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Database as a service company Couchbase (NASDAQ: NASDAQ:BASE) beat analysts’ expectations in Q2 CY2024, with revenue up 19.6% year on year to $51.59 million. The company expects next quarter’s revenue to be around $50.7 million, in line with analysts’ estimates. It made a non-GAAP loss of $0.06 per share, improving from its loss of $0.17 per share in the same quarter last year.
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Couchbase (BASE) Q2 CY2024 Highlights:
- Revenue: $51.59 million vs analyst estimates of $51.12 million (small beat)
- Adjusted Operating Income: -$4.10 million vs analyst estimates of -$5.24 million (21.8% beat)
- EPS (non-GAAP): -$0.06 vs analyst estimates of -$0.09
- The company slightly lifted its revenue guidance for the full year to $207.1 million at the midpoint from $206.5 million (in line)
- ARR guidance for next quarter and the full year below expectations
- Gross Margin (GAAP): 87.5%, up from 86.3% in the same quarter last year
- Free Cash Flow was -$5.92 million, down from $854,075 in the previous quarter
- Annual Recurring Revenue: $214 million at quarter end, up 18.4% year on year (in line)
- Market Capitalization: $954.4 million
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 StorageData is the lifeblood of the internet and software in general, and the amount of data created is accelerating. As a result, the importance of storing the data in scalable and efficient formats continues to rise, especially as its diversity and associated use cases expand from analyzing simple, structured datasets to high-scale processing of unstructured data such as images, audio, and video.
Sales GrowthAs you can see below, Couchbase’s 20.8% annualized revenue growth over the last three years has been decent, and its sales came in at $51.59 million this quarter.
This quarter, Couchbase’s quarterly revenue was once again up 19.6% year on year. However, its growth did slow down compared to last quarter as the company’s revenue increased by just $262,000 in Q2 compared to $1.24 million in Q1 CY2024. While we’d like to see revenue increase by a greater amount each quarter, a one-off fluctuation is usually not concerning.
Next quarter’s guidance suggests that Couchbase is expecting revenue to grow 10.7% year on year to $50.7 million, slowing down from the 18.8% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 10.9% over the next 12 months before the earnings results announcement.
Cash Is KingIf you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Couchbase’s demanding reinvestments have consumed many resources over the last year, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 13.2%, poor for a software business.
Couchbase burned through $5.92 million of cash in Q2, equivalent to a negative 11.5% margin. The company’s cash burn increased meaningfully year on year while its cash conversion fell 8.1 percentage points. This relationship shows Couchbase’s management team spent more cash this quarter but was less efficient at generating sales with that cash.
Over the next year, analysts predict Couchbase’s cash conversion will improve to break even. Their consensus estimates imply its free cash flow margin of negative 13.2% for the last 12 months will increase by 12.2 percentage points.
Key Takeaways from Couchbase’s Q2 Results ARR (annual recurring revenue) was roughly in line, leading to a slight revenue beat. While the company lifted full year revenue guidance that is now in-line with expectations, ARR guidance for next quarter and the full year came in below Wall Street's estimates. Overall, this was a mixed quarter, with the ARR guidance likely to weigh on shares. The stock traded down 6.2% to $17.80 immediately after reporting.
