength of our business was clearly evident in our Q2 cash flow results.

GAAP operating cash flows for Q2 were $23.4 million and we delivered record adjusted free cash flows this quarter of $35.7 million or 28% of total revenue.

Redefined adjusted free cash flows as operating cash flows less purchases of property and equipment plus repayments of convertible senior notes attributable to discount.

Debt discount for the trailing 12 month GAAP operating cash flows were $86.9 million or 19% of total revenues.

For adjusted free cash flows as Rob noted, we delivered $100.4 million or 22% of total revenues for the trailing 12 month, a new financial milestone for the company.

Our strong cash flow performance speaks to the quality of our customer base. The mission critical nature of our platform and ultimately the value we're delivering to our customers.

Cash at quarter end was $1.34 billion up from $706 million last quarter. The main driver of the increase was the issuance of our 2026 convertible notes of $1.38 billion, including the exercise of the Greenshoe. This was offset by 193 million.

Dollars paid for our capped call at an up 125 premium and $484 million paid towards obligations from our first convert our 2023 nodes.

At the end of Q2, we still have approximately $16 million the principal remaining from our 2023 nodes.

We also used $84 million of cash this quarter towards the acquisitions Abele and Conexus.

Now, let's turn to guidance.

With respect to guidance our operating thesis is similar to last quarter and that we expect the macroeconomic environment will remain challenging for at least Q3 and the into Q4 with the possibility of things beginning to open up more broadly starting early in the new year.

From a go to market perspective, we entered Q3 with a significantly stronger pipeline than the same time last year. Both on a gross dollar basis, and then and in terms of what we consider it later stage qualified pipeline.

Not surprisingly, however, any customers and prospects continue to operate with caution, especially those in industry highly affected by the pandemic pandemic, making it difficult to predict the timing of when deals will close.

The third quarter and full year 2021 guidance, we're providing today incorporates our current assumptions with respect to the uncertain effects of the challenging macroeconomic environment based on information available to us at this time around new business renewal timing of collections and various other inputs.

Variations from these assumptions may cause our results to differ our guidance also assumes no billings our revenue contribution from Cooper travel favor, formerly apta for the remainder of the year.

As you may recall entering the year, we expected approximately $20 million in billings and revenue contribution from group of travel favor.

With this as the backdrop, we expect total Q3 revenue of $123 million to $124 million.

This includes subscription revenue of $112 million to $113 million and professional services revenue of approximately $11 million.

We expect a Q2 non-GAAP gross margin of 70% to 71% in GAAP income from operations of four and a half to $5 million. This result in non-GAAP net income per share of two to three cents on approximately 74 million weighted average diluted shares for the quarter.

For non-GAAP net income per share. Please keep in mind that other income and expense or quote unquote below the line expensive are affected by the drop in interest rates over the last two quarters.

Our non-GAAP other income and expense guidance also contemplates potential currency fluctuations and tax liabilities as well as additional cash cash interest on our latest convert at three 8%.

On the Opex side in Q2.

We incurred about half of a typical quarters expense from acquisition as well and we will of course I have a full quarter Bell and expenses in Q3 also after generating a record $36 million of adjusted free cash for this quarter. We expect adjusted free cash flows for Q3 to be breakeven or slightly positive.

For the fiscal year, ending January 30, Onest 2021, we expect total revenues of 496.5 million to $498.5 million. This includes subscription revenue of $446 million to $448 million and professional services and other revenue of approximately 50.5 mill.

$1.

We expect non-GAAP gross margin for the year, 71% to 72%. We also expect non-GAAP operating income for the year of approximately $33.5 million to $35.5 million non-GAAP earnings per share of approximately 43 to 45 cents based upon an estimated $73 million average delay.

To chairs for the years.

We expect adjusted free cash flows to be up year over year on an absolute basis.

To conclude we are still living in unique an uncertain times as we focus on the safety of our employees in the long term prospects of our business. We will continue to execute on our strategy, which is founded on growth financial discipline and operational efficiency.

Backed by a strong balance sheet to emerge stronger than ever when we I'll return to some loans.

[music].

Now we'd be happy to take your questions operator.

Thank you Mr. fourth ladies and gentlemen, if you have a question. Please press star one on your touched on telephone and due to time constraints. We ask that you. Please limit yourself to one question.

And your first question comes the line of Bob Napoli from William Blair.

Thank you good afternoon.

So can you get an update on peak of pay it's obvious.

Question, just if you could give any trends on attach rates or.

The the reception by certain clients, but.

Some update on keep the pay would be helpful.

Sure well, we continue to see some really good.

Data, there as and observable sort of impact in terms of copay for one without Dow we continue to build the very rich pipeline.

In that market secondarily, we are closing quite a few deals and I would say if you look at many they'll the solutions that we've rolled out over the course last decade, plus superpay of all of those solutions is probably taken on the fastest ramp in terms of new customers in terms of go lives and Thats really my third.

Turning around go lives you see these customers not only going live, but you see them getting measurable value there clearly moving away from paper, great based or.

Disjointed processes to more streamlined centralized processes and there were more than willing to stand up as references on our behalf in the marketplace. So it feels like a very promising continue trajectory and we can be more excited about it.

Great. Thank you.

Your next question comes the line of Josh Beck with Keybanc.

Thanks for the question I myself on mute there.

I, just kind of we'll look to understand a little bit about how you're thinking about the recovery.

As we go through the year I think over the last call you had.

Kind of expected Q4 to start to see signs of recovery. This quarter certainly seems like it came in better than you had anticipated. If you look at billings number or the spend under management number but at the same time I think you said that you were pushing back a little bit to the first half of next year. When you are.

We're starting to factor in the broader macro recovery. So maybe just provide a little bit of color on.

What was similar to vote. The positive surprise you saw in the quarter and how that just opposes with pushing out the recovery time in just a bit on the on the macro front.

Sure sure. Appreciate the question I think the broader context is worth sharing.

Sharing with that with everyone on the call and for those of the those even known US for some time you know that we're playing to win in this category without any question whatsoever on and to that end. We've continued to develop a really rich and robust and very sizable pipeline.

And we continue to have incredible engagement within that pipeline. So thats not a pipeline that is moving out as the pipeline that is actively engaged with us and building business cases for approval and driving that through their organizations.

To that end. We've also continued thoughtfully hiring to make sure that we can support that pipeline that pipeline fulfill demand as it drops in what as you well know is a really large total address from addressable market and I would say that the environment. We're in right now to your question is really bringing even more attention to spend practices there.

Our near term spend practices they need to be addressed very quickly kind of high ROI areas like as sourcing and risk. There's also the need to really set up companies for the future of how they do business spending.

Now specifically I would tell you that the fidelity as it pertains to precision on any deal closed timing is probably not as high as it might have been historically, having said that we continue to close a robust of book of business. While building out this pipeline to attack in Q3 Q4 throughout next year as.

We built this company into something very very meaningful and special.

In the World information technology Enterprise software and business.

Really helpful. Thank you.

Your next question comes the line of.

Chris Merwin with Goldman Sachs.

Hi, Thanks, very much for taking my question.

Search had worked for for Rob I think you talked in his prepared remarks about.

I know you acquired a tool for Treasury management software and.

I guess a question that you felt number which we see at a major impacts the financials and number two I know that there's an account receivable automation vendors out there that offer treasury management solution. So in the future could we maybe see you expand more into accounts receivable automation space I know there's lot of camera you are now because just curious how you're thinking about the product or M&A.

Pathway from from here. Thanks.

Sure sure well, our thinking generally around the emerges around M&A or acquisitions that we'd be considering is for it to fall into the strategy that every one of the acquisitions, we've done before falls into writing a core component that can unlock value that transactional core or power applications like a balance in treasury management that can get even.

More value out of that massive transact accelerating trends with transactional flow was better than its really a no brainer for us I mean cash management in real time is pretty important when you think about.

Income of cash and spending of of cash obviously.

Really helping our customers understand.

Cash risk really understand liquidity and where they are at any given point in time understanding working capital management. These are the the is sort of ancillary spaces that the office of CFO has been interested engaging with us for quite some time.

Now, let's say the other component that was really powerful here is just to get a little bit deeper into.

Bank to bank.

The money transfer communications and other things, we're doing with Cooper pay will actually be enhanced with some of the components coming from balance. So we'll likely to fall very much the same strategic approach to acquisitions and this one clearly fell right in the in the sweet spot of that.

