Financial Performance - For the three months ended April 30, 2025, Couchbase reported revenue of $56.5 million, a 10% increase from $51.3 million in the same period of 2024[106]. - Annual recurring revenue (ARR) as of April 30, 2025, was $252.1 million, up 21% from $207.7 million in 2024[106]. - The net loss for the three months ended April 30, 2025, was $17.7 million, compared to a net loss of $21.0 million in the same period of 2024[106]. - Total revenue for the three months ended April 30, 2025, was $56,523,000, an increase of 10.8% from $51,327,000 in the same period of 2024[129]. - Non-GAAP gross profit for the same period was $50,142,000, compared to $46,122,000 in 2024, resulting in a non-GAAP gross margin of 88.7%[129]. - Loss from operations decreased to $18,843,000 in Q2 2025 from $22,540,000 in Q2 2024, with a non-GAAP operating loss of $4,181,000[131]. - Non-GAAP net loss attributable to common stockholders was $3,017,000 for Q2 2025, improving from $5,152,000 in Q2 2024, with a non-GAAP net loss per share of $0.06[133]. - Free cash flow for the three months ended April 30, 2025, was $(8,643,000), a decrease from $564,000 in the same period of 2024[135]. - Gross profit for the three months ended April 30, 2025, was $49.7 million, with a gross margin of 87.9%, down from 88.9% in 2024[155]. Revenue Composition - Subscription revenue accounted for 97% of total revenue for the three months ended April 30, 2025, compared to 96% in 2024[107]. - Subscription revenue increased to $54,843,000 in Q2 2025, up from $49,038,000 in Q2 2024, driven by growth in term-based software licenses and DBaaS offerings[151]. - Subscription revenue increased by $5.8 million, or 12%, driven primarily by existing customers, with 99% of the increase attributed to this group[153]. Customer Growth - The total number of customers grew to 937 in 2025, up from 807 in 2024, with Couchbase Capella customers increasing to 309 from 236[125]. - The dollar-based net retention rate exceeded 115% in six of the past eight quarters, indicating strong expansion within existing customers[118]. Operating Expenses - Total operating expenses for Q2 2025 were $68,510,000, slightly higher than $68,185,000 in Q2 2024, with research and development expenses at $18,490,000[151]. - Research and development expenses were $17.8 million, representing 33% of revenue, a decrease from 35% in the prior year[157]. - Sales and marketing expenses increased by $0.4 million, or 1%, totaling $38.2 million, which is 68% of revenue[158]. - General and administrative expenses decreased by $1.4 million, or 11%, to $11.2 million, representing 20% of revenue[159]. - Stock-based compensation expense totaled $13,384,000 in Q2 2025, down from $14,627,000 in Q2 2024[151]. - The company anticipates an increase in research and development expenses as it continues to invest in platform features and functionalities[143]. Cash and Liquidity - As of April 30, 2025, the company had $141.8 million in cash, cash equivalents, and short-term investments[165]. - Cash provided by investing activities for Q2 2025 was $1.4 million, a decrease from $3.7 million in Q2 2024, primarily due to short-term investments and property equipment additions[170][171]. - Cash provided by financing activities for Q2 2025 was $2.6 million, down from $5.1 million in Q2 2024, with $1.2 million from stock option exercises and $1.4 million from the Employee Stock Purchase Plan[172][173]. - As of April 30, 2025, cash and cash equivalents totaled $28.0 million, with short-term investments at $113.8 million, indicating a stable liquidity position[180]. Market Conditions and Risks - Macroeconomic conditions have led to longer deal cycles and increased budget scrutiny, impacting business spending[115]. - The company expects revenue to vary based on new subscriptions, customer renewals, and fluctuations in DBaaS consumption[138]. - The company does not expect a 10% change in interest rates to materially affect its results of operations or cash flows due to the short-term nature of its investment portfolio[180]. - A hypothetical 10% change in the value of the U.S. Dollar against other currencies would not have a material impact on the company's financial condition or cash flows as of April 30, 2025[183]. - The company remains exposed to market risks, particularly fluctuations in interest rates and foreign currency exchange rates[179]. Corporate Governance and Compliance - There have been no material changes in contractual obligations and commitments since the fiscal year ended January 31, 2025[175]. - The company has entered into indemnification agreements with directors and officers, with no current claims that could materially affect financial conditions[176]. - There have been no material changes to critical accounting policies and estimates since the last annual report[177]. - The company has not engaged in hedging foreign currency transactions to date, although it may consider this in the future[182].

