Here are the biggest winners and losers when the yield curve inverts

As the first quarter comes to an end, the bond market is calling for a recession for the first time in more than a decade, leaving investors scrambling to figure out what to buy and sell. If history is any guide, there's a pattern in the stock market to follow.

The spread between the 3-month and 10-year Treasury notes fell below zero last Friday, and is still negative as of Thursday, sending the biggest recession signal since 2007 as the inversion has predicted every recession in the past 50 years.

While the stock market is still on track to post its best quarter sine 2012, thanks to the epic rebound in the first two months of 2019, the rally seems to be put on hold and volatility has made a comeback.

Now, which stocks would work the next quarter and beyond if this red flag from the bond market turns out to be right and the economy is in trouble?

CNBC analysis using Kensho, a hedge fund analytics tool, found which sectors have been biggest winners and losers during the past eight times the 3-month and 10-year Treasury yield curve inverted. The analysis looks at the one-month, three-month and six-month performance of all the S&P 500 sector indexes after the inversion.

The data show utilities, consumer staples and health care sectors top the list of biggest gainers after the bond market flashed the recession signal. It's no surprise that these sector are winners as they have been typical defensive plays in a risk-off environment because of their stable growth and high dividends.

The S&P 500 utilities sector has posted a nearly 10 percent gain on average six months after the yield curve went upside down, while the S&P 500 consumer staple sector scored a 8 percent return, Kensho data show. The S&P 500 on average has lost 0.19 percent six months after an inversion.

On the flip side, information technology has been the biggest loser, bleeding more than 13 percent on average in the six months post a yield curve inversion. Investors likely flee these hot stocks during times of fear in the market. Communication services has also been a laggard, losing 7 percent on average during the same period of time.

Falling rates

The cause for the yield curve inversion is a big drop in the coupon rates on long-duration Treasuries, driven by the Federal Reserve's decision to call an end to interest-rate increases. As yields continue to fall, consumer-staple stocks emerge as a particularly good bet, according to Wall Street analysts.

"At an individual stock level, nearly every food, beverage, and home & personal care in our study outperformed on average during periods of declining Treasury yields," Rupesh Parikh, senior equity analyst at Oppenheimer, said in a note on Thursday.

The group is already showing its strength. Procter & Gamble was trading at all-time high levels on Wednesday back to when it was first listed on the New York Stock Exchange in 1891. Kimberly-Clark also rose to a nearly two-year high Wednesday.

Binky Chadha, Deutsche Bank's chief strategist, said consumer staples are a preferred tactical play now because other defensive sectors like real estate investment trusts and utilities have already priced in the drop in rates.

The group has also historically outperformed in the months preceding and following the initial fed funds rate cut, Parikh pointed out.

The fed funds futures market is now pricing in a more than 70 percent chance of at least one rate cut by Dec.11, according to the CME's FedWatch tool.

9 Super-Safe-Growth Stocks for Long-Lasting Dividends

[Editor’s note: This story was previously published in February 2019. It has since been updated and republished.]

When the stock market marches higher, it pushes the prices of many companies higher along with it. But as investors bid up good and bad businesses alike, that can make it hard to discern which companies are the best dividend stocks for long-term investors. That’s especially true in the world of dividends.

In this income-centric world, income-starved investors face great temptation to reach for high-dividend stocks that offer juicy yields. Fortunately, Simply Safe Dividends identified the nine best dividend growth stocks that investors can rely on for secure, fast-growing income.

These companies all have very healthy Dividend Safety Scores, which measure a firm’s most important financial metrics to gauge how likely it is to cut its dividend in the future.

Let’s take a look at nine of the safest dividend stocks in the market. These dividend-paying companies generate excellent free cash flow, maintain safe payout ratios, are committed to rewarding shareholders with healthy dividend increases and have bright long-term outlooks.

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Lowe’s (LOW)

Dividend Yield: 1.81%
5-Year Annual Dividend Growth Rate: 21.70%
Year-to-Date Gain: 14.21%

Lowe’s Companies, Inc. (NYSE:LOW) is the world’s second-largest home improvement retailer.

With more than 65 years of existence, this dividend stock has gained recognition as one of the trusted national brands. Over the years, Lowe’s has developed an extensive line of thousands of products for maintenance, repair, remodeling and decorating across lumber and building materials, tools and hardware, lawn and garden, paint, kitchens, outdoor power equipment and home fashion categories.

The company serves a wide spectrum of “do-it-yourself” and “do-it-for-me” customers, including homeowners, renters and professional contractors from different construction trades.

A large footprint of conveniently located stores across the U.S., an extensive range of products, a well-known brand and a diversified customer base are Lowe’s key competitive advantages.

The home improvement industry is also poised to grow as consumer confidence remains high, employment continues rising and home prices climb higher. This should lead to better growth prospects for the company and its dividend.

Lowe’s has an impeccable record of not only paying but also increasing its dividend since 1961, growing it by over 20% annually in the last five years. Lowe’s forward price-earnings (P/E) ratio of 25.85 seems reasonable for a company of this quality.

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Honeywell (HON)

Dividend Yield: 2.07%
5-Year Annual Dividend Growth Rate: 12.5%
YTD Gain: 20.61%

Honeywell International Inc. (NYSE:HON) is a diversified global technology and manufacturing company supplying industrial products, software and services to a diversified set of customers.

Honeywell operates through four segments: aerospace; home and building technologies; performance materials and technologies and safety and productivity solutions .

The company serves customers through a wide variety of products and services in aerospace, control, sensing and security. It also sells specialty chemicals and advanced materials as well as energy efficiency products.

Simply put, Honeywell has invented key technologies that address some of the world’s most critical challenges around energy, safety, security, productivity and urbanization. With a broad portfolio of physical products and software, the company has uniquely positioned itself to sell comprehensive solutions for homes and businesses across many industries.

A broad portfolio of technology, extensive products and services, a global distribution network, and a presence in growing areas like the Internet of Things and energy efficiency are Honeywell’s key strengths.

A track record of strong financial performance and a healthy payout ratio have enabled the company to grow its dividend by 11.5% per year over the last five years. Honeywell has paid uninterrupted dividends for more than two decades.

The company’s earnings per share are expected to rise nearly 10% this year. It should, therefore, continue its impressive dividend growth streak with high-single to low-double-digit annual payout growth in the future as well.

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Apple (AAPL)

Dividend Yield: 1.5%
3-Year Annual Dividend Growth Rate: 11.20%
YTD Gain: 20.25%

Apple Inc. (NASDAQ:AAPL) is one of the world’s most valuable companies and one of the largest positions in Warren Buffett’s dividend stock portfolio.

Apple is the world’s second-largest smartphone company, accounting for more than 10% of the global market share. The iPhone, iPad, Mac, Apple Watch and Apple TV are Apple’s key products, with the iPhone representing over the majority of its 2018 sales. These products are globally recognized for their high quality, premium brand and ease-of-use, allowing Apple to enjoy substantial pricing power.

In addition, the company also owns a portfolio of consumer and professional software such as iOS, macOS, watchOS and tvOS operating systems that act as key differentiators. Apple’s products and solutions are known for their innovative design, user-friendly experience and seamless integration. All these innovative products have established Apple’s supremacy in the mobile space, and the company invests around 5% of its revenues on R&D activities to stay ahead of competitors.

Moreover, only Apple devices run iOS, which means that if customers want to remain within the Apple ecosystem, they must continue buying iOS devices. This results in sticky customer relationships. Its sales of games, music and other digital content through the iTunes store is another high-margin cash flow stream that keeps growing every year.

A leading brand name, global geographical presence, impressive product portfolio and super-sticky customer relationships have helped form a huge moat around Apple’s business.

Apple started paying dividends again in 2012 and it has seen its payout grow by approximately 13.5% annually over the last three years. It last raised its payout by 16%.

Given Apple’s leading market share, loyal customers, innovative products and hoard of cash on the balance sheet, the company should continue raising its dividend at a strong pace in the future as well.

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Medtronic (MDT)

Dividend Yield: 2.14%
5-Year Annual Dividend Growth Rate: 13.30%
YTD Gain: 4.3%

Medtronic plc. Ordinary Shares (NYSE:MDT) is a leading medical technology, services and solutions company serving hospitals, physicians, clinicians and patients worldwide. It owns a portfolio of medical products, therapies and procedures for a wide range of medical disciplines.

Medtronic’s operating segments are classified into cardiac and vascular, minimally invasive therapies, restorative therapies and diabetes groups. The U.S. is Medtronic’s largest market, followed by Western Europe, Japan and emerging markets.

With nearly seven decades of existence, Medtronic has developed a strong reputation globally and claims to improve the lives of two people every second. Some of Medtronic’s key innovations include the world’s smallest pacemaker and artificial pancreas.

As a leader in medical technology and solutions, Medtronic stands to benefit from growing healthcare needs as the global population ages. The business also benefits from meaningful barriers to entry created by various regulations from the U.S. Food and Drug Administration and other government agencies.

Thanks to its product innovation and conservative management, the company has increased its dividend for 40 years in a row and last raised its dividend by 8.7% in 2018.

