Couchbase's (NASDAQ:BASE) Q4 Sales Top Estimates But Stock Drops 16.3%

Adam Hejl /
2022/03/09 4:16 pm EST
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Database as a service company Couchbase (NASDAQ: BASE) reported results ahead of analyst expectations in the Q4 FY2022 quarter, with revenue up 19.2% year on year to $35 million. However, guidance for the next quarter was less impressive, coming in at $32.6 million at the midpoint, being 0.07% below analyst estimates. Couchbase made a GAAP loss of $13.2 million, down on its loss of $8.3 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 FY2022 Highlights:

  • Revenue: $35 million vs analyst estimates of $33.9 million (3.13% beat)
  • EPS (non-GAAP): -$0.22 vs analyst estimates of -$0.25
  • Revenue guidance for Q1 2023 is $32.6 million at the midpoint, roughly in line with what analysts were expecting
  • Management's revenue guidance for upcoming financial year 2023 is $147 million at the midpoint, missing analyst estimates by 2.96% and predicting 18.9% growth (vs 19.6% in FY2022)
  • Free cash flow was negative $2.65 million, compared to negative free cash flow of $20.3 million in previous quarter
  • Gross Margin (GAAP): 88.2%, down from 89.4% same quarter last year

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 solid over the last year, growing from quarterly revenue of $29.4 million, to $35 million.

Couchbase Total Revenue

This quarter, Couchbase's quarterly revenue was once again up 19.2% year on year. We can see that the company increased revenue by $4.24 million quarter on quarter. That's a solid improvement on the $1.12 million increase in Q3 2022, so shareholders should appreciate the acceleration of growth.

Guidance for the next quarter indicates Couchbase is expecting revenue to grow 16.6% year on year to $32.6 million, slowing down from the 21.3% 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 $147 million at the midpoint, growing 18.9% compared to 19.6% increase in FY2022.

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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 88.2% in Q4.

Couchbase Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.88 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 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 $761.1 million and more than $205.9 million in cash, the company has the capacity to continue to prioritise growth over profitability.

We enjoyed the optimistic revenue guidance Couchbase provided for the next year. And we were also excited to see that it outperformed analysts' revenue expectations. On the other hand, it was unfortunate to see that Couchbase's revenue guidance for the full year miss analyst's expectations . Overall, this quarter's results could have been better. The company is down 16.3% on the results and currently trades at $15.55 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.