Couchbase (NASDAQ:BASE) Q3: Beats On Revenue But Quarterly Guidance Underwhelms

Radek Strnad /
2022/12/06 7:40 am EST

Database as a service company Couchbase (NASDAQ: BASE) beat analyst expectations in Q3 FY2023 quarter, with revenue up 25% year on year to $38.5 million. Guidance for the full year also exceeded estimates, however the guidance for the next quarter was less impressive, coming in at $38.3 million, 1.63% below analyst estimates. Couchbase made a GAAP loss of $16.6 million, down on its loss of $15.9 million, in the same quarter last year.

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Couchbase (BASE) Q3 FY2023 Highlights:

  • Revenue: $38.5 million vs analyst estimates of $36.5 million (5.35% beat)
  • EPS (non-GAAP): -$0.22 vs analyst estimates of -$0.33
  • Revenue guidance for Q4 2023 is $38.3 million at the midpoint, below analyst estimates of $38.9 million
  • Free cash flow was negative $16.3 million, compared to negative free cash flow of $9.33 million in previous quarter
  • Gross Margin (GAAP): 87.3%, in line with same quarter last year

"We are proud to have delivered third quarter results ahead of all guidance metrics," said Matt Cain, Chairperson 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 $25.6 million in Q3 FY2021, to $38.5 million.

Couchbase Total Revenue

This quarter, Couchbase's quarterly revenue was once again up a very solid 25% year on year. But the revenue actually decreased by $1.23 million in Q3, compared to $4.93 million increase in Q2 2023.Shareholders might want to pay closer attention to this as the management is guiding for the decline in sales to continue in the coming quarter

Guidance for the next quarter indicates Couchbase is expecting revenue to grow 9.22% year on year to $38.3 million, slowing down from the 19.1% 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 14.8% 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.


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 87.3% in Q3.

Couchbase Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.87 left to spend on developing new products, marketing & sales and the general administrative overhead. This is 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. It is good to see that the gross margin is staying stable which indicates that Couchbase is doing a good job controlling costs and is not under pressure from competition to lower prices.

Key Takeaways from Couchbase's Q3 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 $625.2 million and more than $177.2 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 to see good revenue growth. On the other hand, it was unfortunate to see that the revenue guidance for the next quarter missed analysts' expectations. Overall, it seems to us that this was a complicated quarter for Couchbase. The company is flat on the results and currently trades at $13.96 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.

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