WASHINGTON, DC 20549
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
April 30, 2023
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
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Delaware | 26-3576987 | ||||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||
3250 Olcott Street Santa Clara |
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| (Address of principal executive |
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code)
| Title of each class | Trading | Name of each exchange on which registered | ||||||||||||
Common stock, par value $0.00001 per share | BASE | Nasdaq Global Select Market | ||||||||||||
| Large accelerated filer | o |
| Accelerated filer |
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Non-accelerated filer | o |
| Smaller reporting company |
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Emerging growth company |
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Condensed Consolidated Statements of | ||||||||
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i
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
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•our future financial performance, including our expectations regarding our revenue, cost of revenue, operating expenses, our ability to determine reserves and our ability to achieve and maintain future profitability; |
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•the sufficiency of our cash, cash equivalents and short-term investments to meet our liquidity needs; |
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•the demand for our products and services or for data management solutions in general; |
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•our ability to attract and retain customers and partners; |
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•our ability to develop new products and features and bring them to market in a timely manner and make enhancements to our offerings, as well as market acceptance of new products and features; |
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•our expectations regarding future developments with respect to Couchbase Capella, our fully-managed database-as-a-service (“DBaaS”) offering; |
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•our ability to compete with existing and new competitors in existing and new markets and offerings; |
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•macroeconomic conditions, foreign exchange fluctuation, inflation concerns, rising interest rates and recessionary fears, on our business and results of operations; |
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•our expectations regarding the effects of existing and developing laws, rules, regulations and other legal obligations, including with respect to taxation and data privacy and security; |
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•our ability to manage risk associated with our business; |
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•our expectations regarding new and evolving markets; |
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•our ability to maintain, develop and protect our brand; |
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•our ability, and our customers’ and our third-party service providers’ ability, to maintain the security and availability to each of our technological and physical infrastructures; |
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•our expectations and management of future growth; |
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•our expectations concerning relationships with third parties; |
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•our ability to obtain, maintain, defend and enforce our intellectual property; |
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•our use of third-party open source software in our solutions and the availability of portions of our source code on an open source basis; |
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•our ability to successfully acquire and integrate companies and assets; and |
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that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and investorsyou are cautioned not to unduly rely upon these statements.
Our business is subject to significant risks and uncertainties that make an investment in us speculative and risky. Below we summarize what we believe are the principal risk factors but these risks are not the only ones we face. You should carefully review and consider the full discussion of our risk factors below this summary, together with the other information in this Quarterly Report on Form 10-Q.10-Q. If any of the following risks or if any of those listed elsewhere in this Quarterly Report on Form 10-Q actually occur, our business, reputation, financial condition, results of operations, revenue and future prospects could be seriously harmed. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business.
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•We have a history of net losses, may not achieve or maintain profitability in the future and may not continue to grow on pace with historical rates. |
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•We face intense competition and if we are unable to compete effectively, our business, financial condition and results of operations would be adversely affected. |
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•We may fail to cost-effectively acquire new customers or obtain renewals, upgrades or expansions from our existing customers, which would adversely affect our business, financial condition and results of operations. |
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•The market for our products and services is relatively new and evolving, and our future success depends on the growth and expansion of this market. |
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•If we fail to innovate in response to changing customer needs, new technologies or other market requirements, our business, financial condition and results of operations could be harmed. |
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•We have a limited operating history, which makes it difficult to predict our future results of operations. |
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•Our future results of operations and key business metrics may fluctuate significantly, and if we fail to meet the expectations of analysts or investors, the market price of our common stock and the value of your investment could decline substantially. |
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•We depend on our sales force, and we may fail to attract, retain, motivate or train our sales force, which could adversely affect our business, financial condition and results of operations. |
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•Our sales strategy to target larger enterprises involves risks that may not be present or that are present to a lesser extent with respect to smaller enterprises, such as long and unpredictable sales cycles and sales efforts that require considerable time and expense, particularly in the current macroeconomic environment. |
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•If we are not able to maintain and enhance our brand, especially among enterprise architects, application developers and other key functions that support them, our business and results of operations may be adversely affected. |
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•Our business could be adversely affected by economic downturns. |
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•Our ability to maintain and increase sales with our existing customers depends, in part, on the quality of our customer support, and our failure to offer high-quality support would harm our reputation and adversely affect our business and results of operations. |
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•We track certain key business metrics with internal systems and tools and do not independently verify such metrics. Certain of these metrics are subject to inherent challenges in measurement, and any real or perceived inaccuracies in such metrics may adversely affect our business and reputation. |
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•Our company culture has contributed to our success and if we cannot maintain this culture as we grow, our business could be harmed. |
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•We may be unable to make acquisitions and investments or successfully integrate acquired companies and assets into our business, and our acquisitions and investments may not meet our expectations, any of which could adversely affect our business, financial condition and results of operations. |
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• | Certain estimates and information we refer to publicly are based on information from third-party sources and we do not independently verify the accuracy or completeness of the data contained in such sources or the methodologies for collecting such data, and any real or perceived inaccuracies in such estimates and information may harm our reputation and adversely affect our business. |
• | Our use of third-party open source software in our solutions, the availability of core portions of our source code on an open source basis and contributions to our open source projects could negatively affect our ability to sell our products and provide our services, subject us to possible litigation and allow third parties to access and use software and technology that we use in our business, all of which could adversely affect our business and results of operations. |
• | Our distribution and licensing model could negatively affect our ability to monetize and protect our intellectual property rights. |
• | Because of the rights accorded to third parties under open source licenses, there may be fewer technology barriers to entry in the markets in which we compete and it may be relatively easy for new and existing competitors, some of whom may have greater resources than we have, to compete with us. |
•Our decision to license certain source code under a source-available license, the Business Source License version 1.1 (“BSL 1.1”), may harm the adoption of our source code. |
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•We could incur substantial costs in obtaining, maintaining, protecting, defending and enforcing our intellectual property rights and any failure to obtain, maintain, protect, defend or enforce our intellectual property rights could reduce the value of our software and brand. |
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•We have been and may in the future become subject to intellectual property disputes which may be costly to defend, subject us to significant liability, require us to pay significant damages and limit our ability to use certain technologies. |
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•If our security measures, or those of our service providers or customers, are breached or unauthorized parties otherwise obtain access to our or our customers’ data or software, our products and services may be perceived as not being secure, customers may reduce or terminate their use of our products and services and we may face claims, litigation, regulatory investigations, significant liability and reputational damage. |
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•A portion of our revenue is generated by sales to heavily regulated organizations, which are subject to a number of challenges and risks. |
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PART
ITEMFinancial Information
Financial Statements (unaudited)
Condensed ConsolidatedBalance Sheets
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| As of July 31, |
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| As of January 31, |
| As of April 30, | As of January 31, | |||||||||||
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| 2021 |
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| 2021 |
| 2023 | 2023 | |||||||||||
Assets |
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| Assets | ||||||||||
Current assets |
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| Current assets | ||||||||||
Cash and cash equivalents |
| $ | 239,246 |
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| $ | 37,297 |
| Cash and cash equivalents | $ | 46,240 | $ | 40,446 | ||||||
Short-term investments |
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| 14,321 |
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| 19,546 |
| Short-term investments | 117,403 | 127,856 | ||||||||
Accounts receivable, net |
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| 20,183 |
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| 35,897 |
| Accounts receivable, net | 42,212 | 39,847 | ||||||||
Deferred commissions |
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| 8,645 |
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| 8,353 |
| Deferred commissions | 12,814 | 13,096 | ||||||||
Prepaid expenses and other current assets |
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| 8,099 |
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| 2,449 |
| Prepaid expenses and other current assets | 6,839 | 8,234 | ||||||||
Total current assets |
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| 290,494 |
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| 103,542 |
| Total current assets | 225,508 | 229,479 | ||||||||
Property and equipment, net |
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| 5,578 |
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| 6,506 |
| Property and equipment, net | 8,032 | 7,430 | ||||||||
| Operating lease right-of-use assets | Operating lease right-of-use assets | 6,233 | 6,940 | ||||||||||||||||
Deferred commissions, noncurrent |
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| 5,394 |
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| 4,941 |
| Deferred commissions, noncurrent | 8,089 | 7,524 | ||||||||
Other assets |
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| 1,316 |
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| 2,199 |
| Other assets | 1,608 | 1,666 | ||||||||
Total assets |
| $ | 302,782 |
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| $ | 117,188 |
| Total assets | $ | 249,470 | $ | 253,039 | ||||||
Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) |
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| Liabilities and Stockholders’ Equity | Liabilities and Stockholders’ Equity | ||||||||||||||||||
Current liabilities |
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| Current liabilities | ||||||||||
Accounts payable |
| $ | 7,153 |
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| $ | 2,428 |
| Accounts payable | $ | 6,865 | $ | 1,407 | ||||||
Accrued compensation and benefits |
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| 9,020 |
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| 9,110 |
| Accrued compensation and benefits | 8,495 | 12,641 | ||||||||
Other accrued liabilities |
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| 3,575 |
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| 4,154 |
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| Other accrued expenses | Other accrued expenses | 4,813 | 6,076 | ||||||||||||||||
| Operating lease liabilities | Operating lease liabilities | 3,060 | 3,117 | ||||||||||||||||
Deferred revenue |
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| 48,980 |
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| 57,168 |
| Deferred revenue | 78,540 | 71,716 | ||||||||
Total current liabilities |
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| 68,728 |
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| 72,860 |
| Total current liabilities | 101,773 | 94,957 | ||||||||
Long-term debt |
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| 24,963 |
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| 24,948 |
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| Operating lease liabilities, noncurrent | Operating lease liabilities, noncurrent | 3,873 | 4,543 | ||||||||||||||||
Deferred revenue, noncurrent |
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| 5,356 |
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| 4,542 |
| Deferred revenue, noncurrent | 2,874 | 3,275 | ||||||||
Other liabilities |
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| 1,312 |
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| 1,358 |
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Total liabilities |
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| 100,359 |
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| 103,708 |
| Total liabilities | 108,520 | 102,775 | ||||||||
Commitments and contingencies (Note 8) |
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Redeemable convertible preferred stock, $0.00001 par value; 0 shares and 26,070,258 shares authorized as of July 31, 2021 and January 31, 2021, respectively; 0 shares and 26,070,213 shares issued and outstanding as of July 31, 2021 and January 31, 2021, respectively; aggregate liquidation preference of $314,829 as of January 31, 2021 |
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| — |
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| 259,822 |
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Stockholders’ equity (deficit) |
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Preferred stock, $0.00001 par value; 200,000,000 and 0 shares authorized as of July 31, 2021 and January 31, 2021, respectively; 0 shares issued outstanding as of July 31, 2021 and January 31, 2021, respectively |
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| — |
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| — |
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Common stock, $0.00001 par value; 1,000,000,000 and 43,200,000 shares authorized as of July 31, 2021 and January 31, 2021, respectively; 43,282,941 and 6,199,305 shares issued and outstanding as of July 31, 2021 and January 31, 2021, respectively |
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| — |
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| — |
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| Commitments and contingencies (Note 9) | Commitments and contingencies (Note 9) | ||||||||||||||||||
| Stockholders’ equity | Stockholders’ equity | ||||||||||||||||||
| Preferred stock, $0.00001 par value; 200,000,000 shares authorized as of April 30, 2023 and January 31, 2023; zero shares issued outstanding as of April 30, 2023 and January 31, 2023 | Preferred stock, $0.00001 par value; 200,000,000 shares authorized as of April 30, 2023 and January 31, 2023; zero shares issued outstanding as of April 30, 2023 and January 31, 2023 | — | — | ||||||||||||||||
| Common stock, $0.00001 par value; 1,000,000,000 shares authorized as of April 30, 2023 and January 31, 2023; 46,155,499 and 45,432,029 shares issued and outstanding as of April 30, 2023 and January 31, 2023, respectively | Common stock, $0.00001 par value; 1,000,000,000 shares authorized as of April 30, 2023 and January 31, 2023; 46,155,499 and 45,432,029 shares issued and outstanding as of April 30, 2023 and January 31, 2023, respectively | — | — | ||||||||||||||||
Additional paid-in capital |
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| 515,245 |
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| 37,410 |
| Additional paid-in capital | 573,791 | 561,547 | ||||||||
Accumulated other comprehensive income |
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| — |
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| 1 |
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| Accumulated other comprehensive loss | Accumulated other comprehensive loss | (490) | (807) | ||||||||||||||||
Accumulated deficit |
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| (312,822 | ) |
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| (283,753 | ) | Accumulated deficit | (432,351) | (410,476) | ||||||||
Total stockholders’ equity (deficit) |
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| 202,423 |
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| (246,342 | ) | |||||||||||
Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit) |
| $ | 302,782 |
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| $ | 117,188 |
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| Total stockholders’ equity | Total stockholders’ equity | 140,950 | 150,264 | ||||||||||||||||
| Total liabilities and stockholders’ equity | Total liabilities and stockholders’ equity | $ | 249,470 | $ | 253,039 | ||||||||||||||
Condensed ConsolidatedStatementsof Operations
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| Three Months Ended July 31, |
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| Six Months Ended July 31, |
| Three Months Ended April 30, | ||||||||||||||||||||||||||||||||
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| 2021 |
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| 2020 |
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| 2021 |
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| 2020 |
| 2023 | 2022 | |||||||||||||||||||||||||
Revenue: |
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| Revenue: | ||||||||||||||||||||||
License |
| $ | 4,416 |
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| $ | 3,010 |
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| $ | 8,694 |
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| $ | 5,540 |
| License | $ | 4,943 | $ | 5,007 | ||||||||||||||||||
Support and other |
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| 23,613 |
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| 20,627 |
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| 45,800 |
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| 39,269 |
| Support and other | 33,599 | 26,974 | ||||||||||||||||||||
Total subscription revenue |
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| 28,029 |
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| 23,637 |
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| 54,494 |
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| 44,809 |
| Total subscription revenue | 38,542 | 31,981 | ||||||||||||||||||||
Services |
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| 1,670 |
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| 1,523 |
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| 3,160 |
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| 3,396 |
| Services | 2,454 | 2,872 | ||||||||||||||||||||
Total revenue |
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| 29,699 |
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| 25,160 |
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| 57,654 |
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| 48,205 |
| Total revenue | 40,996 | 34,853 | ||||||||||||||||||||
Cost of revenue: |
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| Cost of revenue: | ||||||||||||||||||||||
