SANTA CLARA, Calif., Sept. 4, 2024 /PRNewswire/ — Couchbase, Inc. (NASDAQ: BASE), the cloud database platform company, today announced financial results for its second quarter ended July 31, 2024.
“I’m pleased with our hard work and execution in the quarter,” said Matt Cain, Chair, President and CEO of Couchbase. “We delivered revenue and operating loss results that exceeded the high end of our outlook, generated strong new business and new logos, and saw a meaningful increase in our Capella mix. I remain highly confident in our outlook and ability to achieve our objectives in fiscal 2025.”
Second Quarter Fiscal 2025 Financial Highlights
Revenue: Total revenue for the quarter was $51.6 million, an increase of 20% year-over-year. Subscription revenue for the quarter was $49.3 million, an increase of 20% year-over-year.Annual recurring revenue (ARR): Total ARR as of July 31, 2024 was $214.0 million, an increase of 18% year-over-year, or 19% on a constant currency basis. See the section titled “Key Business Metrics” below for details.Gross margin: Gross margin for the quarter was 87.5%, compared to 86.3% for the second quarter of fiscal 2024. Non-GAAP gross margin for the quarter was 88.3%, compared to 87.2% for the second quarter of fiscal 2024. See the section titled “Use of Non-GAAP Financial Measures” and the tables titled “Reconciliation of GAAP to Non-GAAP Results” below for details.Loss from operations: Loss from operations for the quarter was $21.0 million, compared to $21.9 million for the second quarter of fiscal 2024. Non-GAAP operating loss for the quarter was $4.1 million, compared to $9.2 million for the second quarter of fiscal 2024.Cash flow: Cash flow used in operating activities for the quarter was $4.9 million, compared to cash flow used in operating activities of $0.5 million in the second quarter of fiscal 2024. Capital expenditures were $1.0 million during the quarter, leading to negative free cash flow of $5.9 million, compared to negative free cash flow of $1.6 million in the second quarter of fiscal 2024.Remaining performance obligations (RPO): RPO as of July 31, 2024 was $215.8 million, an increase of 27% year-over-year.
Recent Business Highlights
Announced the general availability of Capella Columnar, an exciting milestone for Couchbase with strong uptake and positive feedback from early adopters across various industries. Columnar helps organizations streamline the development of adaptive applications by enabling real-time data analysis alongside operational workloads within a single database platform.Announced the general availability of Couchbase Mobile with vector search, which makes it possible for businesses to offer similarity and hybrid search in their applications on mobile and at the edge. With Capella Columnar and vector search capabilities in one cloud database platform, Couchbase helps businesses reduce cost and simplify operations, while enabling developers to create trustworthy adaptive applications.Introduced Capella Free Tier, a workspace which empowers developers to work faster by enabling the development of next generation, production-ready applications on Couchbase. Developers now have the access and convenience they need to build on applications without worrying about an end date.Announced the appointment of Josh Harbert as senior vice president and chief marketing officer. In this role, Harbert will lead all marketing and sales development efforts, driving brand momentum, demand creation, market leadership and growth initiatives. He brings over 20 years’ experience in the enterprise software industry and a proven track record of accelerating growth and achieving strategic outcomes in both private and public companies.
Financial Outlook
For the third quarter and full year of fiscal 2025, Couchbase expects:
Q3 FY2025 Outlook
FY2025 Outlook
Total Revenue
$50.3-51.1 million
$205.1-209.1 million
Total ARR
$218.5-221.5 million
$235.5-240.5 million
Non-GAAP Operating Loss
$5.5-4.5 million
$24.5-19.5 million
The guidance provided above is based on several assumptions that are subject to change and many of which are outside our control. If actual results vary from these assumptions, our expectations may change. There can be no assurance that we will achieve these results.
Couchbase is not able, at this time, to provide GAAP targets for operating loss for the third quarter or full year of fiscal 2025 because of the difficulty of estimating certain items excluded from non-GAAP operating loss that cannot be reasonably predicted, such as charges related to stock-based compensation expense. The effect of these excluded items may be significant.
Conference Call Information
Couchbase will host a live webcast at 1:30 p.m. Pacific Time (or 4:30 p.m. Eastern Time) on Wednesday, September 4, 2024, to discuss its financial results and business highlights. The conference call can be accessed by dialing 877-407-8029 from the United States, or +1 201-689-8029 from international locations. The live webcast and a webcast replay can be accessed from the investor relations page of Couchbase’s website at investors.couchbase.com.