Given the company’s technology leadership and unmatched breadth and scale, Medtronic should be able to continue its dividend growth streak at a high-single-digit rate going forward. Investors can learn more about Medtronic’s competitive advantages and business profile here.

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Texas Instruments (TXN)

Dividend Yield: 2.74%
3-Year Annual Dividend Growth Rate: 57.50%
YTD Gain: 19%

Texas Instruments Incorporated (NASDAQ:TXN) is one of the largest designers and sellers of semiconductors globally. It develops analog integrated circuits and embedded processors that are subsequently sold to electronics manufacturers. The company’s product portfolio consists of tens of thousands of products that are used to accomplish many different things, such as converting and amplifying signals, interfacing with other devices and managing and distributing power.

Texas Instruments’ focus on these segments provides a combination of stability and strong cash generation, owing to the products’ long product life cycles and low capital-intensive manufacturing.

Leading industry products, a diverse portfolio, unique technologies and manufacturing scale and a strong reputation enable Texas Instruments to generate stable and recurring cash flows.

As a result, Texas Instruments has paid uninterrupted dividends since 1962 and it has recorded an impressive annual dividend growth rate of approximately 34.2% over the last three years.

Last year marked the company’s 14th consecutive year of dividend increases, wherein Texas Instruments raised its dividend by nearly 25%.

Given its predictable cash flow generation, impressive dividend track record and reasonable payout ratio,, the company should be able to continue rewarding shareholders with double-digit dividend growth in the years ahead.

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Costco (COST)

Dividend Yield: 0.95%
5-Year Annual Dividend Growth Rate: 12.8%
YTD Gain: 17.1%

Costco Wholesale Corporation (NASDAQ:COST) is a membership warehouse club with more than 500 U.S. store locations that provide merchandise at low prices to its members. Costco sells a wide range of products, including packaged foods, groceries, appliances, cleaning supplies, clothing and electronics.

The company is the world’s second-largest retailer by sales and it generates the majority of its sales in North America. Costco’s membership base is growing with a renewal rate of over 90% as of its December 2018 quarter.

Over its 35 years of existence, Costco has succeeded in providing a great customer experience by blending together the convenience of specialty departments and a selection of wide merchandise at affordable prices. It has become a trusted name owing to its low cost and quality merchandise.

The company buys directly from many producers of national brand-name merchandise and sends products directly to its warehouses, eliminating multi-step distribution costs. High sales volumes, rapid inventory turnover, efficient distribution and self-service warehouse facilities also ensure high operational efficiency.

A large and loyal customer base, economies of scale, a diverse mix of merchandise, and strategically-located warehouses are Costco’s major competitive advantages.

Analysts expect Costco’s sales growth to sit in the mid-single-digits range over the long-term, which could result in 8%-9% annual earnings growth in the coming years. Costco could, therefore, continue its solid pace of dividend growth.

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American Tower (AMT)

Dividend Yield: 1.85%
3-Year Annual Dividend Growth Rate: 23.20%
YTD Gain: 24.35%

American Tower Corp (NYSE:AMT) is a leading owner, operator and developer of multitenant communications real estate. The company was formed in 1995 as a unit of American Radio Systems and it was spun off in 1998 when that company merged with CBS Corporation.

American Tower reports its results in five segments U.S. (59% of 2016 sales), Asia (14%), EMEA (9%) and Latin America (17%) property, and services (1%). It owns a portfolio of over 170,000 communications sites.

American Tower leases space on its communications sites to wireless service providers, radio and television broadcast companies, government agencies and tenants in a number of industries. Its top tenants include well-known names like AT&T Inc. (NYSE:T), Verizon Communications Inc. (NYSE:VZ), T-Mobile Us Inc (NASDAQ:TMUS) and Sprint Corp (NYSE:S).

The real estate investment trust derives most of its revenue from tenant leases, which typically have an initial non-cancellable term of ten years with multiple renewal terms, as well as provisions for annual price increases. It is difficult for tenants to find suitable alternative sites and as such the lease renewal rates are generally high.

Moreover, the incremental operating costs associated with adding new tenants to an existing communications site are relatively low and annual capital expenditures to maintain communications sites are also not high. All these factors provide high cash-flow visibility and excellent profitability for American Tower.

American Tower should keep growing its earnings as demand for wireless services and data grows in the coming years. A global asset base, recession-proof demand for its sites, long-standing relationships with customers and low cash-flow volatility provide a moat around American Tower’s business.

Simply put, wireless tower companies possess many attractive qualities. That’s probably why Crown Castle International (CCI), one of American Tower’s peers, is a position in Bill Gates’ dividend stock portfolio.

Given American Tower’s history of double-digit growth in property revenue and the near-tripling of its dividend in just the past five years, shareholders can likely expect at least 20% annual dividend growth in the years ahead.

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Becton, Dickinson and Company (BDX)

Dividend Yield: 1.25%
3-Year Annual Dividend Growth Rate: 29.10%
YTD Gain: 8.8%

Becton, Dickinson and Co (NYSE:BDX) is a global medical technology company engaged in the development, manufacture and sale of a broad range of medical supplies, devices, laboratory equipment and diagnostic products. The company uses independent distribution channels to distribute its products both in the U.S. and internationally.

Europe, EMA, Greater Asia, Latin America and Canada are Becton Dickinson’s major international markets. Becton Dickinson is also growing its presence in emerging markets.

The company has major R&D facilities located in North America, China, France, India, Ireland and Singapore. BDX’s customer base is also quite diverse, ranging from healthcare institutions, life science researchers and the pharmaceutical industry to clinical laboratories and the general public.

Diversification across geographies, customers and products, strong R&D capabilities and a portfolio of successful brands are Becton Dickinson’s key competitive advantages. With more than a century’s worth of operating experience, the company is known for providing integrated products and services that seamlessly support healthcare providers across care areas. Its acquisition of C.R. Bard is also expected to create a stronger company in the future.

Becton Dickinson is a dividend aristocrat with 46 years of consecutive dividend growth. It has grown its dividend at an impressive 10% compound annual growth rate over the last five years.

With its need to restore its balance sheet after acquiring C.R. Bard, dividend growth over the near-term will likely remain below the company’s historical double-digit pace. However, with earnings expected to grow over 10% this year, it won’t be long before investors are once again rewarded with strong payout growth.

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ADP  (ADP)

Dividend Yield: 2.03%
5-Year Annual Dividend Growth Rate: 7.6%
YTD Gain: 19.3%

Automatic Data Processing (NASDAQ:ADP) is a top global provider of cloud-based Human Capital Management (HCM) solutions, and a leader in business outsourcing services, analytics and compliance expertise.

Automatic Data Processing’s business can be categorized into two reportable segments — Employer Services and Professional Employer Organization Services. By geography, the U.S. is its largest market, accounting for most of its revenues followed by Europe, Canada and other .

Automatic Data Processing provides a host of services ranging from recruitment to talent management to retirement that help customers improve their business results and alleviate the pain from non-core, administrative tasks.

The company serves over hundreds of thousands of  clients ranging from small and mid-sized to large organizations operating in more than 110 countries around the world. It caters to the needs of more than 70% of the Fortune 500 companies.

Automatic Data Processing is responsible for making payments to approximately one out of every six U.S. workers and nearly 13 million workers internationally. In addition, its mobile applications enable over 10 million of its clients’ employees to easily access to their HR information.

With six decades of experience, Automatic Data Processing has developed deep insights and cutting-edge technologies that have transformed human resources from a back-office administrative function to a strategic business advantage.

A client-centric approach, long-standing customer relationships, extensive experience in payroll services and a growing demand for cloud platforms are Automatic Data Processing’s biggest advantages.

The company has raised its dividend for 43 years in a row,. Automatic Data Processing’s earnings-per-share is expected to rise over 10% this year, which should allow dividends to continue compounding at a high-single-digit rate over the medium-term.

As of this writing, Brian Bollinger was long LOW, MDT,

Why Real Estate Investing Might Make You a Mint

At The Motley Fool, our primary investing focus is on individual stocks -- which we view as the most powerful tool out there for long-term wealth building. But there are other options, and one that's long been popular is real estate. For those looking to branch out from Wall Street to something near the corner of Elm Street and Summit Avenue, Motley Fool Answers co-hosts Alison Southwick and Robert Brokamp have invited a special guest to join them for this podcast: Thomas Castelli, a tax strategist with The Real Estate CPA, who will take them and their listeners on an exploratory ramble through the world of real estate investing.

But first, it's a "What's Up, Bro?" segment about something that could have been good news for every American who ever interacts with the world of healthcare. When the Affordable Care Act was passed, it mandated that hospitals would have to start posting their master lists of baseline charges -- called, simply enough, "chargemasters" -- so that we as customers could price shop, and have a clue about what we were going to be billed. And this year, the federal government has finally begun insisting they do just that. Unfortunately, medical care providers have found plenty of ways to keep their chargemasters opaque, confusing, and in most cases, meaningless. 

A full transcript follows the video.

