Couchbase Announces First Quarter Fiscal 2024 Financial Results

Santa Clara, Calif., – June 6, 2023– Couchbase, Inc. (NASDAQ: BASE), the cloud database platform company, today announced financial results for its first quarter ended April 30, 2023.

“We delivered a solid start to the fiscal year and are pleased that our results exceeded our guidance on all metrics,” said Matt Cain, Chair, President and CEO of Couchbase. “I am proud of the progress our team is making on our commitment to drive continued growth, increase Capella adoption, improve sales and marketing efficiency, and accelerate the pace of leverage in our model as we innovate for an exciting future.”

First Quarter Fiscal 2024 Financial Highlights

• Revenue: Total revenue for the quarter was $41.0 million, an increase of 18% year-over-year. Subscription revenue for the quarter was $38.5 million, an increase of 21% year-over-year.
• Annual recurring revenue (ARR): Total ARR as of April 30, 2023 was $172.2 million, an increase of 23% year-over-year as reported and on a constant currency basis. See the section titled “Key Business Metrics” below for details.
• Gross margin: Gross margin for the quarter was 85.6%, compared to 86.7% for the first quarter of fiscal 2023. Non-GAAP gross margin for the quarter was 86.4%, compared to 87.3% for the first quarter of fiscal 2023. 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 $22.5 million, compared to $19.0 million for the first quarter of fiscal 2023. Non-GAAP operating loss for the quarter was $12.9 million, compared to $13.4 million for the first quarter of fiscal 2023.
• Cash flow: Cash flow used in operating activities for the quarter was $7.2 million, compared to $8.6 million in the first quarter of fiscal 2023. Capital expenditures were $1.3 million during the quarter, leading to negative free cash flow of $8.5 million, compared to negative free cash flow of $9.4 million in the first quarter of fiscal 2023.
• Remaining performance obligations (RPO): RPO as of April 30, 2023 was $165.6 million, a change of (2)% year-over-year.

Recent Business Highlights

• Introduced an integration with Netlify and a new Visual Studio Code extension for Couchbase Capella. These ecosystem enhancements make it easier for developers and development teams to build modern applications on Capella, streamline their workflows and increase productivity.
• Announced the broadening of Capella’s enterprise features and capabilities so customers can more easily migrate their applications. This includes support for time series data, extending deployability and enhanced management. The new features collectively position Capella as a single, comprehensive cloud database platform that offers broad multimodel support and in-memory performance, which is a powerful combination that lowers TCO for customers.
• Introduced the Couchbase Independent Software Vendor (ISV) Starter Factory. This program supports ISVs with additional tools and resources required to build and monetize their applications with Capella on Amazon Web Services (AWS).
• Announced the availability of Capella in the Microsoft Azure Marketplace, an online store providing applications and services for use on Azure. Couchbase customers can now take advantage of the productive and trusted Azure cloud platform with streamlined deployment and management.

Financial Outlook

For the second quarter and full year of fiscal 2024, Couchbase expects:

			Q2 FY2024 Outlook			FY2024 Outlook
Total Revenue			$41.2-41.8 million			$171.7-174.7 million
Total ARR			$176.0-179.0 million			$191.5-195.5 million
Non-GAAP Operating Loss			$10.9-10.1 million			$43.0-39.0 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 second quarter or full year of fiscal 2024 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 2:00 p.m. Pacific Time (or 5:00 p.m. Eastern Time) on Tuesday, June 6, 2023, 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.

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 attributable to common stockholders and non-GAAP net loss per share attributable to common stockholders: 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 and restructuring charges. 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.

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 automatically renewed at the same levels unless we receive notification of non-renewal and are no longer in negotiations prior to the measurement date. ARR also includes revenue from consumption-based cloud credits of Couchbase Capella products. ARR for Couchbase Capella products in a customer’s initial year is calculated as described above; after a customer’s initial year it is calculated by annualizing the prior 90 days of actual consumption, assuming no increases or reductions in usage. ARR excludes revenue derived from the use of cloud products only based on on-demand arrangements and services revenue. 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 and expand within our existing customers. We believe that our ARR is an important indicator of the growth and performance of our business. We updated our definition of ARR beginning in the third quarter of fiscal 2023 to clarify that the 90-day actual consumption methodology is only used after a customer’s initial year. The reason for this change is to better reflect the ARR for Couchbase Capella products following the launch of Couchbase Capella in fiscal 2022. ARR for prior periods have not been adjusted to reflect these changes as they are not material to any period previously presented.

