Couchbase (NASDAQ:BASE) Q2: Beats On Revenue But Quarterly Guidance Underwhelms

Adam Hejl /
2023/09/06 4:14 pm EDT

Database as a service company Couchbase (NASDAQ: BASE) beat analysts' expectations in Q2 FY2024, with revenue up 8.41% year on year to $43.1 million. However, next quarter's revenue guidance of $43 million was less impressive, coming in 1.34% below analysts' estimates. Turning to EPS, Couchbase made a GAAP loss of $0.44 per share, down from its loss of $0.34 per share in the same quarter last year.

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Couchbase (BASE) Q2 FY2024 Highlights:

  • Revenue: $43.1 million vs analyst estimates of $41.7 million (3.42% beat)
  • EPS (non-GAAP): -$0.17 vs analyst estimates of -$0.22
  • Revenue Guidance for Q3 2024 is $43 million at the midpoint, below analyst estimates of $43.6 million
  • The company reconfirmed its revenue guidance for the full year of $173.2 million at the midpoint
  • Free Cash Flow was -$1.59 million compared to -$8.47 million in the previous quarter
  • Gross Margin (GAAP): 86.3%, down from 88% in the same quarter last year

"We delivered revenue and profitability that exceeded the high end of our guidance range, highlighted by 24% ARR growth, strong retention, and increasing momentum with Capella," 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 $29.7 million in Q2 FY2022 to $43.1 million this quarter.

Couchbase Total Revenue

Couchbase's quarterly revenue was only up 8.41% year on year, which might disappoint some shareholders. However, its revenue increased $2.14 million quarter on quarter, a strong improvement from the $627 thousand decrease in Q1 2024. This is a sign of acceleration of growth and very nice to see indeed.

Next quarter's guidance suggests that Couchbase is expecting revenue to grow 11.5% year on year to $43 million, slowing down from the 25.1% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 13.5% over the next 12 months before the earnings results announcement.

The pandemic fundamentally changed several consumer habits. There is a founder-led company that is massively benefiting from this shift. The business has grown astonishingly fast, with 40%+ free cash flow margins. Its fundamentals are undoubtedly best-in-class. Still, the total addressable market is so big that the company has room to grow many times in size. 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's left after paying for servers, licenses, technical support, and other necessary running expenses, was 86.3% in Q2.

Couchbase Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.86 left to spend on developing new products, sales and marketing, and general administrative overhead. Couchbase's excellent gross margin allows it to fund large investments in product and sales during periods of rapid growth and achieve profitability when reaching maturity. It's also comforting to see its gross margin remain stable, indicating that Couchbase is controlling its costs and not under pressure from its competitors to lower prices.

Key Takeaways from Couchbase's Q2 Results

Although Couchbase, which has a market capitalization of $790.3 million, has been burning cash over the last 12 months, its more than $165.8 million in cash on hand gives it the flexibility to continue prioritizing growth over profitability.

It was good to see Couchbase beat analysts' revenue and non-GAAP operating profit expectations this quarter. That really stood out as positives in these results. On the other hand, its revenue guidance for next quarter underwhelmed. For the full year, guidance was largely maintained, which shows that the business is on track and that there are no surprises. Overall, this was a mediocre quarter for Couchbase. The stock is up 3.33% after reporting and currently trades at $17.05 per share.

Couchbase may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research 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 50% 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 in this report.