What Happened:
Shares of database as a service company Couchbase (NASDAQ: BASE) fell 18.6% in the morning session after the company reported first quarter results that beat analysts' revenue and earnings per share estimates. However, RPO and cRPO growth decelerated meaningfully and gross margin deteriorated. The company continued to burn cash. In addition, revenue and operating loss guidance for the next quarter fell below Consensus. The full year revenue guidance was roughly inline. Overall, it was a weak quarter for the company, with the guidance clouding the outlook. Note that the week before the earnings release, SaaS database peer MongoDB reported very strong quarterly results with optimistic forward guidance. This dynamic further added to the disappointment around Couchbase's quarter, as the market was hopeful that the same tailwinds driving MDB's strength would also potentially help Couchbase.
What is the market telling us:
Couchbase's shares are very volatile and over the last year have had 50 moves greater than 5%. But moves this big are very rare even for Couchbase and that is indicating to us that this news had a significant impact on the market's perception of the business.
Couchbase is up 40% since the beginning of the year, but at $18.84 per share it is still trading 15.2% below its 52-week high of $22.23 from June 2023. Investors who bought $1,000 worth of Couchbase's shares at the IPO in July 2021 would now be looking at an investment worth $624.43.
Is now the time to buy Couchbase? Access our full analysis of the earnings results here, it's free.