And on the financial contributions, Chris We obviously spent $84 million for bell and and can access in the quarter, 90% of that was approximately bell and obviously the the full impact of expenses is in our guidance and as you've seen with acquisitions in the pass it will take time for the revenue to ramp.

To steady state, but as we look out through fiscal 2022, I'd expect $20 million to $25 million in revenue contribution from.

Those two acquisitions once again, primarily belen.

In the majority of that and then I would also expect as Rob mentioned additional positive impact to Cooper pay and overall pricing of the BSM platform as we continue to see our average deal size increased quarter over quarter on quarter, which we continue to see this last quarter as well.

Great. Thanks, so much.

Your next question comes lineup.

Alex Zukin with RBC capital markets.

Hi, This is Robert Simmons on for Alex. Thanks for taking question. So you had mentioned in the customer is over 95% of transactions going through.

And so I'm wondering if I can tell us kind of how thats impacted your ASP pre pay and now.

Okay.

Sure So I'm not sure that directly impacted.

The reality is we charge based on value delivery, we don't have a sort of take rate model as some percentage of electronic transaction model with just a few exceptions co pay and in some cases being that type of exception. When you think about the overall business is largely a value as a service business, where there's a fair.

From revenue price point for value delivery and to that end. This is our virtually a 40 or 46 quarter virtually every quarter going up in average.

Subscription revenue per customer. So clearly there are seeing more more value being delivered for them on this platform and Cooper pays us and digital module that provides it.

Got it great. Thanks, and then can you talk to your net retention rate, what you're seeing there.

Yes, if you look at the renewal rates committed continue to remain strong and best in class nothing that I would call out related to cover it otherwise.

One of things I would say those as Rob mentioned, we've seen significant positive trends in upsell with our current customers.

In multiple areas whether its.

Cooper risk Assaf group of sourcing Cooper pay and others and what are the things that.

Important to note and that we saw a little bit of impacted us in Q2, when we do these powerup add ons in many cases, we don't realize the benefit of the full year billing to the customer and are calculated billings results.

Because the first billing installment for data modules is often coterminous with the customers either annual anniversary or renewal date, meaning that we only build the customer for partial Europe front, so while no impact necessarily a revenue does impact billings for partial payments and it's likely we'll see some benefit from this dynamic.

In Q4.

Where a significant amount of our deals or build and transacted.

Great. Thank you very much.

And as a reminder, we please ask that you limit yourself to one question.

Your next question comes online as Stan Zlotsky with Morgan Stanley.

Perfect. Thank you so much and congratulations on a good quarter guys.

Maybe just one very quick one from me Todd I'm not sure if maybe I missed it odd during the prepared remarks, but how are you thinking about billings for Q3.

There are unit as a point estimate or maybe on a trailing 12 month basis.

Yeah. Thanks, Dan So given the current macroeconomic environment, we've continued to be very measured with our billings outlook and if you look at the three components, a professional services renewals and new business on the professional services front, when we went into the quarter with a a very strong pipeline.

And we've also demonstrated the ability to take customers live remotely as Rob mentioned in the remarks hundred percent of our go lives were done remotely. So feel good about professional services renewals have continued to be strong and we've seen even customers reaching in on the expansion that we had talked about so.

A lot of people expected impact from coded and we haven't seen that at all and then on the on the new business front, you know I can give you a couple comments quantitatively and qualitatively or quantitatively, although somewhat have to consider the law of small numbers are new bookings in August were higher than last year and.

In the entering Q3 as I noted in my remarks, we had a substantially stronger pipeline for the second half of the year compared to that of last year. Both in terms of gross pipeline in later stage.

We are seeing sent some green shoots, particularly in the level of engagement fire go to market teams being extremely high and overall I would say my confidence entering Q3 is stronger than that entering Q2, but given historical seasonality and just the macroeconomic environment and expecting to get back to normal hopefully.

The sometime later this year.

The point estimate I would use for calculated billings on a trailing 12 month basis would be 27% exiting Q3, but once again, it's difficult to determine the order of magnitude just given all the factors I just covered.

Perfect very helpful. Thank you so much.

And your next question comes line of Brad Sills.

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Oh, Great Hey, Thanks, guys I wanted to ask about some of the progress you've seen here with the community intelligence applications. You mentioned advantage risk assess sourcing seems like those are picking up we're hearing that from the channel as well is there is there a common theme here is it just that these offerings are now maturing where you're building that analytics capability really leveraging that data.

In there.

Or is it just awareness growing of the benefits of these solutions I suspect, it's both but any any color on just what might be driving that thank you.

Oh, Thanks, I'll answer the question I I think is absolutely both of those and it's very hard to understand exactly how some of the tipping points develop but.

No clearly there's a massive amount of data that's going into providing the community intelligence back to customers now I think we've passed many thresholds of data volume there will be required to make the individual insights that a prescribed offered up to individual customers be a value on we're getting to to levels, where that is a bit.

Coming meaningful invaluable for them and making their decisions I think there's also an incredible continued willingness amongst our community to share Anonymized sanitize data so that that builds up.

The the likelihood that then insights what would be valuable and then it's the current time. So I think the current times, they're an important factor consider here as well you know many of the conversations I'm having.

With focuses cfos and folks in the CFO as office or about the supply chain disruptions, they're seeing the risk that they're seeing amongst their supply base that they need neighborhood watch type programs like we have built into community intelligence helped to mitigate that risk there need to get advice and insight on how to go from perhaps single sourcing.

With certain suppliers to multi sourcing.

Ideas or input around best practices for renegotiating certain categories of spend how to prioritize where to renegotiate where to start.

And how to move into a much more digital best practices, we're doing things. So there's a lot of factors that coming into play, but all of them are producing exactly what I think you're hearing from our former community, which is we're starting to get real meaningful value from community intelligence and I can tell you without any reservation. We are definitely just at the very tip of.

The iceberg in terms of what's possible servers, and making all of our all of our customers smarter together.

Thats great. Thanks, Rob.

And your next question comes from line its Terry Tillman with Trust Securities.

Yes. Thanks for taking my question, it's it's related to Todd what you just talked about a few questions ago as it related to billing. This concept of the add on sales what I'm curious about is you called that out and how that could potentially impact Fourq you could you maybe give us a little bit more perspective on how notable that could be and is this add on sales motion something that you often aggressively.

Hey, pursuing or just kind of happening up kind of organically or naturally given the times weren't.

Yes.

I would say, it's been more organic in nature and customers are looking to drive value and get a very quick ROI and reduce risk rights. If you look at the sourcing tool weve had customers.

It really say tens of millions of dollars within the first week, obviously, a quick payback and then in the coveted 19 environment.

Got people, especially with supply chains in risk and making sure the supply chain doesn't go out a go down and potential issues related to bankruptcy and that type of thing and then you've also seen some uptake and Cooper pay which is which is broader but there are some slight benefits with respect to digital checks and that type of thing so when.

You look at the number of add ons, we had in Q2 and actually even Q1 to be Frank.

They were pretty significant and.

What is it more than a million dollars, yes, and is it less than five probably so somewhere in that range I'm not going to give a specific point estimate and and a lot of that doesn't show up anywhere right. It would come up.

From a backlog perspective or deferred revenue, so, but it should definitely be a net benefit in Q4 as people either go through their annual contracted degree cycle billing cycles and or their renewals.

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Your next question comes the line is Daniel Jester with Citi.

Yeah. Thanks for taking my question because the last couple of quarters, you talked about some customers that were using Cooper morford direct procurement and I'm wondering given some of your comments about sort of supply chain being we worked what you're seeing on on that front today.

Sure well thanks to the question is that that's absolutely the case and that's seen you know in in our pipeline first of all its just touch on that and we're looking at our global systems Integrator partners in a way of an open pipeline than in the one hundreds of millions of dollars and a lot of that it has to do I think with our proven.

Referenceability in the market in the successes, we've had but also the conditions externally whether there is real disruption happening and procurement and CFO is really have a chance to lead. So you look at capabilities like dynamic strategic sourcing with multi factorial.

Hey, I am a powered assessments of where to get the goods and services you need at the right price points for the right delivery during whether through the right freight for a point in time challenge I mean that we have some of the largest companies in the world.

Standardize on Cooper for making those decisions and a pipeline of folks to want to do the same.