Core Viewpoint - Couchbase's stock experienced significant fluctuations, initially declining but later gaining 3.3% following the release of its earnings report, which exceeded market expectations [1][2]. Financial Performance - In Q1 of the current fiscal year, Couchbase reported a non-GAAP loss of $0.06 per share on sales of $56.52 million, outperforming analyst expectations of a loss of $0.08 per share on sales of $55.59 million [4]. - Revenue increased approximately 10% year-over-year, and the adjusted loss per share improved from $0.10 in the prior-year period [4]. - Annual recurring revenue (ARR) reached $252.1 million at the end of the quarter, reflecting a 21% year-over-year increase [4]. Future Guidance - For Q2, Couchbase anticipates sales between $54.4 million and $55.2 million, indicating a potential sequential decline but a year-over-year growth of 6.2% [5]. - For the full fiscal year, management targets sales between $228.3 million and $232.3 million, which would represent an annual growth of 9.9% if the midpoint is achieved [6]. - The company expects performance to improve in the second half of the year despite current macroeconomic uncertainties [5].

Group 1 - The stock market is experiencing a surge due to optimism surrounding a potential U.S.-China trade deal, prompting a shift in investment focus towards value and "growth at a reasonable price" strategies [1] - Valuation multiples for many large-cap companies appear to be stretched, indicating a potential overvaluation in the market [1] - The analyst has extensive experience in covering technology companies and has been involved with startups, providing insights into current industry trends [1] Group 2 - The analyst has been a contributor to Seeking Alpha since 2017 and has been featured in various web publications, indicating a recognized presence in the investment community [1]

Financial Performance - The company's Annual Recurring Revenue (ARR) reached $252.1 million, representing a 20% year-over-year growth[8,58] - The company boasts a high dollar-based Net Retention Rate (NRR) of over 114%[8] - The company's Non-GAAP gross margin is strong at 89%[8] - The company's revenue mix shows that 97% comes from software and 3% from services[66] Customer Base - The company has a total of 937 customers[8] - The company has 306 customers with ARR greater than $100,000 and 51 customers with ARR greater than $1 million[8] - Capella contributes to 17.4% of the total ARR[8] Future Outlook - The company anticipates achieving 20%+ growth and positive Free Cash Flow (FCF) and Non-GAAP Operating Income by FY27[73] - The company projects ARR to reach $281.8 million and revenue to reach $230.3 million for FY26[72]

