Coupa Software’s mission hinges on the thesis that companies are willing to spend money to save money. That argument went over well with investors on Thursday during the cloud software company’s Nasdaq debut.
The company’s shares reached a high of more than $41 during its first day of trading—more than double the $18 initial public offering price it commanded Wednesday evening. Its shares closed at $33.28, earning it a market capitalization of $1.66 billion and assuaging fears that the San Mateo, Calif.-based business would fail to justify the “unicorn” valuation of more than $1 billion it commanded after an $80 million venture round in June 2015.
Coupa (COUP) specializes in systems that help corporate finance teams evaluate what they pay for everything from landscaping services to components—and identify ways to negotiate better contract terms. According to the official count cited in its September IPO prospectus, the company tracks more than $250 billion in spending for approximately 460 customers—including Procter & Gamble (PG) and Airbus.
“Many of them are very familiar with Salesforce, which helps drive new revenue,” Coupa CEO Rob Bernshteyn tells Fortune. “We’re on the other side of that equation. We’re helping them spend more efficiently.” Before joining Coupa almost eight years ago, Bernshteyn held positions at SuccessFactors and Siebel Systems.
Jonathan Ebinger, general partner with BlueRun Ventures, which was Coupa’s first outside investor, said the software helps organizations identify overspending more quickly than the systems typically used by corporate procurement teams. “The CFO understands that this is not a matter of spend management, but rather a matter of managing one of the biggest line items on the corporate P&L,” he said.
Hints that Coupa was ready to take its chance on the public market surfaced over the summer, after the successful debuts of two other business software companies: communications software specialist Twilio (TWLO) (which is trading at four times its $15 IPO price) and big data firm Talend Software (up around 33%). In its prospectus filed in early September, Coupa said it hoped to raise about $75 million. It wound up raising about $133 million on the 7.4 million shares it sold.
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Bernshteyn explains the company’s decision to go public was, in part, is largely motivated by its interest in raising visibility for new sorts of financial management software. “We want the market awareness, we want the further legitimacy,” he says.
There are some pretty big companies standing in its way—including well-established software giants SAP (SAP) and Oracle (ORCL)—although Coupa’s software was designed to work in collaboration with systems from both companies. Another up-and-coming rival is likely to be Workday (WDAY), which last week added broader budget planning and expense management features to its cloud financial software offering.
