SAN MATEO, Calif., June 9, 2020 /PRNewswire/ -- Today, Coupa
Software (NASDAQ: COUP) announced the findings of its Q2 2020 Coupa
Business Spend Index (BSI). The Q2 Report revealed that business
spend sentiment dropped well below the trend line across all
industry sectors with the exception of Health & Life Sciences,
indicating that businesses have grown significantly more cautious
about the outlook of the economy.
Leveraging billions of dollars of aggregated and anonymized
business spend decisions, the Coupa BSI serves as an early
indicator of macroeconomic health, giving businesses insight into
where the economy is headed over the next three-to-six months.
Q2 Findings
While the BSI was already showing indications of a slowing
economy as far back as Q4 2019, not surprisingly, businesses'
economic concern in the midst of COVID-19 has increased
significantly.
In the Q2 Report, RFIs (the number of new requests going out
to suppliers to procure goods and services) increased by 60
percent and average time to approve spend decisions
decreased by 38 percent. In prior quarters, the inverse
relationship between these two factors indicated confidence in the
economy. However, while the data in the current quarter followed a
similar pattern as prior quarters, the interpretation is different.
The increase in RFIs this quarter indicates that businesses are
scrambling to find suppliers to fulfill their orders, and once
goods are located, businesses are acting quickly to approve spend
to purchase those items. This combination, as opposed to prior
quarters, shows there is instability and uncertainty for
businesses, leading to a murky outlook regarding near-term economic
growth.
"The Q2 2020 BSI shows clearly the impact that the global
pandemic has had on supply chains and businesses' confidence in the
economy over the coming 3-6 months," said Rob Bernshteyn, chairman and chief executive
officer at Coupa. "While uncertainty may remain a principal
theme for some time, businesses can build resilience with their
business spend. Today's modern technologies provide them with the
visibility and control and supplier insights needed to not only
navigate but emerge from this crisis stronger than before."
What to Expect in the Coming Months
- Businesses Overall: Sector data indicates that sentiment
across most industries has fallen sharply, likely as a result of
the global pandemic, with some industries more impacted than
others. The Coupa BSI indicates that the U.S. economy may operate
well below trend over the next three-to-six months.
- Financial Services: Sentiment for financial services,
which had been relatively strong in prior quarters, was hard hit by
the global pandemic. Declining economic activity coupled with
interest rate cuts by the Federal Reserve have significantly
impacted the sector.
- Health and Life Sciences: Despite being above the trend
line, treating patients for COVID-19, coupled with the decline in
non-essential services, has negatively impacted the revenue of the
U.S. healthcare system, so overall sentiment has declined.
- High Tech: Data for the sector shows that sentiment is
down slightly quarter-over-quarter. The modest decline is likely a
result of trade disruptions with China impacting the shipping of technology,
but positively countered by the increase in demand for technology
as many people shifted to working remotely.
- Manufacturing: After several quarters of flat growth,
sentiment for the manufacturing sector sharply declined. Just as
trade tensions with China were
improving, COVID-19 significantly impacted supply chains that were
dependent on materials from China.
- Retail: Retail was the sector most heavily impacted by
the pandemic. As a result, sentiment fell drastically below trend
as consumers obeyed stay-at-home orders and moved to mainly
shopping online.
To view the Q2 2020 Coupa BSI in its entirety, visit
www.spendindex.com.
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 approximately $1.8
trillion, 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 spend
factors at a business: (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 composite value of the three
components in the reference period (July
2016).
Note: In Q2 2020, the Coupa BSI methodology was updated with a
new weighting model across all factors. The factors established in
Q4 2019 remain unchanged.
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