Subscription |
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| 2,072 |
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| 1,276 |
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| 4,124 |
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| 2,273 |
| Subscription | 3,673 | 2,396 | ||||||||||||||||||||
Services |
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| 1,453 |
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| 1,407 |
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| 2,793 |
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| 3,087 |
| Services | 2,249 | 2,255 | ||||||||||||||||||||
Total cost of revenue |
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| 3,525 |
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| 2,683 |
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| 6,917 |
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| 5,360 |
| Total cost of revenue | 5,922 | 4,651 | ||||||||||||||||||||
Gross profit |
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| 26,174 |
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| 22,477 |
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| 50,737 |
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| 42,845 |
| Gross profit | 35,074 | 30,202 | ||||||||||||||||||||
Operating expenses: |
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| Operating expenses: | ||||||||||||||||||||||
Research and development |
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| 12,623 |
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| 9,237 |
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| 25,164 |
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| 18,279 |
| Research and development | 15,383 | 14,421 | ||||||||||||||||||||
Sales and marketing |
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| 22,263 |
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| 16,475 |
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| 42,897 |
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| 33,702 |
| Sales and marketing | 32,553 | 26,843 | ||||||||||||||||||||
General and administrative |
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| 5,278 |
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| 3,468 |
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| 10,775 |
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| 6,861 |
| General and administrative | 9,625 | 7,926 | ||||||||||||||||||||
| Restructuring | Restructuring | 46 | — | ||||||||||||||||||||||||||||||||||||
Total operating expenses |
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| 40,164 |
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| 29,180 |
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| 78,836 |
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|
| 58,842 |
| Total operating expenses | 57,607 | 49,190 | ||||||||||||||||||||
Loss from operations |
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| (13,990 | ) |
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| (6,703 | ) |
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| (28,099 | ) |
|
| (15,997 | ) | Loss from operations | (22,533) | (18,988) | ||||||||||||||||||||
Interest expense |
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| (252 | ) |
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| (2,495 | ) |
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| (497 | ) |
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| (4,016 | ) | Interest expense | (25) | (25) | ||||||||||||||||||||
Other income (expense), net |
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| (77 | ) |
|
| 614 |
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|
| 7 |
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|
| 307 |
| Other income (expense), net | 1,433 | (556) | ||||||||||||||||||||
Loss before income taxes |
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| (14,319 | ) |
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| (8,584 | ) |
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| (28,589 | ) |
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| (19,706 | ) | Loss before income taxes | (21,125) | (19,569) | ||||||||||||||||||||
Provision for income taxes |
|
| 151 |
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|
| 254 |
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|
| 480 |
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|
| 482 |
| Provision for income taxes | 750 | 265 | ||||||||||||||||||||
Net loss |
| $ | (14,470 | ) |
| $ | (8,838 | ) |
| $ | (29,069 | ) |
| $ | (20,188 | ) | Net loss | $ | (21,875) | $ | (19,834) | ||||||||||||||||||
Cumulative dividends on Series G redeemable convertible preferred stock |
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| (1,438 | ) |
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| (1,150 | ) |
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| (2,917 | ) |
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| (1,150 | ) | |||||||||||||||||||||||
Net loss attributable to common stockholders |
| $ | (15,908 | ) |
| $ | (9,988 | ) |
| $ | (31,986 | ) |
| $ | (21,338 | ) | |||||||||||||||||||||||
Net loss per share attributable to common stockholders, basic and diluted |
| $ | (1.76 | ) |
| $ | (1.76 | ) |
| $ | (4.16 | ) |
| $ | (3.77 | ) | |||||||||||||||||||||||
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted |
|
| 9,045 |
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|
| 5,662 |
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|
| 7,696 |
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|
| 5,660 |
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| Net loss per share, basic and diluted | Net loss per share, basic and diluted | $ | (0.48) | $ | (0.45) | ||||||||||||||||||||||||||||||||||
| Weighted-average shares used in computing net loss per share, basic and diluted | Weighted-average shares used in computing net loss per share, basic and diluted | 45,843 | 44,265 | ||||||||||||||||||||||||||||||||||||
Condensed ConsolidatedStatementsof ComprehensiveLoss
| Three Months Ended April 30, | |||||||||||||||||||||||||||||||||||||||
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| Three Months Ended July 31, |
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| Six Months Ended July 31, |
| 2023 | 2022 | |||||||||||||||||||||||||||||||
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| 2021 |
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| 2020 |
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| 2021 |
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| 2020 |
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Net loss |
| $ | (14,470 | ) |
| $ | (8,838 | ) |
| $ | (29,069 | ) |
| $ | (20,188 | ) | Net loss | $ | (21,875) | $ | (19,834) | ||||||||||||||||||
Other comprehensive income (loss): |
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| Other comprehensive loss: | Other comprehensive loss: | ||||||||||||||||||||||||||||||||||||||
Net unrealized gains (losses) on investments, net of tax |
|
| 1 |
|
|
| — |
|
|
| (1 | ) |
|
| — |
| Net unrealized gains (losses) on investments, net of tax | 317 | (686) | ||||||||||||||||||||
Total comprehensive loss |
| $ | (14,469 | ) |
| $ | (8,838 | ) |
| $ | (29,070 | ) |
| $ | (20,188 | ) | Total comprehensive loss | $ | (21,558) | $ | (20,520) | ||||||||||||||||||
Condensed ConsolidatedStatements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)
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| Redeemable Convertible Preferred Stock |
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| Common Stock |
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| Additional Paid-In |
|
| Accumulated Other Comprehensive Income |
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| Accumulated |
|
| Total Stockholders’ Equity |
| ||||||||||||||
|
| Shares |
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| Amount |
|
|
| Shares |
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| Amount |
|
| Capital |
|
| (Loss) |
|
| Deficit |
|
| (Deficit) |
| ||||||||
Balance as of April 30, 2020 |
|
| 18,901,887 |
|
| $ | 155,506 |
|
|
|
| 5,659,677 |
|
| $ | — |
|
| $ | 31,481 |
|
| $ | — |
|
| $ | (255,120 | ) |
| $ | (223,639 | ) |
Issuance of common stock upon exercise of stock options |
|
| — |
|
|
| — |
|
|
|
| 12,810 |
|
|
| — |
|
|
| 58 |
|
|
| — |
|
|
| — |
|
|
| 58 |
|
Issuance of Series G redeemable convertible preferred stock, net of issuance costs |
|
| 7,168,326 |
|
|
| 104,316 |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Stock-based compensation |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| 1,366 |
|
|
| — |
|
|
| — |
|
|
| 1,366 |
|
Net loss |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (8,838 | ) |
|
| (8,838 | ) |
Balance as of July 31, 2020 |
|
| 26,070,213 |
|
| $ | 259,822 |
|
|
|
| 5,672,487 |
|
| $ | — |
|
| $ | 32,905 |
|
| $ | — |
|
| $ | (263,958 | ) |
| $ | (231,053 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Redeemable Convertible Preferred Stock |
|
|
| Common Stock |
|
| Additional Paid-In |
|
| Accumulated Other Comprehensive Income |
|
| Accumulated |
|
| Total Stockholders’ Equity |
| ||||||||||||||
|
| Shares |
|
| Amount |
|
|
| Shares |
|
| Amount |
|
| Capital |
|
| (Loss) |
|
| Deficit |
|
| (Deficit) |
| ||||||||
Balance as of April 30, 2021 |
|
| 26,070,213 |
|
| $ | 259,822 |
|
|
|
| 6,460,868 |
|
| $ | — |
|
| $ | 40,686 |
|
| $ | (1 | ) |
| $ | (298,352 | ) |
| $ | (257,667 | ) |
Issuance of common stock upon exercise of stock options |
|
| — |
|
|
| — |
|
|
|
| 521,489 |
|
|
| — |
|
|
| 2,841 |
|
|
| — |
|
|
| — |
|
| $ | 2,841 |
|
Conversion of redeemable convertible preferred stock to common stock upon initial public offering |
|
| (26,070,213 | ) |
|
| (259,822 | ) |
|
|
| 26,710,600 |
|
|
| — |
|
|
| 259,822 |
|
|
| — |
|
|
| — |
|
|
| 259,822 |
|
Issuance of common stock in connection with initial public offering, net of underwriting discounts and commissions and other issuance costs |
|
| — |
|
|
| — |
|
|
|
| 9,589,999 |
|
|
| — |
|
|
| 209,924 |
|
|
| — |
|
|
| — |
|
| $ | 209,924 |
|
Settlement of fractional shares to be paid in cash |
|
| — |
|
|
| — |
|
|
|
| (15 | ) |
|
| — |
|
|
| (9 | ) |
|
| — |
|
|
| — |
|
|
| (9 | ) |
Stock-based compensation |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| 1,981 |
|
|
| — |
|
|
| — |
|
|
| 1,981 |
|
Net unrealized gains (losses) on investments |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1 |
|
|
| — |
|
|
| 1 |
|
Net loss |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (14,470 | ) |
|
| (14,470 | ) |
Balance as of July 31, 2021 |
|
| — |
|
| $ | — |
|
|
|
| 43,282,941 |
|
| $ | — |
|
| $ | 515,245 |
|
| $ | — |
|
| $ | (312,822 | ) |
| $ | 202,423 |
|
| Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||
| Balance as of January 31, 2023 | 45,432,029 | $ | — | $ | 561,547 | $ | (807) | $ | (410,476) | $ | 150,264 | ||||||||||||||||||||||||
| Issuance of common stock upon exercise of stock options | 389,377 | — | 1,917 | — | — | 1,917 | |||||||||||||||||||||||||||||
| Issuance of common stock in connection with employee stock purchase plan | 74,113 | — | 847 | — | — | 847 | |||||||||||||||||||||||||||||
| Vesting of restricted stock units | 259,980 | — | — | — | — | — | |||||||||||||||||||||||||||||
| Stock-based compensation | — | — | 9,480 | — | — | 9,480 | |||||||||||||||||||||||||||||
| Net unrealized gains on investments | — | — | — | 317 | — | 317 | |||||||||||||||||||||||||||||
| Net loss | — | — | — | — | (21,875) | (21,875) | |||||||||||||||||||||||||||||
| Balance as of April 30, 2023 | 46,155,499 | $ | — | $ | 573,791 | $ | (490) | $ | (432,351) | $ | 140,950 | ||||||||||||||||||||||||
|
| Redeemable Convertible Preferred Stock |
|
|
| Common Stock |
|
| Additional Paid-In |
|
| Accumulated Other Comprehensive Income |
|
| Accumulated |
|
| Total Stockholders’ Equity |
| ||||||||||||||
|
| Shares |
|
| Amount |
|
|
| Shares |
|
| Amount |
|
| Capital |
|
| (Loss) |
|
| Deficit |
|
| (Deficit) |
| ||||||||
Balance as of January 31, 2020 |
|
| 18,901,887 |
|
| $ | 155,506 |
|
|
|
| 5,646,238 |
|
| $ | — |
|
| $ | 30,554 |
|
| $ | — |
|
| $ | (243,770 | ) |
| $ | (213,216 | ) |
Issuance of common stock upon exercise of stock options |
|
| — |
|
|
| — |
|
|
|
| 26,249 |
|
|
| — |
|
|
| 144 |
|
|
| — |
|
|
| — |
|
|
| 144 |
|
Issuance of Series G redeemable convertible preferred stock, net of issuance costs |
|
| 7,168,326 |
|
|
| 104,316 |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Stock-based compensation |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| 2,207 |
|
|
| — |
|
|
| — |
|
|
| 2,207 |
|
Net loss |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (20,188 | ) |
|
| (20,188 | ) |
Balance as of July 31, 2020 |
|
| 26,070,213 |
|
| $ | 259,822 |
|
|
|
| 5,672,487 |
|
| $ | — |
|
| $ | 32,905 |
|
| $ | — |
|
| $ | (263,958 | ) |
| $ | (231,053 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Redeemable Convertible Preferred Stock |
|
|
| Common Stock |
|
| Additional Paid-In |
|
| Accumulated Other Comprehensive Income |
|
| Accumulated |
|
| Total Stockholders’ Equity |
| ||||||||||||||
|
| Shares |
|
| Amount |
|
|
| Shares |
|
| Amount |
|
| Capital |
|
| (Loss) |
|
| Deficit |
|
| (Deficit) |
| ||||||||
Balance as of January 31, 2021 |
|
| 26,070,213 |
|
| $ | 259,822 |
|
|
|
| 6,199,305 |
|
| $ | — |
|
| $ | 37,410 |
|
| $ | 1 |
|
| $ | (283,753 | ) |
| $ | (246,342 | ) |
Issuance of common stock upon exercise of stock options |
|
| — |
|
|
| — |
|
|
|
| 783,052 |
|
|
| — |
|
|
| 4,288 |
|
|
| — |
|
|
| — |
|
|
| 4,288 |
|
Conversion of redeemable convertible preferred stock to common stock upon initial public offering |
|
| (26,070,213 | ) |
|
| (259,822 | ) |
|
|
| 26,710,600 |
|
|
| — |
|
|
| 259,822 |
|
|
| — |
|
|
| — |
|
|
| 259,822 |
|
Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other issuance costs |
|
| — |
|
|
| — |
|
|
|
| 9,589,999 |
|
|
| — |
|
|
| 209,924 |
|
|
| — |
|
|
| — |
|
|
| 209,924 |
|
Settlement of fractional shares to be paid in cash |
|
| — |
|
|
| — |
|
|
|
| (15 | ) |
|
| — |
|
|
| (9 | ) |
|
| — |
|
|
| — |
|
|
| (9 | ) |
Stock-based compensation |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| 3,810 |
|
|
| — |
|
|
| — |
|
|
| 3,810 |
|
Net unrealized gains (losses) on investments |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1 | ) |
|
| — |
|
|
| (1 | ) |
Net loss |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (29,069 | ) |
|
| (29,069 | ) |
Balance as of July 31, 2021 |
|
| — |
|
| $ | — |
|
|
|
| 43,282,941 |
|
| $ | — |
|
| $ | 515,245 |
|
| $ | — |
|
| $ | (312,822 | ) |
| $ | 202,423 |
|
| Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||
| Balance as of January 31, 2022 | 43,847,484 | $ | — | $ | 525,392 | $ | (195) | $ | (341,982) | $ | 183,215 | ||||||||||||||||||||||||
| Issuance of common stock upon exercise of stock options | 452,313 | — | 2,614 | — | — | 2,614 | |||||||||||||||||||||||||||||
| Issuance of common stock in connection with employee stock purchase plan | 237,499 | — | 3,525 | — | — | 3,525 | |||||||||||||||||||||||||||||
| Stock-based compensation | — | — | 5,450 | — | — | 5,450 | |||||||||||||||||||||||||||||
| Net unrealized losses on investments | — | — | — | (686) | — | (686) | |||||||||||||||||||||||||||||
| Net loss | — | — | — | — | (19,834) | (19,834) | |||||||||||||||||||||||||||||
| Balance as of April 30, 2022 | 44,537,296 | $ | — | $ | 536,981 | $ | (881) | $ | (361,816) | $ | 174,284 | ||||||||||||||||||||||||
COUCHBASE, INC.
Condensed ConsolidatedStatementsof Cash Flows
|
| Six Months Ended July 31, |
| Three Months Ended April 30, | |||||||||||||||
|
| 2021 |
|
| 2020 |
| 2023 | 2022 | |||||||||||
Cash flows from operating activities |
|
|
|
|
|
|
|
| Cash flows from operating activities | ||||||||||
Net loss |
| $ | (29,069 | ) |
| $ | (20,188 | ) | Net loss | $ | (21,875) | $ | (19,834) | ||||||
Adjustments to reconcile net loss to net cash used in operating activities |
|
|
|
|
|
|
|
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||||
Depreciation and amortization |
|
| 1,406 |
|
|
| 607 |
| Depreciation and amortization | 890 | 739 | ||||||||
Amortization of debt issuance costs |
|
| 15 |
|
|
| 460 |
| |||||||||||
Debt prepayment costs |
|
| — |
|
|
| 375 |
| |||||||||||
Stock-based compensation |
|
| 3,810 |
|
|
| 2,207 |
| |||||||||||
| Stock-based compensation, net of amounts capitalized | Stock-based compensation, net of amounts capitalized | 9,276 | 5,450 | ||||||||||||||||
Amortization of deferred commissions |
|
| 6,326 |
|
|
| 4,505 |
| Amortization of deferred commissions | 4,540 | 4,009 | ||||||||
| Non-cash lease expense | Non-cash lease expense | 772 | 648 | ||||||||||||||||
Foreign currency transaction (gains) losses |
|
| 5 |
|
|
| (279 | ) | Foreign currency transaction (gains) losses | (84) | 974 | ||||||||
Other |
|
| 68 |
|
|
| 45 |
| Other | (746) | 198 | ||||||||
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
| Changes in operating assets and liabilities | ||||||||||
Accounts receivable |
|
| 15,845 |
|
|
| 13,014 |
| Accounts receivable | (2,274) | 11,781 | ||||||||
Deferred commissions |
|
| (7,071 | ) |
|
| (4,758 | ) | Deferred commissions | (4,824) | (3,798) | ||||||||
Prepaid expenses and other assets |
|
| (5,848 | ) |
|
| (364 | ) | Prepaid expenses and other assets | 1,405 | 312 | ||||||||
Accounts payable |
|
| 4,553 |
|
|
| 462 |
| Accounts payable | 5,458 | 731 | ||||||||
Accrued compensation and benefits |
|
| (91 | ) |
|
| (1,244 | ) | Accrued compensation and benefits | (4,060) | (8,112) | ||||||||
Other accrued liabilities |
|
| (1,749 | ) |
|
| (794 | ) | |||||||||||
| Accrued expenses and other liabilities | Accrued expenses and other liabilities | (1,256) | (71) | ||||||||||||||||
| Operating lease liabilities | Operating lease liabilities | (826) | (666) | ||||||||||||||||
Deferred revenue |
|
| (7,375 | ) |
|
| (13,514 | ) | Deferred revenue | 6,423 | (968) | ||||||||
Net cash used in operating activities |
|
| (19,175 | ) |
|
| (19,466 | ) | Net cash used in operating activities | (7,181) | (8,607) | ||||||||
Cash flows from investing activities |
|
|
|
|
|
|
|
| Cash flows from investing activities | ||||||||||
Purchases of short-term investments |
|
| (7,133 | ) |
|
| — |
| Purchases of short-term investments | (7,821) | (53,630) | ||||||||
Maturities of short-term investments |
|
| 12,285 |
|
|
| — |
| Maturities of short-term investments | 19,423 | 9,600 | ||||||||
Purchases of property and equipment |
|
| (250 | ) |
|
| (2,626 | ) | |||||||||||
| Additions to property and equipment | Additions to property and equipment | (1,288) | (799) | ||||||||||||||||
Net cash provided by (used in) investing activities |
|
| 4,902 |
|
|
| (2,626 | ) | Net cash provided by (used in) investing activities | 10,314 | (44,829) | ||||||||
Cash flows from financing activities |
|
|
|
|
|
|
|
| Cash flows from financing activities | ||||||||||
Payments of debt |
|
| — |
|
|
| (31,777 | ) | |||||||||||
Proceeds from issuance of debt, net of issuance costs |
|
| — |
|
|
| 6,402 |
| |||||||||||
Proceeds from issuance of Series G redeemable convertible preferred stock, net of issuance costs |
|
| — |
|
|
| 104,316 |
| |||||||||||
Proceeds from exercise of stock options |
|
| 4,288 |
|
|
| 144 |
| Proceeds from exercise of stock options | 1,917 | 2,614 | ||||||||
Proceeds from initial public offering, net of underwriting discounts and commissions |
|
| 214,854 |
|
|
| — |
| |||||||||||
Payments of deferred offering costs |
|
| (2,795 | ) |
|
| — |
| |||||||||||
| Proceeds from issuance of common stock under ESPP | Proceeds from issuance of common stock under ESPP | 847 | 3,525 | ||||||||||||||||
Net cash provided by financing activities |
|
| 216,347 |
|
|
| 79,085 |
| Net cash provided by financing activities | 2,764 | 6,139 | ||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
| (125 | ) |
|
| 24 |
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (103) | (719) | ||||||||
Net increase in cash, cash equivalents and restricted cash |
|
| 201,949 |
|
|
| 57,017 |
| |||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | Net increase (decrease) in cash, cash equivalents and restricted cash | 5,794 | (48,016) | ||||||||||||||||
Cash, cash equivalents and restricted cash |
|
|
|
|
|
|
|
| Cash, cash equivalents and restricted cash | ||||||||||
Beginning of period |
|
| 37,840 |
|
|
| 18,767 |
| Beginning of period | 40,989 | 96,231 | ||||||||
End of period |
| $ | 239,789 |
|
| $ | 75,784 |
| End of period | $ | 46,783 | $ | 48,215 | ||||||
Cash and cash equivalents |
| $ | 239,246 |
|
| $ | 75,241 |
| Cash and cash equivalents | $ | 46,240 | $ | 47,672 | ||||||
Restricted cash included in other assets |
|
| 543 |
|
|
| 543 |
| Restricted cash included in other assets | 543 | 543 | ||||||||
Total cash, cash equivalents and restricted cash |
| $ | 239,789 |
|
| $ | 75,784 |
| Total cash, cash equivalents and restricted cash | $ | 46,783 | $ | 48,215 | ||||||
Supplemental disclosures of cash activities |
|
|
|
|
|
|
|
| Supplemental disclosures of cash activities | ||||||||||
Cash paid for income taxes |
| $ | 442 |
|
| $ | 349 |
| Cash paid for income taxes | $ | 294 | $ | 275 | ||||||
Cash paid for interest |
| $ | 495 |
|
| $ | 2,494 |
| Cash paid for interest | $ | 25 | $ | 25 | ||||||
Non-cash investing and financing activities: |
|
|
|
|
|
|
|
| Non-cash investing and financing activities: | ||||||||||
Change in purchases of property and equipment included in accounts payable and other accrued liabilities |
| $ | 230 |
|
| $ | (533 | ) | |||||||||||
Change in deferred offering costs included in accounts payable and other accrued liabilities |
| $ | 1,051 |
|
| $ | — |
| |||||||||||
Conversion of redeemable convertible preferred stock to common stock |
| $ | 259,822 |
|
| $ | — |
| |||||||||||
| Stock-based compensation capitalized as internal-use software costs | Stock-based compensation capitalized as internal-use software costs | $ | 204 | $ | — | ||||||||||||||
| Net change in unrealized gains or losses on available-for-sale debt securities | Net change in unrealized gains or losses on available-for-sale debt securities | $ | 317 | $ | (686) | ||||||||||||||
| Change in purchases of property and equipment included in accounts payable and other accrued expenses | Change in purchases of property and equipment included in accounts payable and other accrued expenses | $ | — | $ | (9) | ||||||||||||||
Notes to Condensed Consolidated Financial Statements
Initial Public Offering
In July 2021, the Company completed its initial public offering (“IPO”), for the sale and issuance of 9,589,999 shares of its common stock at $24.00 per share, which included 1,250,869 shares issued pursuant to the exercise of the underwriters’ option to purchase additional shares. The Company received net proceeds of $214.9 million, after deducting underwriters’ discounts and commissions and before consideration of other issuance costs. In connection with the IPO, all 26,710,600 shares of outstanding redeemable convertible preferred stock automatically converted into an equivalent number of shares of common stock.