Similarly in the area of contract management, the ability to very quickly understand where contracts needs to be renegotiated.

Dynamically engage with suppliers on that renegotiation process and the right priority water taking in account the risk that those suppliers may have to their business with even be in business.

The next quarter in year, and leveraging community insight to help them make those those decisions we see it in the Treasury management area as I discussed earlier around having liquidity and cash management properly sorted out within your company, we see it in inventory management than levels that companies are willing to go to the to have a balance on hand inventory.

Sorry, with outstanding waters, we see in the area of contingent workforce, where we see companies.

Pushing to greater agility through contingent workforce management with many of the modules. We deliver so I mean, we're really in the heart of a very significant focus area for you know so many companies around the world large medium and somewhat you know aspiring are growing and a and our job.

Just a ticket one customer at a time and drive value for each and every one of them in a way that's fair thoughtful and has been allows to build a a long term market leading business here.

And your next question comes the line of Peter We're fine with Evercore.

Great. Thanks for taking my question, Congrats and good quarter, maybe could you talked about what customers are thinking about cooper, whether that be procurement traveled expenditure payments relative to.

The other mission critical systems in terms of prioritization around spend especially in this environment.

I think and to your results in your commentary it seems like investor concerns that some of the back office would have been pushed off it seems like you for Cooper and what you deliver it seems like thats not the case, but curious to know how are your customers think about your products in terms of transmission. Thank you.

Sure well you look I think this these the categories around business by management and that business management is comprised of.

Has always been have always been on the priority list as part of the digital transformation a set of initiatives I wouldn't say that they will first I think some at your point the front office capabilities around CRM. Another as perhaps came earlier, but we were moving in turn it to an area, where this was becoming more and more in the spotlight and I think what has happened.

Now, where there's just such disconnect such a disconnection that's happening around people understanding how sub par their processes are internally around procurement paper based invoice processing complicated payments.

Difficulty in the not only managing expenses, but maintaining situations where fraud doesn't escalate all of these areas in the business management, our us are being seen in a much greater light and or I should say, great a light as being put on to them and we're in a phase right now that I would assess is one where companies are really trying to.

Figure out.

How to develop their transformation agenda is for the next.

Two three years midsize companies. The next decade for larger companies and I really like where we stack up in the marketplace as it pertains to that and a I'm really excited about the everything that our team and our partners are doing to make sure that we map our.

Capabilities to those challenges in a way that the is most likely not only to build up a bigger customer base, but to ensure that theyre going to get value with us forever and stay with us forever as we build this business.

And your next question comes the line of Citi kind of Crazy with Mizuho.

Thanks for taking my question and thanks, all the color in terms of macro just wondering what kind of storefronts, you're seeing in the U.S. versus international any color on geography would be helpful.

One of the things that this businesses, we've tried to for the last decade, plus to create a really robust portfolio set for ourselves and when I say portfolio effect I mean, so when we get on calls like this with our Investor base. We will have we can say with great confidence that we.

We have delivered the goods if you will deliver to the best of our ability to to manage our not only quarterly expectations, but to set ourselves up for a bright future and that portfolio comes in the in a couple of dimensions. One is certainly geographic as you mentioned there are certain quarters, where we have now greater impact from.

Asia or Europe for South America, or United States and the other intervention is enterprise and Midmarket and our corporate team. There are many quarters, where we see a lot more volume, let's say in the in the mid market business and there is some quarters, where we have significant whales in enterprise they get us to it where we need to be well also have an incredible portfolio effect in our product.

Areas a modules we have so many different modules, we began with one in procurement a 11 years ago and now have you know nearly a dozen modules. So any given quarter, we'll see different dynamics from any of those three dimensions, but ultimately they get us to where we want to be which is ensuring that every customer.

We close has a high likelihood of.

Laying out measurable success criteria that we can deliver on and this quarter was was really no different channel.

And your next question comes the line of Koji Ikeda with Oppenheimer.

Great. Thanks for taking my questions.

Wanted to ask you a question about deals cycle thinking about some of your larger slip deals for the first half or maybe what organizations are thinking about longer sales cycles. Overall have had those conversations changed at all now that companies are becoming more comfortable in the the norm from now environment environment are any of those elongated enterprise sales cycle.

Going back to something more recognizable pre pandemic. Thank you.

That's a great question absolutely. They are one of the things I shared is and its exactly how I see it to the fidelity the precision of when the actual timing of a deal will naturally come to closure and we can begin frankly, the more interesting work, which is the implementation and the results realization the Referenceability and then coming back around.

So that that positions not where it has been pre pandemic yet, but it is coming back. It is absolutely come back as Todd shared about kind of last.

Onto the quarter and look did event that make the sales cycle times in some cases of extended but then extended a near term and we could see our way too.

Them them them landing.

And that is happening in tandem with incredible engagement across the entire pipeline and in tandem with the pipeline growing very very rapidly at the same time. So all that really spells for of really healthy medium and kind of longer term prospect on the business. While at the same time allows us to no closed dozens and dozens of.

Deals as a new deals as we've done just this past quarter.

And your next question comes line of Brian Peterson with Raymond James.

Oh, thanks for taking the questions. So Rob if you have to think about the value.

The customer value or journey or call. It a question you had to put that through the lens of a hard dollar oral why I'm curious how do you stack rank the value of coupe of pay specifically relative to some other parts of the platform do you see that time devalue looks materially different.

Yeah. That's a great question, then I'm not going to be able to give a distinct answer because it really does depend on the maturity of the company and the use cases, where they are more mature versus not we we faced some companies that have incredible processes lets say around procurement preordering everything is clean and done really well, but when you.

Look at their expense process, it's it's completely fragment that or vice versa. They have some encumbered solution for expense management that seems to be okay, but their pre approval percentage is horrible there on contracts spend is horrible their invoice processing is paper based as I mentioned with inventory they might not even be tracking inventory. So our goal here has always been too.

Be really like a Swiss army knife I mean, you can use any component first wherever the pain is greatest or ever they organizational momentum is closest to beginning it business by management transformation and then as you start to gain value and working with US in this value service model will turn on other capabilities now that's not to say.

Hey, there on some customers, we faced who are doing almost 100% paper based payments processes or completely disjointed loggins to 15 or 16 different systems to run a monthly batch payment job, where clearly the value as much much greater to begin there there may be streamlining expense management.

Sample. So it's a very very customer specific and I'm one of the things I'm quite proud of is that with our colleagues here, we figured out a way to really.

Be.

Consultative with our prospective customers to two with integrity and honestly honesty try to see where we can begin with them that can drive the most value for them and then build the experience and partnership with them over over long period of time.

Your next question comes on line of Ryan Macdonald with Needham.

Yes. Good afternoon. Thanks for taking my question one for you Rob.

As we look at Conexus acquisition, obviously, much smaller attitude that you've made during the quarter, but there is an interesting core data set that you're really acquiring a with that business you talked about one how that's enhancing community intelligence, but you how you might be able to use that core data set as a competitive advantage against against some of your competitors more before thanks.

Yes, absolutely and we're very excited about the new colleagues from Conexus and I feel like they're completely integrated team I haven't heard that name and while it is a world couple of colleagues now, but I'll tell you that dataset is very very powerful I mean, we have a very clear as.

So understanding now have a supplier diversity and we're in a position now and we would always focused on this where even in a better position now than ever to help our buyers right, who are hundreds and hundreds and hundreds of companies around the world and millions of users.

Make decisions in part, but whom they spend money with on criteria such as our these minority owned suppliers are these the diverse suppliers of these inclusive supplier. So it's another set of criteria that we now have as part of our data set that we can not only expose one customer at a time, but thinking give the.

He is to our community. So they can leverage that add to that dataset build that dataset and help us help us in that regard and that's just one example, the whole host of other use cases, with which that data will be will continue to be valuable for us.

And your next question comes line of Joseph Vafi, What's Canaccord.

Thanks, and great results go. So just wondering you know it maybe a multi part answer but can you try to frame the competitive landscape around pay I know, there's a lot of momentum in kind of pure play ATP solutions. You know there you know payment embedded and a lot of mid market.

ERP is you have a are you got different players here.

Just some thoughts on competitive landscape would be appreciated. Thanks.

Sure well I think you touched on it right. The there are incumbent solution provider. There are obviously, some smaller kind of new entrants.