This video was recorded on March 5, 2019.

Alison Southwick: This is Motley Fool Answers! I'm Alison Southwick. Joining me, as always, is Robert Brokamp, personal finance expert here at The Motley Fool.

Robert Brokamp: Everyone, hello!

Southwick: Hello, yes! For everyone who complains that my voice is too high-pitched and chipper, this episode's for you! This week we're going to learn about options for real estate investing with the help of Thomas Castelli, a tax strategist with The Real Estate CPA. All that and more on this week's episode of Motley Fool Answers.

So, Bro, what's up?

Brokamp: Well, Alison, besides your voice, sit right back as I tell the tale of Jeanette Parker, a wildlife biologist in Florida who decided to feed a stray cat. Did you hear this story?

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Atossa Genetics News: FDA Approval Sends ATOS Stock Skyrocketing

Atossa Genetics news about it getting approval from the U.S. Food and Drug Administration (FDA) for one its its drugs has its stock soaring.

Source: Shutterstock

Atossa Genetics (NASDAQ:ATOS) has announced that its breast cancer drug Endoxifen has been given special approval by the FDA. This approval is for using the drug to treat a specific patient under the organization’s expanded access program.

This Atossa Genetics news has the company using Endoxifen as a “post-mastectomy treatment in a pre-menopausal, estrogen-receptor positive (ER+) breast cancer patient.” This same patient also took part in a three-week course of the drug prior to her surgery.

Here’s what Dr. Steven C. Quay, President and CEO of Atossa Genetics, has to say about the news.

“We are extremely pleased that this patient not only benefitted from Endoxifen prior to her surgery, but that the FDA agrees that continued Endoxifen therapy is appropriate for this pre-menopausal patient. This positive progress supports our expansion of oral Endoxifen clinical trials. After surgery is completed, the current standard of care in the USA to prevent a recurrence and/or a new cancer is for patients to undergo ovarian ablation (chemical treatment to induce menopause) and take aromatase inhibitors (AI) for 5 to 10 years. Alternatively, tamoxifen therapy can be used for 5-10 years for those patients who do not want to take AIs, or for whom these medications are contraindicated. This patient, like many others, was not a good candidate for tamoxifen therapy due to low liver enzyme (CYP2D6) activity which means her liver would not adequately metabolize tamoxifen. Unlike tamoxifen, oral Endoxifen does not require liver metabolism so it may be a better treatment approach.”

ATO stock was up 249% as of noon Thursday.

As of this writing, William White did not hold a position in any of the aforementioned securities.

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Snap Gaming Service Coming Soon: What We Know So Far

Snap (NYSE:SNAP) announced that the company is working towards the launch of a new gaming service that may be coming to phone in your pocket sometime next month.

Source: Shutterstock

The Snapchat parent company is reportedly planning on rolling out the platform next month at the earliest, also known as “Project Cognac.” You can expect Snapchat to soon have a number of games from outside developers available to users of the app, per a Cheddar piece.

There have been talks of Snap bringing a gaming platform to the popular social media app since last year as Fortune revealed last summer that users can look forward to some games and a multimedia messaging app. The report had marked autumn 2018 as the release date for the platform and updated app.

The Los Angeles, Calif.-based business will reportedly share more details regarding Project Cognac next month for the company’s summit. This will mark the first such summit, which will take place on April 4 and it will include content developers and partners.

The move is likely to help Snapchat add more users as the business’ user base only grew by 5% during the third quarter of fiscal 2018. Australian game studio Prettygreat may also play a role in the development of the games in the upcoming platform as Snap acquired the brand two months ago.

SNAP stock is down about 2.9% on Friday following the news.

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Expect foreign investments will continue to rise in India: Adrian Mowat

Foreign investments will continue to increase in the Indian market, said emerging market (EM)-equity strategist Adrian Mowat, in an interview with CNBC-TV18, adding that macros were improving for the market.

"There is nothing wrong with the economic outlook in India … with inflationary pressure and the number of houses forecasting that the RBI will cut the repo rate a number of times this year, one should be sanguine about the economic outlook in India," he said.

"Indian market was a significant outperformer in 2018. So what we saw in the first two months of this year was the recovery trade in other markets which have fallen sharply, particularly the Chinese market. We are now into a stage where we move beyond that recovery from the big sell-off in Q4 and it is going to be a function of the underlying fundamentals of different emerging markets. So I do expect the Chinese economic data to begin to improve and that to continue to support that market," Mowat added.

Talking about auto stocks, he said, "I think there is an argument for buying things like two-wheelers on a hope that you get a boost to consumption around election time but beyond that I do not see a strong argument for buying Tata Motors or Maruti at this point in time."

related news What changed for the market while you were sleeping? 12 things to know A morning walk down Dalal Street | Nifty may undergo profit booking near resistance of 11,400 Trade Setup for Wednesday: Top 15 things to know before Opening Bell Source: CNBC-TV18 First Published on Mar 13, 2019 11:40 am

Coupa Software Incorporated (COUP) Q4 2018 Earnings Conference Call Transcript

Image source: The Motley Fool.

Coupa Software Incorporated  (NASDAQ:COUP)Q4 2018 Earnings Conference CallMarch 11, 2019, 5:00 p.m. ET

Contents: Prepared Remarks Questions and Answers Call Participants Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the Coupa Software Fourth Quarter Fiscal Year 2019 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. At the conclusion of the prepared remarks, we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this call is being recorded.

I would now like to introduce your host for today's conference call, Ms. Nicole Noutsios, Investor Relations. Ms. Noutsios, you may begin your conference.

Nicole Noutsios -- Investor Relations

Good afternoon, and welcome to Coupa Software's fourth quarter conference call. Joining me today are Rob Bernshteyn, Coupa's CEO; and Todd Ford, Coupa's CFO.

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, 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 and if you prefer to access replay via phone, you can find the information in the earnings release. Unless otherwise stated, growth comparisons are against the same period of the prior year.

With that, I'll turn the call over to Rob.

Rob Bernshteyn -- Chief Executive Officer

Hello, everyone, and thank you for joining us, as we speak to you from our newly opened New York City office located in Midtown Manhattan. To start, I'm pleased to share that we closed out fiscal 2019 with a strongest financial performance ever as a Company. Subscription revenues for the year grew 42% and we were profitable for the full fiscal year, delivering free cash flow margins of 11.5%.

Tomorrow we'll be holding our second Financial Analyst Day at the Nasdaq MarketSite in Times Square, as we continue on our path to $1 billion of revenue, a financial objective and theme we shared at our first Analyst Day.

During our presentation, we will share details on why we believe we are uniquely positioned to win and capture the Business Spend Management market and make a meaningful impact on the broader enterprise software industry.

With that, let's start with customers. Well in excess of 100 Coupa customers went live this fiscal year, it's important to note that Coupa certified partners led more than 80% of these deployments, as the size, global reach and technical depth of our partner ecosystem continues to proliferate. To give you a real time sense of our implementations in action and the partnership we look to forge with all our customers, let me highlight just a few here today.

National Grid, a FTSE 100 Energy and Utilities company, recently went live with Coupa BSM in a UK wide roll out. Their defined key success metrics with Coupa included improved requisition to order time, significant increases in electronic invoicing, spend under contract and increased self-service procurement for field personnel. We'll look forward to continuing to partner with National Grid as we've progressed our implementation innovating it with SAP S/4HANA globally.

Copa Airlines operating in 33 countries with a fleet of over 100 aircraft went live with the first of three phases of their BSM initiative called invoicing for fuel. Fuel alone represents 27% of Copa's total operational spend. They achieved an aggressive initial go live date, driven by savings commitment within the organization for their 2019 strategy.

DXP Enterprises, a distribution management company recently went live with Coupa BSM. Since go live, DXP has enabled more than 18,000 suppliers and processed over 85,000 invoices, helping them toward their goal of increasing electronic invoicing, reducing invoice approval cycle times and optimizing for early payment discounts.

Farfetch, a global technology platform for luxury fashion recently went live in two countries with Coupa BSM as part of an expansive system wide technology transformation that has increased AP efficiency with over 90% supplier invoices being processed through Coupa. Global roll out is planned by the end of 2019 to deliver increased visibility and control over spend.

KPMG UK went live in the first phase of their deployment, enabling their internal procurement operations and focusing primarily on their central functions spent. The next phase will be KPMG UK rolling out Coupa BSM across their entire organisation for the very first time.

Lululemon athletica is a designer, distributor and retailer of healthy life style inspired athletic apparel and accessories through 400 plus stores in online. Lululemon is now using Coupa BSM in North America with a full global roll out plan for the coming quarters. We're excited that Coupa is helping Lululemon achieve the next level of their digital transformation.

In Monash University, the largest university in Australia went live with Coupa BSM in less than six months with integration test AP. This is the first of two phases in a university wide roll out across 9,000 faculty, students, and staff. In a typical implementation ranging from three to eight months in length, the speed of Coupa deployments is helping accelerate times of value for customers, also known as the letter A in Coupa.