Prior to the IPO, all deferred offering costs were capitalized in other noncurrent assets on the condensed consolidated balance sheets. Deferred offering costs of $4.9 million, primarily consisting of accounting, legal, and other fees related to the Company’s IPO, were offset against the IPO proceeds upon the closing of the Company’s IPO in July 2021. As of July 31, 2021 and January 31, 2021, unpaid deferred offering costs totaled $2.1 million and $1.1 million, respectively.
Reverse Stock Split
On June 30, 2021, the Company effected a 2.5-for-1 reverse stock split of its outstanding common stock, common stock warrants, preferred stock, and stock option awards. All issued and outstanding shares of common stock, common stock warrants, preferred stock, stock option awards and per share data have been adjusted in these condensed consolidated financial statements, on a retrospective basis, to reflect the reverse stock split for all periods presented. The par value of the common stock and preferred stock was not adjusted because of the reverse stock split.
Use of Estimates
COVID-19
While
Significant
There have been no significant changes to the Company’s significant accounting policies disclosed in “Note 2 – Basis of Presentation and Summary of Significant Accounting Policies” of the Company’s Final Prospectus.
Recent Accounting Pronouncements
Accounting Pronouncements Not Yet Adopted
In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), which requires lessees to record most leases on their balance sheets and disclosing key information about lease arrangements. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases. The ASU makes 16 technical corrections to the new lease standard and other accounting topics, alleviating unintended consequences from applying the new standard. It does not make any substantive changes to the core provisions or principles of the new standard. In July 2018, the FASB also issued ASU 2018-11, Leases (Topic 842): Targeted Improvements. The ASU provides (1) an optional transition method that entities can use when adopting the standard and (2) a practical expedient that permits lessors to not separate non-lease components from the associated lease component if certain conditions are met. In March 2019, the FASB also issued ASU 2019-01, Leases (Topic 842): Codification Improvements, which impacts transition disclosures related to the new guidance. The Company plans to adopt this guidance using a modified retrospective approach on February 1, 2022 and is currently evaluating the impact of the adoption on its condensed consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected, with further clarifications made more recently. For trade receivables, loans and other financial instruments, the Company will be required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable. Credit losses relating to available-for-sale debt securities are required to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. The Company plans to
adopt this standard on February 1, 2023 and is currently evaluating the impact of the adoption on its condensed consolidated financial statements.
In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other —Internal-Use Software, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The new guidance is effective for the Company beginning February 1, 2022. The Company does not expect the adoption of this guidance to have a material impact on its condensed consolidated financial statements.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by eliminating some exceptions to the general approach in Topic 740 to reduce cost and complexity of its application. This new guidance is effective for the Company beginning February 1, 2022. The Company is currently evaluating the impact of the adoption of this guidance on its condensed consolidated financial statements.
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for certain convertible instruments, amends the guidance on derivative scope exceptions for contracts in an entity’s own equity and modifies the guidance on diluted earnings per share calculations. The guidance is effective for the Company beginning February 1, 2024. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of this guidance on its condensed consolidated financial statements.
|
| As of July 31, 2021 |
| As of April 30, 2023 | |||||||||||||||||||||||||||||||||||
|
| Amortized Cost |
|
| Gross Unrealized Gains |
|
| Gross Unrealized Losses |
|
| Estimated Fair Value |
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||||||||||||
Cash Equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash Equivalents | ||||||||||||||||||||||
Money market funds |
| $ | 235,045 |
|
| $ | — |
|
| $ | — |
|
| $ | 235,045 |
| Money market funds | $ | 13,484 | $ | — | $ | — | $ | 13,484 | ||||||||||||||
Total cash equivalents |
|
| 235,045 |
|
|
| — |
|
|
| — |
|
|
| 235,045 |
| Total cash equivalents | 13,484 | — | — | 13,484 | ||||||||||||||||||
Short-Term Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Short-Term Investments | ||||||||||||||||||||||
| U.S. government treasury securities | U.S. government treasury securities | 63,309 | — | (452) | 62,857 | ||||||||||||||||||||||||||||||||||
Commercial paper |
|
| 8,095 |
|
|
| — |
|
|
| — |
|
|
| 8,095 |
| Commercial paper | 25,597 | — | — | 25,597 | ||||||||||||||||||
| U.S. government agency securities | U.S. government agency securities | 11,881 | 16 | (2) | 11,895 | ||||||||||||||||||||||||||||||||||
Corporate debt securities |
|
| 6,227 |
|
|
| — |
|
|
| (1 | ) |
|
| 6,226 |
| Corporate debt securities | 11,919 | — | (25) | 11,894 | ||||||||||||||||||
| Asset-backed securities | Asset-backed securities | 5,187 | — | (27) | 5,160 | ||||||||||||||||||||||||||||||||||
Total short-term investments |
|
| 14,322 |
|
|
| — |
|
|
| (1 | ) |
|
| 14,321 |
| Total short-term investments | 117,893 | 16 | (506) | 117,403 | ||||||||||||||||||
Total |
| $ | 249,367 |
|
| $ | — |
|
| $ | (1 | ) |
| $ | 249,366 |
| Total | $ | 131,377 | $ | 16 | $ | (506) | $ | 130,887 | ||||||||||||||
|
| As of January 31, 2021 |
| As of January 31, 2023 | |||||||||||||||||||||||||||||||||||
|
| Amortized Cost |
|
| Gross Unrealized Gains |
|
| Gross Unrealized Losses |
|
| Estimated Fair Value |
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||||||||||||
Cash Equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash Equivalents | ||||||||||||||||||||||
Money market funds |
| $ | 31,438 |
|
| $ | — |
|
| $ | — |
|
| $ | 31,438 |
| Money market funds | $ | 29,239 | $ | — | $ | — | $ | 29,239 | ||||||||||||||
| Corporate debt securities | Corporate debt securities | $ | 1,122 | $ | — | $ | — | 1,122 | |||||||||||||||||||||||||||||||
Total cash equivalents |
|
| 31,438 |
|
|
| — |
|
|
| — |
|
|
| 31,438 |
| Total cash equivalents | 30,361 | — | — | 30,361 | ||||||||||||||||||
Short-Term Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Short-Term Investments | ||||||||||||||||||||||
| U.S. government treasury securities | U.S. government treasury securities | 71,981 | 1 | (729) | 71,253 | ||||||||||||||||||||||||||||||||||
Commercial paper |
|
| 12,290 |
|
|
| — |
|
|
| — |
|
|
| 12,290 |
| Commercial paper | 31,500 | — | — | 31,500 | ||||||||||||||||||
| U.S. government agency securities | U.S. government agency securities | 7,839 | 3 | (1) | 7,841 | ||||||||||||||||||||||||||||||||||
Corporate debt securities |
|
| 7,255 |
|
|
| 2 |
|
|
| (1 | ) |
|
| 7,256 |
| Corporate debt securities | 11,952 | — | (50) | 11,902 | ||||||||||||||||||
| Asset-backed securities | Asset-backed securities | 5,391 | — | (31) | 5,360 | ||||||||||||||||||||||||||||||||||
Total short-term investments |
|
| 19,545 |
|
|
| 2 |
|
|
| (1 | ) |
|
| 19,546 |
| Total short-term investments | 128,663 | 4 | (811) | 127,856 | ||||||||||||||||||
Total |
| $ | 50,983 |
|
| $ | 2 |
|
| $ | (1 | ) |
| $ | 50,984 |
| Total | $ | 159,024 | $ | 4 | $ | (811) | $ | 158,217 | ||||||||||||||
year and greater than one year, respectively. As of JulyJanuary 31, 2021,2023, the Company’s short-term investments consisted of $122.0 million and $5.9 million with a contractual maturity of less than one year and greater than one year, respectively.
| As of April 30, 2023 | |||||||||||||||||||||||||||||||||||
| Less Than 12 Months | 12 Months or Greater | Total | |||||||||||||||||||||||||||||||||
| Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | ||||||||||||||||||||||||||||||
| U.S. government treasury securities | $ | (135) | $ | 38,243 | $ | (317) | $ | 24,615 | $ | (452) | $ | 62,858 | |||||||||||||||||||||||
| Corporate debt securities | (25) | 10,894 | — | — | (25) | 10,894 | |||||||||||||||||||||||||||||
| Asset-backed securities | (27) | 5,160 | — | — | (27) | 5,160 | |||||||||||||||||||||||||||||
| U.S. government agency securities | (2) | 3,941 | — | — | (2) | 3,941 | |||||||||||||||||||||||||||||
| Total | $ | (189) | $ | 58,238 | $ | (317) | $ | 24,615 | $ | (506) | $ | 82,853 | |||||||||||||||||||||||
| As of January 31, 2023 | |||||||||||||||||||||||||||||||||||
| Less Than 12 Months | 12 Months or Greater | Total | |||||||||||||||||||||||||||||||||
| Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | ||||||||||||||||||||||||||||||
| U.S. government treasury securities | $ | (729) | $ | 64,397 | $ | — | $ | — | $ | (729) | $ | 64,397 | |||||||||||||||||||||||
| Corporate debt securities | (49) | 8,909 | (1) | 1,999 | (50) | 10,908 | |||||||||||||||||||||||||||||
| Asset-backed securities | (31) | 5,359 | — | — | (31) | 5,359 | |||||||||||||||||||||||||||||
| U.S. government agency securities | (1) | 1,918 | — | — | (1) | 1,918 | |||||||||||||||||||||||||||||
| Total | $ | (810) | $ | 80,583 | $ | (1) | $ | 1,999 | $ | (811) | $ | 82,582 | |||||||||||||||||||||||
|
| As of July 31, 2021 |
| As of April 30, 2023 | |||||||||||||||||||||||||||||
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| Level 1 | Level 2 | Total | ||||||||||||||||||
Cash Equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash Equivalents | ||||||||||||||||
Money market funds |
| $ | 235,045 |
|
| $ | — |
|
| $ | — |
|
| $ | 235,045 |
| Money market funds | $ | 13,484 | $ | — | $ | 13,484 | ||||||||||
Total cash equivalents |
|
| 235,045 |
|
|
| — |
|
|
| — |
|
|
| 235,045 |
| Total cash equivalents | 13,484 | — | 13,484 | |||||||||||||
Short-Term Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Short-Term Investments | ||||||||||||||||
| U.S. government treasury securities | U.S. government treasury securities | — | 62,857 | 62,857 | |||||||||||||||||||||||||||||
Commercial paper |
|
| — |
|
|
| 8,095 |
|
|
| — |
|
|
| 8,095 |
| Commercial paper | — | 25,597 | 25,597 | |||||||||||||
| U.S. government agency securities | U.S. government agency securities | — | 11,895 | 11,895 | |||||||||||||||||||||||||||||
Corporate debt securities |
|
| — |
|
|
| 6,226 |
|
|
| — |
|
|
| 6,226 |
| Corporate debt securities | — | 11,894 | 11,894 | |||||||||||||
| Asset-backed securities | Asset-backed securities | — | 5,160 | 5,160 | |||||||||||||||||||||||||||||
Total short-term investments |
|
| — |
|
|
| 14,321 |
|
|
| — |
|
|
| 14,321 |
| Total short-term investments | — | 117,403 | 117,403 | |||||||||||||
Total |
| $ | 235,045 |
|
| $ | 14,321 |
|
| $ | — |
|
| $ | 249,366 |
| Total | $ | 13,484 | $ | 117,403 | $ | 130,887 | ||||||||||
|
| As of January 31, 2021 |
| As of January 31, 2023 | |||||||||||||||||||||||||||||
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| Level 1 | Level 2 | Total | ||||||||||||||||||
Cash Equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash Equivalents | ||||||||||||||||
Money market funds |
| $ | 31,438 |
|
| $ | — |
|
| $ | — |
|
| $ | 31,438 |
| Money market funds | $ | 29,239 | $ | — | $ | 29,239 | ||||||||||
| Corporate debt securities | Corporate debt securities | $ | — | 1,122 | 1,122 | ||||||||||||||||||||||||||||
Total cash equivalents |
|
| 31,438 |
|
|
| — |
|
|
| — |
|
|
| 31,438 |
| Total cash equivalents | 29,239 | 1,122 | 30,361 | |||||||||||||
Short-Term Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Short-Term Investments | ||||||||||||||||
| U.S. government treasury securities | U.S. government treasury securities | — | 71,253 | 71,253 | |||||||||||||||||||||||||||||
Commercial paper |
|
| — |
|
|
| 12,290 |
|
|
| — |
|
|
| 12,290 |
| Commercial paper | — | 31,500 | 31,500 | |||||||||||||
| U.S. government agency securities | U.S. government agency securities | — | 7,841 | 7,841 | |||||||||||||||||||||||||||||
Corporate debt securities |
|
| — |
|
|
| 7,256 |
|
|
| — |
|
|
| 7,256 |
| Corporate debt securities | — | 11,902 | 11,902 | |||||||||||||
| Asset-backed securities | Asset-backed securities | — | 5,360 | 5,360 | |||||||||||||||||||||||||||||
Total short-term investments |
|
| — |
|
|
| 19,546 |
|
|
| — |
|
|
| 19,546 |
| Total short-term investments | — | 127,856 | 127,856 | |||||||||||||
Total |
| $ | 31,438 |
|
| $ | 19,546 |
|
| $ | — |
|
| $ | 50,984 |
| Total | $ | 29,239 | $ | 128,978 | $ | 158,217 | ||||||||||
There were 0 transfers of financial assets into or out of Level 1, Level 2 or Level 3 during the periods presented.
|
| As of July 31, |
|
| As of January 31, |
| As of April 30, | As of January 31, | |||||||||||
|
| 2021 |
|
| 2021 |
| 2023 | 2023 | |||||||||||
Prepaid expenses |
| $ | 5,919 |
|
| $ | 803 |
| Prepaid expenses | $ | 2,860 | $ | 4,140 | ||||||
Prepaid software |
|
| 1,656 |
|
|
| 1,380 |
| Prepaid software | 3,143 | 2,560 | ||||||||
Other current assets |
|
| 524 |
|
|
| 266 |
| Other current assets | 836 | 1,534 | ||||||||
Total prepaid expenses and other current assets |
| $ | 8,099 |
|
| $ | 2,449 |
| Total prepaid expenses and other current assets | $ | 6,839 | $ | 8,234 | ||||||
|
| As of July 31, |
|
| As of January 31, |
| As of April 30, | As of January 31, | |||||||||||
|
| 2021 |
|
| 2021 |
| 2023 | 2023 | |||||||||||
Computer equipment |
| $ | 3,584 |
|
| $ | 3,304 |
| Computer equipment | $ | 3,562 | $ | 3,586 | ||||||
Furniture and fixtures |
|
| 412 |
|
|
| 408 |
| Furniture and fixtures | 342 | 342 | ||||||||
Capitalized internal-use software |
|
| 5,772 |
|
|
| 5,772 |
| Capitalized internal-use software | 8,435 | 7,884 | ||||||||
Leasehold improvements |
|
| 1,582 |
|
|
| 1,387 |
| Leasehold improvements | 1,889 | 1,889 | ||||||||
| Construction in progress—capitalized internal-use software | Construction in progress—capitalized internal-use software | 4,336 | 3,395 | ||||||||||||||||
Total gross property and equipment |
|
| 11,350 |
|
|
| 10,871 |
| Total gross property and equipment | 18,564 | 17,096 | ||||||||
Accumulated depreciation and amortization |
|
| (5,772 | ) |
|
| (4,365 | ) | Accumulated depreciation and amortization | (10,532) | (9,666) | ||||||||
Total property and equipment, net |
| $ | 5,578 |
|
| $ | 6,506 |
| Total property and equipment, net | $ | 8,032 | $ | 7,430 | ||||||
|
| As of July 31, |
|
| As of January 31, |
| As of April 30, | As of January 31, | |||||||||||
|
| 2021 |
|
| 2021 |
| 2023 | 2023 | |||||||||||
Accrued bonus |
| $ | 4,182 |
|
| $ | 4,149 |
| Accrued bonus | $ | 2,528 | $ | 5,944 | ||||||
Accrued commissions |
|
| 2,481 |
|
|
| 2,364 |
| Accrued commissions | 3,442 | 3,593 | ||||||||
Accrued payroll and benefits |
|
| 2,357 |
|
|
| 2,597 |
| Accrued payroll and benefits | 2,041 | 1,995 | ||||||||
| Employee contributions under the ESPP | Employee contributions under the ESPP | 484 | 1,109 | ||||||||||||||||
Total accrued compensation and benefits |
| $ | 9,020 |
|
| $ | 9,110 |
| Total accrued compensation and benefits | $ | 8,495 | $ | 12,641 | ||||||
Expenses
|
| As of July 31, |
|
| As of January 31, |
| As of April 30, | As of January 31, | |||||||||||
|
| 2021 |
|
| 2021 |
| 2023 | 2023 | |||||||||||
Accrued professional fees |
| $ | 1,384 |
|
| $ | 1,925 |
| Accrued professional fees | $ | 913 | $ | 1,020 | ||||||
Sales and value added tax payable |
|
| 106 |
|
|
| 415 |
| Sales and value added tax payable | 830 | 737 | ||||||||
Income taxes payable |
|
| 513 |
|
|
| 436 |
| Income taxes payable | 1,064 | 743 | ||||||||
Accrued interest |
|
| - |
|
|
| 95 |
| |||||||||||
| Accrued restructuring | Accrued restructuring | 74 | 1,567 | ||||||||||||||||
Other |
|
| 1,572 |
|
|
| 1,283 |
| Other | 1,932 | 2,009 | ||||||||
Total other accrued liabilities |
| $ | 3,575 |
|
| $ | 4,154 |
| |||||||||||
| Total other accrued expenses | Total other accrued expenses | $ | 4,813 | $ | 6,076 | ||||||||||||||
|
| As of July 31, |
|
| As of January 31, |
| As of April 30, | As of January 31, | |||||||||||
|
| 2021 |
|
| 2021 |
| 2023 | 2023 | |||||||||||
Deferred revenue, current |
| $ | 48,980 |
|
| $ | 57,168 |
| Deferred revenue, current | $ | 78,540 | $ | 71,716 | ||||||
Deferred revenue, noncurrent |
|
| 5,356 |
|
|
| 4,542 |
| Deferred revenue, noncurrent | 2,874 | 3,275 | ||||||||
Total deferred revenue |
| $ | 54,336 |
|
| $ | 61,710 |
| Total deferred revenue | $ | 81,414 | $ | 74,991 | ||||||
|
| Six Months Ended July 31, |
| Three Months Ended April 30, | |||||||||||||||
|
| 2021 |
|
| 2020 |
| 2023 | 2022 | |||||||||||
Beginning balance |
| $ | 61,710 |
|
| $ | 60,929 |
| Beginning balance | $ | 74,991 | $ | 71,723 | ||||||
Performance obligations satisfied during the period that were included in the deferred revenue balance at the beginning of the year |
|
| (38,813 | ) |
|
| (39,997 | ) | Performance obligations satisfied during the period that were included in the deferred revenue balance at the beginning of the year | (29,061) | (24,207) | ||||||||
Increases due to invoicing prior to satisfaction of performance obligations |
|
| 31,439 |
|
|
| 26,483 |
| Increases due to invoicing prior to satisfaction of performance obligations | 35,484 | 23,239 | ||||||||
Ending balance |
| $ | 54,336 |
|
| $ | 47,415 |
| Ending balance | $ | 81,414 | $ | 70,755 | ||||||
Debt is presented net of issuance costs on the condensed consolidated balance sheets as follows (in thousands)
|
| As of July 31, |
|
| As of January 31, |
| ||
|
| 2021 |
|
| 2021 |
| ||
Principal outstanding |
| $ | 25,000 |
|
| $ | 25,000 |
|
Unamortized discount and debt issuance costs |
|
| (37 | ) |
|
| (52 | ) |
Long-term debt |
| $ | 24,963 |
|
| $ | 24,948 |
|
Interest expense on the Company’s borrowingsconsisting primarily of unused Credit Facility (as defined below) fees was $0.3 million and $2.5 millionimmaterial for the three months ended July 31, 2021April 30, 2023 and 2020, respectively, and $0.5 million and $4.0 million for the six months ended July 31, 2021 and 2020, respectively. The effective interest rate was 3.9% and 6.5% for the three months ended July 31, 2021 and 2020, respectively, and 3.9% and 8.9% for the six months ended July 31, 2021 and 2020, respectively.