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 relatively new 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; 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, 2023. Additional information will be made available in our Quarterly Report on Form 10-Q for the quarter ended April 30, 2023 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.

Investor Contact:
Edward Parker
ICR for Couchbase
IR@couchbase.com

Media Contact:
Michelle Lazzar
Couchbase Communications
CouchbasePR@couchbase.com

 

Couchbase, Inc.

Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)

	Three Months Ended April 30,
	2023	2022
Revenue:
License	$4,943	$5,007
Support and other	33,599	26,974
Total subscription revenue	38,542	31,981
Services	2,454	2,872
Total revenue	40,996	34,853
Cost of revenue:
Subscription(1)	3,673	2,396
Services(1)	2,249	2,255
Total cost of revenue	5,922	4,651
Gross profit	35,074	30,202
Operating expenses:
Research and development(1)	15,383	14,421
Sales and marketing(1)	32,553	26,843
General and administrative(1)	9,625	7,926
Restructuring(1)	46	—
Total operating expenses	57,607	49,190
Loss from operations	(22,533)	(18,988)
Interest expense	(25)	(25)
Other income (expense), net	1,433	(556)
Loss before income taxes	(21,125)	(19,569)
Provision for income taxes	750	265
Net loss	$(21,875)	$(19,834)
Net loss per share, basic and diluted	$(0.48)	$(0.45)
Weighted-average shares used in computing net loss per share, basic and diluted	45,843	44,265
(1)Includes stock-based compensation expense as follows:
	Three Months Ended April 30,
	2023	2022
Cost of revenue—subscription	$ 193	$122
Cost of revenue—services	145	94
Research and development	2,768	1,899
Sales and marketing	3,241	1,987
General and administrative	2,928	1,348
Restructuring	1	—
Total stock-based compensation expense	$9,276	$5,450

 

Couchbase, Inc.

Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)

	As of April 30, 2023	As of January 31, 2023
Assets
Current assets
Cash and cash equivalents	$46,240	$40,446
Short-term investments	117,403	127,856
Accounts receivable, net	42,212	39,847
Deferred commissions	12,814	13,096
Prepaid expenses and other current assets	6,839	8,234
Total current assets	225,508	229,479
Property and equipment, net	8,032	7,430
Operating lease right-of-use assets	6,233	6,940
Deferred commissions, noncurrent	8,089	7,524
Other assets	1,608	1,666
Total assets	$249,470	$253,039
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$6,865	$1,407
Accrued compensation and benefits	8,495	12,641
Other accrued expenses	4,813	6,076
Operating lease liabilities	3,060	3,117
Deferred revenue	78,540	71,716
Total current liabilities	101,773	94,957
Operating lease liabilities, noncurrent	3,873	4,543
Deferred revenue, noncurrent	2,874	3,275
Total liabilities	108,520	102,775
Stockholders’ equity
Preferred stock	—	—
Common stock	—	—
Additional paid-in capital	573,791	561,547
Accumulated other comprehensive loss	(490)	(807)
Accumulated deficit	(432,351)	(410,476)
Total stockholders’ equity	140,950	150,264
Total liabilities and stockholders’ equity	$249,470	$253,039

 

Couchbase, Inc.

Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

 

	Three Months Ended April 30,
	2023	2022
Cash flows from operating activities
Net loss	$(21,875)	$(19,834)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	890	739
Stock-based compensation, net of amounts capitalized	9,276	5,450
Amortization of deferred commissions	4,540	4,009
Non-cash lease expense	772	648
Foreign currency transaction (gains) losses	(84)	974
Other	(746)	198
Changes in operating assets and liabilities
Accounts receivable	(2,274)	11,781
Deferred commissions	(4,824)	(3,798)
Prepaid expenses and other assets	1,405	312
Accounts payable	5,458	731
Accrued compensation and benefits	(4,060)	(8,112)
Accrued expenses and other liabilities	(1,256)	(71)
Operating lease liabilities	(826)	(666)
Deferred revenue	6,423	(968)
Net cash used in operating activities	(7,181)	(8,607)
Cash flows from investing activities
Purchases of short-term investments	(7,821)	(53,630)
Maturities of short-term investments	19,423	9,600
Additions to property and equipment	(1,288)	(799)
Net cash provided by (used in) investing activities	10,314	(44,829)
Cash flows from financing activities
Proceeds from exercise of stock options	1,917	2,614
Proceeds from issuance of common stock under ESPP	847	3,525
Net cash provided by financing activities	2,764	6,139
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(103)	(719)
Net increase (decrease) in cash, cash equivalents and restricted cash	5,794	(48,016)
Cash, cash equivalents, and restricted cash at beginning of period	40,989	96,231
Cash, cash equivalents, and restricted cash at end of period	$46,783	$48,215
Reconciliation of cash, cash equivalents, and restricted cash within the consolidated balance sheets to the amounts shown above:
Cash and cash equivalents	$46,240	$47,672
Restricted cash included in other assets	543	543
Total cash, cash equivalents and restricted cash	$46,783	$48,215

