Coupa issues raises over stock as share price continues to crater

Coupa is giving employees an out-of-cycle pay raise in lieu of additional equity as the procurement software provider’s stock, down 83% from its 2021 high, continues its decline amid worsening economic conditions and rising inflation.

The award will impact roughly 90% of the company, a spokesperson told Protocol, declining to disclose the size of the raises. The remaining 10% is largely the leadership team, the spokesperson added. Employees will also still be eligible to receive regular year-end raises.

While the company touted the decision to do cash bonuses instead of issuing additional RSUs as one that will give immediate benefit to employees struggling with increased prices for everything from baby formula to airline tickets, the choice is perhaps also a reflection of the reality that it could be a while before Coupa’s stock recovers any lost ground.

“Our immediate focus is getting help to people right away, and raising salaries is the fastest way to respond to the crunch people feel from rising prices and volatile stock markets,” the Coupa spokesperson said when asked about the optics.

While struggling technology companies like DoorDash and Robinhood have granted employees more equity amid the market decline, software vendors don’t seem to be announcing such bonuses with the same fervor, instead opting for immediate cash raises.

But Coupa has been hit harder than other enterprise tech providers, many of which got a major bump during the pandemic and are now suffering amid a broader technology stock sell-off. Coupa shares have been in near-constant decline since February 2021, falling to $63 at the close of the market on Thursday.

While Coupa has seen a small recovery, the road ahead seems just as treacherous as the past two years. Sales grew a better-than-expected 18% in the three months through March to $196 million. And the company expects 2023 sales to be in line with Wall Street’s predictions.

But if economic conditions were to worsen and force businesses to curb IT spending — which, though it doesn’t appear to have occurred yet, is expected to happen by the end of the year — many could look to postpone or halt major ERP overhauls, like moving from SAP’s Ariba to Coupa. As of now, however, CEO Rob Bernshteyn sees those types of large-scale projects slowly “coming back on line.”

And despite the pandemic wreaking havoc on supply chains, many companies are still in the early stages of reworking that part of their business, according to Bernshteyn. That’s bad news for Coupa, which now has to wait even longer to reap the benefits of such a change. One bright spot could be mid-sized companies, which Coupa sees as a key avenue to grow sales.

“It certainly feels promising,” Bernshteyn told investors on the recent earnings call about the outlook.