2022.
In April 2019, the Company entered into an amendment to the Loan with Hercules Capital to increase the maximum Loan amount to $70.0 million and extending the maturity date. The Company borrowed $34.8 million, net of issuance costs, during the year ended January 31, 2020. Under the terms of the amended Loan, the Company continued to pay interest at the same rate monthly with the aggregate principal balance repayment date being extended to May 2023. The amended Loan was also subject to a 3.75% end-of-term charge on the aggregate borrowings, payable upon maturity. The amendment also added certain financial covenants, including covenants related to achieving a target annual recurring revenue, that if not met by June 2022, could trigger early repayment in June
2022, and a target annual recurring revenue leverage ratio, that if not met, would limit the additional amount of borrowings under the Loan.
In June 2020, the Company paid off $25.0 million of the Loan and entered into an amendment to the Loan with Hercules Capital, which reduced theprovided maximum borrowings under the Loan from $70.0 millionof up to $25.0 million, and extended the Loan maturity date to maturing in June 2024. Additionally, this amendment required the Company to make a prepayment charge equal to $0.4 million upon the effective date of the agreement. Accordingly, the Company paid a prepayment penalty of $0.4 million and an end-of-term charge of $0.9 million in accordance with the terms of the Loan which was recorded as interest expense in the condensed consolidated statement of operations.
2024. In January 2021, the Company repaid all outstanding indebtedness owed pursuant to the Amended Loan and terminated the Loan and paid off the $25.0 million remaining outstanding balance of the Loan together with a prepayment penalty of $0.6 million and an end-of-term charge of $0.9 million in accordance with the terms of the Loan, which was recorded as interest expense in the condensed consolidated statement of operations. The Company wrote off the remaining unamortized debt discounts and issuance costsagreement. Pursuant to interest expense upon the termination of the Amended Loan, with Hercules in January 2021.
the related security interests have been removed and the covenants shall be of no further force and effect.
In November 2018, the Company entered into an amendment with Silicon Valley Bank to increase the line of credit limit to $15.0 million and extend the maturity date to November 2019.
In April 2019, an amendment was entered into with the Silicon Valley Bank to decrease the line of credit to $10.0 million. In October 2019, an amendment was entered into with Silicon Valley Bank to extend the maturity of the line of credit to November 2020. There were 0 borrowings against the line of credit as of January 31, 2020.
In November 2020, the Company entered into an amendment with Silicon Valley Bank to extend the maturity of the line of credit to February 2021. In January 2021, the Company entered into an amendment with Silicon Valley Bank to increase the line of credit limit to $40.0 million and extend the maturity date to January 2024. Upon the execution of this amendment, the Company borrowed $25.0 million from the line of credit. The outstanding principal balance is due at maturity with interest payable monthly. The line of credit bears a variable annual interest rate of the prime rate plus 0.5%. The Company is required to pay a fee equal to 0.25% per annum on the unused portion of the line of credit. The Company is also subject to a termination fee ranging from 0.5% to 1.0% of the line of credit if the Company terminates the agreement prior to the maturity date. The amendment also added certain financial covenants, including covenants related to certain financial metrics, that if not met, would limit the amount of additional borrowings under the line of credit. As of July 31, 2021, $15.0 million was available for borrowing under the line of credit.
The amended line of credit agreement requiresalso required the company to maintain an adjusted quick ratio (as defined by the agreement) of at least 1.15 to 1.0. The line of credit agreement also containscontained certain customary affirmative and negative covenants as well as customary events of default, subject to certain exceptions, including restrictions on the Company’s ability to, among other things, incur debt and liens, maintain collateral accounts, undergo fundamental changes including mergers or consolidations, dispose assets including selling, transferring or assigning assets, pay dividends or other distributions or make or permit payments on any subordinated debt. The outstanding principal balance was due at maturity with interest payable monthly. The line of credit bore a variable annual interest rate of the prime rate plus 0.5%. The Company was required to pay a fee equal to 0.25% per annum on the unused portion of the line of credit. The Company was also subject to a termination fee ranging from 0.5% to 1.0% of the line of credit if the Company terminates the agreement prior to the maturity date. The Company was in compliance with the financial covenants under the line of credit as of July 31, 2021.
April 30, 2023.
Operating Leases
The Company officers. The Company incur material costs. Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when and if declared by the board of directors, subject to the prior rights of holders of all classes of stock outstanding. As of Stock options outstanding Restricted stock units issued and outstanding Options Outstanding Shares Available for Grant Number of Options Weighted- Average Exercise Price Weighted- Average Contractual Term Aggregate Intrinsic Value Balances as of January 31, 2021 253,958 8,912,477 $ 6.42 6.49 $ 38,582 Additional shares reserved 5,604,548 — Options exercised — (759,081 ) $ 5.48 Options granted (1,948,563 ) 1,948,563 $ 22.49 Options cancelled 210,057 (210,057 ) $ 8.48 Balances as of July 31, 2021 4,120,000 9,891,902 $ 9.61 6.94 $ 203,235 Options vested and expected to vest as of July 31, 2021 9,891,902 $ 9.61 6.94 $ 203,235 Options vested and exercisable as of July 31, 2021 5,804,191 $ 5.93 5.51 $ 140,607 Three Months Ended July 31, Six Months Ended July 31, 2021 2020 2021 2020 Stock Option Plans: Expected term (in years) 6.1 6.1 6.1 6.1 Expected volatility 42.4 % 39.9 % 42.0 % 39.9 % Risk-free interest rate 1.0 % 0.4 % 1.0 % 0.4 % Dividend yield — — — — Three Months Ended July 31, Six Months Ended July 31, 2021 2020 2021 2020 Cost of revenue—subscription $ 30 $ 19 $ 57 $ 34 Cost of revenue—services 24 17 46 27 Research and development 569 394 1,139 640 Sales and marketing 688 412 1,229 676 General and administrative 670 524 1,339 830 Total stock-based compensation expense $ 1,981 $ 1,366 $ 3,810 $ 2,207 Employee Stock Purchase Plan Company’s common stock on the purchase date. A participant will be permitted to purchase a maximum of shares during each offering determined on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: The Three Months Ended July 31, Six Months Ended July 31, 2021 2020 2021 2020 United States $ 18,336 $ 16,149 $ 36,383 $ 31,366 International 11,363 9,011 21,271 16,839 Total $ 29,699 $ 25,160 $ 57,654 $ 48,205 The following table presents the calculation of basic and diluted net loss per share attributable to common stockholders (in thousands, except per share data): Three Months Ended July 31, Six Months Ended July 31, 2021 2020 2021 2020 Numerator Net loss $ (14,470 ) $ (8,838 ) $ (29,069 ) $ (20,188 ) Cumulative dividends on Series G redeemable convertible preferred stock (1,438 ) (1,150 ) (2,917 ) (1,150 ) Net loss attributable to common stockholders $ (15,908 ) $ (9,988 ) $ (31,986 ) $ (21,338 ) Denominator Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted 9,045 5,662 7,696 5,660 Net loss per share attributable to common stockholders, basic and diluted $ (1.76 ) $ (1.76 ) $ (4.16 ) $ (3.77 ) As of July 31, 2021 2020 Stock options 9,909 9,194 Redeemable convertible preferred stock (on an if-converted basis) — 26,312 Common stock warrants 105 105 Total 10,014 35,611 microseconds, enable rich, customized user experiences and perform without latency. manage additional databases or supporting technologies. further discussion of these challenges and risks. As of July 31, 2021 2020 (in millions) ARR $ 115.2 $ 96.2 As of July 31, 2021 2020 Customers 558 522 Three Months Ended July 31, Six Months Ended July 31, 2021 2020 2021 2020 (dollars in thousands) Total revenue $ 29,699 $ 25,160 $ 57,654 $ 48,205 Gross profit $ 26,174 $ 22,477 $ 50,737 $ 42,845 Add: Stock-based compensation expense 54 36 103 61 Non-GAAP gross profit $ 26,228 $ 22,513 $ 50,840 $ 42,906 Gross margin 88.1 % 89.3 % 88.0 % 88.9 % Non-GAAP gross margin 88.3 % 89.5 % 88.2 % 89.0 % Three Months Ended July 31, Six Months Ended July 31, 2021 2020 2021 2020 (dollars in thousands) Total revenue $ 29,699 $ 25,160 $ 57,654 $ 48,205 Loss from operations $ (13,990 ) $ (6,703 ) $ (28,099 ) $ (15,997 ) Add: Stock-based compensation expense 1,981 1,366 3,810 2,207 Add: Litigation-related expenses — 138 — 213 Non-GAAP operating loss $ (12,009 ) $ (5,199 ) $ (24,289 ) $ (13,577 ) Operating margin (47 )% (27 )% (49 )% (33 )% Non-GAAP operating margin (40 )% (21 )% (42 )% (28 )% Three Months Ended July 31, Six Months Ended July 31, 2021 2020 2021 2020 (dollars in thousands) Net loss attributable to common stockholders $ (15,908 ) $ (9,988 ) $ (31,986 ) $ (21,338 ) Add: Stock-based compensation expense 1,981 1,366 3,810 2,207 Add: Litigation-related expenses — 138 — 213 Non-GAAP net loss attributable to common stockholders $ (13,927 ) $ (8,484 ) $ (28,176 ) $ (18,918 ) GAAP net loss per share attributable to common stockholders $ (1.76 ) $ (1.76 ) $ (4.16 ) $ (3.77 ) Non-GAAP net loss per share attributable to common stockholders $ (1.54 ) $ (1.50 ) $ (3.66 ) $ (3.34 ) Weighted average shares outstanding, basic and diluted 9,045 5,662 7,696 5,660 Three Months Ended July 31, Six Months Ended July 31, 2021 2020 2021 2020 (in thousands) Net cash used in operating activities $ (15,986 ) $ (13,318 ) $ (19,175 ) $ (19,466 ) Less: Purchases of property and equipment (20 ) (785 ) (250 ) (2,626 ) Free cash flow $ (16,006 ) $ (14,103 ) $ (19,425 ) $ (22,092 ) Net cash provided by (used in) investing activities $ 1,668 $ (785 ) $ 4,902 $ (2,626 ) Net cash provided by financing activities $ 216,339 $ 72,597 $ 216,347 $ 79,085 restructuring. training and fluctuations in customer consumption of our database-as-a-service offering. and training. over time. fees for professional services such as external legal, accounting and other professional services, expenses associated with software and subscription services dedicated for use by our general and administrative organization, certain taxes other than income taxes and allocated overhead. We expect interest income. Three Months Ended July 31, Six Months Ended July 31, 2021 2020 2021 2020 Revenue: License $ 4,416 $ 3,010 $ 8,694 $ 5,540 Support and other 23,613 20,627 45,800 39,269 Total subscription revenue 28,029 23,637 54,494 44,809 Services 1,670 1,523 3,160 3,396 Total revenue 29,699 25,160 57,654 48,205 Cost of revenue: Subscription(1) 2,072 1,276 4,124 2,273 Services(1) 1,453 1,407 2,793 3,087 Total cost of revenue 3,525 2,683 6,917 5,360 Gross profit 26,174 22,477 50,737 42,845 Operating expenses: Research and development(1) 12,623 9,237 25,164 18,279 Sales and marketing(1) 22,263 16,475 42,897 33,702 General and administrative(1) 5,278 3,468 10,775 6,861 Total operating expenses 40,164 29,180 78,836 58,842 Loss from operations (13,990 ) (6,703 ) (28,099 ) (15,997 ) Interest expense (252 ) (2,495 ) (497 ) (4,016 ) Other income (expense), net (77 ) 614 7 307 Loss before income taxes (14,319 ) (8,584 ) (28,589 ) (19,706 ) Provision for income taxes 151 254 480 482 Net loss $ (14,470 ) $ (8,838 ) $ (29,069 ) $ (20,188 ) Three Months Ended July 31, Six Months Ended July 31, 2021 2020 2021 2020 Cost of revenue—subscription $ 30 $ 19 $ 57 $ 34 Cost of revenue—services 24 17 46 27 Research and development 569 394 1,139 640 Sales and marketing 688 412 1,229 676 General and administrative 670 524 1,339 830 Total stock-based compensation expense $ 1,981 $ 1,366 $ 3,810 $ 2,207 Three Months Ended July 31, Six Months Ended July 31, 2021 2020 2021 2020 Revenue: License 15 % 12 % 15 % 11 % Support and other 80 82 79 81 Total subscription revenue 94 94 95 93 Services 6 6 5 7 Total revenue 100 100 100 100 Cost of revenue: Subscription 7 5 7 5 Services 5 6 5 6 Total cost of revenue 12 11 12 11 Gross profit 88 89 88 89 Operating expenses: Research and development 43 37 44 38 Sales and marketing 75 65 74 70 General and administrative 18 14 19 14 Total operating expenses 135 116 137 122 Loss from operations (47 ) (27 ) (49 ) (33 ) Interest expense �� (1 ) (10 ) (1 ) (8 ) Other income (expense), net * 2 * 1 Loss before income taxes (48 ) (34 ) (50 ) (41 ) Provision for income taxes 1 1 1 1 Net loss (49 )% (35 )% (50 )% (42 )% 2022 Three Months Ended July 31, Six Months Ended July 31, 2021 2020 $ Change % Change 2021 2020 $ Change % Change (dollars in thousands) (dollars in thousands) Revenue License $ 4,416 $ 3,010 $ 1,406 47 % $ 8,694 $ 5,540 $ 3,154 57 % Support and other 23,613 20,627 2,986 14 % 45,800 39,269 6,531 17 % Total subscription revenue 28,029 23,637 4,392 19 % 54,494 44,809 9,685 22 % Services 1,670 1,523 147 10 % 3,160 3,396 (236 ) (7 )% Total revenue $ 29,699 $ 25,160 $ 4,539 18 % $ 57,654 $ 48,205 $ 9,449 20 % Three Months Ended July 31, Six Months Ended July 31, 2021 2020 $ Change % Change 2021 2020 $ Change % Change (dollars in thousands) (dollars in thousands) Cost of revenue: Subscription $ 2,072 $ 1,276 $ 796 62 % $ 4,124 $ 2,273 $ 1,851 81 % Services 1,453 1,407 46 3 % 2,793 3,087 (294 ) (10 )% Total cost of revenue $ 3,525 $ 2,683 $ 842 31 % $ 6,917 $ 5,360 $ 1,557 29 % Gross profit $ 26,174 $ 22,477 $ 50,737 $ 42,845 Gross margin 88.1 % 89.3 % 88.0 % 88.9 % Headcount (at period end) 59 44 59 44 Capella. RSUs. Development Three Months Ended July 31, Six Months Ended July 31, 2021 2020 $ Change % Change 2021 2020 $ Change % Change (dollars in thousands) (dollars in thousands) Research and development $ 12,623 $ 9,237 $ 3,386 37 % $ 25,164 $ 18,279 $ 6,885 38 % Percentage of revenue 43 % 37 % 44 % 38 % Headcount (at period end) 241 177 241 177 Marketing Three Months Ended July 31, Six Months Ended July 31, 2021 2020 $ Change % Change 2021 2020 $ Change % Change (dollars in thousands) (dollars in thousands) Sales and Marketing $ 22,263 $ 16,475 $ 5,788 35 % $ 42,897 $ 33,702 $ 9,195 27 % Percentage of revenue 75 % 65 % 74 % 70 % Headcount (at period end) 278 218 278 218 Three Months Ended July 31, Six Months Ended July 31, 2021 2020 $ Change % Change 2021 2020 $ Change % Change (dollars in thousands) (dollars in thousands) General and administrative $ 5,278 $ 3,468 $ 1,810 52 % $ 10,775 $ 6,861 $ 3,914 57 % Percentage of revenue 18 % 14 % 19 % 14 % Headcount (at period end) 55 43 55 43 Three Months Ended July 31, Six Months Ended July 31, 2021 2020 $ Change % Change 2021 2020 $ Change % Change (dollars in thousands) (dollars in thousands) Interest expense $ (252 ) $ (2,495 ) $ 2,243 (90 )% $ (497 ) $ (4,016 ) $ 3,519 (88 )% Other Income (Expense), Net Three Months Ended July 31, Six Months Ended July 31, 2021 2020 $ Change % Change 2021 2020 $ Change % Change (dollars in thousands) (dollars in thousands) Other income (expense), net $ (77 ) $ 614 $ (691 ) (113 )% $ 7 $ 307 $ (300 ) (98 )% Three Months Ended July 31, Six Months Ended July 31, 2021 2020 $ Change % Change 2021 2020 $ Change % Change (dollars in thousands) (dollars in thousands) Loss before income taxes $ (14,319 ) $ (8,584 ) $ (5,735 ) 67 % $ (28,589 ) $ (19,706 ) $ (8,883 ) 45 % Provision for income taxes 151 254 $ (103 ) (41 )% 480 482 $ (2 ) (0 )% Effective tax rate (1.1 )% (3.0 )% (1.7 )% (2.4 )% revenue and non-cancelable contracted amounts, were Six Months Ended July 31, 2021 2020 (in thousands) Net cash provided by (used in): Operating activities $ (19,175 ) $ (19,466 ) Investing activities $ 4,902 $ (2,626 ) Financing activities $ 216,347 $ 79,085 under our employee stock purchase plan. obligations. that could reasonably be expected to have a material effect on our financial condition, results of operations or cash flows. March 29, 2023. Quantitative and Qualitative Disclosures About Market Risk Controls and Procedures. Inherent Limitations on Effectiveness of Controls and Procedures Legal Proceedings Risk Factors systems and procedures, recruit, train and retain highly skilled personnel and maintain customer satisfaction. In addition, we have encountered and will continue to encounter risks and challenges frequently experienced by growing companies in evolving industries, including market acceptance of our products and services, intense competition and our ability to manage our costs and operating expenses. Further, as our customers adopt our products and services for an increasing number of use cases, we have had to support more complex commercial relationships. We must continue to improve and expand our information technology comprehensive offerings than were previously offered and adapt more quickly to new technologies and customer needs, devote greater resources to the promotion or sale of their products, initiate or withstand substantial price competition, take advantage of other opportunities more readily or develop and expand their offerings more quickly than we do. For all of these reasons, we may not be able to compete successfully against our current or potential competitors. If we are unable to anticipate or effectively react to competitive challenges, our competitive position would weaken, and our business, financial condition and results of operations would be adversely affected. The market for our products and services is relatively new and evolving, and our future success depends on the growth and expansion of this market. manage the growth of our services business and improve our profit margin from these services, our results of operations, including our profit margins, will be harmed. We recognize a significant portion of revenue from subscriptions over the term of the relevant subscription period, and as a result, downturns or upturns in sales are not immediately reflected in full in our results of operations. expense, particularly in the current macroeconomic environment. Moreover, large customers often require proof of concept deployments, free trials or begin to deploy our products on a limited basis but nevertheless negotiate pricing discounts, which all increase our upfront investment in the sales effort with no guarantee that sales to these customers will justify our substantial upfront investment. If we fail to effectively manage risks associated with sales cycles and sales to large customers, our business, financial condition and results of operations could be adversely affected. Our business could be adversely affected by economic downturns. We cannot predict the timing, strength or duration of any economic slowdown, instability or recovery, generally or within any particular industry or geography. Any economic downturns of the general economy or industries in which we operate would adversely affect our business, financial condition and results of operations. the other factors discussed in this “Risk Factors” section. We may be unable to make acquisitions and investments or successfully integrate acquired companies and assets into our business, and our acquisitions and investments may not meet our expectations, any of which could adversely affect our business, financial condition and results of operations. We rely on third-party service providers for many aspects of our business, and any failure to maintain these relationships could harm our business. require the release of the source code of our closed-source proprietary software to the public. However, we cannot ensure that we have not incorporated additional open source software in our software in a manner that is inconsistent with the terms of the applicable license or our current policies and procedures. If we fail to comply with the terms of these licenses or otherwise combine our closed-source proprietary software with open source software in a certain manner, we could, under certain open source licenses, be required to release the source code of our closed-source proprietary software to the public at no cost, make available source code for modifications or derivative works we create based upon, incorporating or using the open source software and license such modifications or derivative works under the terms of applicable open source licenses. This would allow our competitors to create similar offerings with lower development effort and time and ultimately could result in a loss of our competitive advantages. Additionally, if an author or other third party that distributes such open source software were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages, enjoined from the sale of our products that contained the open source software and required to comply with onerous conditions or restrictions on these products, which could disrupt the distribution and sale of these products. Alternatively, to avoid the public release of the affected portions of our source code, we could be required to expend substantial time and resources to re-engineer some or all of our software which may divert resources away