Coupa Software (COUP) reported earnings last night that beat expectations on revenue and non-GAAP earnings, while raising guidance for the year.

Total revenue for the quarter came in at $125.9 million – a growth rate of 32%. Which is below Q2 2019’s growth rate of 54%, and also below the 5 year average of 42%.

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Gross margins ticked down to 61.5%.

R&D expenses as a % of revenue dropped from 25% to 24%, and SG&A expenses as a % of revenue dropped from 63.2% to 62.9%.

The decrease in operating expenses weren’t enough to offset the decline in the pace of revenue growth and gross profits. Operating margins went from -24% to -25.3%. Although non-GAAP results were much better.

Forward guidance for the next quarter is for an increase in revenues of 21.3%, down from the 50% growth rate of the prior year. But still better than expectations.

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COUP Weekly Chart

There is a lot to like about this company over the long term and the stock price reflects a lot of this optimism. In the near term, the slowing pace of revenue growth and margin compression, coupled with a high valuation, could mean the stock is due for a pause.

In the weekly chart above, we can see the stock has corrected a few times in the 40% range. I wouldn’t be surprised to see a repeat performance.

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COUP Daily Chart

On the daily chart above, I see near term support in the $240 range. If that doesn’t hold, the $200-205 range consists of a lot of confluence. I already own the stock, but would add to it should such a drop materialize.