Financial Data and Key Metrics Changes - Total ARR was $252.1 million, up 21% year over year and 6% sequentially [6][19] - Net new ARR was $14.2 million, up more than 300% year over year [7][19] - Revenue in Q1 was $56.5 million, up 10% year over year and 3% sequentially [7][20] - Non-GAAP operating loss in Q1 was $4.2 million, improving from a loss of $6.7 million a year ago [8][23] - Gross margin was 88.7%, compared to 89.9% a year ago [22] Business Line Data and Key Metrics Changes - Capella ARR was $44 million, an increase of 84% year over year [19] - Capella now represents 17.4% of total ARR, up from 11.5% in Q1 of fiscal 2025 [19] - Professional service revenue was $1.7 million, down 27% year over year [20] Market Data and Key Metrics Changes - The company exited Q1 with 937 customers, a decrease of 10 net new customers from the last quarter [21] - The dollar-based net retention rate (NRR) was greater than 114% [20] Company Strategy and Development Direction - The company aims to be the database for critical applications, focusing on large strategic accounts and Capella adoption [5][9] - Enhancements to the go-to-market strategy include dedicated strategic account teams and a Capella free tier to lower entry barriers for developers [8][14] - The company is focused on innovation, including the launch of Couchbase Edge Server and AI-driven solutions [15][16] Management's Comments on Operating Environment and Future Outlook - Management noted that macroeconomic uncertainty did not impact the company's ability to deliver strong results [6] - The pipeline of large strategic opportunities continues to grow, reinforcing confidence in the company's strategy [9][17] - Management expects total revenue for Q2 to be in the range of $54.4 million to $55.2 million, representing a year-over-year growth rate of 6% at the midpoint [26] Other Important Information - The company ended Q1 with $141.8 million in cash and short-term investments, remaining well-capitalized for long-term growth [24] - The remaining performance obligations (RPO) totaled $239.6 million, an increase of 9% year over year [25] Q&A Session Summary Question: Impact of macroeconomic conditions on customer conversations - Management acknowledged longer sales cycles and higher deal scrutiny but emphasized a healthy pipeline and execution [29][30] Question: Go-to-market improvements and Capella free tier - Management highlighted enhancements to offerings for developers, including the Capella free tier, which has increased trial volumes significantly [31][33] Question: Revenue performance versus ARR growth - Management explained that the difference in revenue and ARR growth is due to migration patterns and the timing of revenue recognition [38][41] Question: Competition from Postgres databases - Management expressed confidence in Couchbase's differentiation and its ability to support critical applications better than competitors [46][49] Question: Workloads added from strategic accounts - Management indicated that strategic accounts are adopting multiple applications, leading to significant growth potential [64][66] Question: Adjustments to guidance and early renewals - Management clarified that there were no early renewals impacting guidance, but they remain optimistic about the pipeline and execution [68][70]

Financial Data and Key Metrics Changes - Total ARR was $252.1 million, up 21% year over year and 6% sequentially, exceeding guidance by $7.7 million [5][15][24] - Net new ARR was $14.2 million, up more than 300% year over year, marking the highest net new ARR performance for the first quarter in company history [5][16] - Revenue in Q1 was $56.5 million, up 10% year over year and 3% sequentially [5][17] - Non-GAAP operating loss was $4.2 million, an improvement from a loss of $6.7 million year over year [6][20] - Gross margin was 88.7%, down from 89.9% a year ago [19] Business Line Data and Key Metrics Changes - Capella ARR was $44 million, representing 17.4% of total ARR, up from 11.5% in Q1 of fiscal 2025 [6][16] - Capella saw an increase of over 80% in consumption year over year, driven by new applications and migrations [7][8] - Professional service revenue was $1.7 million, down 27% year over year [17] Market Data and Key Metrics Changes - The company exited Q1 with 937 customers, a decrease of 10 net new customers from the previous quarter, primarily due to churn in starter pack customers [18] - The dollar-based net retention rate (NRR) was greater than 114%, with expectations to return to historical levels in the second half of the fiscal year [17][18] Company Strategy and Development Direction - The company aims to be the database for critical applications, focusing on large strategic accounts and enhancing Capella adoption [4][6] - The introduction of a free tier for Capella is intended to lower barriers for developers and drive long-term expansion [6][11] - The company is committed to maintaining a rapid pace of innovation, particularly in AI and mobile use cases [12][13] Management's Comments on Operating Environment and Future Outlook - Management noted that macroeconomic uncertainty did not impact performance, with a healthy pipeline and strong execution [5][28] - The company expects continued growth in Capella and strategic opportunities, with guidance for Q2 revenue between $54.4 million and $55.2 million [23][24] - Management remains confident in achieving full-year objectives, including driving growth and Capella adoption [14][24] Other Important Information - The company launched Couchbase Edge Server, aimed at providing low-latency data access in resource-constrained environments [11][12] - The remaining performance obligations (RPO) totaled $239.6 million, with an expected 66% to be recognized as revenue over the next twelve months [21][22] Q&A Session Summary Question: Impact of macroeconomic conditions on customer conversations - Management acknowledged longer sales cycles and increased deal scrutiny but emphasized a healthy pipeline and strategic positioning in the market [26][28] Question: Go-to-market improvements and the new free Capella tier - Management highlighted enhancements to offerings for developers, including the Capella free tier, which has significantly increased trial volumes [29][30] Question: Revenue performance versus ARR growth - Management explained that differences in revenue recognition patterns, particularly due to migrations to Capella, impacted revenue growth [35][40] Question: Competition from Postgres databases - Management expressed confidence in Couchbase's differentiation and its ability to support critical applications, despite competition from Postgres [46][49] Question: Workloads being added by strategic accounts - Management indicated that strategic accounts are deploying multiple applications, leading to significant growth in ARR [65][67] Question: Changes to starter packs and customer churn - Management noted that churn in starter pack customers was expected, but highlighted success in converting some to higher ARR levels [73][75] Question: Future growth and efficiency in sales and marketing - Management is focused on improving efficiency while expanding growth, aiming to reduce sales and marketing expenses as a percentage of revenue [76][77]

