Good day, ladies and gentlemen, and welcome to the Coupa Software first 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. At the conclusion of our prepared remarks, we will conduct the question-and-answer session. If you would like to ask a question, you may press star one on your touch-tone pad at any time. If anyone should require assistance during the conference, please press star zero on your touch tone 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. Steven Horwitz, VP of Investor Relations. Mr. Horwitz, you may begin your conference. Thank you. Good afternoon, and welcome to Coupa Software's second quarter conference call. Joining me today are Rob Bernshteyn, Coupa CEO, and Tony Tiscornia, Chief Financial Officer. 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 be materially different. Forward-looking statements involve risks and uncertainties and assumptions that are described in our most recently filed 10-Q. 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 or accurate information. We also present both GAAP and non-GAAP financial measures. A reconciliation of certain of these measures is included in today's earnings release, which you can find on our investor relations website. A 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 to Rob. Rob? Thanks, Steve. I hope everyone had an enjoyable and safe Labor Day weekend. Let me start with a few highlights from this quarter, our 50th quarter of execution as a business. 49% growth in calculated billings, $179 million in revenue, now more than three years of consecutive quarterly non-GAAP profitability, and roughly $2.8 trillion in cumulative spend under management. This strong financial performance is highlighted by the following indicators of a steadily improving business environment. We're seeing sales cycles continue to move towards normalizing, even if they're still a bit longer than they were before the pandemic. We're seeing enterprise customers' companies become more engaged, as evidenced by the increased number of seven-figure deals we closed this quarter. We're seeing global scale and improved predictability in our mid-market business. We continue to welcome new Coupa Pay customers, with another quarter of achieving 30%+ attach rates on new deals. We're rapidly deploying our Supply Chain Design & Planning solutions and helping customers save millions in sourcing, production, raw materials, and transportation costs. We're realizing early dividends from our Japanese joint venture in the form of both pipeline and early wins. These are just some of the recent highlights. With all this encouraging news about Coupa and our business, it's clear that we are still very much living through a time when companies are operating with a heightened level of uncertainty. What we're witnessing is that companies are doing their best to adapt to this uncertainty. Our Coupa Business Spend Index report that was released last week illustrates that our customers are doing just that. They're adapting to this uncertainty. While the BSI data shows that global order per customer activity has returned to pre-pandemic levels, the increased supplier-to-buyer ratio illustrates how companies are diversifying their supply base to de-risk supply chain disruptions. The BSI data also shows an increasing lack of correlation between COVID case spikes and order patterns, which would imply that companies have taken the need to become more adept regarding continuity of operations. As the leader in our industry, we see our customers approaching this need for agility head-on, and proudly, the Coupa platform is a critical element of their strategy. Let me share an example. Our distribution-heavy customers are running into unprecedented bottlenecks with transportation. In many cases, trucking companies haven't been able to increase their personnel quickly enough to meet increasing demand. This forces them to figure out not only how to source the transportation, but also how to do so without paying exorbitant fees. Our Supply Chain Design & Planning solutions are helping identify where these shortages will impact the customer ahead of time, at which point, a dynamic sourcing event can be kicked off to engage multiple suppliers while maintaining fair prices and high quality of service. This is just one example of how continuous design and redesign is leading to significant improvements in agility. By enabling our customers to create rapid digital twins of their supply chain, we're taking technology that's already revolutionized healthcare and the auto industry and bringing it to all BSM customers, allowing them to thrive in this time of uncertainty. In my view, this is the future of modern back-office operations, and at Coupa, the future has arrived. Speaking of future, this quarter also marked the launch of the Coupa Application Marketplace, the Coupa App Marketplace. The Coupa App Marketplace gives customers an easier and smarter way to extend the power of our platform. With the App Marketplace, we're enabling quick access to solutions such as supply chain insights, supplier risk analysis, IT management, and much more. Many of the solutions included are ready to use right off the virtual shelf. This is also the very first marketplace in the business management space that empowers users to customize their experience, making it a more powerful tool to share information, automate workflows, and conduct key tasks. We proudly have more than 70 applications onboarded already, with over 20 more in the pipeline. The more customers participate, the more powerful our platform will become in helping them comprehensively address their spend. As you've heard me say, the third