The marketplace, we've done our homework initially probably two years ago. When we started thinking about answering into the space and ultimately we haven't seen any of them really flux on us I mean, we we have we have seen.

The situation in a way where the greatest competition is ourselves I mean, we have an opportunity really reimagine the way companies manage.

Business.

Payments taken them from a largely still paper based world are very dysfunctional decentralized world and making it much much easier and get a much more user centric, which is of course, the UN Cooper and getting much more open. So they have choice amongst banking relationships, which is the Olin Cooper and we're really just getting going here, but I will tell you great leader.

Key indicators when I do see when reports I do see a number of incumbents in early actions that we've been lucky enough to be chosen over in selections and I think that as well as is still very early innings.

And your last question comes from line as Pat Walravens with JMP Securities.

Hi, Didnt smartphones, but Pat Thank you so much for taking my question.

So just wondering with everybody working from home how do you make group pace that you don't want looking.

Sure well you know, it's not anything new for US you know our goal our second core value here is focused on results and so the fact that people are working from home, where they're working on the office of the work for different plant. It doesn't matter us. It's the result that we're focused on so we've always had a very flexible approach.

With our employees.

And our colleagues.

We've always been highly decentralized and his organization, there's only a couple of hundred people here at our headquarters and thousands all over the world.

And so we are on soon we are connecting.

Over the phone we are engaging with customers in ways that we actually weren't able to probably at the pace we would've liked.

In the past so in general I think it's it's a it's a really and net positive for us in that regard having said that there is some level of collegiality and physical presence that has lost someone doing all that we counter to emulate that in this environment for now looking forward to time, when we could all be together and physical locations and engaging.

In day to day collaboration and bantering everything that comes with with workload.

At this time there are no further questions. This concludes todays conference for today, we do thank you for joining us and you may now disconnect.

Okay.

Thanks.

Vince.

Mm.

[music].

Mm.

No.

Vince.

[music].

No.

[music].

No.

[music].

Mm.

[music].

Good day, ladies and gentlemen, and welcome to the Cuba software second quarter fiscal year 2021 earnings release Conference call.

At this time all participants are in a listen only mode at the conclusion of our prepared remarks, we will conduct a question and answer session. If you'd like to answer a question you May press star one on your touched on pad at any time, if anyone should require assistance. During the conference. Please press the star zero on your Touchtone pad at any time as a reminder, this call.

Is being recorded.

I'd now like to introduce your host for today's conference call Mr., Stephen Horwitz VP of Investor Relations Mr. Hurts you may begin your conference.

Thank you good afternoon, and welcome to Cook with where second quarter Conference call joining me today or Rob currency could be CEO and Todd Ford Qubits CFO.

Our remarks today include forward looking statements about guidance and future results of operations strategies market size products competitive position and potential growth opportunities. Our actual results may differ materially be materially different forward looking statements involve risks and uncertainties and assumptions that are described here. Most recently filed TNT. These forward looking stay.

MS are based on our beliefs and assumptions that we disclaim any obligation to update any forward looking statements.

If this call is replaced after today. The information presented May not contained current are accurate information. We also present, both GAAP and non-GAAP financial measures reconciliation of certain of these measures is included in today's earnings release, which you can find on our Investor Relations website.

Replay of this call will also be available unless otherwise stated growth comparisons are against the same period of the prior year with that I will now turn the call over.

All right well, thank you Steven Hello, everyone and thank you for joining us.

Well, we started this journey more than a decade ago, we had a very clear vision to forever changed the way things we're done.

What was the procurement space and solve the broader challenges in how business is managed their spending with the support of innovative in re imagined information technology solutions.

Our platform would provide real time visibility control automation spend compliance and so much more.

We set out to help our customers be more more agile to flourish in great times and be more resilience in difficult times.

Cumulative spend under management that is now flowed through Cooper's transactional core.

Looking at our financials for this quarter, we once again delivered we once again again delivered record revenue of 126 million. Despite the global macroeconomic headwinds present today, it's important to note. The while we are largely focused on growth. We're also focused on profitability and cash flows.

To that end Q2 was our ninth consecutive quarter of profitability on a non-GAAP basis.

We also reached a new milestone this quarter, having generated more than $100 million in adjusted free cash flow over the trailing 12 months.

Our financial results clearly illustrate the leverage in our model not to mention the strength in our balance sheet.

We delivered strong solid results across the board, but make no mistake, we are playing to win the market over the long term.

Let me share some additional updates about our business sales cycles have not surprisingly extended somewhat from what we were seeing last year. However, many customer prospects, but pause in the March and April timeframe, Reengaged and became the newest members of our could the community.

We're also seeing strong pipeline built and an increase in RFP activity, our new customers and prospects are focused on business really resilience and they are seeing Cooper's platform as mission critical for today's new realities.

Many of these customers up testify our testifying to the importance of our value as a service platform.

Prime example of this is trans Union, who spoke about coupon on their June earnings call. They discuss their strategic initiative to transform global operations by creating consistent standards around the world.

They specifically highlighted that they are implementing a full lifecycle procure to pay system from Kupol a lot of complete business spent visibility globally.

Schneider Electric global director of PDP transformation shared comments about their recent successful go lot. She said I'm extremely proud of my team and deploying Cooper software harmonizing proxies and centralizing our people across France, U.S. and Mexico, we're bringing simplification compliance and.

Organizational efficiency around the world Delighting our stakeholders.

Another mentioned came from Westpac Bank.

There are CPL said amazing that someone can access a procurement business application and make purchases within 15 seconds without any manual instructions are training.

We're excited to be implementing this at Westpac. Thank you Cooper and deployed for being on this journey with us.

Clearly there CPL quickly discovered the user centric aspect of our platform also known as the you in Cuba.

Now let me highlight a few of the many customers that have gone live across more than a dozen industries during the quarter.

Representing the consumer products industry ATM, a fortune 50 global leader in human and animal nutrition as recently gone live with Cooper.

Even with project teams working remotely the implementation was completed on schedule.

Joe candidate VP global procurement set the pandemic, certainly atta challenges, but I'm extremely proud of our ATM team coop and our business partners for their relentless engagement and focus which allowed us to deliver this go live as planned.

Using kouba ATM enhances end to end processes improve data insights establishes a common platform for spot bids and standardizes and automates core processes.

This is done through a business spend management platform. It makes it easy for colleagues to request the goods and services they need and for business partners to engage with ATM.

[noise], representing the process manufacturing industry group, both cement dose that you all up and leading supplier and producer of cement and concrete across Mexico, United States in Canada has gone live on Cooper.

The focus of GCC was to automate supplier management increased spend control and generate savings.

With Cooper GCC has gone from disconnected purchasing process to a single digitized platform and as procured millions of dollars in Peel back spend and just the first few weeks of being lives.

Such accelerated user adoption has helped GCC to increase spend under management and elevate cost savings through contract compliance.

In the oil and gas industry Pro petrol holdings completed its implementation of Cooper to enable process improvements for greater efficiency and enhance spent control using Cooper pro Petro established best practices across procure to pay including the use of online catalog to ensure spend compliance and dynamic approval chains for spend visit.

Ability and improved financial controls within the first 12 days that process millions of dollars in pre approved spend through Cooper.

Already more than $1 billion spend has flowed through the platform.

Now, let me welcome somebody new customers, representing companies of all industries and sizes as well first let me highlight some up and coming companies such as confluent Delhi's gap materials sales loft.

Simon car chrome shoreline education, well top and many others. We also welcomed midsized organizations, including CSC service works strategic Education, Toyota Financial Australia and others.

Of course, we welcomed large enterprise companies, such as Canfora cycle and carriage and Gen Petroleum one main financial shape LER.

Second Sui chemical Westpac banking and numerous others.

Not only are companies of all sizes, joining our community, but also across nearly 20 different industries.

Now as you've heard me say many times before our continued progress in providing customers with prescriptive insights. The PM Cooper is a major reason our prospects and customers are in lock step with our vision.

On a side note I'm humbled to have the opportunity to share personal thoughts on the subject in our new book smarter together, which is being released this week.

This new book is essentially a position paper that builds upon our first book value as a service.

Let me share. An example of how community intelligence help the product group a company who provides specialty craft the maintenance services to diverse industries across the United States and Canada and employs more than 13000 employees in over 400 facilities reduce fraudulent spend.

As construction and maintenance projects ramp up at the end of each year, the product group higher seasonal field workers with so many seasonal employ submitting expenses.