Revenue and Growth - Total revenue for Q1 FY2026 was $56.5 million, a 10% increase year-over-year, with subscription revenue at $54.8 million, up 12% year-over-year[4] - Annual recurring revenue (ARR) as of April 30, 2025, reached $252.1 million, reflecting a 21% year-over-year increase, or 20% on a constant currency basis[4] - Total revenue for the three months ended April 30, 2025, was $56.523 million, a 10.5% increase from $51.327 million in the same period of 2024[22] - Subscription revenue reached $54.843 million, up from $49.038 million year-over-year, representing an increase of 11.5%[22] - For Q2 FY2026, total revenue is expected to be between $54.4 million and $55.2 million, with total ARR projected between $255.8 million and $258.8 million[6] Profitability and Loss - Loss from operations was $18.8 million, an improvement from $22.5 million in Q1 FY2025, with a non-GAAP operating loss of $4.2 million, down from $6.7 million[4] - The net loss for the quarter was $17.679 million, compared to a net loss of $20.995 million in the prior year, reflecting a 15.5% improvement[22] - Non-GAAP net loss per share improved to $0.06 from $0.10 year-over-year, indicating a reduction in losses[29] - Non-GAAP operating loss guidance for FY2026 is between $15.5 million and $10.5 million[6] Cash Flow and Expenses - Cash flow used in operating activities was $6.8 million, compared to a cash flow of $1.6 million provided in Q1 FY2025, resulting in negative free cash flow of $8.6 million[4] - The company experienced a net cash used in operating activities of $6.783 million, a decline from a net cash provided of $1.559 million in the same quarter of 2024[29] - Total operating expenses for the quarter were $68.510 million, slightly up from $68.185 million in the same quarter of 2024[22] - The company reported a total stock-based compensation expense of $13.384 million, down from $14.627 million in the previous year[22] Margins and Performance Obligations - Gross margin for the quarter was 87.9%, down from 88.9% in Q1 FY2025, while non-GAAP gross margin was 88.7%, compared to 89.9% in the same period[4] - Remaining performance obligations (RPO) as of April 30, 2025, were $239.6 million, a 9% increase year-over-year[4] - The gross profit margin for the quarter was 87.9%, compared to 88.9% in the prior year[28] Product Development and Investment - The company launched Couchbase Edge Server, designed for low latency data access in resource-constrained environments[4] - Continued investment in AI capabilities, including a high-performance vector database for AI agent-based applications[4]