Now moving on to this quarter, we signed many great new customers who are aligned with our success oriented value-as-a-service approach to Business Spend Management. New customers in Q4 included Air Methods, Bank of Hope, Canadian Tire, Emerson Electric, Freshworks, Guardian Industries, InVisionApp, Kin Group, KPMG Australia, Looker, Munich Re, Novo Nordisk, Pacific Life Insurance Company, Peloton Interactive, Prudential Asia, Randstad US, Shopify, Sibanye-Stillwater in Africa, Telia, Provident and many many others.

I'm also very proud to share a new marquee customer in federal government. The United States Postal Service, one of the largest organizations in the world with procurement spend exceeding $12.9 billion annually has selected Coupa for its eBuy plus program. Coupa is providing our core BSM solution to help the United States Postal Service achieve stronger financial controls, better spend management and visibility, improved pricing, higher contract compliance rates and lower overall life cycle costs. We look forward to helping all our new customers capitalize upon the user-centric nature of our platform with letter U in Coupa, to drive widespread user adoption upon completing their successful deployments.

Now, as I noted earlier at our Analyst Day, tomorrow, we plan to go deep on why we are uniquely positioned to capture our market opportunity. For starters, during Q4, we achieved this significant milestone surpassing $1 trillion of cumulative spend under management. The fact that we possess this massive aggregation of data on one platform puts us in the position to do some very innovative things.

One example of this innovation is our Coupa 2019 benchmark report released earlier this week. This report is based on aggregated transactional data on the Coupa platform and identifies key performance indicators for driving profitability and growth through Business Spend Management. It allows our prospects and customers to explore how they might best optimize their own Company's processes by benchmarking the performance levels of industry peers.

Another example of innovation in this area is the Coupa Business Spend Index or Coupa BSI, which we plan to release in coming months to share some of our insights broadly. The Coupa BSI will include spend metrics for approval cycle times, approval rates and average spend per employee across all key industries. By way of preview, our January data suggests that in aggregate, the spend sentiment going into this calendar year was positive across all major industries of course at varying degrees. So clearly this aggregated anonymized and fully sanitized spend data has powerful benefits. But the area where these are most pronounced is with our game changing community intelligence offering that is being continually developed to generate more more value that is prescriptive for each of our customers also known as the letter P in Coupa.

To that end, we continue to see strong traction in this area. In Q4, our community insights capabilities were once again accessed by the majority of our customers with significantly increased usage compared to Q3 as measured in page views, as JR Miller, SVP of Finance and Controller at the Leukemia & Lymphoma Society noted in a Forbes article.

Real time supplier risk information is a game changer. Coupa Community Intelligence intelligently applies AI and analytics across an extensive community and flags risky suppliers that we conduct significant spend with that I would not have noticed otherwise. This helps me make real time decisions to minimize supply chain risk. This is of course just one example of a customer leveraging one of our community intelligence capabilities in a generally available offering called Risk Aware.

More broadly, during the quarter, we launched our latest major release, R23, which is full of exciting product innovations and industry first capabilities that also leverage Community Intelligence. By way of highlight, R23 includes the general availability of Coupa Spend Guard, our fraud prevention solution that uses artificial intelligence and community insights to help customers evolve from antiquated after the fact fraud recovery methods to real time fraud prevention across procurement, expense management and invoice processing. An example of the comprehensive nature of our platform, also known as the letter C in Coupa. In fact, by using Spend Guard, one of our customers recently identified $150,000 in duplicate invoices on one day, not good, with different invoice numbers that they were then able to immediately address.

Next, as we continue our development in the payment space, we are excited to launch an early access program for our Coupa Pay invoice payments solution, which once generally available will support both domestic and cross-border invoice payments for our customers. Over time this has the potential to be the most widely deployed Coupa Pay module. Unlike other payment point solutions on the market, we're able to leverage our proven core competencies in developing intuitive user interface design, AP Automation, dynamic workflow and other areas of the -- of our Business Spend Management expertise. This supports our ability to extend the Coupa platform to the next natural step in the transactional spectrum, the payments of the invoice.

Now of course Coupa Virtual Cards for POs and Coupa Accelerate already generally available. In continually developing our payments roadmap, we are working closely with our customers and the more money we come across, the more problems we see. These problems are ones that we are uniquely positioned to go help our customers overcome. Though still very early, we've received great feedback on Coupa Pay's current set of capabilities and future vision, and we're very excited about this new addition to the core of our platform.

Finally as part of our 23 new innovations within Coupa open buy are bringing in improved Google like search experience to cross catalog search, representing the open nature of our platform or the letter O in Coupa. Searches in Coupa now generate results from Amazon, Amazon Business, Staples, Office Depot, Imperial Supplies and many other B2B suppliers in a highly intuitive and seamless fashion.

Now let's move on to acquisitions. As many of you have probably come to know, our acquisition strategy is focused on adding key advanced power user applications that we can seamlessly integrate into our unified organic transactional engine and/or acquiring distinct technology components then enhance this engine. In Q4, we completed the acquisition of Hiperos, a leading third-party risk management provider, whose technology addresses advanced risks such as information security, bribery, corruption and demanding new data privacy regulations like the General Data Protection Regulation, also known as GDPR.

We see the area of third-party risk and compliance as a growing initiative that historically been addressed inefficiently with point solutions. As an integral part of our BSM platform, our peers will help equip customers with the advanced technology they need to protect themselves by comprehensively evaluating the risk of their full supply base. Additionally, the Hiperos power user capabilities will not only be seamlessly integrated into Coupa's core transactional engine, but the supplier risk data will become a key component of our Community Intelligence, thereby increasing its value for each of our customers in the future. My Coupa colleagues and I once again warmly welcome the Hiperos team to our community of customers, partners and colleagues.

Now as many of you have come to learn about us, our success is founded upon our three core values of ensuring customer success, focusing on results, and striving for excellence.

Seven years ago at Coupa, we instituted a key component of our annual performance assessment called the shuffle. The shuffle includes promotions of exceptional performers, transfers to new roles within Coupa, and the canceling out of individuals where to authentic and real discussions, it is determined that there is a mismatch and often a joint desire to part ways. This year we promoted 144 colleagues, transferred 28 and cancelled out 54. A highlight of our shuffle as an example of the meritocratic culture we are cultivating here at Coupa, one that keeps us agile and on point.

Now during Q4, we are excited to hand out three MVP awards, one for each of our core values as voted by our colleagues at Coupa around the globe. Michael Su won the award for ensuring customer success. Michael's colleague stated that he lives and breathes customer success. He doesn't shy away from difficult situations and always takes a proactive approach internally when dealing customer issues. Fernanda Faustino De Silva was the winner for focusing on results based upon her thoughtful collaborative approach and her willingness to do anything necessary to drive results, even if it's outside the scope of her position. And finally, Celeste Johnson, won for striving for excellence, due to and I quote her tireless, never ending, insightful, outstanding efforts and around the clock support and in-depth product knowledge. Big congratulations to Michael, Fernanda and Celeste, inspired.

Now before finishing off, let me touch on a few more highlights. First, we were proud to be named the leader in the IDC MarketScape Worldwide SaaS and Cloud-Enabled Accounts Payable Applications 2019 Vendor Assessment and then the Forrester Wave, Source-to-Contract CLM, Q1 2019 report for contract lifecycle management. We greatly appreciate the support of the industry analyst community and consistently seek their input and willingness to collaborate around what is best for our marketplace.

Secondly, I'd like to touch upon some of our community outreach efforts through our Coupa Cares program. In March, a group of 10 of our Coupa colleagues will be travelling to Costa Rica to spend a week working on local sustainable community development projects such as pouring the foundation for community centers, planting organic gardens at local school and painting and tiling community kitchens. I'm also proud to report that with courtesy of Coupa Advantage, we have now made donations to more than 360 charitable organizations. It feels so good to be able to give in this way.

So with this, our tenth earnings call as a public Company and as -- as we now head into our 41st quarter of execution, my fellow Coupa colleagues and I are more excited and confident than ever about the future we are jointly developing in our industry.

At our Analyst Day tomorrow, we'll look forward to sharing a wealth of new information about Coupa. With that in mind and as we continue our path to reaching $1 billion in revenue, let me now hand the call over to our CFO, Todd Ford. Todd?

Todd Ford -- Chief Financial Officer

Thanks, Rob, and good afternoon everyone. Last year was a record year for the Company as we have continued to execute on all fronts and deliver on the commitments we have made to our stakeholders. Our execution is reflected in our financial results and key metrics.

Let's now look at some of the highlights for the fourth quarter and fiscal year. Total revenues for Q4 were $75 million, up 39% year-over-year, and for the year total revenues were $260 million, also up 39% year-over-year. Furthermore, subscription revenues for Q4 were up 45% year-over-year and up 42% for the year. Calculated billings for Q4 were $127 million, up 51% year-over-year. Several factors contributed to the strong billings in Q4. One, our largest new ACV quarter ever; two, our largest renewal quarter ever; and three, billings contribution from the Hiperos acquisitions.