Difficult for them to review all expense reports for suspicious transaction.

This leaves opportunities for spend leakages and even fraud.

Cuba community Intelligence has helped him address this problem by detecting suspicious transactions at scale across all of their spend.

Using artificial intelligence to detect patterns from the cubic humidity spend that deviates from expected behaviors that would otherwise fly under the radar is flagged as suspicious.

In the first our at the turning on these capabilities the broad group identified tens of thousands of dollars of suspicious transactions.

Identified duplicate transactions and even discovered in employee let's admitted thousands of dollars of seemingly legitimate small dollar expenses that were fraudulent.

With community intelligence brought group prevented spends leakage and fraud.

The knowledge of the comes from access to data is also extremely important when strategically managing inventory.

Detailed inventory studies have shown the company inventory is inaccurate more than one third of the time in nearly half of companies either don't track inventory would do so manually.

When you consider that inventory represents approximately 15% of the total assets for public companies in the United States Theres clearly a big disconnect.

To remedy the disconnect Cooper has worked with more than 100 customers to improved visibility management and optimization in the area of inventory management.

Having a single system of record for orders receipts and inventory they can ensure that they aren't placing duplicated orders and then employees are making purchases from approved suppliers.

With hundreds of thousands of transactions every month the optimization of this inventory process saves the companies see significant amounts of money.

Moving on.

Pandemic induced focus on cost reduction and risk mitigation has led to higher demand for quick ROI solutions, such as coop advantage Cooper risk assess cooper's strategic sourcing and Cooper source together.

An example of how our customers address this focus while Simon simultaneously continue to tap into our open platform, the Oh and Cooper can be seen with strategic sourcing.

A great example is illustrated by the quote by a quote from Procter and Gamble's Associate director of purchasing he said with the help of Cooper's sourcing tools, Procter and gamble significantly optimized several hygiene raw materials purchases with Cooper the team was able to manage the intense sourcing process more efficiently.

Collecting bids and running numerous complex scenarios to optimize awards in a short period of time.

The process is now more robust and we're better able to achieve our stewardship goals.

Another area, where our customers are extracting meaningful value is cooper pay.

As most of you know by now our pay module has strong value propositions for both large enterprises and midsize customers apart from the efficiency that accompany if any is any size can extract from integrating payments into their spend platform enterprise customers are able to save hundreds of thousands of dollars per year by eliminating the need for back.

Integrations at the same time midsize companies can mitigate it can migrate from manual digitized processes.

Using spreadsheets.

Before implementing copay, they were running a salad process using spreadsheets hundreds of invoices covering millions of dollars per month were being handled manually. These manual processes not only increase the potential for era, but they were far from optimal for internal process purposes. They also had an inefficient working capital approach often paying bills.

By paper check in 15 days in fear of having late payments scalability was out of the question.

Within 90 days of being lives.

They were paying 95% of their invoices through the Cooper platform Salmonella now has confidence in their simple and tracker trackable digital payments process, Dave even commented on how feedback from the suppliers is overwhelmingly positive with an appreciation that the money is in the bank and a remittance.

He is right there and Cooper.

And the ease of cross border payments has enabled them to confidently scale internationally.

Perhaps that's why they're VP of finance said in recent Webinars Cooper pay is an absolute no brainer.

We appreciate the finance people realize the value that Cooper pay provides in fact, it's part of our strategy to continue bringing more value to the office of the CFO as we expand our already comprehensive offering known as the C in Cuba.

To that end during the quarter, we completed the acquisition of Belen a leader in Treasury management now owns offering provides real time real time transparency on cash balances.

Our intention with Cooper Treasury management is to make spend contract data and the risk of risks associated with both clearly visible to an actionable by the treasury team.

As we work to synergize, our integrated offering feature capabilities of Treasury will include access to community intelligence, which will show our customers best practices for conserving cash there will also be made aware potential contract risks if a customer has filed for bankruptcy. These are just a few examples representing only the tip of the.

Iceberg when it comes to the value, we will be able to create by incorporating treasury management into the Kubot platform.

As I've noted before anytime we look at a potential acquisition, we're focused on adding technology components, the maximize and enhance the value of our organic transactional core engine and or augmenting. This engine with key advanced power applications that optimize the value of these transactions.

This acquisition dresses both aspects of this strategy, most importantly, balanced culture and values aren't close alignment with ours, and we are already well on our way towards unifying as one.

Now, let's move onto the Cooper business spend index or be ESI.

To be ASI is a leading indicator of economic growth analyzing hundreds of billions of dollars, an aggregated and anonymized business spend before getting into the Q3 outlook I'd like to once again reiterate that the PXI data is not necessarily indicative of the trends, we're seeing in Cooper's business.

Attributed to the slight improvement in sentiment relative to the previous quarter.

Also given the continued impact on global supply chains spend sentiment in manufacturing decreased slightly in Q3.

For a closer look at our Q3 be OSI, where we'll share more details on each of these trends. Please visit www dot spend index dotcom.

Moving on now let me now recognize a few of my colleagues that have made outstanding contributions that clearly demonstrate cooper's core values.

Let's start with Kevin Chris for George who was recently recognized by his peers for exemplifying our number one core value of ensuring customer success.

Customers consider kevin's via strategic resource often feeling like he is part of their company. He holds the customer accountable for their commitments and always delivers on his.

Next I'd like to mentioned Terry Kim was recognized for focusing on results. We when many deals because of Terry He works across teams to ensure we are as accurate as possible upfront.

This sets everyone out for success during implementation.

His pushes projects towards the best outcomes for the customer.

And finally srinivas cannot embodies striving for Exelis excellence, Sri passionately pushes everyone to connect collaborate and improve and he does so with tremendous inspiration and professionalism.

Congratulations and thank you, Kevin Terry and story.

7% ascribe to our number three core value of striving for excellence.

My aspiration is to get all of these two 100%.

So in conclusion, we believe that the our cake old fashioned methods of attempting to deliver value in our industry will soon be a thing of the past frankly, those who have visit have been disappointed in the past effect fuming and they've had it up to here, we aspire to a completely different level of.

Customer value creation.

In closing we are currently well into our 47th quarter of execution.

And as we guide our customers through these times as a key priority. We simultaneously remain focused on Cooper's long term success and market leadership.

With that let me now handed over to our Chief Financial Officer, Todd Ford, who will review, our Q2 financial results and provide our outlook for the third quarter and updated fiscal 2021 Todd.

Thanks, Rob and good afternoon, everyone. While the world has changed Raul adapted into the new normal our strategy accrued by has not changed we continue to manage our business to 30% annual revenue growth disciplined sales and marketing investment and demonstrating leverage at our operating model as we continue to grow specific.

Great operating and capital margins.

As we continue to grow our business and extend our market leadership position, we'll do so from a position of operational and financial strength, where they focus on resiliency over the long term.

Now getting into some of the details starting with Q2 results.

Total revenue for Q2 grew 32% year over year to $125.9 million subscription revenue for Q2 was $111.6 million up 34% compared to Q2 of last year, comprising 89% of total revenue professional services and other revenue was 14.3.

Million dollars.

Calculated billings for Q2 were $130.5 million up from $107.7 million in Q2 of last year, representing a 21% year over year increase.

For the trailing 12 month calculated billings were $518.5 million.

From $378.8 million in the previous trailing 12 month period, representing a 37% increase.

Total deferred revenue at the end of Q2 was $249 million up from $244.5 million at the end of Q1 and up from $188.9 million at the end of Q2 of last year, our year over year increase of 32%.

Specifically, one some of the new customer billings, which were both in Q2 of last year were build in Q1 of this year for the terms of the contract and to a one type a onetime spike in billings related to the exemplary acquisition that we completed in Q2 of last year.

The impact to Q2 billings from these two events was approximately $15 million from a year over year compare perspective.

Let's now turn to margins are results of operations.

Our second quarter non-GAAP gross margin was 72.1%, which was above our guidance, a 70% to 71% but down from Q1.

The sequential decrease was primarily due to the impact of our acquisition of Ballan now Cooper Treasury management, we typically see a drag and gross margin for the first few quarters. After completing an acquisition due to immediately post acquisition, we carry the full burden of acquired businesses cost, but don't recognize one.