wave of our strategy is powered by Community.AI. As you'll recall, the first wave is focused on capturing all spend comprehensively. The second is focused on optimizing every dollar spent with suite synergy, and the third is amplifying community value with our platform. For those of you new to this wave of our strategy, let me illustrate a few examples of how this third wave is already delivering for our customers. The most straightforward is via Coupa Advantage. With Coupa Advantage, we pool customer spending to provide more value through pre-negotiated contracts, giving customers access to better pricing from trusted suppliers like UPS, National Car Rental, Zoom, Staples, The Home Depot, Office Depot, and many, many more. There's the intelligence component of Community.AI, where we pool customer data. When I say data, I'm not just referring to transactions, but the combination of transactions, configurations, and outcomes. This is more than just information. It's intelligence, and it helps customers in a host of ways. One of those ways is risk mitigation. To illustrate, one of our customers recently leveraged this intelligence to discover that a particular supplier had a high error rate, which led to a more in-depth investigation, and as a result, the risky supplier was removed from a clinical drug trial. The third component is collaboration, a pooling not of spend or data, but of brainpower. As I've said many times, we're not a products company. We're a Value as a Service company, and that value is amplified because of our growing community that is getting smarter together every single day. To that end, Coupa is quickly becoming the place for spend management professionals to share insights and best practices. Because the platform embeds these opportunities for collaboration within the process of conducting transactions, this collective wisdom is at their fingertips when they're making key decisions. For example, say you're beginning a sourcing event on the platform, one you've never tried before. A context-aware suggestion may come up referring you to other community members who opted into sharing their experiences with launching similar events at their companies. This is, of course, just the tip of the iceberg. These solutions will only continue to become more and more valuable as we develop the third wave of our strategy and our Community.AI vision becomes realized. Let's talk about ESG. Recently, we published our inaugural environmental, social, and governance report. It talks about our focus on achieving carbon neutrality, the employee resource groups we've launched to support our diverse employee base, and the hundreds of thousands of dollars we've donated towards scholarships and charities. We're just one company, and as proud as we are of the work we're doing, we're equally proud of how we're enabling others to do so as well. A lot of companies have made sincere commitments to ESG initiatives, it's not as simple as freeing your mind and the rest will follow. We believe we have a role to play by helping companies shorten the distance between intention and impact. With thousands of customers, millions of suppliers, and trillions of dollars of business spend, we're leveraging our scale and the power of our community to enable companies to do just that. A great example of this is CHEP, a Brambles company. CHEP relies upon our Supply Chain Design & Planning software to reduce waste, engage in strategic planning, save costs, and create circularity, a concept that aims to eliminate waste and minimize the consumption of resources through continual reuse. The key to supporting this has been the use of flow optimization, strategies that are there to implement and assess the most efficient and environmentally friendly transportation modes and routes. Via Coupa, CHEP is significantly reducing waste while simultaneously optimizing their logistics. Another area of ESG impact is meeting sustainability and diversity benchmarks. This is another area where we and our Community.AI focus are making a big difference for many of our customers. Coupa dynamically highlights suppliers that meet sustainability and diversity benchmarks and does so at the point of potential transaction. It provides real-time prescriptions so that our customers are more easily able to support their desire to engage with more minority-owned businesses and work with suppliers that are diverse and focused on sustainability. Switching to our core values. My colleagues and I are proud of the impact we're making. Let me share this quarter's Most Valuable Player awards at Coupa. Let me start with Constance Caylar, who was recognized for our first core value of ensuring customer success. Constance is adept at building positive and trusting relationships with customers. She's been particularly instrumental in helping our European customers deploy our spend analysis solutions, driving visibility and value for their organizations. Next, Sal Alswafta was recognized for epitomizing our second core value, focusing on results. Sal has an incredible work ethic and cares deeply about getting the right result, no matter how large or small the task. From catching potential errors in a credit posting to keeping our business moving fast with complex order approvals, Sal is uniquely driven and dedicated. He leads by example and inspires and motivates those around him. Finally, Kyle Dowling was recognized for demonstrating our third core value, striving for excellence. As one example, Kyle took the initiative to organize a cross-training series between our core source-to-contract and our contracts lifecycle management teams to strengthen the knowledge within the