From a revenue visibility perspective going into this year, total deferred revenue and backlog at year end was $532 million, up from $359 million a year ago, representing a year-over-year increase of 48%. Deferred revenue at the end of Q4 included approximately $6 million from the Hiperos acquisition. As a reminder, we defined calculated billings as the change in deferred revenue on the balance sheet for the period, plus revenue recognized during the period.

Further, we defined backlog as future non-countable amounts on multi-year contracts that are not yet contractually -- that we are not able to contractually invoice. Until these amounts are invoiced, they are not recorded in revenues, deferred revenues, accounts receivable or elsewhere in our consolidated financial statements and are considered by us to be backlog. Our calculated billings, backlog and deferred revenue results often fluctuate on a quarterly basis due to a number of factors including seasonality, the timing of renewals and the timing of annual contracted billings.

Let's now turn to margins and results of operations. In Q4 we made significant investments in the business with the acquisition of Hiperos and a new headcount, ending the year with 1,202 full time employees up from 833 last year. Even with these significant investments, our fourth quarter non-GAAP gross margin exceeded our previous guidance at 71% to 72%, ending at 72.5%, and non-GAAP operating margins also came in ahead of expectations at 3.1%. For the fiscal year, our non-GAAP gross margins were 73% and our non-GAAP operating margins were 5%.

Now let's discuss net income and EPS results. Driven by our strong Q4 revenue performance and leverage in our financial model, we deliver non-GAAP net income of $3.4 million and non-GAAP earnings per share of $0.05 on 66.5 million diluted shares.

Now moving on to the balance sheet and cash flows. Cash in short term investments at quarter end were $321 million, down from $406 million at the end of Q3. This includes $95 million in cash paid for Hiperos in Q4, which was offset by positive free cash flow of $7 million and positive $3 million from financing activities. For the fiscal year, free cash flows were $30 million or 11.5% of revenue, up year-over-year on both an absolute dollar basis and as a percentage of revenue.

Now let's turn to guidance. For the first quarter, we expect total revenues to be between $73.5 million and $74 million. This includes subscription revenues of between $67.5 and $68 million, and professional services and other revenues of approximately $6 million. As a reminder, every Q1 subscription revenues are negatively impacted by approximately 3%, because subscription revenues are recognized based on the number of days in the quarter and there are three fewer days in Q1. This Q1, the impact in the number of days in the quarter will result in a reduction to subscription revenue in excess of $2 million.

Q1 also reflects the first full quarter impact to expenses from the Hiperos acquisition. With this backdrop, we expect Q1 non-GAAP gross margins to be approximately 70% and we expect non-GAAP loss from operations to be between $2 million and $3.5 million. We also expect non-GAAP net loss per share of $0.03 to $0.06 on 61 million basic weighted average shares for the quarter. Although margins are expected to be impacted in the near term due to acquisitions, we don't expect material impact to billings or free cash flows.

To provide additional clarity for Q1, we expect billings growth to be approximately 38% on a trailing twelve month basis and free cash flows to be approximately $15 million. For the fiscal year ending January 31st, 2020, we expect total revenues to be between $325 million and $327 million, with non-GAAP gross margins in the range of 71% to 72&. We expect non-GAAP income from operations for the year to be between $3 million and $7 million. As a reminder, our sales and marketing expense spikes in Q2 by approximately $3 million to $4 million due to our Annual User Conference which will be held in Las Vegas this year from June 24th to June 27th.

For the full year, we expect non-GAAP net income per share in the range of $0.04 to $0.10 based upon an estimated 70 million diluted weighted average shares for the year. We are not providing specific guidance for cash flows, but similar to last year, we expect free cash flows to be up year-over-year, both in terms of absolute dollars and as a percentage of total revenue.

To conclude, we are confident in our ability to continue to execute and win this large market opportunity by focusing on results and delivering on the commitments we have made to our customers, employees and shareholders.

Now we will be happy to take your questions. Operator?

Questions and Answers:

Operator

Thank you, Mr. Ford. (Operator Instructions). We'll now take your first question from Stan Zlotsky from Morgan Stanley. Please go ahead. Your line is open.

Stan Zlotsky -- Morgan Stanley -- Analyst

Perfect. Thank you so much guys for taking my question, and congrats on a really strong end to the year. So maybe just, first one for me. On the performance in the quarter, what did you guys see from your sales organization at the end of the year from a productivity standpoint execution that produced strong results? And then a quick follow-up for Todd on the guidance for fiscal '20, what do you guys baking in as far as inorganic contributions into the revenue numbers? Thank you.

Rob Bernshteyn -- Chief Executive Officer

Thanks, Stan. So as you -- who have come to see from us, very strong continued execution from our sales organization, very very high contribution in terms of individual reps across the team both domestically and internationally as well as in mid-market and enterprise. So very healthy continued execution of our global sales team and the continuation of scaling that organization in and around the world.

Todd Ford -- Chief Financial Officer

Hey, Stan, on the acquisition revenue factored in 2020, as we noted in the call, the deferred revenue from the Hiperos acquisition at the end of the year was about $6 million and you know obviously there'll be some additional revenue from Hiperos recognized during the year from incremental billings. But I would caution that need to be mindful that due to the deferred revenue haircut and timing of incremental billings of renewals that will take several quarters for revenues to reach their historical run rate. In addition, given we just acquired Hiperos and are still in the process of integrating them into our business and product line, we have assumed the minimal revenue contribution beyond the deferred revenue balance at the end of FY 2019. And as we noted in prior calls, the contribution from DCR and acquires is small as well.

Stan Zlotsky -- Morgan Stanley -- Analyst

So is it then fair to say that the fiscal '20 contribution from acquisitions is -- that's implied in your revenue guidance is quite minimal?

Todd Ford -- Chief Financial Officer

That's right. And typical with our store fashion, especially since these are new acquisitions, all of them were done in the second half of last year, let us execute and then give us credit.

Stan Zlotsky -- Morgan Stanley -- Analyst

Perfect. Thank you.

Operator

We will now take our next question from Ross MacMillan from RBC Capital Markets. Please go ahead. Your line is open.

Ross MacMillan -- RBC Capital Markets -- Analyst

Thanks so much and congratulations from me as well. Two questions. Maybe first one for Rob. As you go down the payment, looked down at payment opportunity, I think a lot of the early moves have been around financing with things like accelerate and the virtual procurement cards. As you think about the e-payment opportunity, maybe you could just give us your thoughts around how that will evolve, will you be sort of enhancing data on third-party rails and maybe the timing that you would expect to have a payment offering in market?

And then I had a follow-up for Todd. Just on Hiperos, I wonder if you could just maybe be specific about the subscription revenue contribution in fiscal Q4 if material? Thank you.

Rob Bernshteyn -- Chief Executive Officer

Well, thanks very much for the questions Ross. So in terms of Coupa Pay, in very typical Coupa fashion, we go through three stages of release in terms of products: the first is, declaring that we have something in development; second is, launching it in early access, which means making it available for a certain set of customers, and we learned from our deployments with those customers of course; and thirdly is GA, and that is generally available, and when we say generally available that means it is available for any prospective customer to leverage.

The order of our deployment with Coupa Pay began with virtual cards and development, went through early access and is now generally available and actually getting used by quite a few customers with a very nice pipeline developing. The second is Coupa Accelerate, which is as you called out our early discount solution began in development early access and now generally available. Currently where we have early access is something called Coupa Fit Pay for invoice payments, and we think this is indeed a very interesting area to delve into. This allows us to run batch payment runs on invoice, along a whole host of payment rails that companies might want to leverage, whether it be bank of bank across border. And so as we take that out from early access to generally available, we'll be hitting what we believe as a rich part of the market. And while we're ready to make a general available, we'll obviously make that -- we'll make that broadly known.

Todd Ford -- Chief Financial Officer

Hey, Ross. On the revenue contribution for Hiperos, obviously a very strong subscription revenue result in Q4, and most of that was driven by the strong performance as Steve and the sales organization and the linearity of the bookings in the quarter December in particular which was our largest month ever for new bookings. If you look at Hiperos, the deferred revenue that was on the balance sheet of $6 million, obviously that will bleed into revenue over the next year, the majority of it anyhow. So the amount for Q4 was minimal but you could kind of infer from the opening deferred balance that there was some, but nothing that I would call up separately.

Stan Zlotsky -- Morgan Stanley -- Analyst

Thank you.

Operator

We will now take our next question Chris Merwin from Goldman Sachs. Please go ahead. Your line is open.

Christopher Merwin -- Goldman Sachs -- Analyst

Okay. Great. Thanks for taking my questions. So, yes, first I just wanted to touch on Community Intelligence a bit as I understand it now, some of the offerings are included in the platform fee and some of the newer offerings like Risk Aware and Spend Guard are monetized separately. And I think in your remarks, Rob, you talked about increased usage of the product. So maybe you can you just talk a bit about the incremental opportunity for community intelligence as it relates to adoption and monetization of newer products. And then I just had a follow-up. Thanks.