Hundred percent of the revenue because of the write down of deferred revenue in the purchase accounting and also it typically takes a few quarters to complete the full business integration to the point, where we can take advantage of expense related synergies such as the benefit of combining supplier purchases, we expect to see an impact on margins this quarter and for part of Q.

For normalizing for the most part by the end of the year.

Consistent with our long term strategy and disciplined approach, we continue to make investments in our business, including hiring new employees.

Even so we were yet again able to demonstrate the scale and leverage in our operating margin and adjusted free cash flow result.

For the quarter, we delivered non-GAAP operating income of $12.3 million as well as non-GAAP net income of $15.2 million or 21 cents per share on 73 million diluted shares I'd also like to note that we booked a general reserve of $2 million in Q2, reflecting the answer.

Anti in todays macroeconomic environment.

Moving to cash and cash flows entering Q2 cash collection expectations were difficult to predict due to extended cobot 19 pandemic environment, but the strength of our business was clearly evident in our Q2 cash flow results.

GAAP operating cash flows for Q2 or $23.4 million and we delivered record adjusted free cash flows this quarter of $35.7 million or 28% of total revenue.

Redefined adjusted free cash flows as operating cash flows less purchases of property and equipment plus repayments of convertible senior notes attributable to discount.

Debt discount for the trailing 12 month GAAP operating cash flows were $86.9 million or 19% of total revenues for adjusted free cash flows as Rob noted, we delivered $100.4 million or 22% of total revenues for the trailing 12 month, a new five.

Unanswered milestone for the company.

Our strong cash flow performance speaks to the quality of our customer base. The mission critical nature of our platform and ultimately the value we're delivering to our customers.

Theres paid for our cap call at an up 125 premium and $484 million paid towards obligations from our first convert our 2023 nodes.

At the end of Q2, we still have approximately $16 million the principal remaining from our 2023 nodes.

We also used $84 million of cash this quarter towards the acquisitions Abele and Conexus.

Now, let's turn to guidance.

With respect to guidance our operating thesis is similar to last quarter and that we expect a macroeconomic environment will remain challenging for at least Q3 and the into Q4 with the possibility of things beginning to open up more broadly starting early in the near year.

The third quarter and full year 2021 guidance, we are providing today incorporates our current assumptions with respect to the uncertain effects of the challenging macroeconomic environment based on information available to us at this time around new business renewal timing of collections and various other inputs.

Variations from these assumptions may cause our results to differ our guidance also assumes no billings our revenue contribution from Cooper travel Saver, formerly apta for the remainder of the year.

As you may recall entering the year, we expected approximately $20 million in billings and revenue contribution from group travel favor.

With this as the backdrop, we expect total Q3 revenue of $123 million to $124 million.

This includes subscription revenue of $112 million to $113 million and professional services revenue of approximately $11 million.

We expect a Q2 non-GAAP gross margin of 70% to 71% in GAAP income from operations of four and a half the $5 million. This result in non-GAAP net income per share of two to three cents on approximately 74 million weighted average diluted shares for the quarter.

For non-GAAP net income per share. Please keep in mind that other income and expense or quote unquote below the line expensive are affected by the drop in interest rates over the last two quarters.

Our non-GAAP other income and expense guidance also contemplates potential currency fluctuations and tax liabilities as well as additional cash and cash interest on our latest convert at three 8%.

On the Opex side in Q2.

We incurred about half of a typical quarters expense from acquisition of Alan We will of course have a full quarter Bell and expenses in Q3 also after generating a record $36 million of adjusted free cash flow. This quarter, we expect adjusted free cash flows for Q3 to be breakeven or slightly positive.

For the fiscal year, ending January 30, Onest 2021, we expect total revenues of 496.5 million to $498.5 million.

This includes subscription revenue of $446 million to $448 million and professional services and other revenue of approximately $50.5 million.

To chairs for the years.

We expect adjusted free cash flows to be up year over year on an absolute basis.

Backed by a strong balance sheet to emerge stronger than ever we all returned to some level.

[music].

Now we'd be happy to take your questions operator.

Thank you Mr. fourth ladies and gentlemen, if you have a question. Please press star one on your Touchtone telephone and due to time constraints. We ask that you. Please limit yourself to one question.

And your first question comes on line of Bob Napoli from William Blair.

Hi, Thank you good afternoon.

So can you get an update on peak a pay.

A question just if you could give any trends on attach rates or.

[music].

The there's a reception by certain clients, but.

Some update on keep the pay would be helpful.

Sure well, we continue to see some really good.

Data, there is and observable sort of impact in terms of copay for one without Dow we continue to build a very rich pipeline.

In our markets secondarily, we are closing quite a few deals and I would say if you look at many other solutions that we've rolled out of the cost last decade, plus superpay of all of those solutions is probably taken on the fastest ramp in terms of new customers in terms of.

Go lives and Thats really my third point around go lives you see these customers not only going live, but you see them getting measurable value there clearly moving away from paper, great based or.

As jointed processes to more streamlined centralized processes and there were more than willing to stand up as references on our behalf in the marketplace. So it feels like a very promising continued trajectory and you know we can be more incentive.

Great. Thank you.

And your next question comes the line of Josh Beck with Keybanc.

Thanks for the question I myself on mute there.

I, just kind of we'll look to understand a little bit about how you're thinking about the recovery.

As we go through the year I think on the last call you hub.

Kind of expected Q4 to start to see signs of recovery. This quarter surely seems like it came in better than you had anticipated. If you look at the billings number or the spend under management number but at the same time I think you said that you were pushing back a little bit to the first half of next year.

And you are starting to factor in that broader macro recovery. So maybe just provide a little bit of color on.

Well some of the the positive surprise you saw in the quarter and how that juxtaposes with pushing out the recovery time, and just a bit on the on the macro front.

Sure sure appreciate the question I think the broader context as worth.

Sharing with everyone on the call and for those that those even noticed for some time you know that we're playing to win in this category without any question whatsoever and to that end, we've continue to develop a really rich and robust and very sizable pipeline.

And we continue to have incredible engagement within that pipeline. So thats not a pipeline that is moving out. It's a pipeline that is actively engaged with us and building business cases for approval and driving that through their organizations.

To that end. We've also continued thoughtfully hiring to make sure that we can support that high flying that pipeline fulfill demand as it drops in what as you well knows of really large total addressable addressable market and I would say that the environment. We're in right now to your question is really bringing even more attention to spend practices there.

Our near term spend practices they need to be addressed very quickly kind of high ROI areas like sourcing and risk. There's also the need to really set up companies for the future of how they do business spending.

Now specifically I would tell you that the fidelity as it pertains to precision on any deal close timing is probably not as high as it might have been historically, having said that we continue to close a robust of book of business. While building up this pipeline to attack in Q3 Q4 throughout next year as.

We built this company into something very very meaningful and special.

In the World of information Technology Enterprise software and business.

Really helpful. Thank you.

Your next question comes the line of.

Chris Marlin with Goldman Sachs.

Hi, Thanks, very much for taking my question.

Research had worked for Rob I think you talked in his prepared remarks about.

We acquired a tool for Treasury management software and.

I guess the question that you called number once we see any major impacts the financials and number two I know that there's an account receivable automation vendors out there that offer treasury management solution. So in the future could we maybe see you expand more into accounts receivable automation space I know there's lot of camera Youre now, but just curious how you think about the product or M&A.

Pathway from from here. Thanks.

Sure sure well, our thinking generally around the emerges and around M&A or acquisitions that we'd be considering is for it to fall into the strategy that every one of the acquisitions. We've done before falls into right now a core component that can unlock value that transactional core or power applications like a balance in treasury management that can get even.

A more value out of that massive transact accelerating trends with transactional flow with bell and it's really a no brainer for us I mean cash management in real time is pretty important when you think about.

Income of cash and spending of of of cash obviously.

Really helping our customers understand a cash risk really understand liquidity and where they are at any given point in time understanding working capital management. These are the sort of ancillary spaces that the office of CFO has been interested engaging with us for quite some time.

Now, let's say the other component that was really a powerful here is just to get a little bit deeper into.

Bank to bank.

And on the financial contributions, Chris We obviously spent $84 million for bell and and can access in the quarter, 90% of that was approximately bell and obviously the the full impact of expenses in our guidance and as you've seen without acquisitions in the pass it will take time for the revenue to ramp.

To steady state, but as we look out through fiscal 2022, I'd expect $20 million to $25 million in revenue contribution from.