overall group. Recently, a customer asked if they could steal Kyle away. Thankfully, Kyle chose to stay on our continued journey together. Ultimately, for us, everything comes back to executing on the strategic vision areas spelled out in the letters of our company name, C-O-U-P-A, to bring the most comprehensive, open, user-centric, prescriptive, and accelerated approach to the market, as we partner with our community of customers to deliver them unprecedented Value as a Service. With that, let me now hand the call over to our CFO, Tony Tiscornia. Thanks, Rob. Good afternoon, everyone. Q2 was a great result across the board for all key financial metrics. We delivered strong top-line growth driven by rich levels of engagement with customers and partners, strong momentum in the area of back-office optimization, and outstanding execution by our teams in both the enterprise and mid-market. We also delivered strong bottom-line results in terms of gross margin, operating margin, and cash flows. As we enter the back half of the year, we continue to be excited about our business and are focused on continuing to drive growth by unlocking incredible value for our customers, employees, and partners. With that, let's dive right into the details of our second quarter results. Calculated billings for Q2 were $195 million, up 49% year-over-year. For the second quarter in a row, and on the back of stellar sales execution, we more than doubled new business compared to the prior period. We also had seasonally strong calculated billings contribution from Supply Chain Design & Planning, formerly LLamasoft, coming in at $25 million. Total revenue for the quarter was $179 million, up 42% year-over-year. Subscription revenue was $156 million, up 40% year-over-year. Strong new bookings and favorable linearity in the timing of deal closure contributed to our Q2 subscription revenue performance. We also delivered solid results in terms of gross margin, operating margin, cash flows, and other financial metrics. Our Q2 non-GAAP gross margin was approximately 71.5%, while non-GAAP operating income was $27 million, or 15% of total revenue. Non-GAAP net income was $20 million, or $0.26 per share on approximately 77 million diluted shares. These results were significantly ahead of our Q2 expectations. This can be primarily attributed to strong outperformance on the top line and faster than expected realization of synergies from the Supply Chain Design & Planning integration. Q2 operating cash flows were a record $41 million, and adjusted free cash flows were $37 million. Cash at quarter end was $634 million, up from $600 million a quarter ago. In terms of complementing growth with profitability, we continue to deliver strong results from a Rule of 40 perspective, with a current trailing 12-month calculation of approximately 59%. As a reminder, we define Rule of 40 as the trailing 12-month revenue growth rate plus the trailing 12-month adjusted free cash flow margin. Before moving on to guidance, let me share some additional color on calculated billings. As you know, we typically don't provide a detailed breakdown of organic versus inorganic because that's not aligned with how we run our business. Our focus is to quickly integrate our acquisitions and to go to market as a business spend management platform rather than a menu of distinct products. We also don't monitor distinct products separately from a financial statement or P&L perspective when making decisions about our business. Rather, we leverage one set of financial and operating results. With that said, this quarter, I'd like to provide some additional data points. We estimate that the Q2 calculated billings contribution from Supply Chain Design & Planning was approximately $25 million. This included approximately $5.5 million from professional services and about $1.5 million from term licenses. Overall, we are pleased with the migration of our supply chain customers from term license to subscription, as evidenced by our reduced license revenue. Next, last quarter marked the one-year anniversary of the Coupa Treasury acquisition, formerly BELLIN, which means no inorganic contribution should be considered going forward. Only a nominal contribution should be considered for Q2, as the anniversary date was in the first half of the quarter in early June. Finally, as a reminder, the acquired deferred revenue from BELLIN in Q2 of last year was $4.2 million. This was a one-time benefit that should be backed out from last year's calculation when calculating the compare figure for calculated billings. Based on these figures, year-over-year organic Q2 calculated billings was in excess of 30%. With that, let's now turn to guidance. I'll begin by laying out some of the background. As evidenced by our financial results, our business has been re-accelerating as the pandemic wanes. Similar to last quarter, I'd be remiss if I didn't mention that customers and prospects continue to operate with some level of caution, and that the Delta variant and other variants have some feeling uncertain about the potential impact on their business. While we are excited about our prospects for the back half of the year, we continue to incorporate a heightened level of caution in our outlook. With that said, I'll now share our expectations for the third quarter and full fiscal year. We expect total Q3 revenue of $177 million-$178 million. This includes subscription revenue of $158 million-$159 million, and professional services and other revenue of approximately $19 million. As we continue to execute on our strategy of migrating legacy LLamasoft term license arrangements to subscription and shifting professional