Rob Bernshteyn -- Chief Executive Officer

Sure. I think you actually understand it pretty well but I'll expand a little on it. Community Intelligence is really incorporated throughout the platform, and the purpose of it is to leverage data from the community for the community to equip customers to get powerful information they could use to fuel a whole host of applications Risk Aware and Spend Guard are just two of those applications.

Now of course you know the data is obviously aggregated anonymized normalized when it's presented to customers, but the real opportunity here comes from monetization perspective is not only the incremental apps like the ones I just described but the actual evolution of the platform pricing over time. With more and more value that our customers get from subscribing to Coupa, the more we anticipate them to continue to pay us fairly to the value we're delivering. We see ourselves as a value-as-a-service Company. And I'm really proud to tell you that now that it's been 40 quarters here and the average annual subscription per customer has gone up virtually every quarter for 40 quarters which is a testament of this incremental value. We continue to deliver for our customers.

Christopher Merwin -- Goldman Sachs -- Analyst

Okay. That's right. And then just as it relates to the non-GAAP op income guidance for fiscal '20. It looks like it's a little bit below I think what you put up in fiscal '19, and I know there's a lot of operating leverage in the model and the unit economics are up there in software. So maybe you can you just talk about some of the investments that you're making in the business and if there's any impact from the acquisitions being accounted for in guidance as well?

Rob Bernshteyn -- Chief Executive Officer

Yes, as you kind of work through the years, typical one for margins to be down in Q1 given that the subscription revenues are lower because of the number of days in the quarter, and obviously we're getting impacted by the acquisitions as well. If you look at what we've kind of indicated with respect to revenue contribution from Hiperos and versus the expense profile, it's going to take a few quarters before the revenue reach is kind of steady state and catches up with the expenses and obviously we're taking all the expenses up front and Q1 will be the first quarter of that impact of the expenses.

And we're gonna go through this in more detail tomorrow when we talk about the new mid-term targets et cetera, but if you look over the next 12 to 18 months, we do expect the gross margin profile to reach a range of the 74% to 75% range. So the scale in the model is continuing and obviously we're taking a couple of steps back with the impact of the acquisitions. But obviously long term we think there's a significant amount of shareholder value that's going to be created here.

Christopher Merwin -- Goldman Sachs -- Analyst

Okay. Great. Thank you.

Operator

We'll now take our next question from Brian Peterson from Raymond James. Please go ahead. Your line is open. We'll now take our next question from Brian Peterson from Raymond James. Please go ahead. Your line is open.

Brian Peterson -- Raymond James -- Analyst

Hi sorry about that guys. I was on mute. So thanks for taking the questions. So Rob, I wanted to follow-up on one of your comments you mentioned with the more money you come across maybe the more money you'll see. I'm just curious what you can say about the price points of some of your products particularly on the modules as they've generated more value for these customers?

Rob Bernshteyn -- Chief Executive Officer

Sure Brian. Thanks for the question. The interesting thing about Coupa Pay is that, it was really driven by customers to begin with. We have customers coming to us said, look, if we're buying through Coupa, why can't we also be paying through Coupa. And when we went in to look at the ways that these customers are doing payments, we did really see a great deal of prompts (ph) and prompts in terms of being able to handle complex batch runs, a lot of complex integrations, a lot of different rails and forms of payment, a whole host of complexity around reconciliation. So really are very meaningful prompts there to go solve. And what we've been doing strategically is peeling back the onion on the most low hanging fruit, the most intuitive areas where a core competencies can be leveraged to drive value for customers and digging deeper and deeper into the core, and that will be monetized as we've monetized everything with our customers. We sit on the same side with our customers. We don't penalize them, we don't tax them, we charge them fair recurring subscription price for the value that we offer through our software. And in some areas of pay, we will be determining distinct models where we can share in some of the transactional leverage there, but we're not ready to talk about specific model scenarios publicly at this moment. We're in early access with some of the newest capabilities, and as we bring them to market, we'll of course share more. No question about it.

Brian Peterson -- Raymond James -- Analyst

Understood it. Thanks Rob. And Todd maybe one for you. You mentioned the record renewals that I think you can share on the dollar based revenue retention? Thanks guys.

Todd Ford -- Chief Financial Officer

Yeah, so when you look at the renewal rates, both gross and dollar base expansion, same trend continues, small improvements quarter-over-quarter, but you know basically within the same range that we highlighted last quarter.

Operator

We will now take our next question from Joseph Foresi from Cantor Fitzgerald. Please go ahead. Your line is open.

Drew Kootman -- Cantor Fitzgerald -- Analyst

Hi, this is Drew coming on for Joe. I wonder if you can highlight a couple areas of growth maybe by geography and functionality?

Rob Bernshteyn -- Chief Executive Officer

You know that's a very interesting question, but it's tough question to slice. So one of the things we really pride ourselves on a Coupa is being able to work with customers and ensure the relationship of the -- where everyday are in their maturity mark. You know they may be struggling with automating their expense reports, they might not have most of their spend on contract, they might have very low usability of whatever solutions they have at the moment from incumbents, there might be a lot of paper based processing. So we enter in wherever the biggest paying point is and where the biggest value driver is from a functional perspective, and then we go from there, we take folks further and further up the value maturity curve.

From a geographic perspective or a market perspective, we're seeing very strong growth in our mid-market business. We're seeing very strong return on investment in our international Investments. From a sales and marketing perspective, now we're obviously seeing continued cultivation of the market opportunity domestically in enterprise. So in every sector, we're seeing very strong growth, we have a nice portfolio effect as we build out our business organically, and that would be the best way I could address your question.

Drew Kootman -- Cantor Fitzgerald -- Analyst

Perfect. And can you discuss any macro expectations that are baked into guidance and how the overall demand environment looks?

Todd Ford -- Chief Financial Officer

The only I would call out, Rob, kind of highlighted some of the macro trends we see from our data set and that things continue to look strong. And from a guidance perspective, obviously macro can change it any time that we look more toward what is that our pipeline looks like, and how do we feel good about closure rates and you'll actually see a lot of good stuff from Chandar and Steve tomorrow with respect how we continue to build the pipeline, how we get a more prescriptive and targeting customers and how that's resulting in stronger ACV, deal sizes continuing to go up et cetera. So that's how we look at guidance and the visibility that we have.

Drew Kootman -- Cantor Fitzgerald -- Analyst

Great. Thank you.

Operator

We'll now take our next question from Ryan MacDonald from Needham & Company. Please go ahead. Your line is open.

Ryan MacDonald -- Needham & Company -- Analyst

Hey, good evening, Rob and Todd. I guess first question is around the federal government opportunity. I feel really great to see the USPS deal. I would love to hear maybe a little more color if you can on the potential scalability there and then also sort of what you're seeing in the pipeline on the federal government vertical heading into fiscal year '20 here?

Rob Bernshteyn -- Chief Executive Officer

Yeah, sure happy to address that Ryan. So in terms of United States Postal Service specifically, and obviously this is I think well known, but it's one of the largest organizations in the world, over half a million people, over $7 billion in revenue. Their annual spend is obviously managed in billions of dollars. We're looking at 65,000 plus initial users, a five year kind of transaction, and they're using us for all the great things that we're known for, streamlining and improving their user experience, improving their item categorization and search ability, reducing overall invoice errors and proving pricing, driving higher contract compliance rates. I mean, these are just some of the things off the top of my head. I mean, a lower overall lifecycle costs. It's been management visibility and they're going to be doing this across a whole host of spend categories from maintenance repaired to signage displays, marketing, you name it, and they are all aligned on a project like this is really really strong, measured in millions and millions of dollars annually.

So if these types of large scale projects that were really well suited to deliver for the federal government, while our greatest core competencies are around usability, high volume transactional capabilities on a 24/7 basis with a very very strong customer support, customer success team. So we're excited about this opportunity and the pipeline overall continues to develop nicely.

One of the areas we're concerned about answering federal is that the time to close is quite long and the payback is quite long. But we've been at this for a bit and we're starting to see some really good fruits of our labor starting to drop and USPS is obviously a great example of that.

Ryan MacDonald -- Needham & Company -- Analyst

Great. And then for my follow-up question, it's really around platform functionality with workflows. Based on some of our recent field work, we've heard that service now is developing a workflow specifically for the procurement process and it seems to offer some similar functionality with, say, dynamic approvals around procurement. I'm just trying to look for some color around, what sort of demand you see from the customer base around driving workflows like that within the call procurement engine?

Rob Bernshteyn -- Chief Executive Officer

Sure. I firmly believe that every large scale enterprise software product has to have some elements of core workflow capabilities. You're automating some business processes in some way. So I imagine the vast majority of large scale enterprise software companies you may cover run or run into are doing that. We're doing obviously a great deal more than that. Our workflow engine is highly dynamic and it's highly suited to the Business Spend Management process, haven't been thought through deliver for that process. So we think we're in a very good position to continue to scale that as part of our platform, no doubt.

Ryan MacDonald -- Needham & Company -- Analyst

Great. Thanks for the questions. Congrats on the quarter.

Rob Bernshteyn -- Chief Executive Officer

Thank you.

Operator

We'll now take our next question from Raimo Lenschow from Barclays. Please go ahead. Your line is open.