Those two acquisitions once again, primarily belen being the majority of that and then I would also expect as Rob mentioned additional positive impact to Cooper pay and overall pricing of the DSMB platform as we continue to see our average deal size increased quarter over quarter on quarter, which we continue to see this last quarter as well.

Perfect. Thanks, so much.

Your next question comes the line of Alex Zukin with RBC capital markets.

Hi, This is Robert Simmons on for Alex. Thanks for taking my question. So you had mentioned in the customer is over 95% of transactions going through.

Lots going on so many sorry, if I can tell us how thats impacted your ASP free and now.

Okay.

Sure So I'm not sure that directly impacted.

The reality is we charge based on value delivery, we don't have a sort of take rate model as some percentage of electronic transaction model of just a few exceptions coupe of pay in some cases being that type of exceptions, but do you think about the overall business, it's largely a value as a service business, where there's a fair recur.

From revenue price point for value delivery and to that end. This is our virtually a 40 or 46 quarter virtually every quarter going up in average.

Subscription revenue per customer. So clearly there are seeing more and more value being delivered for them on this platform and Cooper phase just in additional module that provides it.

Got it great. Thanks, and then can you talk to your net retention rate, what you're seeing there.

Yeah. If you look at the renewal rates. It can continue to remain strong and best in class nothing that I would call out related to coveted otherwise.

One of the thanks, I would say, though as Rob mentioned, we've seen significant positive trends in upsell with our current customers and multiple areas whether its.

Cooper risk assess Cooper sourcing Cooper pay and others and one other thing Thats.

Important to note and that we saw a little bit of impacted us in Q2, when we do these powerup add ons in many cases, we don't realize the benefit of the full year billing to the customer in our calculated billings results.

Because the first billing installment for the out of modules is often coterminous with the customers either annual anniversary or renewal date, meaning that we only build the customer for partial year upfront, so while no impact necessarily a revenue.

As impact billings for partial payments and it's likely we'll see some benefit from this dynamic in Q4.

There are significant amount of our deals or build and transacted.

Great. Thank you very much.

And as a reminder, we please ask that you limit yourself to one question. Your next question comes the line as Stan Zlotsky with Morgan Stanley.

Perfect. Thank you so much and congratulations on good quarter guys.

Maybe just one very quick one from me Todd I'm not sure if maybe I missed it odd during the prepared remarks, but how are you thinking about billings for Q3.

There you know as a point estimate it may be on trailing 12 month basis.

Yeah. Thanks, Dan So given the current macroeconomic environment, we've continued to be very measured with our billings outlook and if you look at the three components, a professional services renewals and new business on the professional services front, we went into the quarter with a a very strong pipeline.

A lot of people expected impact from coveted and we haven't seen that at all and then on the on the new business front I can give you a couple comments quantitatively and qualitatively or quantitatively, although somewhat have to consider the law of small numbers are new bookings in August were higher than last year and.

In the entering Q3 as I noted in my remarks, we had a substantially stronger pipeline for the second half year compared to that of last year. Both in terms of gross pipeline and later stage.

But as Rob mentioned, it's also difficult to predict sales cycles time, and there's also some seasonality in Q3 historically, although there are some trends pointing to perhaps that won't be the case this quarter.

And when we have seen deals push out, it's typically weeks or months and not quarters.

So and then on the qualitative side, we are seeing sent some green shoots, particularly in the level of engagement by our go to market teams being extremely high and overall say my confidence entering Q3 is stronger than that entering Q2, but given historical seasonality and just the macroeconomic environment.

You know expecting to get back to normal hopefully sometime later this year.

Perfect very helpful. Thank you so much.

And your next question comes line of Brad Sills with.

Nothing.

Oh, Great Hey, Thanks, guys I wanted to ask about some of the progress you've seen here with the community intelligence applications you, Matt mentioned advantage risk assess sourcing seems like those are picking up we're hearing that from the channel as well is there is there a common theme here is just that these offerings are now maturing where you're building that analytics capability really leveraging that data.

In there.

Or is it just awareness growing up the benefits of these solutions I suspect, it's both but any any color on just what may be driving that thank you.

Yeah. Thanks, I'll answer the question I think is absolutely, but also did some very hard to understand exactly how some of the tipping points developed but.

Clearly, there's a massive amount of data that's going into.

Providing the community intelligence back to customers now I think we've passed many thresholds of data volume there will be required to make the individual insights that have prescribed offered up to individual customers via value on we're getting to to levels, where that is becoming meaningful and valuable for them and making their decisions I think there's also an incredible.

So continued willingness amongst our community to share Anonymized and sanitize data so that builds up.

So the likelihood that that insights what would be valuable and then it's the current time. So I think the current times are an important factor consider here as well you know many of the conversations I am having.

With folks to CFO as in folks in the CFO as office or about the supply chain disruptions, they're seeing the risk that they're seeing amongst their supply base that they need neighborhood watch type programs like we have built into community intelligence helped to mitigate that risk there need to get advice and insight on how to go from perhaps single sourced.

And with certain suppliers to multi sourcing.

Ideas or input around best practices for renegotiating certain categories of spend how to prioritize where to renegotiate where to start.

And how to move into a much more digital best practices way of doing things. So there's a lot of factors in the coming into play, but all of them are producing exactly what I think you're hearing from a from our community, which is we're starting to get real meaningful value from community intelligence and I can tell you without any reservation, we're definitely just at the very tip.

The iceberg in terms of what's possible terms and making all of our all of our customers smarter together.

That's great. Thanks, Rob.

And your next question comes online, it's Terry Tillman with Trust Securities.

Yeah. Thanks for taking my question, it's related to Todd what you just talked about a few questions ago as it related to billing. This concept of the add on sales what I'm curious about is you called that out and how that could potentially impact or Q could you maybe give us a little bit more perspective on how notable that could be and is this add on sales motion something that you all been aggressively.

Hey, pursuing or it's just kind of happening up kind of organically or naturally given the times we're in.

I would say, it's been more organic in nature and customers are looking to drive value and get a very quick ROI and reduce risk rights. If you look at the sourcing tool weve had customers.

Literally say tens of millions of dollars within the first week, obviously, a quick payback and then in the Covance 19 environment, you've got people, especially with supply chains in risk and making sure their supply chain doesn't go out a go down and potential issues related to bankruptcy and that type of thing and then you've also seen some.

Uptake and group, a pay which is which is broader but there are some slight benefits with respect to digital checks and that type of thing. So when you look at the number of add ons, we had in Q2 and actually even Q1 to be Frank.

They were pretty significant and what is it more than a million dollars, yes and is it less than five probably so somewhere in that range I'm not going to give a specific point estimate and and a lot of that Doesnt show up anywhere right. It would come up meaning from a a backlog perspective or.

Deferred revenue, so, but it should definitely be a net benefit in Q4 as people either go through their annual contracted degree cycle billing cycles and or the renewals.

Yeah.

Your next question comes the line is Daniel Jester with Citi.

Yeah. Thanks for taking my question because the last couple of quarters, you talked about some customers that were using Cooper more for direct procurement and I'm wondering given some of your comments about sort of supply chain being we worked what you're seeing on that front today.

Sure well thanks to the question is that's absolutely the case and that's seen in in our pipeline first of all its just touch on that and we'll look at our global systems Integrator partners. You know, we haven't opened pipeline in the hundreds of millions of dollars and a lot of that it has to do I think with our proven.

Referenceability in the market in the successes, we've had but also the conditions externally whether there is real disruption happening on procurement and CFO is really have a chance leads so you look at capabilities like dynamic strategic sourcing with multi factorial.

AI powered assessments of where to get the goods and services you need at the right price points for the right delivery room with the through the right freight for a point in time challenge I mean that we have some of the largest companies in the world.

Standardize on Cooper for making those decisions and a pipeline of folks to want to do the same.

Similarly in the area of contract management, and the ability to very quickly understand where contracts needs to be renegotiated.

Dynamically engage with suppliers on that renegotiation process and the right priority water taking in account the risk that those suppliers may have to their business with even be in business.

The next quarter and year and leveraging community insight to help them make those those decisions we see it in the Treasury management area as I discussed earlier around having liquidity and cash management properly sorted out within your company, we see it in inventory management than levels that companies are willing to go to the out of balance on hand invenergy.

Sorry, with outstanding orders, we see in the area of contingent workforce will we see company is.