from our product development efforts and, as a result, adversely affect our business. Our decision to license certain source code In addition, we have made core portions of our own software available under open source or source-available licenses, and we include third-party open source software in our products. We have also occasionally contributed source code to open source projects. Because the source code for any software we distribute under open source or source-available licenses or contribute to open source projects is publicly available, our ability to protect our intellectual property rights with respect to such source code may be limited or lost entirely. treble damages and attorneys’ fees if we are found to have willfully infringed a party’s rights), royalties or other fees in connection with a claimant securing a judgment against us and we may be subject to an injunction or other restrictions that cause us to cease selling or using products or services that incorporate the intellectual property rights that we allegedly infringe, misappropriate or violate, including subscriptions to our products. We may also be required to redesign any allegedly infringing portion of our products, which could be time-consuming or impossible, or we may agree to a settlement that prevents us from distributing our products or a portion thereof, any of which could adversely affect our business, financial condition and results of operations. Additionally, though we continue to evaluate and take steps to enhance the security of our products and services, our data, our systems and our internal IT infrastructure, these efforts may cause us to incur substantial costs and may not be effective. ensure that any limitation of liability provisions in our customer, partner, vendor and other contracts would be enforceable or adequate with respect to any security lapse or breach or other security incident or would otherwise protect us from any liabilities or damages with respect to any particular claim. These risks may increase as we continue to grow and evolve our offerings to collect, host, process, store and transmit increasing volumes of data. In addition, these risks may increase if the type of data that we collect, host, process, store and transmit increasingly include sensitive and regulated data, such as protected health information, rapidly drives the adoption of legislation or regulation affecting the use, collection or other processing of data and manner in which we conduct our business. mandates. Similar laws have been proposed in other states and at the federal level, reflecting a trend toward more stringent privacy legislation in the United States. This legislation may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data and could result in increased compliance costs or changes in business practices and policies. under such agreements or other contractual obligations. Some of these indemnity agreements provide for uncapped liability for which we would be responsible, and some indemnity provisions survive termination or expiration of the applicable agreement. Large indemnity payments could harm our business, financial condition and results of operations. Although we attempt to contractually limit our liability with respect to such indemnity obligations, we are not always successful and may still incur substantial liability related to such claims and we may be required to cease use of certain functions of our products or services as a result of any such claims. Moreover, even claims that ultimately are unsuccessful could result in our expenditure of funds in litigation, divert management’s time and other resources and harm our business and reputation. investigation or action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees. In addition, the U.S. government may seek to hold us liable for successor liability for FCPA violations committed by companies in which we invest or that we acquire. As a general matter, investigations, enforcement actions and sanctions could harm our reputation, business, financial condition and results of operations. other jurisdictions may be proposed or enacted in the future or what effect such changes would have on our business. Any significant increase in our future effective tax rate could have a material adverse impact on our business, financial condition, results of operations, or cash flows. examinations will not have an adverse effect on our financial condition and results of operations. A difference in the ultimate resolution of tax uncertainties from what is currently estimated could adversely affect our financial condition and results of operations. significant resources in order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting. pronouncements as of public company effective dates. We have elected to take advantage of this extended transition period under the JOBS Act with respect to Section 22 of the Securities Act of 1933, as amended (the “Securities Act”), creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims. To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated bylaws further provide that the federal district courts of the United States will be the exclusive forum for resolving any complaints asserting a cause of action arising under the Securities Unregistered Sales of Equity Securities and Use of Proceeds There has been no material change in the expected use of the net proceeds from our Defaults Upon Senior Securities Mine Safety Disclosures Exhibit Number Description Form File No. Exhibit Filing Date Filed Herewith 3.1 Amended and Restated Certificate of Incorporation of Couchbase, Inc. X 3.2 X 10.1 Couchbase, Inc. 2021 Equity Incentive Plan and related form agreements. S-1/A 333-257205 10.2 7-12-21 10.2 Couchbase, Inc. 2021 Employee Stock Purchase Plan and related form agreements. S-1/A 333-257205 10.3 7-12-21 10.3 Couchbase, Inc. 2021 Executive Incentive Compensation Plan and related form agreements. S-1/A 333-257205 10.6 6-21-21 10.4 S-1/A 333-257205 10.7 6-21-21 10.5 Change in Control and Severance Policy and related form agreements. S-1/A 333-257205 10.8 6-21-21 10.6 S-1/A 333-257205 10.9 6-21-21 10.7 Confirmatory Employment Letter between the registrant and Margaret Chow, dated as of June 17, 2021. S-1/A 333-257205 10.10 6-21-21 10.8 Confirmatory Employment Letter between the registrant and Denis Murphy, dated as of June 17, 2021. S-1/A 333-257205 10.11 6-21-21 31.1 X 31.2 X 32.1* X 32.2* X 101.INS Inline XBRL Instance Document X 101.SCH Inline XBRL Taxonomy Extension Schema Document X 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X 104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibits 101) X Matthew M. Cain Chair, President and Chief Executive Officer (Principal Executive Officer) By: /s/ GREG HENRY Greg Henry Senior (Principal Financial Rent expense was $0.7Operating lease costs were $0.8 million and $0.7$0.6 million for the three months ended July 31, 2021April 30, 2023 and 2020, respectively, and $1.32022, respectively. Variable lease costs were $0.1 million and $1.4$0.2 million forduring the sixthree months ended July 31, 2021April 30, 2023 and 2020,2022, respectively. Short-term lease costs were immaterial during the three months ended April 30, 2023 and 2022.Three Months Ended April 30, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 823 $ 661 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ — $ 1,509 April 30, 2023 January 31, 2023 Operating lease right-of-use assets $ 6,233 $ 6,940 Operating lease liabilities $ 3,060 $ 3,117 Operating lease liabilities, noncurrent 3,873 4,543 Total operating lease liabilities $ 6,933 $ 7,660 Weighted-average remaining lease term 2.5 years 2.7 years Weighted-average discount rate 3.8 % 3.8 % Period Operating Leases Remaining for Fiscal 2024 $ 2,492 Fiscal 2025 2,988 Fiscal 2026 1,183 Fiscal 2027 353 Fiscal 2028 and thereafter 251 Total lease payments 7,267 Less: imputed interest (334) Total $ 6,933 In July 2021, the Company negotiated a noncancelable arrangement with a cloud hosting service provider. Under the arrangement, the Company committed to spend an aggregate of at least $10.0 million between August 2021 and August 2024, with a minimum amount of approximately $3.0 million in each of the first two years and $4.0 million in the third year on services with this vendor.July 31, 2021, except for the arrangement noted above,April 30, 2023, there were no other material changes to the Company’s otherCompany’s contractual commitments since January 31, 2021.2023.Indemnificationenters into standard indemnification arrangementsis not currently a party to any legal proceedings that, if determined adversely to it, would, in management’s opinion, have a material and adverse effect on the Company’s financial condition, results of operations, or cash flows.business. Pursuant to these arrangements,business, the Company indemnifies, holds harmlessenters into agreements of varying scope and terms pursuant to which the Company agrees to reimburseindemnify customers, vendors, lessors and other business partners with respect to certain matters, including, but not limited to, losses arising out of the indemnified parties for losses suffered or incurredbreach of such agreements, services to be provided by the indemnified party, in connection with any trade secret, copyright, patentCompany or otherfrom intellectual property infringement claims broughtmade by any third party against such indemnified party with respect to licensed technology. The term of these indemnification agreements is generally perpetual any time after the execution of the agreement. The maximum potential amount of future paymentsparties. Additionally, the Company could be required to make under these agreements is not determinable because it involves claims that may be made against the Company in the future but have not yet been made. To date, the Company has not incurred costs to defend lawsuits or settle claims related to these indemnification agreements.The Company has entered into indemnification agreements with itsthe Company’s directors and officers that may require the Company, among other things, to indemnify its directors and officersthem against certain liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from willful misconduct of the individual. NaN liability associated with such indemnifications has been recorded as of July 31, 2021, or January 31, 2021.9. Retirement Plansponsors a defined contribution savings plan under Section 401(k)has not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements nor are we aware of the Internal Revenue Code of 1986, as amended, covering substantially all full-time U.S. employees. Each eligible employee may contributeany such claims that could reasonably be expected to the 401(k) plan in accordance with the plan terms. The Company matches its employee contributions to the 401(k) plan. The total matching contributions were $0.1 million and less than $0.1 million for the three months ended July 31, 2021 and 2020, respectively, and $0.2 million and $0.2 million for the six months ended July 31, 2021 and 2020, respectively. (Deficit) and Employee Incentive PlansUpon the closing of the Company’s IPO, all 26,710,600 shares of redeemable convertible preferred stock were automatically converted into shares of common stock, which includes an additional 640,387 shares of redeemable convertible preferred stock. The additional shares of redeemable convertible preferred stock consisted of 162,032 shares for the Series E conversion feature and 478,355 shares for the Series G dividends. The carrying value of $259.8 million was reclassified into common stock and additional paid-in-capital. July 31, 2021,April 30, 2023, there were 0no shares of redeemable convertible preferred stock issued and outstanding.In connection with the IPO, theamendedAmended and restated certificateRestated Certificate of incorporation became effective, which authorizedIncorporation authorizes the issuance of 200,000,000 shares of undesignated preferred stock with a par value of $0.00001 per share with rights and preferences, including voting rights, designated from time to time by the board of directors.and 43,200,000 shares of common stock at a par value of $0.00001 as of July 31, 2021April 30, 2023 and January 31, 2021, respectively. As of July 31,2023.2021 and January 31, 2021, approximately 43,282,941 and 6,199,305 shares of common stock were issued and outstanding, respectively.July 31, 2021April 30, 2023 and January 31, 2021,2023, no dividends had been declared.July 31, 2021,April 30, 2023, the Company has reserved common stock for future issuance as follows:Number of Shares 7,387,648 9,908,5766,573,473 Remaining shares available for issuance under the 2021 Plan 2,207,333 Shares available for issuance under the 2023 Inducement Plan 1,139,968 ESPP 1,334,366 Common stock warrants 105,350 105,350Reserved for future grant of stock options18,748,138 4,120,000Total14,133,926threefour equity incentive plans: the 2008 Equity Incentive Plan (the “2008 Plan”), 2018 Equity Incentive Plan (the “2018 Plan”) and the, 2021 Equity Incentive Plan (the “2021 Plan”) and 2023 Inducement Equity Incentive Plan (the "2023 Inducement Plan"), collectively (the “Stock Plans”). In connection with the Company’s IPO in July 2021, the 2008 Plan and the 2018 Plan were terminated and replaced by the 2021 Plan and all shares that remained available for issuance under the 2018 Plan at that time were reserved for issuance under the 2021 Plan. The number of shares of common stock available for issuance under the 2021 Plan will be increased by any shares of common stock subject to awards outstanding under the 2008 Plan and the 2018 Plan that expire or otherwise terminate without having been exercised or issued in full, are tendered to or withheld by the Company for payment of an exercise price or for satisfying tax withholding obligations or are forfeited to or repurchased by the Company due to failure to vest.Plan. Through July 31, 2021, the Company has granted 0 equity awards pursuant toPlan and restricted stock units (“RSUs”) under the 2021 Plan.Options grantedJuly 31, 2021,April 30, 2023, there were 4.12.2 million shares available for grant under the 2021 Plan. The 2021 Plan provides that the number of shares reserved will automatically increase on the first day of each fiscal year, beginning on February 1, 2022, by an amount equal to the least of (i) 4,120,000 shares, (ii) five-percent (5%) of the outstanding Sharesshares of our common stock on the last day of the immediately preceding fiscal year, or (iii) such number of shares determined by the administrator of the 2021 Plan no later than the last day of the immediately preceding Fiscal Year.Stock option activity and activity regardingStock Plans for six months ended July 31, 2021 are as follows (aggregate intrinsic value in thousands):2023 Inducement Plan.Stock options granted during the three months ended July 31, 2021 and 2020 had a weighted-average grant-date fair value of $11.31 and $2.99, respectively. The aggregate intrinsic value of options exercised during the three months ended July 31, 2021 and 2020 was $10.6 million and less than $0.1 million, respectively.Stock options granted during the six months ended July 31, 2021 and 2020 had a weighted-average grant-date fair value of $9.30 and $2.99, respectively. The aggregate intrinsic value of options exercised during the six months ended July 31, 2021 and 2020 was $14.4 million and $0.1 million, respectively.Aggregate intrinsic value represents the difference between the exercise price of the options and the estimated fair value of the Company’s common stock.The fair value of employee stock options was estimated using the following weighted-average assumptions:Expected term—The expected term of stock options represents the weighted-average period the stock options are expected to remain outstanding and is calculated using the simplified method, as the Company did not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. The simplified method calculates the expected term as the midpoint between the vesting date and the contractual expiration date of the option.Expected volatility—The expected stock price volatility assumption was determined by examining the historical volatilities for industry peers, as the Company does not have any trading history for the Company’s common stock.Risk-free interest rate—The risk-free rate assumption is based on the U.S. Treasury instruments whose term was consistent with the expected term of the Company’s stock options.Dividend yield—The expected dividend assumption is based on the Company’s history and expectation of dividend payouts.Fair value of underlying common stock— Prior to the Company’s initial public offering, the fair value was determined by the Board of Directors with input from management and contemporaneous independent third-party valuations. Subsequent to the IPO, the fair value of the Company’s common stock is based on the daily average selling price on the Nasdaq Global Select Market.Stock-Based CompensationStock-based compensation expense was as follows (in thousands):Stock-based compensation expense related to options granted to nonemployees for the three and six months ended July 31, 2021 and 2020 was not material.As of January 31, 2021 and July 31, 2021, there was $8.7 million and $22.4 million, respectively, of unrecognized stock-based compensation expense related to unvested stock options, which is expected to be recognized over a weighted-average period of 2.5 years and 2.8 years, respectively.period. NaNperiod and no participant may purchase more than 1,000 shares during any offering period. As of July 31, 2021, 830,000 shares were available for issuance and 0 shares of common stock were issued under the ESPP. 2021 ESPP provides for 24-month offering periods beginning March 21 and September 21 of each year, and each offering period will consist of 4four six-month purchase periods. The initial offering period began on July 22, 2021 and will end on September 20, 2023. The initial offering shall consistperiod consists of 4four purchase periods with the first purchase period endingdate on March 20,21, 2022, and the final purchase period ending on September 20, 2023.Options Outstanding Weighted-
Average
Contractual
TermAggregate
Intrinsic
ValueNumber of
OptionsWeighted-
Average
Exercise
