Couchbase (NASDAQ:BASE) Posts Better-Than-Expected Sales In Q4 But Full Year Guidance Underwhelms

Petr Huřťák /
2023/03/07 4:16 pm EST

Database as a service company Couchbase (NASDAQ: BASE) reported Q4 FY2023 results beating Wall St's expectations, with revenue up 18.7% year on year to $41.6 million. The company expects that next quarter's revenue would be around $39.8 million, which is the midpoint of the guidance range. That was roughly in line with analyst expectations. Couchbase made a GAAP loss of $16.6 million, down on its loss of $13.2 million, in the same quarter last year.

Is now the time to buy Couchbase? Access our full analysis of the earnings results here, it's free.

Couchbase (BASE) Q4 FY2023 Highlights:

  • Revenue: $41.6 million vs analyst estimates of $38.2 million (8.87% beat)
  • EPS (non-GAAP): -$0.18 vs analyst estimates of -$0.34
  • Revenue guidance for Q1 2024 is $39.8 million at the midpoint, roughly in line with what analysts were expecting
  • Management's revenue guidance for upcoming financial year 2024 is $173.2 million at the midpoint, missing analyst estimates by 1.1% and predicting 11.9% growth (vs 25.6% in FY2023)
  • Free cash flow was negative $11.8 million, compared to negative free cash flow of $16.3 million in previous quarter
  • Gross Margin (GAAP): 85.7%, down from 88.2% same quarter last year

"We delivered another strong quarter of sustained growth along with substantial operational progress in fiscal 2023," said Matt Cain, Chair, President and CEO of Couchbase.

Formed in 2011 with the merger of Membase and CouchOne, Couchbase (NASDAQ:BASE) is a database as a service platform that allows enterprises to store large volumes of semi-structured data.

Data is the lifeblood of the internet and software in general, and the amount of data created is growing at an accelerating pace. Likewise, the importance of storing the data in scalable and efficient formats continues to rise, especially as the diversity of the data and associated use cases expand from analyzing simple, structured data to high-scale processing of unstructured data, images, audio and video.

Sales Growth

As you can see below, Couchbase's revenue growth has been strong over the last two years, growing from quarterly revenue of $29.4 million in Q4 FY2021, to $41.6 million.

Couchbase Total Revenue

This quarter, Couchbase's quarterly revenue was once again up 18.7% year on year. On top of that, revenue increased $3.07 million quarter on quarter, a strong improvement on the $1.23 million decrease in Q3 2023, and a sign of acceleration of growth, which is very nice to see indeed.

Guidance for the next quarter indicates Couchbase is expecting revenue to grow 14.2% year on year to $39.8 million, slowing down from the 24.7% year-over-year increase in revenue the company had recorded in the same quarter last year. For the upcoming financial year management expects revenue to be $173.2 million at the midpoint, growing 11.9% compared to 25.3% increase in FY2023.

In volatile times like these we look for robust businesses with strong pricing power. Unknown to most investors, this company is one of the highest-quality software companies in the world, and their software products have been the default standard in critical industries for decades. The result is an impressive business that is up an incredible 18,152% since the IPO. You can find it on our platform for free.


What makes the software as a service business so attractive is that once the software is developed, it typically shouldn't cost much to provide it as an ongoing service to customers. Couchbase's gross profit margin, an important metric measuring how much money there is left after paying for servers, licenses, technical support and other necessary running expenses was at 85.7% in Q4.

Couchbase Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.86 left to spend on developing new products, marketing & sales and the general administrative overhead. Despite it going down over the last year, this is still a great gross margin, that allows companies like Couchbase to fund large investments in product and sales during periods of rapid growth and be profitable when they reach maturity.

Key Takeaways from Couchbase's Q4 Results

Since it has still been burning cash over the last twelve months it is worth keeping an eye on Couchbase’s balance sheet, but we note that with a market capitalization of $739.9 million and more than $168.3 million in cash, the company has the capacity to continue to prioritise growth over profitability.

We were impressed by how strongly Couchbase outperformed analysts’ revenue expectations this quarter, and the company also outperformed expectations for ARR. These features of the results really stood out as positives. On the other hand, it was unfortunate to see that Couchbase's revenue guidance for the full year missed analysts' expectations and the revenue guidance for next year indicates quite a significant slowdown in growth. Overall, it seems to us that this was a complicated quarter for Couchbase. The company is up 2.34% on the results and currently trades at $16.65 per share.

Couchbase may have had a tough quarter, but does that actually create an opportunity to invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.