Pushing to a greater agility through contingent workforce management with many of the modules. We deliver so I mean, we're really in the heart of a very significant focus area for you know so many companies around the world large medium and somewhat you know aspiring are growing.

And and our job is to take in one customer at a time and drive value for each and every one of them in a way that's fair thoughtful and has been allows to build to a long term a market leading business here.

And your next question comes the line of Peter will define with Evercore.

Right. Thanks for taking my question Congrats on the good quarter, maybe could you talk about what customers are speaking about cooper, whether that be procurement travel expense or payments relative to.

The other mission critical systems in terms of prioritization around spend especially in this environment.

I think and to your results in your commentary seems like investor concerns that some of the back office would have been pushed off it seems like.

For Cooper and what you deliver it seems like that's not the case, but curious to know how are your customers or thinking about your products in terms of prioritization. Thank you.

Sure well you look I think this these the categories around business spend management and that business management is comprised of has always been have always been on the priority list as part of the digital transformation set of initiatives I wouldn't say that they will first I think some at your point the front office capabilities around CRM.

Another as perhaps came earlier, but we were moving Internet turn area, where this was becoming more and more in the spotlight and I think what has happened now where there's just such disconnect such a disconnection that's happening around people understanding how subpar their processes are internally around procurement paper based invoiced.

Processing complicated payments.

Difficulty and did not only managing expenses, but maintaining situations where fraud doesn't escalate all of these areas in the business management, our us are being seen in a much greater light and him or I should say, great a light as being put on to them and we're in a phase right now that I would assess as one where companies are really trying to.

Figure out.

How to develop their transformation agenda is for the next.

For two three years for his midsize companies. The next decade for larger companies and I really like where we stack up in the marketplace as it pertains to that and a I'm really excited about the everything that our team and our partners are doing to make sure that we map our.

And your next question comes the line of Citi. Please go ahead with Mizuho.

Thanks for taking my question and thanks, all the color in terms of macro just wondering what kind of storefronts, you're seeing in the U.S. versus international any color on geography or be hopeful.

One other things with this businesses, we've tried to for the last decade, plus to create a really robust portfolio set for ourselves and when I say portfolio effect I mean, so when we get on calls like this with our Investor base. We will have we will can say with great confidence that.

We have delivered the goods if you will deliver to the best of our ability to to manage our not only quarterly expectations, but to set ourselves up for a bright future in that portfolio comes in it in a couple of dimensions. One is certainly geographic as you mentioned theres certain quarters, where we have now greater impact from.

Asia or Europe for South America, or United States and the other intervention is enterprise and Midmarket and our corporate team. There are many quarters, where we see a lot more volume, let's say in the in the mid market business and there's some quarters, where we have no significant whale's new enterprise they get us to it where we need to be well also have an incredible portfolio effect in our product.

Areas a modules we have so many different modules, we began with one in procurement a 11 years ago and now have nearly a dozen modules. So any given quarter, we'll see different dynamics from any of those three dimensions, but ultimately they get us to where we want to be which is ensuring that every customer.

Moving close has a high likelihood of.

Laying out measurable success criteria that we could deliver on and this quarter was was really no different at all.

And your next question comes the line of Koji Ikeda with Oppenheimer.

Great. Thanks for taking my questions.

Wanted to ask you a question about deals cycle speaking about some of your larger slipped deals from the first half were maybe we'll organizations are thinking about longer sales cycles. Overall have had those conversations changed at all now that companies are becoming more comfortable in the the norm from now environment environment are any of those elongated enterprise sales cycle.

Going back to something more recognizable pre pandemic. Thank you.

That's a great question that absolutely. They are one of the things I shared as and ends exactly how I see it to the fidel that need to precision of when the actual timing of the deal will naturally come to closure and we can begin frankly, the more interesting work, which is the implementation and the results realization that referenceability and then coming back around.

So that that positions not where it has been pre pandemic yet, but it is coming back. It is absolutely come back as Todd shared about the kind of last.

Months of the quarter and look I'll do the van that make the sales cycle times in some cases of extended but theyve extended in near term and one can see our way to them them them landing and that is happening in tandem with incredible engagement across the entire pipeline and in tandem with the pipeline growing.

Very very rapidly at the same time, so all that really spells for us really healthy medium to longer term prospect on the business.

While at the same time allows us to no closed dozens and dozens of deals as a new deals as we've done just this past quarter.

And your next question comes line of Brian Peterson with Raymond James.

Oh, thanks for taking the questions. So Rob if you have to think about the value.

The customer value or Germany or call. It a question you had to put that through the lens of a hard dollar oral why I'm curious how do you stack rank the value of Cooper pay specifically relative to some other parts of the platform do you think that time to value looks materially different.

You're not so great question, then I'm not going to be able to give a distinct answer because it really does depend on the maturity of the company and the use cases, where they are more mature versus not knowing we faced certain companies have incredible processes lets say around procurement preordering everything is clean and done really well, but.

You look at their expense process, it's it's completely fragment that or vice versa. They have some incumbents solution for expense management that seems to be okay, but their pre approval percentages horrible there on contract spend is horrible their invoice processing is paper based as I mentioned with inventory they might even be tracking inventory. So our goal here has always been.

To be really like a Swiss army knife I mean, you can use any component first wherever the pain is greatest or ever they organizational momentum is closest to beginning it business by management transformation and then as you start to gain value and working with US in this value service model will turn on other capabilities now that's not the.

Say the on some customers, we faced who are doing almost 100% paper based payments processes or completely disjointed loggins to 15 or 16 different systems to run a monthly batch payment job, where clearly the value is much much greater to begin there there may be streamlining expense management fee.

For example, so it's a very very customer specific and I want to things I'm quite proud of is that with our colleagues here, we figured out a way to really.

Be.

You know consultative with our prospective customers to two with integrity and honestly honesty try to see where we can begin with them that can drive the most value for them and then build the experience and partnership with them over over long periods on.

And your next question comes the line of Ryan Macdonald with Needham.

Yes. Good afternoon. Thanks for taking my question one for you Rob.

As we look at Conexus acquisition, obviously much smaller of the two that you made during the quarter, but there is an interesting court dataset that you're really acquiring with that business you talked about one how thats enhancing community intelligence, but Q, how you might be able to use that core data set as a competitive advantage against against some of your competitors moving forward. Thanks.

Yes, absolutely and we're very excited about the new colleagues from could access and I feel like they're completely integrated seem I haven't heard that name in a while they were all public colleagues now, but I'll tell you that dataset is very very powerful I mean, we have a very clear as so understanding now.

Have a supplier diversity and we are in a position now and we would always focused on this but even in a better position now than ever to help our buyers right and who are hundreds and hundreds and hundreds of companies around the world and millions of users.

Make decisions in part about whom they spend money with on criteria such as our these minority owned suppliers are these the diverse suppliers of these inclusive supplier. So it's another set of criteria that we now have as part of our data set that we can not only expose one customer at a time, but thinking give the.

Keys to our community. So they can leverage that add to that dataset build that dataset and help us or help us in that regard and that's just one example, there's a whole host of other use cases with which that data will be will continue at the valuable for us.

And your next question comes line of Joseph Vafi, what's kind of cord.

Thanks, and great results go. So just wondering you know it may be a multi part answer but can you try to frame the competitive landscape around pay I know, there's a lot of momentum in kind of pure play a piece solutions you know, there's no payment embedded and a lot of mid market.

ERP is you have a are you got different players here.

Just some thoughts on competitive landscape would be appreciated. Thanks.

Sure I I think you touched on it right. The there are incumbents listen providers. There are obviously, some smaller kind of new entrants.

In the marketplace, we've done our homework initially probably two years ago, when we started thinking about answering into the space.

And ultimately we havent seen any of them really flats on us I mean, we we have we have seen the.

This situation in a way where the grains competition is ourselves I mean, we have an opportunity really reimagine the way companies manage business.

Payments taken them from a largely still paper based world, but very dysfunctional decentralized world and making it much much easier and get a much more user centric, which is of course, the UN Cooper and getting much more open. So they have choice amongst banking relationships, which is the Olin Cooper and we're really just getting going here, but I will tell you great leading in.

The caters when I do see when reports I do see a number of incumbents in early actions that we've been lucky enough to be chosen over and selections and I think that as well as is still very early innings.

And your last question comes from the line as Pat Walravens with JMP Securities.

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