services to partners, the trend for professional services and other revenue will continue to decline, and this is by design. The transition will also be a headwind in Q4 on a year-over-year compare basis. As last year, professional services from LLamasoft were at their height, and there were still significant term licenses being recognized in our professional services and other line items. As we previously noted, despite some of the near-term financial noise, this transition is in the best interest of all our stakeholders, and most importantly, our customers. As we carry on with the transition, I encourage investors to look more towards subscription revenue results rather than our total revenue results as an indicator of growth. For calculated billings on a trailing 12-month basis, we expect to exit Q3 at a year-over-year growth rate of approximately 41%. Our estimate contemplates a significantly lower contribution from Supply Chain Design & Planning, or LLamasoft, in Q3 compared to Q2. We expect a Q3 non-GAAP gross margin of approximately 69%. We expect Q3 non-GAAP operating income of $6 million-$7 million and non-GAAP net income of $1 million-$2 million, resulting in non-GAAP net income per share of $0.01-$0.03 on approximately 77 million diluted shares for the quarter. We expect Q3 adjusted free cash flows of approximately $10 million. Moving on to the full year, we expect total revenue of $706 million-$708 million. This includes subscription revenue of $616 million-$618 million, and professional services and other revenue of approximately $90 million. Moving down the income statement, for fiscal 2022, we plan to continue investing in our business to capture the clear market opportunity. As a result, we expect non-GAAP gross margin of approximately 69%, non-GAAP operating income of $40 million-$41 million, and non-GAAP net income of $21 million-$22 million. This results in non-GAAP net income per share of $0.27-$0.29 on approximately 76.5 million diluted shares for the year. We reiterate our expectation that adjusted free cash flows will be up on an absolute dollar basis year-over-year for fiscal 2022. Before wrapping up prepared remarks, we've got a couple new folks joining the coverage team, and I wanted to remind everyone that in Q4 of last year, we had a one-time opening deferred revenue benefit of $14.8 million for LLamasoft for calculated billings. This should be backed out of the compare period for calculated billings when we deliver Q4 results this year. We will remind you about this next quarter when we give Q4 guidance. That concludes our prepared remarks. We'd now be happy to take your questions. Operator? Thank you, Mr. Ford. Ladies and gentlemen, if you have a question, please press star one on your touch-tone telephone. We will take our first question from Ryan MacDonald with Needham. Thanks for taking my questions. Congrats on a really strong quarter here. I guess the first one I have is really around the calculated billings beat here. You talked about really the strength with supply chain here. Curious, as you look at the pipeline and the increased demand there, what are you seeing in terms of mix of demand between sort of the legacy on-prem versus the subscription offerings? Thanks. Sure. Let me say, first of all, Ryan, thanks for the nice words. This isn't just a matter of supply chain on-prem or cloud, this is about business spend management more broadly. When we look at the pipeline, we're just seeing a great deal of enthusiasm around companies wanting to address this whole set of challenges comprehensively. Just to give you a sense for that, obviously, folks on the more traditional core application side are seeing value in Supply Chain Design & Planning, and vice versa. What they're all seeing is the overall business spend management opportunity. Within the Supply Chain Design & Planning area, there's a great deal of interest and enthusiasm around the cloud version. The extensibility and flexibility and configurability of that cloud offering is really second to none, and it's helping us lead in a whole host of deals. Now that we're unlocking suite synergy between that and our Coupa Sourcing Optimization area, it's even more promising. Very positive overall and definitely driven and inclined by a push toward the cloud solutions. Ryan, just to add one thing there. As you noted, we had nearly 50% calculated billings growth in total for our business. We did have a good contribution from LLamasoft this quarter of $25 million, when you back that out and a couple other adjustments that I noted, we were still in excess of 30% organically for the business. Excellent. Maybe Tony, just as a follow-up, it's great to see the cost synergies coming through earlier than expected. Can you just talk about a few areas where you really were able to drive some of those synergies more quickly than expected? Thanks. Of course, in our overall operating income result, there was a strong top-line beat, first and foremost. We benefited from not only double net new business again for the second quarter in a row, but also strong linearity in the quarter versus sometimes you can see more of a back-end loaded quarter. On top of that, I would say we executed incredibly well across the board. The LLamasoft acquisition has been three quarters and running now, and this coming quarter, Q3, will be our last quarter. As far as taking advantage of cost synergies with hosting, with alignment of our teams, just incredibly strong execution across the board, which I think results from experience that we have in executing on integrating acquisitions and incredible dedication by the team. Awesome. Congrats again. Your