Core Insights - Couchbase, Inc. reported strong financial results for the first quarter of fiscal 2026, achieving the highest net new Annual Recurring Revenue (ARR) in company history [2][5] - The company continues to experience growth in its strategic accounts and Capella consumption, with a positive outlook for the full year [2][4] Financial Highlights - Total revenue for the quarter was $56.5 million, representing a 10% year-over-year increase [5] - Subscription revenue was $54.8 million, up 12% year-over-year [5] - Total ARR as of April 30, 2025, was $252.1 million, a 21% increase year-over-year [5] - Gross margin for the quarter was 87.9%, slightly down from 88.9% in the same quarter of the previous year [5] - Non-GAAP operating loss for the quarter was $4.2 million, an improvement from $6.7 million in the first quarter of fiscal 2025 [5] Business Developments - Launched Couchbase Edge Server, designed for low-latency data access in resource-constrained environments [5] - Continued investment in AI capabilities, enhancing the integration of advanced AI workflows [5] - Received industry recognition, including placements on CRN's lists of hottest AI data companies and being named Data Management Platform of the Year [5] Financial Outlook - For Q2 FY2026, Couchbase expects total revenue between $54.4 million and $55.2 million [4] - The full-year revenue outlook is projected to be between $228.3 million and $232.3 million [4] - Total ARR for FY2026 is expected to be between $279.3 million and $284.3 million [4] - Non-GAAP operating loss for FY2026 is anticipated to be between $10.5 million and $15.5 million [4]

Company Overview - Couchbase provides a cloud database platform designed for modern applications, including Couchbase Capella, Couchbase Server, and Couchbase Mobile, focusing on high performance and scalability for mission-critical applications [1] - Couchbase Capella is a fully managed database-as-a-service, while Couchbase Server is a multi-service NoSQL database with SQL-compatible query language SQL++ [1] - Couchbase Mobile is an embedded NoSQL database for mobile and edge devices, ensuring high data availability [1] Market Position - Couchbase operates in the document database space, alongside MongoDB, with few direct competitors, establishing a solid business model used in various applications [4] - Since its IPO on February 22, 2021, Couchbase's shares have declined over 20%, indicating challenges in the public market [4] Financial Performance - Revenue has increased annually by an average of 19.39% since the IPO, with gross margins consistently between 87% and 89% [5] - Selling, general, and administrative (SG&A) expenses were 91.94% of revenue in 2024, slightly above the average of 91.25% since the IPO, compared to MongoDB's 54.34% [5] - Couchbase has overhired sales personnel, leading to lower attainment rates of 40% to 50% compared to peers achieving 70% to 80% [5] Activist Involvement - Irenic Capital has taken a significant stake in Couchbase, making it one of its five largest positions, focusing on operational restructuring or a potential sale of the company [6][7] - The activist's approach may involve optimizing management and salesforce, improving operating margins while maintaining organic growth [6] Potential Outcomes - A sale to a larger strategic or financial acquirer could allow Couchbase to restructure costs and pursue margin-friendly growth away from public market pressures [7] - Haveli Investments, the largest shareholder with approximately 9.8% ownership, may seek to take Couchbase private, viewing it as undervalued [8] - Comparable transactions in the tech space suggest Couchbase could be valued around 5.2 times revenue, potentially offering a 20% premium to shareholders [8]

Group 1 - Couchbase, Inc. will report its financial results for the first quarter ended April 30, 2025, on June 3, 2025, after market close [1] - A conference call and webcast will be held on the same day at 1:30 p.m. Pacific Time to discuss the financial results, accessible via a dedicated phone line and the investor relations page [2] - Couchbase is positioned to lead in the AI-driven market with its Capella platform, which integrates various workloads into a fully managed solution, enhancing performance, scalability, and cost-efficiency [3] Group 2 - The company emphasizes the need for modern database solutions that meet the demands of versatility and performance in the AI landscape, indicating a shift from traditional database systems [3] - Couchbase aims to empower developers and enterprises to innovate and transform customer experiences through its technology, highlighting its role in critical applications [3]