What happened

Shares of Coupa Software (COUP) were up by 14% as of 12:31 p.m. ET Wednesday after the company reported better-than-expected results for its fiscal 2023 second quarter.

For the period that ended July 31, the company reported record revenues and 25% growth in subscription calculated billings. Management raised guidance for subscription revenue but cautioned that the business in Europe is showing weakness. All in all, investors were relieved to see stable quarter-over-quarter revenue growth in a challenging macroeconomic environment.

So what

Revenue increased 18% year over year, the same rate as it grew during the previous quarter. That stability shows that management is still prioritizing spending to improve efficiency and save money.

Coupa offers the leading cloud-based platform in the "business spend management solutions" market. During the earnings call, CEO Robert Bernshteyn noted "very strong performance in the North America enterprise market," with new clients coming on board such as Microsoft's LinkedIn and Royal Caribbean.

Now what

Coupa is not out of the woods yet. Europe continues to be a weak market, but Bernshteyn mentioned that the pipeline for business is the largest in the company's history. "Our total addressable market is massive and underpenetrated, and we are excited as ever in our pursuit to revolutionize this market and deliver customer success like never seen before," he said. 

Management's guidance factors in the potential for further weakness from macroeconomic headwinds. For the year, it calls for revenue in a range of $838 million to $844 million, representing growth of 16%. Adjusted earnings per share are expected to be between $0.37 to $0.44, down from $0.83 last year.

The stock has fallen by 60% year to date. That has slashed its price-to-sales ratio to 6.2 -- Coupa Software's cheapest valuation since its initial public offering more than five years ago. Given that nothing has changed about Coupa's long-term addressable market opportunity, this could be a great buying opportunity for patient investors.