next question is from Bob Napoli with William Blair. Thank you. You there? We can hear you, yes, Bob. Sorry. Sorry about that. No problem. Just a question on Coupa Marketplace. You've added a number of products to that with a big pipeline. How do you expect the marketplace to affect your business over the medium to long term? Sure, Bob. Now, thanks for the question. Look, the main purpose of the marketplace is to foster and grow the partner ecosystem around us. This business spend management opportunity is really sizable. We've defined the market at tens of billions of dollars globally in mid-market and enterprise, and across the board internationally. The reality that we're going to be able to hit every component and every type of use case that a customer would ever expect is not likely in the near term. We want to build an ecosystem around this. The fact that so many great emerging companies and developed companies are building on our marketplace is going to make it so much easier for our customer community to begin to subscribe to these applications and have them pre-integrated with the core Coupa platform. Again, another way to just grow our overall ecosystem for the benefit of the customer community that we're creating. Thanks, Rob. Then just to follow up on the gross margin, that really nice rebound in the gross margin this quarter. I was a little bit confused on the gross margin guide. I was just wondering, Tony, if you could just give me a little more color around the guide for the third quarter versus the actuals for the second quarter. Sure, Bob. Yeah. Last quarter, I believe we guided in the 66%-67% range. This quarter, 69% gross margin. Certainly, we had a strong performance this quarter coming in at 71.5% in total. We realize that we have a massive growth opportunity ahead of us, and as we look to build scale, we want to maintain the flexibility to increase and move the dials on investments as we see fit. We're leaving those degrees of freedom. Your next question is from Brad Sills with BofA Securities. Oh, great. Hey, guys. Thanks for taking my question. Congratulations on a real nice quarter. I wanted to ask about just the environment. We've seen a number of back-office application providers see some uptick this quarter. You're certainly seeing it. What are you hearing from CFOs and CIOs with regards to plans for refresh and is this kind of a catch-up in some pent-up demand here in pipeline, would you say? Or is it just a function of more digital transformation accelerating as we're getting into reopening? Thank you so much. Sure, Brad. My sense for it is that it is digital transformation taking hold, and finally really beginning to take hold in the areas where we operate largely in the back office. Look, just to give you a sense, just in this quarter, we had more seven-figure enterprise deals certainly than last quarter. We had our first ever seven-figure deal in the mid-market this quarter, which was very interesting. When you look at the texture of these transactions, they're not sort of just pent-up demand unlocked. They are transformational deployments of our business spend management platform that is going to help these folks recognize incredible operational efficiency, the agility that they simply don't have without these types of applications fully deployed. I think it is more of the latter of the two options that you shared, but we'll see how it plays out, but that's what we're feeling here, no doubt. That's great. Thanks, Rob. With that record quarter in these bigger deals that you mentioned, is that a function of Coupa moving up market kind of on an ongoing basis, or is it more customers are committing to more components of the stack? It used to be procure plus invoice. It sounds like now you're seeing real traction with sourcing, supplier management. How much of this is a function of just wider footprint on the initial sale and even potentially upsell acceleration here as well versus just the move-up market? Thank you so much. Yeah. No, it's a great question, and I think it's worthwhile for everyone listening to understand. We don't have a continued move upmarket. We have three really strong businesses in enterprise, in upper mid-market and mid-market, which have a really strong growth rate, have a very strong sales and marketing efficiency to them, that are operating in and of themselves separately as very good, strong businesses. Having said that, when you look in aggregate, and by the way, individually, the average annual subscription price point has continued to grow in all segments, virtually every quarter now for 50 quarters, Brad, which is very encouraging. That is not just a move-up market. That is a continued move to deliver more and more of the BSM footprint, more and more of the Value as a Service to our customers, both upfront, as you noted, as well as for those that stay with us and add on more components. All of it boils down to this vision lock we have with our customers around digitally transforming their back-office operations through modern business spend management solutions. Your next question is from Peter Levine with Evercore. Peter, if you're speaking, we can't hear you. Peter, you may be. Operator. Okay, we'll just move on to our next question. Your next question is from Strecker Backe with Wolfe Research. Hi. Thanks for taking the question here. Kind of a two-part. You talked about the economic environment, not quite back to pre-COVID levels. Can you just talk about how that's changed over the past three months when you last gave us an update? We speak really positively about your pipeline and your late-stage pipeline, but sales cycles also not quite back