PriceBalances as of January 31, 2023 7,819,480 $ 9.78 5.21 $ 51,606 Options exercised (389,377) $ 4.92 Options granted — $ — Options cancelled (42,455) $ 19.59 Balances as of April 30, 2023 7,387,648 $ 9.98 5.18 $ 50,996 Options vested and expected to vest as of April 30, 2023 7,387,648 $ 9.98 5.18 $ 50,996 Options vested and exercisable as of April 30, 2023 6,318,721 $ 8.62 4.76 $ 48,584 RSUs Outstanding Number of RSUs Weighted Average Grant Date Fair Value Per Share Balances as of January 31, 2023 3,442,982 $ 18.39 RSUs granted 2,415,445 $ 16.26 RSUs vested (259,980) $ 19.88 RSUs forfeited (154,974) $ 17.62 Balances as of April 30, 2023 5,443,473 $ 17.39 accounting purposes, the portion of the awards where the expectation of the achievement of performance conditions remained probable prior to and post modification, the Company accounted for this change as a Type I modification under ASC 718, Compensation—Stock Compensation. For the portion of the awards where the expectation of the achievement of performance conditions changed from probable prior to the modification to improbable post-modification, the Company accounted for this change as a Type II modification. The Company recognizes expense for performance-based RSUs over the requisite service period based on management's expectation of the number of performance-based RSUs expected to vest. For any change in the expectation of the number of performance-based RSUs that are probable of vesting, the Company will cumulatively adjust compensation expense in the period that the change in estimate is made.firstoption.subsequent to July 31, 2021.Three Months Ended April 30, 2023 2022 Employee Stock Purchase Plan: Expected term (in years) 0.8 1.6 Expected volatility 66.9 % 49.4 % Risk-free interest rate 4.8 % 0.2 % Dividend yield — — Three Months Ended April 30, 2023 2022 Cost of revenue—subscription $ 193 $ 122 Cost of revenue—services 145 94 Research and development 2,768 1,899 Sales and marketing 3,241 1,987 General and administrative 2,928 1,348 Restructuring 1 — Total stock-based compensation expense $ 9,276 $ 5,450 $0.2$0.8 million and $0.3 million for the three months ended July 31, 2021April 30, 2023 and 2020, respectively, and $0.5 million and $0.5 million for the six months ended July 31, 2021 and 2020,2022, respectively. Income tax expense consists primarily of income taxes in foreign jurisdictions in which the Company conducts business. Due to the Company’s history of losses in the United States, a full valuation allowance on substantially all of the Company’s domestic deferred tax assets, including net operating loss carryforwards, research and development tax credits, capitalized research and development, and other book versus tax differences was maintained.American Rescue Plan Act (ARPA)Company has deferred tax attributes for stock-based compensation and fixed assets in the United Kingdom, and has deemed no valuation allowance is necessary at this point. The Company will continue to evaluate for any future developments.signed into law on March 11, 2021.as follows (in thousands):Three Months Ended April 30, 2023 Employee severance and related costs $ 45 Stock-based compensation 1 Total restructuring charges $ 46 ARPA did not have any impact on the Company’s provision for income taxesactivity in our restructuring liabilities for the three and six months ended July 31, 2021.12.April 30, 2023 is as follows (in thousands):Total Balance as of January 31, 2023 $ 1,567 Restructuring charges and adjustments 45 Payments (1,538) Balance as of April 30, 2023 $ 74 Three Months Ended April 30, 2023 2022 United States $ 25,991 $ 21,336 International 15,005 13,517 Total $ 40,996 $ 34,853 and six months ended July 31, 2021April 30, 2023 and 2020.2022.2021 and July 31, 2021, substantially all2023, the majority of the Company’s long-lived assets, including operating lease ROU assets, were located in the United States.13.Three Months Ended April 30, 2023 2022 Numerator Net loss $ (21,875) $ (19,834) Denominator Weighted-average shares used in computing net loss per share, basic and diluted 45,843 44,265 Net loss per share, basic and diluted $ (0.48) $ (0.45) Three Months Ended April 30, 2023 2022 Stock options 7,388 8,604 RSUs RSUs 6,983 3,957 Employee stock purchase rights under the ESPP Employee stock purchase rights under the ESPP 118 138 Common stock warrants 105 105 Total 14,594 12,804 14.EventsSubsequent to July 31, 2021,Eventrepaidterminated the Credit Facility pursuant to Section 12.1 thereof. Any termination fee owed by the Company as required by Section 2.5(c) thereof has been waived by Silicon Valley Bank. At the time of termination, no borrowings were outstanding balanceunder the Credit Facility. Concurrently with the termination of its revolving linethe Credit Facility, all liens securing the Company’s obligations under the Credit Facility were released.ITEMMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSTheManagement's Discussion and Analysis of Financial Condition and Results of Operationsshould be read in conjunctiontogether with our condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our final prospectus dated July 21, 2021 and filed with the U.S. Securities and Exchange Commission, or the SEC, pursuant to Rule 424(b) under the Securities Act of 1933, as amended, or the Securities Act, on July 22, 2021. This discussion containsbusiness, includes forward-looking statements that involve risks and uncertainties. You should review the sections titled “Special Note Regarding Forward-Looking Statements” and “Risk Factors” for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described in or contribute to such differences include those identified below and those discussedimplied by the forward-looking statements contained in the section titled “Risk Factors”following discussion and other parts of this Quarterly Report on Form 10-Q. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.analysis. The last day of our fiscal year is January 31. Our fiscal quarters end on April 30, July 31, October 31 and January 31. Our fiscal years ended January 31, 20202022, 2023 and 20212024 are referred to herein as fiscal 20202022, fiscal 2023 and fiscal 2021,2024, respectively.empower enterprises to build, managesimplify how developers and operatearchitects develop, deploy and consume modern mission-critical applications at the highest scalethat span cloud, edge and performance. Couchbase provides a leading modern database for enterprise applications.everything in between. Enterprises rely on Couchbase to cost-effectively power the core applications their businesses depend on with the highest performance, reliability, scalability and versatility requirements for which there is no tolerance for disruption or downtime. Our database is versatile and works in multiple configurations, from cloud to multi- or hybrid-cloud to on-premise environments to the edge, and can be run by the customer or managed by us. We have architected our database on the next-generation flexibility of NoSQL, embodying a “not only SQL” approach. We combine the schema flexibility unavailable with legacy databases with the power and familiarity of the SQL query language, the lingua franca of database programming, into a single, unified platform. Our cloud-native platform provides a powerful modern database that serves the needs of both enterprise architects and application developers.We built Couchbase for the most important, mission-critical applications for the largest enterprises, with the highest performance, reliability, scalability and agility requirements. Any compromise of these requirements could cause these applications to fail—stopping or delaying package delivery for shipping companies, interrupting reservations for travel companies or causing product shortages in stores for retailers.spent over a decade building aarchitected our database to fuse the trusted strengths of relational databases with the flexibility, performance and scale of many NoSQL systems, across the cloud. Our database platform architected to solve our customers’ most difficult database challenges, from scale to flexibility to deployment. This includes enabling Couchbase to not just simply run inserves the cloud, but to run anywhere from public clouds to hybrid environmentsneeds of both enterprise architects and even all the way to the edge, in truly distributed environments with flexibility in and between those environments.application developers. Combined with our performance at scale, we believe this power enables customers to run their most important applications with the effectiveness they require, with the efficiency they desire and in the modern infrastructure environments they demand.and applicationswhich in turn rely on databases to store, retrieve and operationalize data into action. Today, applications are operating at a scale, speed and dynamism unheard of just a decade ago. There is an increasing diversity of application types, modalities and delivery and consumption models, and the volume, velocity and variety of data on which applicationsthey rely is growing at an exponential rate. Consequently, the demand on enterprises and their databases is growing exponentially. These trendspoisedapproaching the limits for which they were designed. The underlying architecture of these technologies has not changed significantly, while the requirements of the applications they need to continue, applying increasing urgency for enterprises to digitally transform. Indeed,support are changing dramatically. Legacy database technologies are buckling under the pressure of digital transformation, has become both a strategic imperativeas they were not built to update and a competitive necessity for enterprises seeking to thriverespond in a data-driven world.world, overcomingworld. Our platform combines the limitationsbest capabilities of legacya relational database, technologieslike SQL transactions and enablingACID guarantees, with the high performance, reliability,flexibility and scalability and agility required byof a NoSQL database. This allows enterprises to deliver their mission-critical applications. Weconfidently accelerate strategic initiatives such as more quickly moving business-critical applications into the cloud, improving application flexibility and increasing developer agility. For our customers, we facilitate a seamless transition for our customers from legacy relational databases to our modern cloud database platform resulting in better application scalability, user experience and security at the pace that works for them. We believedeliver this cloud database platform both as a customer-managed product and as a fully-managed database-as-a-service that both enterprise architectsis managed by Couchbase. Our database-as-a-service, called Couchbase Capella, supports a broad set of use cases, reducing a customer’s need to buy, deploy and application developers are key to initiating the transition away from legacy database technologies and that we are uniquely positioned and architected to serve both.introduced a new cloud-based, fully managed offeringofferings for enterprises looking for a turnkey version of our platform.sixthree months ended July 31, 2021April 30, 2023 and 2020,2022, our revenue was $57.7$41.0 million and $48.2$34.9 million, respectively, representing period-over-period growth of 20%18%. As of July 31, 2021April 30, 2023 and 2020,2022, our ARRannual recurring revenue (“ARR”) was $115.2$172.2 million and $96.2$139.7 million, respectively, representing period-over-period growth of 20%23%. For the sixthree months ended July 31, 2021April 30, 2023 and 2020,2022, our net loss was $29.1$21.9 million and $20.2$19.8 million, respectively, as we continued to invest in the growth of our business to capture the massive opportunity that we believe is available to us.Initial Public OfferingIn July 2021, we completed our initial public offering, or IPO, in which we issued and sold 9,589,999 shares of our common stock at $24.00 per share, which included 1,250,869 shares issued upon exercise of the underwriters’ option to purchase additional shares. We received net proceeds of $214.9 million after deducting underwriting discounts and commissions. In connection with the IPO, all 26,710,600 shares of our outstanding redeemable convertible stock automatically converted into an equivalent number of shares of common stock.Prior to the IPO, all deferred offering costs were capitalized in other noncurrent assets on the condensed consolidated balance sheets. Deferred offering costs of $4.9 million, primarily consisting of legal, accounting, consulting and other fees relating to the Company’s IPO, were offset against the IPO proceeds upon closing of the IPO in July 2021.subscriptions.subscriptions, which accounted for 94% and 92% of total revenue for the three months ended April 30, 2023 and 2022, respectively. We derive substantially alla substantial majority of our subscription revenue from the Enterprise Edition of our Couchbase platform, which includes Couchbase Server our flagship product, and Couchbase Mobile. The Couchbase platformServer is designed to give our customers flexibility to run anywhere the customer chooses, whether deployed in on-premise data centers, mobile, private clouds, public clouds, multi-clouds or hybrid clouds. The Couchbase platform isgenerally licensed per node, which we define as an instance of Couchbase running on a server. Our platform can be deployed with intentional flexibility between a traditional data center on bare metal servers or within a virtualized or containerized environment, such as VMware or Docker, as well as in a public cloud, such as Amazon Web Services, Microsoft Azure and Google Cloud Platform, with the ability to run in any configuration that a customer desires. Our subscription pricing is based on the computing power and memory per instance, as well as the chosen service level. We offer three different support levels: the Platinum level offers 24/7 support and the shortest response time of 30 minutes; the Gold level offers 24/7 support with a response time of 2 hours; and the Silver level offers 7am-5pm local time support, 5 days a week. These response times are for incidencesincidents of the highest severity level, which we identify as level P1. The initial response time for levels P2 and P3 incidents, which are less severe, are longer.We also derive subscription revenue from a fully-managed offering of Couchbase Server, called Couchbase Cloud, which we introduced in June 2020. Couchbase Cloud is licensed using an on-demand consumption model or an annual credit model, which removes the need to license different node types separately. Couchbase Cloud pricing delivers superior customer flexibility relative to other CSPs as on-demand pricing allows customers to pay only for what they use based on hourly pricing and the credits purchased through our annual credit model expire only at the end of a 12-month period, rather than ratably over the year. We also provide automatic conversion to on-demand consumption when credits expire or are exhausted. Couchbase Cloud credits can be purchased upfront to provide cost savings with volume discounts available based on credit quantity. We offer two pricing levels for Couchbase Cloud, based on the support response time.services.services, which represented 6% and 8% of our total revenue for the three months ended April 30, 2023 and 2022, respectively. Our services revenue is derived from our professional services related to the implementation or configuration of our platform and training. We have invested in building our services organization because we believe it plays an important role in customer success, ensuring that our customers fulfill their digital transformation agendas while leveraging our platform, accelerating our customers’ realization of the full benefits of our platform and driving increased adoption of our platform.or TCO,(“TCO”) savings.CloudCapella products and a web browser-based demonstration version of Couchbase Server to further accelerate application developer adoption. We believe these offerings lead to future purchases of the Enterprise Edition.our paid products. While our Community Edition includes the core functionality of Couchbase Server, it is not suited for mission-critical deployments, as it offers only limitedOur PartnerEngage program, which serves as our umbrella partner program, is tailored to enable our partners to deliver an excellent experience forcustomers while achieving profitable growth. For our customers, PartnerEngage provides more options and enhanced availability to reach Couchbase. A significant portion of our revenue in fiscal 2021 and the sixthree months ended July 31, 2021April 30, 2023 and 2022 was attributable to our partner ecosystem.awareness, whichawareness. Our marketing initiatives drive customer interestawareness and demand for our platform.Couchbase products, starting at the top of the sales funnel with trial experiences. As part of these efforts, we host Couchbase Connect.ONLINE, a technical conference foroffer application developers and enterprise architects, which showcases compelling customer testimonials and various use cases of our platform. Our Couchbase Connect offering also provides application developers with helpfulrobust educational resources to help them learn more about our platform, including access to over one hundred and fifty on-demand instructional webinars.also offer Couchbase Playground, allowing application developersare seeing longer deal cycles along with extra layers of scrutiny and approval, and customers electing to access Couchbase’s APIbuy in smaller increments. Additionally, effects from foreign exchange fluctuations have impacted and Couchbase Academy,may continue to impact our results of operations.includes role-specific training courses.We have also been successful in retainingthey will affect our customersbusiness, future results of operations, and increasing their spend with us over time. Our dollar-based net retention rate was over 115% for each of the past six quarters.financial condition. See the section titled “—Factors Affecting Our Performance”“Risk Factors” for more information about how we calculate dollar-based net retention rate.Cloud,Capella, our fully-managed DBaaSdatabase-as-a-service offering, will become increasingly popular as a result of its compelling pricing model, ease of operation, lower TCO, time to market and flexibility. We will continue to offer Couchbase CloudCapella and provide flexible, highly available and differentiated economical options to capture new customers.eachseven of the past sixeight quarters.or (“Base ARR,ARR"”) attributable to our customers or (“Base Customers,Customers”) as of the end of the same quarter of the prior fiscal year. We then determine the ARR attributable to the Base Customers as of the end of the most recent quarter and divide that amount by the Base ARR.arrangements.arrangements and services revenue. ARR should be viewed independently of revenue, and does not represent our revenue under GAAP on an annualized basis, as it is an operating metric that can be impacted by contract start and end dates and renewal dates. ARR is not intended to be a replacement for forecasts of revenue. Although we seek to increase ARR as part of our strategy of targeting large enterprise customers, this metric may fluctuate from period to period based on our ability to acquire new customers and expand within our existing customers. We believe that our ARR is an important indicator of the growth and performance of our business. We updated our definition of ARR in the third quarter of fiscal 2023 to clarify that the 90-day actual consumption methodology is only used after a customer’s initial year. The reason for this change is to better reflect the ARR for Couchbase Capella products following the launch of Couchbase Capella in fiscal 2022. ARR for prior periods have not been adjusted to reflect these changes as they are not material to any period previously presented.As of April 30, 2023 2022 (in millions) ARR $ 172.2 $ 139.7 As of April 30, 2023 2022 Customers 679 614 recorded to cost of revenue.and employer taxes on employee stock transactions. We use non-GAAP gross profit and non-GAAP gross margin in conjunction with GAAP financial 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.Three Months Ended April 30, 2023 2022 (dollars in thousands) Total revenue $ 40,996 $ 34,853 Gross profit $ 35,074 $ 30,202 Add: Stock-based compensation expense 338 216 Add: Employer taxes on employee stock transactions Add: Employer taxes on employee stock transactions 10 2 Non-GAAP gross profit $ 35,422 $ 30,420 Gross margin 85.6% 86.7% Non-GAAP gross margin 86.4% 87.3% litigation-relatedrestructuring expenses. We use non-GAAP operating loss and non-GAAP operating margin 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.Three Months Ended April 30, 2023 2022 (dollars in thousands) Total revenue $ 40,996 $ 34,853 Loss from operations $ (22,533) $ (18,988) Add: Stock-based compensation expense 9,275 5,450 Add: Employer taxes on employee stock transactions Add: Employer taxes on employee stock transactions 267 133 46 — Non-GAAP operating loss $ (12,945) $ (13,405) Operating margin (55) % (54) % Non-GAAP operating margin (32) % (38) % litigation-relatedrestructuring expenses. We use non-GAAP net loss attributable to common stockholders and non-GAAP net loss per share attributable to common stockholders 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.Three Months Ended April 30, 2023 2022 (in thousands, except per share data) Net loss $ (21,875) $ (19,834) Add: Stock-based compensation expense 9,275 5,450 Add: Employer taxes on employee stock transactions 267 133 46 — Non-GAAP net loss $ (12,287) $ (14,251) GAAP net loss per share $ (0.48) $ (0.45) Non-GAAP net loss per share $ (0.27) $ (0.32) Weighted average shares outstanding, basic and diluted 45,843 44,265 purchases ofadditions to 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. For the three months ended July 31, 2021April 30, 2023 and 2020,2022, our free cash flow included cash paid for our unused Credit Facility (as defined below) and interest on our long-term debt of $0.2 million and $1.1 million, respectively. For the six months ended July 31, 2021 and 2020,less than $0.1 million. Additionally, our free cash flow included cash paid for interest on our long-term debt of $0.5 million and $2.5 million, respectively.Impact of COVID-19The ongoing COVID-19 pandemic and efforts to mitigate its impact have significantly curtailed the movement of people, goods and services worldwide, including in the geographic areas in which we conduct our business operations and from which we generate our revenue. It has also caused societal and economic disruption and financial market volatility, resulting in business shutdowns and reduced business activity. We believe that the COVID-19 pandemic has had a negative impact on our business and results of operations, primarily as a result of:•delaying or pausing digital transformation and expansion projects and negatively impacting IT spending, which has caused potential customers to delay or forgo purchases of subscriptions for our platform and services, and which has caused some existing customers to request concessions including extended payment terms or better pricing, fail to renew subscriptions, reduce their usage or fail to expand their usage of our platform;•restricting our sales operations and marketing efforts, reducing the effectiveness of such efforts in some cases and delaying or lengthening our sales cycles;•delaying collections or resulting in an inability to collect accounts receivable, including as a result of customer bankruptcies; and•delaying the delivery of professional services and training to our customers.Many of our customers in industries and segments that the COVID-19 pandemic has negatively affected, such as consumer-facing travel and hospitality, in-store retail and in-person entertainment, or COVID-19 impacted customers, have reduced, or failed to expand their usage of our platform. Further, our ability to add new customers, particularly COVID-19 impacted customers, was negatively impacted by the economic environment of the COVID-19 pandemic. As a large portion of our renewals and new customer contracts are entered into in the fourth quarter of our fiscal year, the negative impacts of the COVID-19 pandemic on our business and results of operations, in particular with respect to our