About Couchbase
Modern customer experiences need a flexible database platform that can power applications spanning from cloud to edge and everything in between. Couchbase’s mission is to simplify how developers and architects develop, deploy and run modern applications wherever they are. We have reimagined the database with our fast, flexible and affordable cloud database platform Couchbase Capella, allowing organizations to quickly build applications that deliver premium experiences to their customers – all with best-in-class price performance. 30% of the Fortune 100 trust Couchbase to power their modern applications. For more information, visit www.couchbase.com and follow us on X (formerly Twitter) @couchbase.
Couchbase has used, and intends to continue using, its investor relations website and the corporate blog at blog.couchbase.com to disclose material non-public information and to comply with its disclosure obligations under Regulation FD. Accordingly, you should monitor our investor relations website and the corporate blog in addition to following our press releases, SEC filings and public conference calls and webcasts.
Use of Non-GAAP Financial Measures
In addition to our financial information presented in accordance with GAAP, we believe certain non-GAAP financial measures are useful to investors in evaluating our operating performance. We use certain non-GAAP financial measures, collectively, to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, may be helpful to investors because they provide consistency and comparability with past financial performance and meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, results of operations or outlook. Non-GAAP financial measures are presented for supplemental informational purposes only, have limitations as analytical tools and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP, and may be different from similarly-titled non-GAAP financial measures used by other companies. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures (provided in the financial statement tables included in this press release), and not to rely on any single financial measure to evaluate our business.
Non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating loss, non-GAAP operating margin, non-GAAP net loss and non-GAAP net loss per share: We define these non-GAAP financial measures as their respective GAAP measures, excluding expenses related to stock-based compensation expense, employer payroll taxes on employee stock transactions, restructuring charges and impairment of capitalized internal-use software. We use these non-GAAP financial measures in conjunction with GAAP measures to assess our performance, including in the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance.
For the fourth quarter of fiscal 2024, we excluded the impairment of capitalized internal-use software, a non-cash operating expense, from our non-GAAP results as it is not reflective of ongoing operating results. This impairment charge related to certain previously capitalized internal-use software that we determined would no longer be placed into service. Prior period non-GAAP financial measures have not been adjusted to reflect this change as we did not incur impairment of capitalized internal-use software in any prior period presented.
Free cash flow: We define free cash flow as cash used in operating activities less additions to property and equipment, which includes capitalized internal-use software costs. We believe free cash flow is a useful indicator of liquidity that provides our management, board of directors and investors with information about our future ability to generate or use cash to enhance the strength of our balance sheet and further invest in our business and pursue potential strategic initiatives.
Please see the reconciliation tables at the end of this press release for the reconciliation of GAAP and non-GAAP results.
Key Business Metrics
We review a number of operating and financial metrics, including ARR, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions.
We define ARR as of a given date as the annualized recurring revenue that we would contractually receive from our customers in the month ending 12 months following such date. Based on historical experience with customers, we assume all contracts will be renewed at the same levels unless we receive notification of non-renewal and are no longer in negotiations prior to the measurement date. For Capella products, ARR in a customer’s initial year is calculated as the greater of: (i) initial year contract revenue as described above or (ii) annualized prior 90 days of actual consumption; and ARR for subsequent years is calculated with method (ii). ARR excludes services revenue.
Prior to fiscal 2025, ARR excluded on-demand revenue and, for Capella products in a customer’s initial year, ARR was calculated solely on the basis of initial year contract revenue. The reason for these changes is to better reflect ARR where usage rates or timing of purchases may be uneven and to better align with how ARR is used to measure the performance of the business. ARR for prior periods has not been adjusted to reflect this change as it is not material to any period previously presented.
ARR should be viewed independently of revenue, and does not represent our revenue under GAAP on an annualized basis, as it is an operating metric that can be impacted by contract start and end dates and renewal dates. ARR is not intended to be a replacement for forecasts of revenue. Although we seek to increase ARR as part of our strategy of targeting large enterprise customers, this metric may fluctuate from period to period based on our ability to acquire new customers, expand within our existing customers and consumption dynamics. We believe that ARR is an important indicator of the growth and performance of our business.
We also attempt to represent the changes in the underlying business operations by eliminating fluctuations caused by changes in foreign currency exchange rates within the current period. We calculate constant currency growth rates by applying the applicable prior period exchange rates to current period results.