yet. How are those conversion rates trending? When you look to the back half of the year, how does that pipeline sit between the larger enterprise and maybe the small, medium businesses? Thank you. Sure. There were a lot of questions there. Let me address it at the key level where I think you were going. In terms of pipeline, the pipeline appears quite healthy across segments as I look at it today. I'll tell you, without question, we have our largest pipeline we've ever had as we enter Q3. We're seeing this pace of sales cycles continue to improve. They're not quite where they were pre-pandemic, but they're continuing to improve. It's a delicate thing. When we saw with the Delta variant, it's a delicate thing. Things were moving a lot quicker. The Delta variant came, maybe slowed down a little bit. It's a little bit touch and go. Generally speaking, when you zoom out, big growing pipeline, faster conversions, and most importantly, this clear acknowledgment on behalf of CFOs, and frankly, CIOs, that they need to digitally transform their back office, particularly in the area of how they spend money on their business. Your next question is from Terry Tillman with Truist. Hey, guys, this is Joe Meares on for Terry. Thanks for taking the questions. I really appreciate it. Just thinking in terms of international markets, what are you guys seeing in terms of propensity and willingness to buy? How are sales and bookings comparing to the U.S. market right now? Are you seeing more growth on the mid-market side as opposed to the enterprise side internationally? The two slices are international and then by segment. As I mentioned earlier, all segments are doing very well and continuing to improve and get closer and closer to pre-pandemic levels. In terms of international, our strategy has always been an organic expansion internationally. We entered Europe many years ago with a handful of folks and landed our first customers and leveraged those references to land more and more. Now, Europe represents a very significant portion of our business. We're seeing the same dynamic happening in other areas of the world, in South America, in parts of Asia, in South Africa and other locations. Healthy, and I wouldn't say there are any statistically significant off-roads in any particular market that are consistent or worthy of calling out. Maybe, Tony, you'd like to add something? Yeah, just to add some additional color. For this quarter, we'll report 59% U.S. revenue contribution, 41% international. We've steadily been on or around that 60/40 range for quite a bit of time now. Rob pointed out some of our expansion, Latin America and APJ are still early. Also we've been seeing some good early progress with our Japanese business as a result of our joint venture. Super helpful. Just as a quick follow-up, any update on the U.S. federal government side, the government side in the U.S.? Excuse me. Sure. Probably no particularly meaningful update this quarter beyond what we shared last quarter. We're FedRAMP Ready Moderate. We've passed many of the rigorous tests required, which was arguably the hardest part of all of that. The next steps are to complete our audit, and we're working with a customer and a third-party assessment firm for that. We see some real opportunity there, and we think a lot of that will likely begin to truly materialize in the back half of next year. Good progress in city, state, and federal, but not anything overly statistically significant to call on the call. Your next question is from Brian Peterson with Raymond James Congrats on the quarter, gentlemen. The upside is definitely in vogue. Rob, just one high-level one from me. It's interesting to me that there's always such high ROI of the software and the platform, but you're also hitting on very strategic dynamics, right? With supply chains and everything else, it's just beyond hard dollar savings. If we're thinking about that Value as a Service framework, how much does pricing come up as part of the conversation relative to conversations prior to the pandemic? Just curious to get your thoughts there. Thank you. That's a great question, Brian. Thank you. Pricing always comes up at some level in our market because some of the folks involved in championing our offerings or evaluating our offerings, it's their job to create some level of a competitive environment and choose amongst the options. Having said that, as you could see, with a very honest and fair spirit of pricing, our average annual subscriptions have gone up virtually every quarter, as I mentioned, for now 50 quarters. That hasn't changed in the last four to six that we've been experiencing the pandemic. What customers want is, number one, high likelihood of success. We think by far we offer that better than anyone else in the market. Highest likelihood of success. They want time to market. They want to get deployed quickly in an accelerated way, the A in Coupa. They want the value and the ROI to be justifiable. The price to value equation for what we offer is unlike anything I've seen in my 27-year career in enterprise software. I think we're in a really good spot with that. As long as we continue to be focused on authentic, honest conversations with our customers, being real trusted advisors to them, and being maniacally oriented toward ensuring their customer success, I think we sit in a really good spot in the market. Good to hear. Thanks, Rob. Your next question is from Siti Panigrahi with Mizuho. Thanks for taking my question. Rob, I know you want to talk about BSM platform. Just wondering, any color in terms of trend or attach rate of this contract management or even treasury management? Also