Raimo Lenschow -- Barclays Capital, Inc. -- Analyst

Hey, thanks for taking my question. Rob, as we start a new year, I'm sure you had your sales kickoff meeting or it's coming any day now. Can you talk a little bit about what you do with the sales force in terms of the acquired new modules -- kind of in a way new modules you are getting. In terms of, is that a -- how do you cross-sell -- do you cross-sell at the renewal point or are you -- is the sales force incentivized to do -- to go into the accounts straightaway once you get them. And then, one for Todd, any changes to sales force structures (inaudible) compensation as we go into the next financial year? Thank you.

Rob Bernshteyn -- Chief Executive Officer

Sure. Well thanks Raimo. Well, first of all, we actually don't have one annual kick-off, we don't really have much time for that. We do local TV hours and quarterly business reviews and we get moving into the quarter and we've been doing that for many years. We interact online all the time and share best practices across our sales marketing teams, in fact, the entire Company overall. So we're moving very very quickly and we're proud of that.

In terms of the capabilities we acquired, we see it on two perspectives. One is, the need to very quickly integrate these power user capabilities into our transactional core, that is both on the platform side as well as the usability side and permission side. And I can tell you that with every acquisition that we've done including the latest, a large part of that work has already been done, which is very very rewarding to see. Great work by our development team and our products team in making that happen.

And now on the go-to-market strategy, we quickly create positioning materials and we go both to the customer base of the acquired company, as well as to our customer base and new prospects with the overarching integrated platform. Our demos showcased integrated platform, our positioning showcases the integrated platform and our pricing is adjusted accordingly. And the reality is Raimo that, our prospective customers are looking for one Business Spend Management platform solution that addresses all of their spend management needs, and with every one of these acquisitions we've done, we've gotten closer and closer on delivering that comprehensive solution.

Todd Ford -- Chief Financial Officer

Hey, Raimo, with respect to the sales organization. If you look at what Steve's been doing, our CRO is been here two and a half years now or a little bit longer than that and has been very thoughtful in building up the sales team, promoting people in the right places and cases where maybe some minor adjustments were made and have been very proactive on that front. So I would say really nothing out of the ordinary. And as we've talked about before, starting to invest a little bit more heavily in international expansion. And in Q4, as some of you noted in your draw tracker surveys, we went pretty hard to the pain on acquiring and hiring new sales talent in Q4. So now we see a great opportunity there and I think Steve has got the right team to capitalize on it.

Raimo Lenschow -- Barclays Capital, Inc. -- Analyst

Perfect, congrats. Thank you.

Operator

We will now take our next question from Terry Tillman from SunTrust Robinson Humphrey. Please go ahead. Your line is open.

Terry Tillman -- SunTrust Robinson Humphrey -- Analyst

Hi. Good afternoon, gentlemen. Can you hear me?

Rob Bernshteyn -- Chief Executive Officer

Yes.

Terry Tillman -- SunTrust Robinson Humphrey -- Analyst

Congrats on the quarter. Most of my questions have been answered but I started with a list of 30 questions. I actually still have a few. So I guess maybe one thing Rob, could you talk about like and provide any quantification possibly about partner investment. It sounds like you've got a lot of momentum with partners but where are incremental opportunities? Is it geographies or verticals, just maybe a little bit more color on the partner channel?

Rob Bernshteyn -- Chief Executive Officer

Sure Terry. Well, look, first of all let me tell you that, SI, broadly speaking are absolutely investing more in terms of their own dollars to get Coupa folks trained -- to get their folks trained and certified on Coupa, which is a wonderful thing we see happening. Some of that is driven by customer demand, a lot of that is driven by their desire to have the right talent base involved with their own prospective customers. And secondly we're seeing them bring us into more deals. We're seeing them bringing us into more deals domestically as well as internationally. And we really see this as a ground game.

We've -- we're developing very strong relationships all over the world with some of the most marquee systems integrators. We're coming to those relationships with a portfolio of highly successful customers in many of the verticals that they service. And so those relationships are coming together quicker than we might have initially anticipated simply because of the track record we developed. So overall very healthy.

Terry Tillman -- SunTrust Robinson Humphrey -- Analyst

Okay. And on Coupa Pay, I'm assuming we're going to hear more tomorrow. But just anything you can say about the materiality of Coupa Pay. Whether it's billings or some other metrics in FY '20, and you know the sales force payment processing and payment workflow all the way through to that part of the procure to pay cycle, are they adapt at selling or do you need overlay people? Thank you.

Rob Bernshteyn -- Chief Executive Officer

Yeah, so that's a two part question. I think to some extent, there will be overlay folks required in some cases. I'm not talking about a huge overlay team with double comp and all kinds of things of that nature, but really just what we've always done, some specialists in a certain area that's relatively new to the Coupa sales process and Coupa overall platform that can help jump start some of the work we're doing there. So certainly we will invest there, but we will invest there within the same highly efficient sales and marketing constraints that replaced on us now for over a decade.

In terms of how the model will materialize, as I mentioned, it's early days in that area. We have several customers. In some of the products, we're already taking GA. We've seen thousands of transactions in Coupa Pay which is very promising and we continue to develop a very strong pipeline. So a lot of work has happened and a great deal of work to be done that we're really excited about.

Terry Tillman -- SunTrust Robinson Humphrey -- Analyst

Thank you.

Operator

We'll now take our next question from Mark Murphy from JP Morgan. Please go ahead. Your line is open.

Mark Murphy -- JPMorgan -- Analyst

Yes, thank you Rob. So you had mentioned last quarter that you had looked into your data and seen that the time to approval for spend requests was taking a bit longer in certain industries and also that the rejection amounts had increased quite a bit. I was listening to your commentary on the spend index and that -- it sounded like -- that sounded quite positive for this year. So I'm just wondering has that trend diminished with the time to approval and the rejection amounts? Has that diminished or changed at all in recent months?

Rob Bernshteyn -- Chief Executive Officer

Well, thanks Mark for the question. Let me first break apart that question, so there's complete clarity. When we talk about what's happening in the business as it pertains to our business, our business and our pipeline remains strong and we feel we're really well positioned to execute and extend our position as a leader in our industry. Now when we look at the overall data as part of this Coupa Business Spend Index that we're bringing out, surely there's some very interesting insights that come from the data. Generally, everyone, all industries we've seen a great deal of bullishness coming into January.

But if you look at financial services for instance, OK, and if you look at the metric of time to approve, so average to time, that actually has taken a bit longer in Q4 over Q3 and then suddenly we saw bursts of approvals happening in the first month of January on an average and per user basis. So sudden burst in approval time and speed in January.

Alternatively, when you look at something like retail, we saw really strong spend growth in Q4 over Q3, and then a marked deceleration in that growth coming into 2019. That's looking at average spend per person. If you look at average approval rates, you look at a an industry like hi-tech, we saw decelerating spend growth coming into 2019 and a marked increase in spend rejections coming at the January. So the interesting thing here is, we're seeing leading indicators across all of these different industries around what's happening and these are just some examples that I could point to, much of which will be distilled down as part of our Coupa BSI. And when the process of backwards testing that and making sure that when we launch it is statistically significant enough to matter for folks like yourselves, as well as the industry at large.

Mark Murphy -- JPMorgan -- Analyst

Okay, Thank you. Very clear. It makes sense. Todd, just as a follow-up, I think coming back to Hiperos, excuse me, to try to strip out the -- some of the temporary accounting noise. I think we're just wondering about a high level, what was the ACV level or the ARR run rate at the company around the time you acquired it. I think that's all we're kind of trying to look for is a little help on that.

Todd Ford -- Chief Financial Officer

Sure. So one of the things we we did since it was a material acquisition is, we filed an 8-K which had with Hiperos historical, there were two entities and one of those got spun out before we acquired it. And if you back into the numbers, the run rate of that business was in the call it, $15 million range, slightly higher. And as I said, we acquired that company in December, end of the year, and their process was to go 60 days in advance. So most of the Q4 billings that you have in a seasonally strong Q4 for enterprise software that didn't inured to our benefit. So a lot of the billings is going to come in Q4 and then that's when you know by that time you also have the in-quarter billings throughout the year and revenue will start to get to that run rate. And that business was roughly break even on a non-GAAP basis.

So if you think about the amount of additional expense that we're taking, that's what's really impacting the near term gross margins and operating margins although it was roughly break even from a free cash flow perspective.

Mark Murphy -- JPMorgan -- Analyst

Okay. So just to clarify, the run rate of the remaining portion after the -- part of it got spun out is $15 million?

Todd Ford -- Chief Financial Officer

A little bit more than $15 million.

Mark Murphy -- JPMorgan -- Analyst

Okay understood. Thank you and congrats.

Rob Bernshteyn -- Chief Executive Officer

Thanks Mark.

Operator

We'll now take our next question from Koji Ikeda from Oppenheimer. Please go ahead. Your line is open.