Forward-Looking Statements
This press release contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management’s beliefs and assumptions and on information currently available to management. Forward-looking statements include, but are not limited to, quotations of management, the section titled “Financial Outlook” above and statements about Couchbase’s market position, strategies and potential market opportunities. Forward-looking statements generally relate to future events or our future financial or operating performance. Forward-looking statements include all statements that are not historical facts and, in some cases, can be identified by terms such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “continue,” “could,” “potential,” “remain,” “may,” “might,” “will,” “would” or similar expressions and the negatives of those terms. However, not all forward-looking statements contain these identifying words. Forward-looking statements involve known and unknown risks, uncertainties and other factors, including factors beyond our control, which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These risks include, but are not limited to: our history of net losses and ability to achieve or maintain profitability in the future; our ability to continue to grow on pace with historical rates; our ability to manage our growth effectively; intense competition and our ability to compete effectively; cost-effectively acquiring new customers or obtaining renewals, upgrades or expansions from our existing customers; the market for our products and services being highly competitive and evolving, and our future success depending on the growth and expansion of this market; our ability to innovate in response to changing customer needs, new technologies or other market requirements, including new capabilities, programs and partnerships and their impact on our customers and our business; our limited operating history, which makes it difficult to predict our future results of operations; the significant fluctuation of our future results of operations and ability to meet the expectations of analysts or investors; our significant reliance on revenue from subscriptions, which may decline and, the recognition of a significant portion of revenue from subscriptions over the term of the relevant subscription period, which means downturns or upturns in sales are not immediately reflected in full in our results of operations; and the impact of geopolitical and macroeconomic factors. Further information on risks that could cause actual results to differ materially from forecasted results are included in our filings with the Securities and Exchange Commission that we may file from time to time, including those more fully described in our Annual Report on Form 10-K for the fiscal year ended January 31, 2024. Additional information will be made available in our Quarterly Report on Form 10-Q for the quarter ended July 31, 2024 that will be filed with the Securities and Exchange Commission, which should be read in conjunction with this press release and the financial results included herein. Any forward-looking statements contained in this press release are based on assumptions that we believe to be reasonable as of this date. Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons if actual results differ materially from those anticipated in the forward-looking statements.
Couchbase, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended July 31,
Six Months Ended July 31,
2024
2023
2024
2023
Revenue:
License
$ 5,242
$ 4,798
$ 12,101
$ 9,741
Support and other
44,051
36,156
86,230
69,755
Total subscription revenue
49,293
40,954
98,331
79,496
Services
2,296
2,185
4,585
4,639
Total revenue
51,589
43,139
102,916
84,135
Cost of revenue:
Subscription(1)
4,455
3,845
8,412
7,518
Services(1)
2,008
2,064
3,733
4,313
Total cost of revenue
6,463
5,909
12,145
11,831
Gross profit
45,126
37,230
90,771
72,304
Operating expenses:
Research and development(1)
17,370
16,292
35,217
31,675
Sales and marketing(1)
36,168
32,348
73,923
64,901
General and administrative(1)
12,636
10,459
25,219
20,084
Restructuring(1)
—
—
—
46
Total operating expenses
66,174
59,099
134,359
116,706
Loss from operations
(21,048)
(21,869)
(43,588)
(44,402)
Interest expense
(29)
(18)
(29)
(43)
Other income, net
1,741
1,255
3,272
2,688
Loss before income taxes
(19,336)
(20,632)
(40,345)
(41,757)