specifically Coupa Travel, have you seen any recovery on that part of the business? Well, look, we manage the business as a platform, the business management platform. Obviously, we're seeing more and more of our capabilities getting purchased upfront and more and more of our capabilities getting deployed. That for sure includes contract lifecycle management and many of the other areas that you may not be mentioning, but our customers are deploying and getting value from. In terms of travel and expense, we're continuing to deploy and sell our expense management offering. We're in the process of building out our bookings component. I can't say yet, in any meaningful way, that travel's picked up to a level where a significant boom has come to our ability to sell that standalone offering or that offering being the lead for the overall BSM platform as of yet. Tony, just a quick follow-up. What's the M&A contribution embedded into your guidance? Yeah. For our billings guide, let me give you some details on that, Siti. We guided to 41% exiting the quarter, which from a dollar perspective is very similar to what we guided for last quarter. It mainly boils down to one thing, based on what we know, and there are a lot of moving parts. We expect LLamasoft calculated billings to be approximately $8 million-$10 million less in Q3 compared to the $25 million that we recognized in calculated billings in Q2. That's the main kind of color there. All right. Thank you. Your next question is from Steve Koenig with SMBC. Hey, guys. This is Owen Haworth on for Steve Koenig. Thanks for taking our question, and congrats on the strong results. I'm wondering if you can drill into Coupa Supply Chain a bit more. How are the synergies developing both on the sales side and on the product side with LLamasoft? As you move into supply chain, can you tell us more about what the sales motion looks like there? Are they complementary to existing sales motions? Is it a separate sales motion? Are the buyers the same or are the buyers different? Kind of lastly, considering talent brought in through the LLamasoft acquisition, what synergies do you see longer term on the product side? Maybe how can you leverage the added AI expertise across your BSM product suite? Thank you. Sure. A lot of questions there. Let me try to really kind of pull them all together, but I think what you're asking is obviously very relevant to us. When we talk about Supply Chain Design & Planning integration, we slice it not dissimilar to the way you did with sales, product, and talent, but we look at it as people, process, and technology. From the people side, we feel really good about the way we drove synergies aggressively right at the outset of that acquisition. We faced plenty of challenges as we had expected, but find ourselves now in a pretty good spot in terms of the folks that we have on board, the folks that we're hiring, and the fact that we're all rowing in the same direction. Which is really a testament to some incredible people that are now part of Coupa, who were once part of that acquired company. On the process side, everything is already integrated. A big testament to the hard work of many of the departments within Coupa to make that happen. We're operating as one company today. On the technology piece, which you touched on, we have, in our latest release, implemented our first primary integration point, which is between the design and planning and the Coupa Sourcing Optimization platform. We have customers that are deploying and utilizing that first primary synergistic integration point. We've also done everything on the technology side, from the lower level of stack and the technology stack, as well as in the user experience being very, very complementary. The last piece that you touched on, which is some of the synergies with people. The sales cycle began a bit differently. It's becoming more and more complementary as our teams begin to work with one another and showcase the overall BSM vision and how these applications work together on one platform. We have created a center of excellence around artificial intelligence that is led by a key leader from the acquisition that is now beginning to reap rewards for us that span the entire footprint of the Coupa platform. All progressing well, and couldn't be more excited about this integrated group of people we have now. Your next question is from Michael Turrin with Wells Fargo Securities. Hey there. Thanks. Good afternoon. Just going back to the LLamasoft migration efforts and activity that you saw this quarter versus what you're assuming next quarter, I wanted to dig in there a little bit and just try to ask around how much of that might just be general conservatism. We know you've talked in the past around assuming majority migration activity, almost entirely migration activity, as driving that business in the coming year. How much of this is just similar to how you've historically guided versus something you saw in Q2? Anything you can add just around how the migration efforts and renewal conversations are progressing relative to maybe what you were expecting at the start of the year? Thank you. Sure, Michael. Thanks for the question. Definitely we always at Coupa have a little bit of conservatism, but no, based on the inputs that we have in front of us for contracted billings, for renewals, professional services, licenses for next quarter, definitely there are some moving parts, but we do see a meaningful decrease from Q2, which was $25 million, moving to Q3. A bit of conservatism, but based on the numbers we're looking at, we have decent visibility into that, and that's what we expect. Part of