Coupa Business Spend Index Reveals that Business Spend Sentiment is Gradually Improving for Third Consecutive Quarter

Rhea-AI Summary

Coupa Software (NASDAQ: COUP) released its Q1 2021 Business Spend Index (BSI), revealing a 2.9% increase in business spend sentiment, marking a recovery trend since Q2 2020's decline due to the pandemic. Despite this recovery, spending across most sectors remains below trend. Year-over-year data shows significant decreases in air travel (96%), office supplies (25%), while technology and contingent workforce spending increased by 11.5% and 22.8%, respectively. The outlook remains cautious with ongoing COVID-19 challenges, impacting sectors differently.

Positive

• 2.9% increase in business spend sentiment for Q1 2021.
• Third consecutive quarter of improvement in business spend sentiment.
• 11.5% increase in technology spending indicates a shift towards digital transformation.
• 22.8% increase in contingent workforce spending reflects adaptability in business operations.

Negative

• 96% decrease in business spending on air travel shows ongoing travel restrictions.
• 25% decrease in office supplies spending indicates reduced in-office activities.
• Health and Life Sciences sector shows sharp decline, expected to remain below trend.

SAN MATEO, Calif., Feb. 9, 2021 /PRNewswire/ -- Today, Coupa Software (NASDAQ: COUP) published the findings from its Business Spend Index (BSI), Q1 2021 Outlook. The Coupa BSI analyzes billions of dollars of aggregated and anonymized business spend decisions across Coupa's platform, often serving as an early indicator of macroeconomic health over the next three to six months. The Q1 Outlook shows that business spend sentiment is gradually improving (an increase of 2.9 percent), but is still below trend.

Specifically, the Coupa BSI Q1 2021 Outlook shows gradual improvement in business spend sentiment for the third consecutive quarter. This data suggests that the recovery of business spend sentiment is underway following the sharp decline noted in the Coupa BSI Q2 2020 Outlook that aligned to the start of the COVID-19 pandemic. However, businesses remain cautious about the global economic outlook and all industry sectors, with the exception of high tech, remain below trend.

Data from the past quarter shows the following year-over-year changes in business spending:

• 96 percent decrease in business spending on air travel
• 25 percent decrease in business spending on office supplies
• 11.5 percent increase in business spending on technology, including hardware, software, and services
• 22.8 percent increase in contingent workforce spend
• 12.3 percent increase in business spending for shipping and freight

"While the Coupa BSI Q1 2021 Outlook shows modest improvement overall, a return to trend is unlikely until the number of new COVID cases reported daily has been significantly reduced," said Jeff Collins, chief economist at Coupa. "Although government action to combat the economic consequences of the pandemic has likely mitigated the depth of the downturn, we do not expect the U.S. economy to return to 'normal' levels of output or employment in the next three to six months."

Spend Sentiment by Vertical Industry:

• Financial Services: Although below trend for the last four quarters, the sector is improving bolstered by refinancing activity, stimulative fiscal policy, and continued accommodative monetary policy by the Federal Reserve. Improved spend sentiment for Financial Services implies the sector is expected to contribute more positively to U.S. GDP growth for the next three to six months.
• Health and Life Sciences: Spend sentiment for Health and Life Sciences declined sharply from the previous quarter. The sector has been hard hit by the resurgence of COVID-19 cases and is expected to remain below trend for the next three to six months.
• High Tech: Confidence in the tech sector, which has remained high throughout the pandemic, is now returning to trend. Companies in this sector are expected to benefit long-term from changes brought about by the pandemic and continue to contribute positively to U.S. GDP growth for the next three to six months.
• Manufacturing: Spend sentiment for Manufacturing rebounded but is still well below the trend line. Demand is expected to increase as vaccinations and warmer weather reduce the negative impact of the pandemic on the sector.
• Retail: The Retail sector continues to improve but is still below trend, as uncertainty caused by layoffs and business shutdowns persist. However, stimulus checks and low interest rates are expected to mitigate the impact of the pandemic in the months to come.

To view the Coupa BSI Q1 2021 Outlook in its entirety, visit www.spendindex.com.

Disclaimer: The findings of the BSI are not necessarily indicative of trends happening with Coupa's business.

The Coupa BSI Methodology
The Coupa BSI is an early indicator of potential economic growth based on current business spending decisions of hundreds of U.S. companies. It analyzes billions of dollars of anonymized transactions from the Coupa BSM Platform, which has cumulatively processed over $2 trillion in business spend, to measure confidence around U.S. economic growth at an aggregate level, as well as an industry level within financial services, health and life sciences, high tech, manufacturing, and retail. The index is based on three key measurements related to business spend: (1) spend volume, (2) average time to approve spend decisions, and (3) average rate of spend approval/rejection.

The Coupa BSI is normalized to a baseline value of 100, which represents the weighted composite value of the three components in the baseline reference period (July 2016). The weighting methodology is periodically updated based on recalibration of the model. This was most recently done for Q4 2020.

About Coupa Software
Coupa empowers companies around the world with the visibility and control they need to spend smarter and safer. To learn more about how Coupa can help you spend smarter, visit www.coupa.com. Read more on the Coupa Blog or follow @Coupa on Twitter.

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SOURCE Coupa Software

FAQ

What does Coupa's Q1 2021 Business Spend Index indicate?

The Q1 2021 Business Spend Index shows a 2.9% increase in business spend sentiment, indicating gradual improvement but still below pre-pandemic levels.

How has spending changed in different sectors according to Coupa's report?

The report indicates a 96% decrease in air travel spending, a 25% decrease in office supplies, but an 11.5% increase in technology and a 22.8% increase in contingent workforce spending.

What is the outlook for business spending in 2021 according to Coupa?

The outlook remains cautious, as the return to trend in spending is unlikely until COVID-19 case numbers significantly decrease.

Which sectors are expected to contribute positively to U.S. GDP growth?

The Financial Services and High Tech sectors are expected to contribute positively to U.S. GDP growth for the next three to six months.

What is the methodology behind Coupa's Business Spend Index?

The BSI analyzes billions of dollars of anonymized transactions from the Coupa platform, focusing on spend volume, approval times, and rates of approval/rejection.