9326

Couchbase (NASDAQ:BASE) Q1 Sales Beat Estimates, Stock Soars


Radek Strnad /
2022/06/08 4:12 pm EDT
Add to Watchlist

Database as a service company Couchbase (NASDAQ: BASE) reported Q1 FY2023 results beating Wall St's expectations, with revenue up 24.6% year on year to $34.8 million. Guidance for next quarter's revenue was $35.9 million at the midpoint, which is 1.75% above the analyst consensus. Couchbase made a GAAP loss of $19.8 million, down on its loss of $14.5 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) Q1 FY2023 Highlights:

  • Revenue: $34.8 million vs analyst estimates of $32.6 million (6.83% beat)
  • EPS (non-GAAP): -$0.32 vs analyst estimates of -$0.39
  • Revenue guidance for Q2 2023 is $35.9 million at the midpoint, above analyst estimates of $35.2 million
  • The company reconfirmed revenue guidance for the full year, at $147.7 million at the midpoint
  • Free cash flow was negative $9.4 million, compared to negative free cash flow of $2.65 million in previous quarter
  • Gross Margin (GAAP): 86.6%, down from 87.8% same quarter last year

"We delivered a strong first quarter exceeding the high end of our guidance on all metrics, highlighted by the third straight quarter of accelerating ARR growth," said Matt Cain, 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 year, growing from quarterly revenue of $27.9 million, to $34.8 million.

Couchbase Total Revenue

This quarter, Couchbase's quarterly revenue was once again up a very solid 24.6% year on year. But the revenue actually decreased by $211 thousand in Q1, compared to $4.24 million increase in Q4 2022. However, Couchbase's sales do seem to have a seasonal pattern to them, and since management is guiding for revenue to rebound in the coming quarter we wouldn't be too concerned.

Guidance for the next quarter indicates Couchbase is expecting revenue to grow 20.8% year on year to $35.9 million, improving on the 18% year-over-year increase in revenue the company had recorded in the same quarter last year. Ahead of the earnings results the analysts covering the company were estimating sales to grow 18.5% over the next twelve months.

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.

Profitability

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 86.6% in Q1.

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 the recent drop that 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 Q1 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 $622.5 million and more than $201 million in cash, the company has the capacity to continue to prioritise growth over profitability.

We liked to see that Couchbase beat analysts’ revenue expectations pretty strongly this quarter. And we were also glad that the revenue guidance for the next quarter exceeded analysts' expectations. On the other hand, there was a deterioration in gross margin. Overall, this quarter's results seemed pretty positive and shareholders can feel optimistic. The company is up 5.23% on the results and currently trades at $14.88 per share.

Should you invest in Couchbase 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.