that is seasonality for enterprise software. For example, for Coupa and LLamasoft was, and now is incorporated with Coupa in our business, Q1 and Q3 tend to be seasonally weaker, with Q2 and, of course, Q4 being the largest quarter seasonally. That's part of it. Part of it, as you mentioned, is the continued migration. We had in Q4, when we first acquired LLamasoft for the full quarter, we had about $6.9 million of licensed revenue. In Q1, that was down to about 3.5, I believe. Then this quarter was 1.5, so we're definitely making good progress on the conversions as well. That's great. Those details are super helpful. Thank you, Tony. Your next question is from Matt VanVliet with BTIG. Yeah, thanks for taking the question. I just wanted to dig in a little bit on the Coupa Pay side. It sounded like another strong quarter of attach rates on new deals. Wonder if you could update us on maybe a couple things. One, how are you doing with existing customers looking to add that on? Just from a structural standpoint, is there anything limiting that to the sort of greater than 30% attach rates you've talked about the last several quarters? What could be the driver to get that number significantly higher going forward? Thanks. Well, let me just say, Matt, to start out, that our goal is not so much to attach one thing or another thing to an existing account or attach it into a new deal. Our goal, first and foremost, is to get vision lock with prospective customers and maintain vision lock with existing customers around the full business spend management platform. That's what we're playing for. The idea of attaching one product to another is interesting, but that isn't the driver for us. Having said that, without even a focus on attach rates, it's encouraging to see now multiple quarters of over a 30% attach rate on Coupa Pay. We're seeing customers themselves, you asked about deployments, taking a pretty methodical approach to ramping their transactional spend, whether it be through core Coupa Invoice, through vC ards, to early payment discounts. We're seeing customers taking multiple Coupa Pay products up and deploying them in alignment with their digital transformation kind of staging strategy. Very, very healthy uptick in utilization of the product as well as interest in the product from the very front end as part of the overall business spend management offering. That's where our attention is, and it's reaping rewards for us, clearly. Great. Thank you. Your next question is from Joseph Vafi with Canaccord. Hey, guys. Good afternoon. Thanks for taking my question. Great results. You kind of have a two-sided network that's pretty powerful at this point, and I just wanted to explore your ability to penetrate the supplier side of the network more to, for those suppliers actually to become customers of the product as a buyer and how that goes and how you're seeing customer acquisition cost there versus perhaps looking at kind of greenfield opportunities where a potential new client is not already in the supplier network. Yeah, thanks, Joe. It's a very strategic question that you ask. Our thought process is unquestionably that we want to be the platform for B2B commerce between buyers and suppliers. That does mean spending some energy to make sure that suppliers can easily be onboarded, that their experience has the same level of usability that they're used to from consumer applications, that they're able to transact seamlessly with our buyers. As you know, we've managed purchasing from our buyers with millions and millions of suppliers all over the world. It absolutely behooves us to spend energy on the supply side of our platform. We're doing that, we're certainly not yet doing that in a way that would lead to any specific monetization plans. Our goal is to make the buying experience as seamless as possible and make that e-commerce B2B exchange as seamless as possible currently. Fair enough. It feels like that could be a good maybe emerging opportunity strategically on customer acquisition. When you look at accounts payable or accounts receivable automation, we're seeing a lot of synergies across those two. I appreciate it. I appreciate the perspective. Thank you, Joe. Your next question is from Hannah Rudoff with Piper Sandler. Hi, guys. This is Hannah on for Brent Bracelin today. Thanks for taking my question. Just one from me here. I guess, how sustainable are you thinking the impressive operating margin gains during Q2 were, which really surprised to the upside, even with the ongoing LLamasoft acquisition? Thanks, Hannah, for the question. As far as our outperformance this quarter, the first part of it is because we have an industry-leading deployment of Coupa, which allows us to visualize and control our costs incredibly well. In fact, for everyone on the call, I'd strongly suggest they consider using it to benefit their companies as well. Look, of course, we had a very strong top-line beat, first of all, in the quarter. There were a few factors there, just the magnitude of new business for the quarter and also the linearity, therefore bleeding into revenue. We had faster than expected synergies from Supply Chain Design & Planning or the LLamasoft acquisition. As we go forward, we want to leave ourselves, as I mentioned before, degrees of freedom and flexibility to invest to capture the growing market. There's a number of factors at play. I think that our results this quarter did have some component of us wrapping up some pieces of the LLamasoft acquisition. Thank you. At this time, there are no further questions. This concludes the conference call for today. We do thank you for joining. You may now disconnect.