Santa Clara, Calif., – March 7, 2023 – Couchbase, Inc. (NASDAQ: BASE), the cloud database platform company, today announced financial results for its fourth quarter and fiscal year ended January 31, 2023.
“We delivered another strong quarter of sustained growth along with substantial operational progress in fiscal 2023,” said Matt Cain, Chair, President and CEO of Couchbase. “This is a direct result of great execution across the company, which we are particularly pleased with despite this more challenging macro environment. As we begin fiscal 2024, we remain sharply focused on delivering top-line growth, increasing Capella adoption, driving further sales and marketing efficiency and improving profitability.”
Fourth Quarter Fiscal 2023 Financial Highlights
- Revenue: Total revenue for the quarter was $41.6 million, an increase of 19% year-over-year. Subscription revenue for the quarter was $38.1 million, an increase of 16% year-over-year.
- Annual recurring revenue (ARR): Total ARR as of January 31, 2023 was $163.7 million, an increase of 23% year-over-year, or 24% on a constant currency basis. See the section titled “Key Business Metrics” below for details.
- Gross margin: Gross margin for the quarter was 85.7%, compared to 88.2% for the fourth quarter of fiscal 2022. Non-GAAP gross margin for the quarter was 86.3%, compared to 88.7% for the fourth quarter of fiscal 2022. See the section titled “Use of Non-GAAP Financial Measures” and the tables titled “Reconciliation of GAAP to Non-GAAP Results” below for details.
- Loss from operations: Loss from operations for the quarter was $18.5 million, compared to $12.7 million for the fourth quarter of fiscal 2022. Non-GAAP operating loss for the quarter was $9.9 million, compared to $9.1 million for the fourth quarter of fiscal 2022.
- Cash flow: Cash flow used in operating activities for the quarter was $10.2 million, compared to $2.7 million in the fourth quarter of fiscal 2022. Capital expenditures were $1.6 million during the quarter, leading to negative free cash flow of $11.8 million, compared to negative free cash flow of $2.7 million in the fourth quarter of fiscal 2022.
- Remaining performance obligations (RPO): RPO as of January 31, 2023 was $165.9 million, an increase of 3% year-over-year.
Full Year Fiscal 2023 Financial Highlights
- Revenue: Total revenue for the year was $154.8 million, an increase of 25% year-over-year. Subscription revenue for the year was $142.9 million, an increase of 23% year-over-year.
- Gross margin: Gross margin for the year was 86.9%, compared to 88.0% for fiscal 2022. Non-GAAP gross margin for the year was 87.6%, compared to 88.4% for fiscal 2022.
- Loss from operations: Loss from operations for the year was $69.3 million, compared to $56.3 million for fiscal 2022. Non-GAAP operating loss for the year was $41.3 million, compared to $45.5 million for fiscal 2022.
- Cash flow: Cash flows used in operating activities for the year were $41.2 million, compared to $41.6 million in fiscal 2022. Capital expenditures were $5.6 million during the year, leading to negative free cash flow of $46.8 million, compared to negative free cash flow of $42.4 million in fiscal 2022.
Recent Business Highlights
- Announced the Couchbase Capella Database-as-a-Service (DBaaS) offering on Azure, allowing customers to improve alignment with applications and support hybrid and multi-cloud strategies from a single platform. Microsoft Azure customers worldwide gain access to Capella to take advantage of the scalability, reliability and agility of Capella on Azure to drive application development and shape business strategies.
- Announced a newly enhanced Independent Software Vendor (ISV) partner program that provides training, certifications, migration support and resources to cost-efficiently help ISVs modernize applications.
- Recognized in the Gartner® Magic Quadrant™ for Cloud Database Management Systems, December 2022.
- Appointed Fidelma Butler as Chief People Officer to lead the people function. Butler brings a wealth of experience and leadership, with a focus on scaling SaaS teams and building award-winning company culture, and was previously a vice president at Zendesk.
Financial Outlook
For the first quarter and full year of fiscal 2024, Couchbase expects:
| Q1 FY2024 Outlook | FY2024 Outlook | |
|---|---|---|
| Total Revenue | $39.5-40.1 million | $171.7-174.7 million |
| Total ARR | $169.2-172.2 million | $190.0-194.0 million |
| Non-GAAP Operating Loss | $14.9-14.1 million | $44.0-40.0 million |
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.
Couchbase is not able, at this time, to provide GAAP targets for operating loss for the first quarter or full year of fiscal 2024 because of the difficulty of estimating certain items excluded from non-GAAP operating loss that cannot be reasonably predicted, such as charges related to stock-based compensation expense. The effect of these excluded items may be significant.
Conference Call Information
Couchbase will host a live webcast at 2:00 p.m. Pacific Time (or 5:00 p.m. Eastern Time) on Tuesday, March 7, 2023, to discuss its financial results and business highlights. The conference call can be accessed by dialing 877-407-8029 from the United States, or +1 201-689-8029 from international locations. The live webcast and a webcast replay can be accessed from the investor relations page of Couchbase’s website at investors.couchbase.com.
Gartner, Magic Quadrant for Cloud Database Management Systems, December 2022
GARTNER and Magic Quadrant are registered trademarks of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved. Gartner does not endorse any vendor, product or service depicted in its research publications and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s Research & Advisory organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.
Use of Non-GAAP Financial Measures
In addition to our financial information presented in accordance with GAAP, we believe certain non-GAAP financial measures are useful to investors in evaluating our operating performance. We use certain non-GAAP financial measures, collectively, to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, may be helpful to investors because they provide consistency and comparability with past financial performance and meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, results of operations or outlook. Non-GAAP financial measures are presented for supplemental informational purposes only, have limitations as analytical tools and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP and may be different from similarly-titled non-GAAP financial measures used by other companies. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures (provided in the financial statement tables included in this press release), and not to rely on any single financial measure to evaluate our business.
Non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating loss, non-GAAP operating margin, non-GAAP net loss attributable to common stockholders and non-GAAP net loss per share attributable to common stockholders: We define these non-GAAP financial measures as their respective GAAP measures, excluding expenses related to stock-based compensation expense, employer taxes on employee stock transactions and restructuring charges. We use these non-GAAP financial measures in conjunction with GAAP measures to assess our performance, including in the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance.
Beginning with the first quarter of fiscal 2023, we have excluded employer payroll taxes on employee stock transactions, which is a cash expense, from our non-GAAP results. These payroll taxes have been excluded from our non-GAAP results because they are tied to the timing and size of the exercise or vesting of the underlying equity awards, and the price of our common stock at the time of vesting or exercise may vary from period to period independent of the operating performance of our business. Prior period non-GAAP financial measures have not been adjusted to reflect this change, and the effect of this change is not material for any period previously presented.
Free cash flow: We define free cash flow as cash used in operating activities less additions of property and equipment, which includes capitalized internal-use software costs. We believe free cash flow is a useful indicator of liquidity that provides our management, board of directors and investors with information about our future ability to generate or use cash to enhance the strength of our balance sheet and further invest in our business and pursue potential strategic initiatives.
Please see the reconciliation tables at the end of this press release for the reconciliation of GAAP and non-GAAP results.
Key Business Metrics
We review a number of operating and financial metrics, including ARR, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions.
We define ARR as of a given date as the annualized recurring revenue that we would contractually receive from our customers in the month ending 12 months following such date. Based on historical experience with customers, we assume all contracts will be automatically renewed at the same levels unless we receive not