NoSQL database supplier Couchbase is reporting 20 percent Q2 revenue growth, disappointing analysts who hoped for more.
Revenues of $51.6 million on the quarter, ended July 31, 2024, were above its mid-point guidance and 20 percent more than last year’s Q2. It made a net loss of $19.9 million compared to the year-ago of $20.6 million net loss. The company has been losing money since its June 2021 IPO, and the business has emphasized top-line growth over profitability. Couchbase subscription revenues were $49.3 million, 20 percent higher year-on-year, and annual recurring revenue (ARR) was $214 million, 18.4 percent up on the year.
President and CEO Matt Cain said: “I’m pleased with our hard work and execution in the quarter. We delivered revenue and operating loss results that exceeded the high end of our outlook, generated strong new business and new logos, and saw a meaningful increase in our Capella mix.” Capella is Couchbase’s NoSQL database service in AWS, Azure, and GCP. The company has just added vector search to the AWS version.
William Blair analyst Jason Ader told subscribers: “Capella continues to be one of the main drivers of growth for Couchbase as Capella now represents 13.5 percent of total ARR and Capella customers represent 31 percent of the installed base. In the second quarter, net new ARR for Capella more than doubled sequentially, with Couchbase posting its single-largest Capella land (mid-six-figure deal) in company history.
“ARR only met guidance and came in slightly below consensus, attributed to large deal timing and higher-than-expected customer churn (two major accounts churned – one expected and the other unexpected and anomalous) and downsell in the quarter (blamed on macro).”
Couchbase, founded in 2011, is one of several NoSQL database suppliers. Others include Amazon’s DynamoDB, HBase, MongoDB, and Redis. Its revenues have grown pretty consistently at 20 percent or so a quarter since its June 2021 IPO.
The losses have been contained between $15 million and $21 million a quarter as revenue has jumped quarter on quarter, apart from a seasonal Q1 dip. When this high growth rate starts to tail off, we can expect management to switch focus from growth to profitability.
Couchbase said it expects next quarter’s revenues to be $50.7 million +/- $400K, a 10.7 percent increase at the midpoint and below its usual growth rate. Couchbase’s results statement said: “The guidance provided above is based on several assumptions that are subject to change and many of which are outside our control. If actual results vary from these assumptions, our expectations may change. There can be no assurance that we will achieve these results.”
Ader said: “Management maintained full-year fiscal 2025 ARR guidance while raising full-year fiscal 2025 revenue guidance by $0.6 million at the midpoint (15 percent year-over-year revenue growth). The full-year ARR guide implies a steep ramp in net new ARR in the fourth quarter ($18 million versus $6 million in the third quarter).”
In Ader’s view, Couchbase’s “valuation keeps us positive on the risk/reward equation for the stock; at the same time, we recognize that some investors may worry that management did not de-risk numbers enough for the second half, especially in view of the mediocre first-half results.”