Provision for income taxes
559
19
545
769
Net loss
$ (19,895)
$ (20,651)
$ (40,890)
$ (42,526)
Net loss per share, basic and diluted
$ (0.39)
$ (0.44)
$ (0.81)
$ (0.92)
Weighted-average shares used in computing
net loss per share, basic and diluted
50,822
46,714
50,311
46,285
_______________________________
(1)
Includes stock-based compensation expense as follows:
Three Months Ended July 31,
Six Months Ended July 31,
2024
2023
2024
2023
Cost of revenue—subscription
$ 301
$ 236
$ 567
$ 429
Cost of revenue—services
109
149
250
294
Research and development
4,214
3,614
8,207
6,382
Sales and marketing
6,162
4,032
11,385
7,273
General and administrative
5,370
4,086
10,374
7,014
Restructuring
—
—
—
1
Total stock-based compensation expense
$ 16,156
$ 12,117
$ 30,783
$ 21,393
Couchbase, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
As of July 31,
2024
As of January 31,
2024
Assets
Current assets
Cash and cash equivalents
$ 62,607
$ 41,351
Short-term investments
93,526
112,281
Accounts receivable, net
31,263
44,848
Deferred commissions
13,187
15,421
Prepaid expenses and other current assets
10,092
10,385
Total current assets
210,675
224,286
Property and equipment, net
7,053
5,327
Operating lease right-of-use assets
3,497
4,848
Deferred commissions, noncurrent
13,603
11,400
Other assets
1,119
1,891
Total assets
$ 235,947
$ 247,752
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable
$ 5,031
$ 4,865
Accrued compensation and benefits
14,123
18,116
Other accrued expenses
3,373
4,581
Operating lease liabilities
2,670
3,208
Deferred revenue
81,906
81,736
Total current liabilities
107,103
112,506
Operating lease liabilities, noncurrent
1,170
2,078
Deferred revenue, noncurrent
1,031
2,747
Total liabilities
109,304
117,331
Stockholders’ equity
Preferred stock
—
—
Common stock
—
—
Additional paid-in capital
658,165
621,024
Accumulated other comprehensive income
27
56
Accumulated deficit
(531,549)
(490,659)
Total stockholders’ equity
126,643
130,421
Total liabilities and stockholders’ equity
$ 235,947
$ 247,752
Couchbase, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended July 31,
Six Months Ended July 31,
2024
2023
2024
2023
Cash flows from operating activities
Net loss
$ (19,895)
$ (20,651)
$ (40,890)
$ (42,526)
Adjustments to reconcile net loss to net cash used
in operating activities
Depreciation and amortization
363
745
763
1,635
Stock-based compensation, net of amounts
capitalized
16,156
12,117
30,783
21,393
Amortization of deferred commissions
4,184
4,702
8,280
9,242
Non-cash lease expense
765
776
1,530
1,548
Foreign currency transaction losses (gains)
8
249
291
165
Other
(589)
(1,030)
(1,413)
(1,776)
Changes in operating assets and liabilities
Accounts receivable
3,130
9,811
13,295
7,537
Deferred commissions
(5,179)
(4,322)
(8,249)
(9,146)
Prepaid expenses and other assets
412
(1,523)
443
(118)
Accounts payable
938
(3,713)
146
1,745
Accrued compensation and benefits
5,188
2,306
(3,991)
(1,754)
Other Accrued Expenses
(294)
(615)
(1,107)
(1,871)
Operating lease liabilities
(782)
(897)
(1,625)
(1,723)
Deferred revenue
(9,255)
1,526
(1,547)
7,949
Net cash used in operating activities
(4,850)
(519)
(3,291)
(7,700)
Cash flows from investing activities
Purchases of short-term investments
(18,351)
(56,494)
(37,805)
(64,315)
Maturities of short-term investments
34,000
50,697
58,144
70,120
Additions to property and equipment
(1,067)
(1,071)
(2,062)
(2,359)
Net cash provided by (used in) investing
activities
14,582
(6,868)
18,277
3,446
Cash flows from financing activities
Proceeds from exercise of stock options
842
2,733
4,136
4,650
Proceeds from issuance of common stock under
ESPP
—
—
1,795
847
Net cash provided by financing activities
842
2,733
5,931
5,497
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
58
(149)
(204)
(252)
Net increase in cash, cash equivalents and
restricted cash
10,632
(4,803)
20,713
991
Cash, cash equivalents, and restricted cash at
beginning of period
51,975
46,783
41,894
40,989
Cash, cash equivalents, and restricted cash at end
of period
$ 62,607
$ 41,980
$ 62,607
$ 41,980
Reconciliation of cash, cash equivalents, and
restricted cash within the consolidated balance
sheets to the amounts shown above:
Cash and cash equivalents
$ 62,607
$ 41,437
$ 62,607
$ 41,437
Restricted cash included in other assets
—
543
—
543
Total cash, cash equivalents and restricted cash
$ 62,607
$ 41,980
$ 62,607
$ 41,980
Couchbase, Inc.