Koji Ikeda -- Oppenheimer -- Analyst

Great. Thanks for taking my question and congrats on the fourth quarter results here. I'm just thinking about that $1 billion revenue target. How much success from Coupa Pay, the existing products of Coupa Pay and even future products of Coupa Pay too is built into that $1 billion revenue target?

Rob Bernshteyn -- Chief Executive Officer

Thanks Koji. One of the interesting things about our business and we'll be sharing some of this at Analyst Day tomorrow. But if you look at where we began, 100% of our revenue was coming from our core procurement product. And by the time of our IPO, something like 50%, and now it's roughly a third. So what's happening is that, as I mentioned earlier to Raimo's question, we're seeing a desire by this customer to have a comprehensive Business Spend Management solution, and all of these components, all of these information technology modules if you will are part of that overall solution.

So for us to break out whether or not what portion will come from this module that module is very very difficult to do. What isn't difficult to do is to see the average annual subscription revenue per customer and how that's grown now for 40 quarters. So we continue to drive that as part of our solution set. Rest assured, we haven't modeled some crazy model around payments and how that is going to have some massive impact to getting us to $1 billion. It's just another set of capabilities that we believe is key to the overall Business Spend Management platform vision we're working toward.

Koji Ikeda -- Oppenheimer -- Analyst

Thanks Rob for that. Super clear. And I just had a follow-up question to a previous question on the USPS win. In the quarter, curious to hear if winning USPS required some level of fed ramp certification or visible path to certification on Coupa's end to secure that win? Thanks for taking my question.

Rob Bernshteyn -- Chief Executive Officer

So the answer to that question is yes, but I think the broader context to it, Koji, is that there's a whole host of very complex requirements that the government takes you through in order to become -- to be in a position to serve them. So once you get through them, once they help you the second time and you get through them the second time, they help you the third time. And so we've done a lot of work in the last 18 months or so to prepare ourselves, to become a partner of the United States Postal Service, and we think that positions us very very well for other federal customers down the road.

Operator

At this time, there are no further questions. This concludes the conference for today. We do thank you all for joining us. You may know disconnect.

Duration: 57 minutes

Call participants:

Nicole Noutsios -- Investor Relations

Rob Bernshteyn -- Chief Executive Officer

Todd Ford -- Chief Financial Officer

Stan Zlotsky -- Morgan Stanley -- Analyst

Ross MacMillan -- RBC Capital Markets -- Analyst

Christopher Merwin -- Goldman Sachs -- Analyst

Brian Peterson -- Raymond James -- Analyst

Drew Kootman -- Cantor Fitzgerald -- Analyst

Ryan MacDonald -- Needham & Company -- Analyst

Raimo Lenschow -- Barclays Capital, Inc. -- Analyst

Terry Tillman -- SunTrust Robinson Humphrey -- Analyst

Mark Murphy -- JPMorgan -- Analyst

Koji Ikeda -- Oppenheimer -- Analyst

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3 Brand-Name Healthcare Stocks That Haven't Been This Cheap in a Decade

It might be hard to believe, but just a few days ago we celebrated the 10-year anniversary of the stock market hitting its Great Recession lows. Although the ride has been a bit bumpy at times, investors who've held on for the long run have almost certainly been rewarded.

However, as investors, we also know that not every company can be a winner. Despite being reasonably close to new all-time highs on the broad-based S&P 500, three brand-name healthcare stocks aren't doing so hot. In fact, if we were to look at the forward price-to-earnings ratios for these three healthcare stocks, we'd see that they're lower now than they've been over the last decade (if not longer). That might mean bargains abound for opportunistic investors.

Image source: Getty Images.

Celgene: Forward P/E of 6.7

That's right. Even with the looming acquisition of Celgene (NASDAQ:CELG) by Bristol-Myers Squibb (NYSE:BMY), which was announced at the beginning of the year, the company's forward price-to-earnings ratio of less than seven is a low point for the company over the past decade.

The biggest concern from Wall Street has always been Celgene's overreliance on blockbuster cancer drug Revlimid, which is projected to bring in roughly $10.8 billion in sales in 2019. With gross margins well in excess of 90%, Revlimid is almost singlehandedly responsible for pushing free cash flow to nearly $5 billion in each of the last two years. But at 63% of forecasted 2019 sales, Wall Street worries that when Revlimid does face generic competition, Celgene's financials will seriously falter. 

Here's the thing: Celgene has gone to bat to protect its lead drug from generic competitors. Even with a small percentage of generic Revlimid becoming available in March 2022, a flood of generic Revlimid shouldn't occur until after January 2026. Assuming continued demand and pricing power for the drug, up to $40 billion in free cash flow generation between 2019 and 2026 isn't out of the question. That's pretty much two-thirds of Celgene's current market cap. This money can be -- and is being -- reinvested into cancer, immunology, and inflammation research projects that are happening internally and with its dozens of partners.

So investors are left with what I believe is a win-win scenario. If Bristol-Myers Squibb were to walk away from its proposed deal to acquire Celgene for one share of Bristol-Myers' stock plus $50 in cash per Celgene share, long-term investors should do just fine. The upcoming launch of ozanimod for multiple sclerosis -- along with a number of promising next-generation cancer drugs -- coupled with its label expansion opportunities with its existing portfolio provides more than enough runway to support a higher valuation.

Then again, if Bristol-Myers Squibb does go through with the deal, there's about a 20% arbitrage opportunity here, as well as a $9 contingent value right for Celgene shareholders if certain regulatory requirements are met for three experimental therapies. All told, Celgene looks every bit a bargain right now.

Image source: Getty Images.

Walgreens Boots Alliance: Forward P/E of 8.6

Pharmacy and front-end retail giant Walgreens Boots Alliance (NASDAQ:WBA) is also pushing the boundaries of "cheapness." At no point over the past decade has the pharmacy chain been valued at a forward P/E of less than 10, let alone nine, as it is now.

Why is such a well-known and profitable company like Walgreens Boots Alliance down on its luck? Part of the reason relates to concerns that Amazon.com is entering the healthcare space. Amazon's deep pockets and low overhead have been a recipe for disruption in a number of industries. There's also concern that reimbursement rates are being pressured, which has some industry pundits forecasting that Walgreens will struggle to meet its profit growth forecast of 7% to 12% in fiscal 2019. 

But there's also plenty to be excited about. For instance, Walgreens Boots Alliance acquired almost 2,200 stores from Rite Aid for the hefty sum of $5.2 billion. These stores provide a broader retail and pharmacy presence for Walgreens, while at the same time shrinking Rite Aid's, one of the company's core competitors. Further, the additional locations will provide cost synergies and optimizations that'll save Walgreens more than $650 million per year.

The company is also doing what it can to cut expenditures and give back to its shareholders. A recently announced cost management program seeks to reduce annual expenditures by $1 billion annually within the next three years. Combine these actions with the company's regular share repurchases (which can boost earnings per share) and a rising share of online pharmacy orders, and it's easy to see a path toward higher operating margins in the not-so-distant future. 

Investors won't want to overlook its partnerships, either. For example, recently announced initiatives with FedEx, Kroger, and Humana will help keep the brand fresh in consumers' minds, which will probably make its sub-nine forward P/E a bargain.

Image source: Getty Images.

Teva Pharmaceutical Industries: Forward P/E of 6

A third healthcare giant that's been taken to the woodshed of late is generic-drug giant Teva Pharmaceutical Industries (NYSE:TEVA), which, at a forward P/E of six, is cheaper, at least based on this metric, than it's been in a decade.

Poor Teva would need a novel to list all of the problems it's faced over the past two years. Take a deep breath, because you'll need it. The company has: reduced guidance on multiple occasions, completely halted what had been a superior dividend, restructured after going heavy into debt to acquire Actavis, seen its CEO depart, settled bribery allegations with the Justice Department, contended with generic-drug pricing weakness, and seen its best-selling branded drug (Copaxone) face generic competition of its own. Make no mistake about it, there's a reason Teva is trading at a decade-low valuation.

There are, however, reasons to believe that all the bad news is now factored in, especially with management expecting a return to growth in 2020. Though multiple sclerosis drug Copaxone and albuterol inhaler ProAir will see generic competition eat away at sales in 2019, Teva's focus on other branded medications, including migraine drug Ajovy and Huntington's disease treatment Austedo, will help hedge this sales decline.

Let's not also forget that Teva is the largest generic drugmaker in the world. When generic-drug pricing does find a bottom (presumably soon), Teva will be able to once again utilize the breadth of its product portfolio to drive growth. Plus, this is a company that has the numbers game on its side. Even with generics producing much lower margins than branded therapies, a progressively older population in the U.S. and abroad will be looking for cheaper alternatives as branded-drug prices climb.

Teva has done a bang-up job on reducing its outstanding debt, too. Removing its dividend saves more than $1 billion in cash flow annually, while selling its women's health division brought in more than $2 billion. With the company also utilizing its operating cash flow to pay down debt, Teva's net debt has declined from north of $34 billion to $27.2 billion in about two years. 

To be clear, this won't be an overnight turnaround. But given Teva's pole position in generics, as well as its ability to double dip with branded therapies, a forward price-to-earnings ratio of six looks like a screaming bargain.