COVID-19 impacted customers, are reflected in the fourth quarter of fiscal 2021 and future periods. We estimate that ARR from these COVID-19 impacted customers declined from $14.1 million as ofthree months ended April 30, 2020 to $13.62023, included $1.5 million as of April 30, 2021, or (3%), while ARR from all of our other customers increased from $75.7 million as of April 30, 2020 to $95.9 million as of April 30, 2021, or 27%. In contrast, we estimate that ARR from our customers in the same industries and segments as our COVID-19 impacted customers increased from $10.1 million as of January 31, 2019 to $14.1 million as of January 31, 2020, or 39%, and ARR from all of our other customers increased from $56.9 million as of January 31, 2019 to $74.0 million as of January 31, 2020, or 30%.The COVID-19 pandemic may cause us to continue to experience the foregoing challenges in our business in the future and could have other effects on our business, including disrupting our ability to develop new offerings and enhance existing offerings, market and sell our products and services and conduct business activities generally.In contrast, in the longer term we may also see some positive impacts on our business as a result of the COVID-19 pandemic. We believe the COVID-19 pandemic has accelerated the trend of enterprises seeking to modernize and re-architect their mission-critical applications and the building of new applications to allow them to function in the cloud. The constraining of IT budgets could also further accelerate the adoption and expansion of our platform, as it can effectively support mission-critical applications while providing significant TCO benefits.The COVID-19 pandemic has also driven some temporary cost savings to our business. We have experienced slower growth in certain operating expenses due to reduced business-related travel, deferred hiring for some positions and the virtualization or cancellation of customer and employee events. We have also paused expanding some existing facilities, as well as expanding into new facilities.Following the challenges that we experienced due in large part to the COVID-19 pandemic, we have seen continued growth in our business. More broadly, we believe this growth may accelerate as businesses begin to reopen and existing and prospective COVID-19 impacted customers recover, as our investments in our cloud offering begin to gain traction and as our sales and marketing organization is able to operate at full capacity. The impact of the COVID-19 pandemic on our industry continues to evolve, and the full impact on our financial condition and results of operations remains uncertain, including as a result of outbreaks and variants. See the section titled “Risk Factors—Risks Related to Our Industry and Business—The global COVID-19 pandemic has harmed and could continue to harm our business and results of operations” for more information regarding riskscash payments related to the COVID-19 pandemic.Three Months Ended April 30, 2023 2022 ( in thousands) Net cash used in operating activities $ (7,181) $ (8,607) Less: Additions to property and equipment (1,288) (799) Free cash flow $ (8,469) $ (9,406) Net cash provided by (used in) investing activities $ 10,314 $ (44,829) Net cash provided by financing activities $ 2,764 $ 6,139 fromfrom: (1) term-based software licenses to our platform sold in conjunction with post-contract support (“PCS” or PCS.“Support”) and (2) a consumption-based database-as-a-service offering. PCS bundled with software licenses includes internet, email and phone support, bug fixes and the right to receive unspecified software updates and upgrades released when and if available during the subscription term. The software license and PCS revenue is presented as “License”“License.” PCS and database-as-a-service revenue are presented as “Support and other,”respectively,other” in our condensed consolidated statements of operations. License revenue is recognized upon transfer when our customer has received access to our software. The PCS revenue, or “Support,” is recognized ratably over the term of the arrangement beginning on the date when access to the subscription is made available to the customer and represents a substantial majority of our customer.revenue. The database-as-a-service revenue is recognized on a consumption basis. The non-cancelable term of our subscription arrangements typically ranges from one to three years but may be longer or shorter in limited circumstances. “Other” revenue was not material for the periods presented. related tofor the implementation or configuration of our platform and training. Services revenue is recognized over time based on input measures for professional services and upon delivery for training. and delivery of professional services and training.Couchbase Cloudour database-as-a-service offering and allocated overhead. There is no cost of revenue associated with our license revenue. We expect our cost of subscription revenue to increase in absolute dollars as our subscription revenue increases and as we continue to amortize capitalized internal-use software costs related to Couchbase Cloud. our database-as-a-service offering.increase in absolute dollars as ourfluctuate from period to period depending on the timing and delivery of professional services revenue increases.forto the extent the revenue from our database-as-a-service offering increases as a percentage of total revenue, we expect our gross margin towill decline modestly in the long term as we introduce additional platform capabilities and product offerings and continue to expand our client base outside of the United States.and general and administrative and restructuring expenses. Personnel-related costs are the most significant component of operating expenses and consist of salaries, bonuses, benefits, sales commissions and stock-based compensation expenses.to incur additional expenses as a result of operating as a public company, including costs to comply with the rules and regulations applicable to companies listed on a national securities exchange, costs related to compliance and reporting obligations and increased expenses for insurance, investor relations and professional services. We expect that our general and administrative expenses will increase in absolute dollars as we continue to invest in the growth of our business and begin to operate as a publicly-traded company. We expect general and administrative expenses to fluctuate as a percentage of revenue in the near term, but to decrease as a percentage of revenue over the long term as we achieve greater scale in our business.interest, prepayment penalties and end-of-term charges for our term loan and interest charges forunused credit facility fees related to our Credit Facility.gain on a legal settlement.(1)Includes stock-based compensation expense as follows:Three Months Ended April 30, 2023 2022 Revenue: License $ 4,943 $ 5,007 Support and other 33,599 26,974 Total subscription revenue 38,542 31,981 Services 2,454 2,872 Total revenue 40,996 34,853 Cost of revenue: 3,673 2,396 2,249 2,255 Total cost of revenue 5,922 4,651 Gross profit 35,074 30,202 Operating expenses: 15,383 14,421 32,553 26,843 9,625 7,926 46 — Total operating expenses 57,607 49,190 Loss from operations (22,533) (18,988) Interest expense (25) (25) Other income (expense), net 1,433 (556) Loss before income taxes (21,125) (19,569) Provision for income taxes 750 265 Net loss $ (21,875) $ (19,834) Three Months Ended April 30, 2023 2022 (in thousands) Cost of revenue—subscription $ 193 $ 122 Cost of revenue—services 145 94 Research and development 2,768 1,899 Sales and marketing 3,241 1,987 General and administrative 2,928 1,348 Restructuring 1 — Total stock-based compensation expense $ 9,276 $ 5,450 Three Months Ended April 30, 2023 2022 Revenue: License 12 % 14 % Support and other 82 77 Total subscription revenue 94 92 Services 6 8 Total revenue 100 100 Cost of revenue: Subscription 9 7 Services 5 6 Total cost of revenue 14 13 Gross profit 86 87 Operating expenses: Research and development 38 41 Sales and marketing 79 77 General and administrative 23 23 Restructuring Restructuring * — Total operating expenses 141 141 Loss from operations (55) (54) Interest expense * * Other income (expense), net 3 (2) Loss before income taxes (52) (56) Provision for income taxes 2 1 Net loss (53) % (57) % and Six Months Ended July 31, 2021April 30, 2023 and 2020Three Months Ended April 30, 2023 2022 $ Change % Change (dollars in thousands) Revenue License $ 4,943 $ 5,007 $ (64) (1) % Support and other 33,599 26,974 6,625 25 % Total subscription revenue 38,542 31,981 6,561 21 % Services 2,454 2,872 (418) (15) % Total revenue $ 40,996 $ 34,853 $ 6,143 18 % $4.4$6.6 million, or 19%21%, during the three months ended July 31, 2021April 30, 2023 compared to the three months ended July 31, 2020. The increase in subscription revenue was due to an increase in revenue from existing customers and newcustomers, as we increased our customer base from 522 customers as of July 31, 2020, to 558 customers as of July 31, 2021.April 30, 2022. Approximately 97% of the increase in revenue was attributable to growth from existing customers. Additionally, we increased our customer base from 614 customers and the remaining increase was attributableas of April 30, 2022 to new customers.Subscription revenue increased by $9.7 million, or 22%, during the six months ended July 31, 2021 compared to the six months ended July 31, 2020. Approximately 90%679 customers as of the increase in revenue was attributable to growth from existing customers, and the remaining increase was attributable to new customers.April 30, 2023.increaseddecreased by $0.1$0.4 million, or 10%15%, during the three months ended July 31, 2021April 30, 2023 compared to the three months ended July 31, 2020. The increase in services revenue was primarily due to an increasein the number of professional services hours performed.Services revenue decreased by $0.2 million, or 7%, during the six months ended July 31, 2021 compared to the six months ended July 31, 2020.April 30, 2022. The decrease in services revenue was primarily due to a decrease in the numberdelivery of professional services. We do not anticipate the same degree of strength in professional services hours performed due in part to the COVID-19 pandemic.fiscal 2024 as we saw in fiscal 2023.Three Months Ended April 30, 2023 2022 $ Change % Change (dollars in thousands) Cost of revenue: Subscription $ 3,673 $ 2,396 $ 1,277 53 % Services 2,249 2,255 (6) — % Total cost of revenue $ 5,922 $ 4,651 $ 1,271 27 % Gross profit $ 35,074 $ 30,202 Gross margin 85.6 % 86.7 % Headcount (at period end) 67 57 $0.8$1.3 million, or 62%53%, during the three months ended July 31, 2021April 30, 2023 compared to the three months ended July 31, 2020.April 30, 2022. The increase in cost of subscription revenue was primarily due to an increase of $0.6 million related to the computing infrastructure costs associated with Couchbase Capella, an increase of $0.4 million in personnel-related costs associated with increased headcount and increased stock-based compensation related to our RSUs and an increase of $0.2 million related to the amortization of costs associated with capitalized internal-use software related to Couchbase Cloud and an increase of $0.4 million in personnel-related costs associated with increased headcount.Cost of subscription revenue increasedby $1.9 million, or 81%, during the six months ended July 31, 2021 compared to the six months ended July 31, 2020. The increasein cost of subscription revenue was primarily due to an increase of $1.0 million related to the amortization of costs associated with capitalized internal-use software related to Couchbase Cloud and an increase of $0.8 million in personnel-related costs associated with increased headcount.increasedby less than $0.1 million, or 3%,remained relatively flat during the three months ended July 31, 2021April 30, 2023 compared to the three months ended July 31, 2020. The increasein cost of services revenue was primarily due to an increase of $0.1 million in personnel-related costs associated with increased headcount, partially offset by a decrease of $0.1 million related to a reduction in contracted third-party professional services.Cost of services revenue decreased by $0.3 million, or 10%, during the six months ended July 31, 2021 compared to the six months ended July 31, 2020. The decrease in cost of services revenueApril 30, 2022. This was primarily due to a decrease of $0.3 million related to a reduction in contracted third-party professional services, and a decrease of $0.2 million in travel-related costs due to COVID-19 restrictions. These decreases were partially offset by an increase of $0.1$0.3 million in personnel-related costs associated with merit increases and increased headcount and an increase of $0.1 millionstock-based compensation related to software and subscription services dedicated for use by our professional services and training organization.and six months ended July 31, 2021,April 30, 2023 compared to the three and six months ended July 31, 2020,April 30, 2022, primarily due to the amortization of capitalized internal-use software related to Couchbase Cloud which beganchanges in the second half of fiscal 2021, partially offset by the mix of subscriptionssubscription and services we sellservice revenue, including higher costs associated with the growth of our cloud offering.the associated revenue.Three Months Ended April 30, 2023 2022 $ Change % Change (dollars in thousands) Research and development $ 15,383 $ 14,421 $ 962 7 % Percentage of revenue 38 % 41 % Headcount (at period end) 276 249 DevelopmentdeveloResearch and developmentpment increased by $3.4$1.0 million, or 37%7%, during the three months ended July 31, 2021April 30, 2023 compared to the three months ended July 31, 2020.April 30, 2022. The increasein research and development expenses was primarily due to an increaseof $3.1$0.9 million in stock-based compensation related to our RSUs, an increase of $0.7 million associated with computing infrastructure costs and an increase of $0.2 million in contracted third-party professional services. This was partially offset by a decrease of $0.8 million in personnel-related costs associateddespite headcount growth as part of our efforts to optimize our cost structure coupled with increased capitalized-internal use software costs.headcount.Researchdevelopment increased by $6.9 million, or 38%, during the six months ended July 31, 2021 compared to the six months ended July 31, 2020. The increasein research and development expenses was primarily due to an increaseof $6.4 million in personnel-related costs associated with increasedheadcount.Three Months Ended April 30, 2023 2022 $ Change % Change (dollars in thousands) Sales and marketing $ 32,553 $ 26,843 $ 5,710 21 % Percentage of revenue 79 % 77 % Headcount (at period end) 338 283 MarketingmarketiSales and marketingng increased by $5.8$5.7 million, or 35%21%, during the three months ended July 31, 2021April 30, 2023 compared to the three months ended July 31, 2020.April 30, 2022. The increase in sales and marketing expenses was primarily due to an increase of $4.8$3.9 million in personnel-related costs associated with increased headcount, merit increases and higher stock-based compensation related to our RSUs and an increase of $0.3$1.8 million in salesdue to a return to more normal levels of travel-related costs to attend in-person events.marketing program expenses primarily associated with costs of general marketingAdministrativeThree Months Ended April 30, 2023 2022 $ Change % Change (dollars in thousands) General and administrative $ 9,625 $ 7,926 $ 1,699 21 % Percentage of revenue 23 % 23 % Headcount (at period end) 65 70 promotional activities as we continue to expand our sales and marketing efforts to attract new customers and deepen our engagement with existing customers.administrativSales and marketinge increased by $9.2$1.7 million, or 27%, during the six months ended July 31, 2021 compared to the six months ended July 31, 2020. The increase in sales and marketing expenses was primarily due to an increase of $8.6 million in personnel-related costs associated with increased headcount and an increase of $0.9 million in sales and marketing program expenses primarily associated with costs of general marketing and promotional activities as we continue to expand our sales and marketing efforts to attract new customers and deepen our engagement with existing customers.This was partially offset by a decrease of $1.0 million in travel-related costs due to COVID-19 restrictions.General and AdministrativeGeneral and administrative increased by $1.8 million, or 52%21%, during the three months ended July 31, 2021April 30, 2023 compared to the three months ended July 31, 2020.April 30, 2022. The increase in general and administrative expenses was primarily due to an increase of $1.0$1.9 million in personnel-related costs associated with merit increases and increased headcount and an increase of $0.6 million in additional professional fees and other corporate expenses associated with being a publicly traded company.General and administrative increased by $3.9 million, or 57%, during the six months ended July 31, 2021 comparedstock-based compensation related to the six months ended July 31, 2020. The increase in general and administrative expenses was primarily due to an increase of $2.2 million in personnel-related costs associated with increased headcount and an increase of $1.4 million in additional professional fees and other corporate expenses associated with being a publicly traded company.our RSUs.Three Months Ended April 30, 2023 2022 $ Change % Change (dollars in thousands) Interest expense $ (25) $ (25) $ — — % InterestThe interest expense decreased by $2.2 million, or 90%, during the three months ended July 31, 2021April 30, 2023 compared to the three months ended July 31, 2020. The decrease in interest expense was primarily due to the terminationApril 30, 2022 remained flat.Interest expense decreased by $3.5 million, or 88%, during the six months ended July 31, 2021 compared to the six months ended July 31, 2020. The decrease in interest expense was primarily due to the termination of our term loan in January 2021, which was replaced by our Credit Facility that bears interest at a lower rate and has a lower loan balance than our term loan.Three Months Ended April 30, 2023 2022 $ Change % Change (dollars in thousands) Other income (expense), net $ 1,433 $ (556) $ 1,989 (358) % decreasedincreased by $0.7$2.0 million or 113%, during the three months ended July 31, 2021April 30, 2023 compared to the three months ended July 31, 2020.April 30, 2022. The increase in other income (expense), net was primarily driven by an increase of $1.2 million in interest income driven by higher yields on securities. There was an additional increase of $0.8 million in unrealized and realized foreign currency gains due to an increasefluctuations in net foreign currency transaction losses of $0.7exchange rates.Three Months Ended April 30, 2023 2022 $ Change % Change (dollars in thousands) Loss before income taxes $ (21,125) $ (19,569) $ (1,556) 8 % Provision for income taxes 750 265 $ 485 183 % Effective tax rate (3.6) % (1.4) % July 31, 2021, asApril 30, 2023 compared to the three months ended July 31, 2020.April 30, 2022Other income (expense), net decreased by $0.3 million, or 98%, during the six months ended July 31, 2021 compared to the six months ended July 31, 2020.. The increase in other income (expense), net was primarily due to an increase in net foreign currency transaction losses of $0.3 million during the six months ended July 31, 2021, as compared to the six months ended July 31, 2020.Provision for Income TaxesProvision for income taxes decreased by $0.1 million, or 41%, during the three months ended July 31, 2021 compared to the three months ended July 31, 2020. The decrease in provision for income taxes was primarily due to a decreaseincreased revenue in pre-tax income in our international jurisdictions.foreign entities.Provision for income taxes remained relatively flat, during the six months ended July 31, 2021 compared to the six months ended July 31, 2020.as ofin July 31, 2021, we completed our IPO with net proceeds totaling $214.9 million. As of July 31, 2021, we had borrowed $25.0 million under our Credit Facility, which we repaid subsequent to July 31, 2021. We have incurred losses and generated negative cash flows from operations for the last several years, including fiscal 20202022 and 20212023 and the six three months ended July 31, 2021.April 30, 2023. As of July 31, 2021,April 30, 2023, we had an accumulated deficit of $312.8$432.4 million.July 31, 2021,April 30, 2023, we had $253.6$163.6 million in cash, cash equivalents and short-term investments. We maintain our cash and cash equivalents, restricted cash and short-term investments with high-quality financial institutions. For more information, see "Concentration of Credit Risk" in Note 2 of our notes to the condensed consolidated financial statements. We believe our existing cash, cash equivalents and short-term investments availability under the Credit Facility, which is described in Note 7 of our notes to condensed consolidated financial statements, and cash provided by sales of subscriptions to our platform and sales of our services will be sufficient to meet our projected operating requirements and capitalcash expenditures for at least the next 12 months. As a result of our revenue growth plans, both domestically and internationally, we expect that losses and negative cash flows from operations may continue in the future. Our future capitalcash requirements will depend on many factors, including our subscription revenue growth rate, subscription renewals, billing timing and frequency, the timing and extent of spending to support development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced platform features and functionality and the continued market adoption of our platform. We may in the future pursue acquisitions of businesses, technologies, assets and talent.July 31, 2021,April 30, 2023, remaining performance obligations, including both deferred$118.9$165.6 million. We expect to recognize revenue of $74.1$112.1 million on these remaining performance obligations over the next 12 months, with the remaining balance recognized thereafter.Three Months Ended April 30, 2023 2022 (in thousands) Net cash provided by (used in): Operating activities $ (7,181) $ (8,607) Investing activities $ 10,314 $ (44,829) Financing activities $ 2,764 $ 6,139 sixthree months ended July 31, 2021,April 30, 2023 of $19.2$7.2 million primarily consisted of our net loss of $29.1$21.9 million, adjusted for non-cash charges of $11.6$14.6 million and net cash inflows of $0.1 million from changes in our operating assets and liabilities. The primary drivers of the changes in operating assets and liabilities include a $6.4 million increase in deferred revenue due to timing of billings, a $5.5 million increase in accounts payable due to timing of payments, and a $1.4 million decrease in prepaid expenses and other assets due to the timing of prepaid operating expenses. These changes were partially offset by a $4.8 million increase in deferred commissions related to increased sales during the period, a $4.1 million decrease in accrued compensation primarily due to the timing of bonus payments and purchases under our employee stock purchase plan, a $2.3 million increase in accounts receivable due to timing of billings and collections, a $1.3 million decrease in accrued expenses and other liabilities due to payments related to restructuring activities, and a $0.8 million decrease in lease liabilities driven by monthly rental payments for operating leases.