Reconciliation of GAAP to Non-GAAP Results
(in thousands, except per share data)
(unaudited)
Three Months Ended July 31,
Six Months Ended July 31,
2024
2023
2024
2023
Reconciliation of GAAP gross profit to
non-GAAP gross profit:
Total revenue
$ 51,589
$ 43,139
$ 102,916
$ 84,135
Gross profit
$ 45,126
$ 37,230
$ 90,771
$ 72,304
Add: Stock-based compensation expense
410
385
817
723
Add: Employer taxes on employee stock
transactions
28
21
98
31
Non-GAAP gross profit
$ 45,564
$ 37,636
$ 91,686
$ 73,058
Gross margin
87.5 %
86.3 %
88.2 %
85.9 %
Non-GAAP gross margin
88.3 %
87.2 %
89.1 %
86.8 %
Three Months Ended July 31,
Six Months Ended July 31,
2024
2023
2024
2023
Reconciliation of GAAP operating
expenses to non-GAAP operating
expenses:
GAAP research and development
$ 17,370
$ 16,292
$ 35,217
$ 31,675
Less: Stock-based compensation expense
(4,214)
(3,614)
(8,207)
(6,382)
Less: Employer taxes on employee stock
transactions
(170)
(123)
(479)
(231)
Non-GAAP research and development
$ 12,986
$ 12,555
$ 26,531
$ 25,062
GAAP sales and marketing
$ 36,168
$ 32,348
$ 73,923
$ 64,901
Less: Stock-based compensation expense
(6,162)
(4,032)
(11,385)
(7,273)
Less: Employer taxes on employee stock
transactions
(421)
(330)
(1,103)
(450)
Non-GAAP sales and marketing
$ 29,585
$ 27,986
$ 61,435
$ 57,178
GAAP general and administrative
$ 12,636
$ 10,459
$ 25,219
$ 20,084
Less: Stock-based compensation expense
(5,370)
(4,086)
(10,374)
(7,014)
Less: Employer taxes on employee stock
transactions
(172)
(59)
(327)
(88)
Non-GAAP general and administrative
$ 7,094
$ 6,314
$ 14,518
$ 12,982
Three Months Ended July 31,
Six Months Ended July 31,
2024
2023
2024
2023
Reconciliation of GAAP operating loss to
non-GAAP operating loss:
Total revenue
$ 51,589
$ 43,139
$ 102,916
$ 84,135
Loss from operations
$ (21,048)
$ (21,869)
$ (43,588)
$ (44,402)
Add: Stock-based compensation expense
16,156
12,117
30,783
21,392
Add: Employer taxes on employee stock
transactions
791
533
2,007
800
Add: Restructuring(2)
—
—
—
46
Non-GAAP operating loss
$ (4,101)
$ (9,219)
$ (10,798)
$ (22,164)
Operating margin
(41) %
(51) %
(42) %
(53) %
Non-GAAP operating margin
(8) %
(21) %
(10) %
(26) %
Three Months Ended July 31,
Six Months Ended July 31,
2024
2023
2024
2023
Reconciliation of GAAP net loss to non-
GAAP net loss:
Net loss
$ (19,895)
$ (20,651)
$ (40,890)
$ (42,526)
Add: Stock-based compensation expense
16,156
12,117
30,783
21,392
Add: Employer taxes on employee stock
transactions
791
533
2,007
800
Add: Restructuring(2)
—
—
—
46
Non-GAAP net loss
$ (2,948)
$ (8,001)
$ (8,100)
$ (20,288)
GAAP net loss per share
$ (0.39)
$ (0.44)
$ (0.81)
$ (0.92)
Non-GAAP net loss per share
$ (0.06)
$ (0.17)
$ (0.16)
$ (0.44)
Weighted average shares outstanding, basic
and diluted
50,822
46,714
50,311
46,285
_______________________________
(2)
For the six months ended July 31, 2023, an immaterial amount of stock-based compensation expense related to restructuring charges was included in the restructuring expense line.
The following table presents a reconciliation of free cash flow to net cash provided by (used in) operating activities, the most directly comparable GAAP measure, for each of the periods indicated (in thousands, unaudited):
Three Months Ended July 31,
Six Months Ended July 31,
2024
2023
2024
2023
Net cash used in operating activities
$ (4,850)
$ (519)
$ (3,291)
$ (7,700)
Less: Additions to property and equipment
(1,067)
(1,071)
(2,062)
(2,359)
Free cash flow
$ (5,917)
$ (1,590)
$ (5,353)
$ (10,059)
Net cash provided by (used in) investing
activities
$ 14,582
$ (6,868)
$ 18,277
$ 3,446
Net cash provided by financing activities
$ 842
$ 2,733
$ 5,931
$ 5,497
Couchbase, Inc.
Key Business Metrics
(in millions)
(unaudited)
As of
Oct. 31,
Jan. 31,
April 30,
July 31,
Oct. 31,
Jan. 31,
April 30,
July 31,
2022
2023
2023
2023
2023
2024
2024
2024
Annual Recurring
Revenue
$ 151.7
$ 163.7
$ 172.2
$ 180.7
$ 188.7
$ 204.2
$ 207.7
$ 214.0
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SOURCE Couchbase, Inc.
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