Couchbase’s revenue grows 20% and its stock rises in extended trading

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Cloud database company Couchbase Inc. reported a 20% increase in its fourth-quarter revenue today, beating Wall Street’s expectations and sending its stock up more than 10% in extended trading.

The company reported a fourth-quarter loss before certain costs such as stock compensation of six cents per share, easily topping the analyst consensus estimate, which called for a much wider loss of 14 cents. Revenue for the period came to $50.1 million, ahead of the Street’s forecast of $46.56 million. Subscription revenue rose 26%, to $48.1 million.

Despite the solid results, Couchbase wasn’t able to do much about its bottom line, reporting a net loss of $21.4 million, bigger than the $16.6 million loss it posted one year ago.

Couchbase is the creator of the namesake Couchbase NoSQL database service, which is used by enterprises to power complex business applications. Its flagship product these days is the cloud-hosted Couchbase Capella database-as-a-service offering, which is offered alongside a more traditional, on-premises version called Couchbase Server, and a mobile version.

The main advantage of Couchbase Capella, unlike traditional databases such as Oracle Database, is its ability to process both structured and unstructured data at the same time. It’s a unique capability that makes Capella a better alternative for certain kinds of apps that can benefit from both kinds of data. In addition, Couchbase Capella can act as a data cache, so customers essentially get three systems for the price of one.

Couchbase Chair, President and Chief Executive Matt Cain (pictured) said the company ended the year on a really strong note, delivering results that exceeded its own guidance across all key metrics. “We achieved an important milestone with Capella, which now represents 11% of our ARR and over 25% of our customer base,” he added.

Couchbase’s annual recurring revenue rose 25% from a year earlier, to $204.2 million, while its remaining performance obligations, which represents the total value of contracted products or services that are yet to be delivered, rose 46% from a year ago, to $241.8 million.

On the product front, there was a lot going on too, with the company announcing new features for Capella and Couchbase Server last month, such as vector search to support generative artificial intelligence-powered applications. In addition, it added support for retrieval-augmented generation or RAG, which enables large language models to tap into customer’s private data to enhance their knowledge beyond the training data they were initially taught with. The integrations with LlamaIndex and LangChain will also help to streamline the development of generative AI apps.

Those announcements followed the general availability of the Capella iQ service, which is a generative AI-powered copilot for coding tasks. With Capella iQ, developers can interact with Capella using natural language in order to simplify database interactions.

Looking to the first quarter of fiscal 2025, Couchbase said it’s looking for revenue of $48.5 million at the midpoint of its guidance range, ahead of the analysts’ consensus estimate of $46.94 million.

For the full year, Couchbase is forecasting total sales of $205 million at the midpoint, which implies revenue growth of 14% and is in line with Wall Street’s forecast.

Analyst Holger Mueller of Constellation Research Inc. said Couchbase can pat itself on the back for delivering both a good quarter and full year, with revenue in January breaking the $50 million milestone for the first time. With $180 million in revenue for fiscal 2024, the target for the next full-year must be the $200 million barrier, and it’s one that Mueller believes the company should be able to achieve. “Given the demand for document-centric automation in the digitally transformed economy, Couchbase has everything to fulfill that demand,” Mueller explained.”

Another challenge will be cost discipline, Mueller said. as the company went backwards in terms of profitability, with the last quarter being worse than it was one year earlier. “Its predicted growth likely won’t be enough to make the company profitable, so Matt Cain and team must think about what they can do to reduce costs,” he added, “The first quarter will tell us if that’s likely to happen.”

Photo: Couchbase

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