 

Couchbase, Inc.

Reconciliation of GAAP to Non-GAAP Results
(in thousands, except per share data)
(unaudited)

 

	Three Months Ended April 30,
	2023	2022
Reconciliation of GAAP gross profit to non-GAAP gross profit:
Total revenue	$40,996	$34,853
Gross profit	$35,074	$30,202
Add: Stock-based compensation expense	338	216
Add: Employer taxes on employee stock transactions	10	2
Non-GAAP gross profit	$35,422	$30,420
Gross margin	85.6%	86.7%
Non-GAAP gross margin	86.4%	87.3%

 
 

	Three Months Ended April 30,
	2023	2022
Reconciliation of GAAP operating expenses to non-GAAP operating expenses:
GAAP research and development	$15,383	$14,421
Less: Stock-based compensation expense	(2,768)	(1,899)
Less: Employer taxes on employee stock transactions	(108)	(24)
Non-GAAP research and development	$12,507	$12,498
GAAP sales and marketing	$32,553	$26,843
Less: Stock-based compensation expense	(3,241)	(1,987)
Less: Employer taxes on employee stock transactions	(120)	(36)
Non-GAAP sales and marketing	$29,192	$24,820
GAAP general and administrative	$9,625	$7,926
Less: Stock-based compensation expense	(2,928)	(1,348)
Less: Employer taxes on employee stock transactions	(29)	(71)
Non-GAAP general and administrative	$6,668	$6,507
GAAP restructuring expense	$46	$—
Less: Restructuring (2)	(46)	—
Non-GAAP restructuring	$—	$—

 
 

	Three Months Ended April 30,
	2023	2022
Reconciliation of GAAP operating loss to non-GAAP operating loss:
Total revenue	$40,996	$34,853
Loss from operations	$(22,533)	$(18,988)
Add: Stock-based compensation expense	9,275	5,450
Add: Employer taxes on employee stock transactions	267	133
Add: Restructuring (2)	46	—
Non-GAAP operating loss	$(12,945)	$(13,405)
Operating margin	(55)%	(54)%
Non-GAAP operating margin	(32)%	(38)%

 
 

	Three Months Ended April 30,
	2023	2022
Reconciliation of GAAP net loss to non-GAAP net loss:
Net loss	$(21,875)	$(19,834)
Add: Stock-based compensation expense	9,275	5,450
Add: Employer taxes on employee stock transactions	267	133
Add: Restructuring (2)	46	—
Non-GAAP net loss	$(12,287)	$(14,251)
GAAP net loss per share	$(0.48)	$(0.45)
Non-GAAP net loss per share	$(0.27)	$(0.32)
Weighted average shares outstanding, basic and diluted	45,843	44,265
(2)For the three months ended April 30, 2023, stock-based compensation expense related to restructuring charges were included in the restructuring expense line.

The following table presents a reconciliation of free cash flow to net cash used in operating activities, the most directly comparable GAAP measure, for each of the periods indicated (in thousands, unaudited):

 
 

	Three Months Ended April 30,
	2023	2022
Net cash used in operating activities	$(7,181)	$(8,607)
Less: Additions to property and equipment	(1,288)	(799)
Free cash flow	$(8,469)	$(9,406)
Net cash provided by (used in) investing activities	$10,314	$(44,829)
Net cash provided by financing activities	$2,764	$6,139

 
 

Couchbase, Inc.

Key Business Metrics
(in millions)
(unaudited)

 

	Jan. 31,	April 30,	July 31,	Oct. 31,	Jan. 31,	April 30,
	2022	2022	2022	2022	2023	2023
Annual Recurring Revenue	$132.9	$139.7	$145.2	$151.7	$163.7	$172.2