What happened

Shares of Coupa Software (COUP) climbed sharply higher this week, surging as much as 23.9%, according to data provided by S&P Global Market Intelligence. As of 3:04 p.m. ET on Thursday, the stock was still up 22.9%.

The catalyst that drove the business spending management specialist higher was bullish financial results and a more robust outlook.

So what

For the fiscal 2023 second quarter (ended July 31), Coupa generated record quarterly revenue of $211 million, up 18% year over year, driven by record quarterly subscription revenue of $193 million, up 23%. This resulted in non-GAAP (adjusted) earnings per share (EPS) of $0.20, down 23%. 

Both numbers were well ahead of expectations, however, as analysts' consensus estimates were calling for revenue of $203.8 million and adjusted EPS of $0.09. 

Another positive indicator was the company's calculated billings of $217 million, up 25% year over year. Billings represents future sales not yet booked as revenue. When this grows at a higher rate than current revenue growth, that suggests a spike in future growth.

Now what

The robust financial results aside, there were other reasons to be bullish.

Coupa raised both its full-year revenue and subscription revenue outlook, though its outlook remains conservative. Management is now forecasting revenue in a range of $838 million to $844 million, nudging the high end up by $1 million and representing growth of 16% at the midpoint of its guidance.

More importantly to long-term investors, however, Coupa raised its subscription revenue guidance to a range of $766 million to $771 million, up from its previous range of $762 million to $767 million. This suggests that more customers are inking subscription deals, which bodes well for future results.

Furthermore, Coupa's board of directors announced a share repurchase program, with plans to buy back as much as $100 million of the company's stock. This is generally viewed positively by investors, as it suggests management believes shares are undervalued.

Its ability to deliver consistent, yet modest growth -- particularly in the face of macroeconomic headwinds -- makes Coupa Software a buy.