$1.7$0.8 million from changes in our operating assets and liabilities. Changes in operating assets and liabilities primarily reflected a $15.8$11.8 million decrease in accounts receivable related to timing of billings and collections and a $7.3 million decrease in deferred revenue due to timing of billings. Additionally, there was an increase of $7.1 million in deferred commission related to increased sales during the period and an increase of $5.8 million in prepaid expenses offset by an increase in account payable of $4.6 million and a decrease of $1.7 million in other accrued liabilities.Cash used in operating activities for the six months ended July 31, 2020, of $19.5 million primarily consisted of our net loss of $20.2 million, adjusted for non-cash charges of $7.9 million and net cash outflows of $7.2 million from changes in our operating assets and liabilities. Changes in operating assets and liabilities primarily reflected a $13.0 million decrease in accounts receivable related to timing of billings and collections and a $13.5$1.0 million decrease in deferred revenue due to timing of billings. Additionally, there was a $1.2 million$8.1 decrease in accrued compensation and benefits relatedprimarily due to the timing of accruals paidbonus payments and purchases under our employee stock purchase plan and a $4.8$3.8 million increase in deferred commissions related to increased sales during the period.Cash provided byCash used in investing activities for the sixthree months ended July 31, 2021,April 30, 2023 of $4.9$10.3 million consisted of maturitiespurchases of short-term investments net of maturities of $11.6 million and additions to property and equipment of $1.3 million.$5.2short-term investments net of maturities and sales of $44.0 million offset byand purchases of property and equipment of $0.3$0.8 million.Cash used in investing activities for the six months ended July 31, 2020, of $2.6 million consisted of cash paid for purchases of property and equipment.sixthree months ended July 31, 2021,April 30, 2023 of $216.3$2.8 million was primarily consisted ofdue to $1.9 million in proceeds from the completionissuance of our IPOcommon stock upon exercises of $214.9stock options, and $0.8 million net of underwriters’ discounts and commissions, andin proceeds from the issuance of common stock option exercises of $4.3 million offset by the payment of deferred offering costs of $2.8 million.sixthree months ended July 31, 2020,April 30, 2022 of $79.1$6.1 million primarily consisted of net$3.5 million in proceeds from the issuance of Series G redeemable convertible preferredcommon stock of $104.3under our employee stock purchase plan, and $2.6 million netin proceeds from borrowingsthe issuance of $6.4 million and proceeds fromcommon stock optionupon exercises of $0.1 million. This was offset by net payments on borrowingsstock options.We negotiated a noncancelable arrangement with a cloud hosting service provider in July 2021. Underarrangement, we committed to spend an aggregate of at least $10.0 million between August 2021 and August 2024, with a minimum amount of approximately $3.0 million in eachapproximate timing of the first two yearstransaction. These obligations relate to third-party cloud infrastructure agreements and $4.0 millionsubscription arrangements. Our operating lease commitments relate primarily to our office facilities.the third yearour unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on services with this vendor. Except for the cloud hosting arrangement, there wereForm 10-Q. There has been no material changes outside ofchange in our contractual obligations and commitments other than in the ordinary course of business insince our fiscal year ended January 31, 2023. See our commitments and contractual obligationsAnnual Report on Form 10-K for the six monthsfiscal year ended JulyJanuary 31, 2021, from2023, which was filed with the commitments andSEC on March 29, 2023, for additional information regarding our contractual obligations disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations, set forth in our Final Prospectus.We enter into standard indemnification arrangements inbusiness. Pursuantbusiness, we enter into agreements of varying scope and terms pursuant to these arrangements,which we indemnify, hold harmless and agree to reimburseindemnify customers, vendors, lessors and other business partners with respect to certain matters, including, but not limited to, losses arising out of the indemnified parties for losses sufferedbreach of such agreements, services to be provided by us or incurred by the indemnified party, inconnection with any trade secret, copyright, patent or otherfrom intellectual property infringement claims broughtmade by any third party against such indemnified party with respect to licensed technology. The term of these indemnification agreements is generally perpetual any time after the execution of the agreement. The maximum potential amount of future paymentsparties. Additionally, we could be required to make under these agreements is not determinable because it involves claims that may be made against us in the future that have not yet been made. To date, we have not incurred costs to defend lawsuits or settle claims related to these indemnification agreements.We have entered into indemnification agreements with our directors and officers that may require us, among other things, to our directors and officersthem against certain liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from willful misconduct of the individual. No liability associated with such indemnification arrangementsofficers. To date, no demands have been recorded asmade upon us to provide indemnification under such agreements, and there are no claims that we are aware of July 31, 2021.U.S. generally accepted accounting principles (GAAP).GAAP. The preparation of condensed consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by management. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected.Final Prospectus.Annual Report on Form 10-K for the fiscal year ended January 31, 2023, which was filed with the SEC on Off-Balance Sheet ArrangementsWe did not have during the periods presented, and we do not currently have, any off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purposeITEMQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.marketmarket funds, U.S. government treasury securities, commercial paper, andU.S. government agency securities, corporate debt securities, and asset-backed securities. As of July 31, 2021,April 30, 2023, we had cash and cash equivalents of $239.2$46.2 million and short-term investments of $14.3 million.$117.4 million and no amounts outstanding under the Credit Facility. We do not enter into investments for trading or speculative purposes. Our investmentsinvestments are exposed to market risk due to fluctuations in interest rates, which may affect our interest income and the fairfair value of our investments. However, due to the short-term nature of our investment portfolio, we do not believe an immediate 10% increase or decrease in interest rates would have a material effect on our results of operations and cash flows. We therefore do not expect our results of operations or cash flows to be materially affected by a sudden change in market interest rates.As further discussed in Note 7 to our condensed consolidated financial statements, in January 2021, we borrowed $25.0 million under the Credit Facility. The Credit Facility bears interest at a floating rate. A hypothetical 10% relative change in interest rates would not have had a material impact on our results of operations and cash flows.July 31, 2021,April 30, 2023, a hypothetical 10% change in the relativerelative value of the U.S. Dollar to other currencies would not have a material impact on our results of operations and cash flows.ITEMCONTROLS AND PROCEDURES.as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.forms of the Securities and Exchange Commission (the “SEC”). Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.PARTPart II OTHER INFORMATIONITEMLEGAL PROCEEDINGSor results of operations.operations or cash flows. Future litigation may be necessary to defend ourselves, our partners and our customers, to determine the scope, enforceability and validity of third-party intellectual property and proprietary rights or to establish our intellectual property and proprietary rights. The results of any current or future litigation cannot be predicted with certainty and there can be no assurances that favorable outcomes will be obtained, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management attention and resources and other factors.ITEMRISK FACTORSOperations”.Operations.” Our business, financial condition, results of operations or prospects could also be harmed by risks and uncertainties not currently known to us or that we currently do not believe are material. If any of the risks actually occur, our business, financial condition, results of operations and prospects could be adversely affected. In that event, the market price of our common stock could decline, and you could lose part or all of your investment. The last day of our fiscal year is January 31. Our fiscal years ended January 31, 20202022 and 20212023 are referred to herein as fiscal 20202022 and fiscal 2021,2023, respectively.$29.3$68.5 million, $40.0$58.2 million, $20.2$21.9 million and $29.1$19.8 million for fiscal 2020 and 20212023, fiscal 2022 and the sixthree months ended July 31, 2020April 30, 2023 and 2021,2022, respectively. As of July 31, 2021,April 30, 2023, we had an accumulated deficit of $312.8$432.4 million. We expect our costs to increase in future periods. In particular, we intend to continue to invest significant resources to further develop our platform, expand our sales and marketing and expand our operations and infrastructure, both domestically and internationally. These efforts may be more costly than we expect and may not result in increased revenue or growth in our business. In addition to the expected costs to grow our business,As we also expect todevelop as a public company, we may incur significant additional legal, accounting and other expenses as a newly public company.that we did not incur historically. Our efforts to reduce spend in certain areas may not be successful or result in the desired cost savings or may have unintended negative consequences. Any failure to increase our revenue sufficiently at a rate that exceeds the rate of increase in our investments and other expenses could prevent us from achieving or maintaining profitability.$82.5$154.8 million, $103.3$123.5 million, $48.2$41.0 million and $57.7$34.9 million for fiscal 2020 and 20212023, fiscal 2022 and the sixthree months ended July 31, 2020April 30, 2023 and 2021,2022, respectively. However, you should not rely on our revenue or key business metrics for any previous quarterly or annual period as any indication of our revenue, revenue growth, key business metrics or key business metrics growth in future periods. In particular, our revenue growth rate has fluctuated in prior periods. We expect our revenue growth rate to continue to fluctuate over the short term. Our revenue growth rate may also decline in future periods for a number of reasons, including slowing adoption of or demand for our products and services, increasing competition, a decrease in the growth of our overall market, changes to technology or our failure to capitalize on growth opportunities, among others. In addition, our revenue growth rate may experience increased volatility due to global societal and economic disruption, including the COVID-19 pandemic.disruption. If our revenue growth rate declines, investors’ perceptions of our business and the market price of our common stock could be adversely affected.experience growthgrow in the future. Our employee headcount grew from 437659 as of January 31, 2020April 30, 2022 to 633746 as of July 31, 2021. Employee growth has occurred both at our headquarters and in a number of locations across the United States and internationally.April 30, 2023. Our ability to manage our growth effectively and to integrate new employees, technologies and acquisitions into our existing business will require us to continue to expand our operational and financial infrastructure and to continue to effectively integrate, develop and motivate a large number of new employees, while maintaining the beneficial aspects of our culture. Continued growth could challenge our ability to develop and improve our operational, financial and management controls, enhance our reportingor IT,(“IT”), and financial infrastructure, operating and administrative systems and relationships with various partners and other third parties. In addition, we operate globally, sold subscriptions in more than 50 countries as of July 31, 2021April 30, 2023 and have established subsidiaries in the United Kingdom, India, France, Germany, Israel, Japan and the United Arab Emirates.numerous international subsidiaries. We plan to continue to expand our international operations into other countries in the future, which will place additional demands on our resources and operations. If we do not manage the growth of our business and operations effectively, the quality of our products and services and the efficiency of our operations could suffer. This could impair our ability to attract new customers, retain existing customers and expand their use of our products and services, any of which could adversely affect our brand, business, financial condition and results of operations.
•greater name recognition and brand awareness, longer operating histories and larger customer bases and application developer communities;•greater name recognition and brand awareness, longer operating histories and larger customer bases and application developer communities;
•larger sales and marketing budgets and resources;•larger sales and marketing budgets and resources;
•broader distribution and established relationships with partners and customers;•broader distribution and established relationships with partners and customers;
•greater professional services and customer support resources;•greater professional services and customer support resources;
•greater resources to make acquisitions and enter into strategic partnerships;•greater resources to make acquisitions and enter into strategic partnerships;
•lower labor and research and development costs;•lower labor and research and development costs;
•larger and more mature intellectual property rights portfolios; and•larger and more mature intellectual property rights portfolios; and
•substantially greater financial, technical and other resources.•substantially greater financial, technical and other resources.recent move toward source-available licensing, as well as the continued availability of our source code, may enable others to compete more effectively against us. Such competitive pressures may adversely affect our financial performance. Further, the market in which we compete has attracted significant investments from a wide range of funding sources, and we anticipate that many of our competitors will continue to be highly capitalized.well-capitalized. These investments, along with the other competitive advantages discussed above, may allow our competitors to compete more effectively against us. In addition, conditions in our market could change rapidly and significantly as a result of technological advancements and changing customer preferences and companies with greater financial resources and technical capabilities may be able to respond more quickly to changes that could render our products and services less attractive or obsolete. Additionally, some of our current or potential competitors have made or could make acquisitions of businesses or establish cooperative relationships, among themselves or with others, that may allow them to offer more directly competitive andCOVID-19 pandemic on the current economicmacroeconomic environment has caused, and may in the future continue to cause, certain customers to request concessions including extended payment terms or better pricing, increased customer churn, a lengthening of our sales cycles with prospective customers, a delay of planned projects or expansions and reduced contract values with certain prospective and existing customers. Our customer retention or our customers’ use of our products and services may decline or fluctuate as a result of a number of factors, including our customers’ satisfaction with our products and services, our licensing models, the prices, features or perceived value of competing offerings, changes to our offerings or general economic conditions. Our business model entails significant investments in our technology, sales and marketing function and operations ahead of our planned growth. If these efforts fail and our customers do not renew, increase their subscriptions or increase their usage of our offerings, or if they renew their subscriptions on terms less favorable to us or fail to increase adoption of our products and services, our business, financial condition and results of operations would be adversely affected.Community Editions, which are the free versus paid versions of our products versus(which we call the Community Edition and Enterprise Editions, which are the paid versionsEdition, respectively, for our Server and Mobile suite of our products,products) including the timing of when to incorporate Enterprise Edition features into our Community Edition.Edition products. Any failure on our part to determine the correct balance and timing may adversely affect our business. Existing or potential customers may determine that the functionality of our Community Editionfree versions is sufficient for their needs and as a result may not convert from the use of our Community Edition or free trials to a paid product or downgrade from our paid Enterprise Edition to our Community Edition.products. Further, customersusers of our Enterprise Edition Server and Mobile products may violate our license terms by using our product in production without paying for a required subscription or by exceeding their subscription entitlements, and we may not always be able to determine when this occurs or enforce our license terms.the Enterprise Edition of our Couchbase platform, which includes Couchbase Server, our flagship product, and Couchbase Mobile, a full featured embedded NoSQL database for mobile and edge devices that can securely synchronize locally stored data with Couchbase Server and other devices.Couchbase Mobile. Demand for our platform is affected by a number of factors, many of which are beyond our control, including continued market acceptance by existing customers and potential customers, the ability to expand the product for different use cases, the timing of development and releases of new offerings by our competitors, technological change and the growth or contraction in the market in which we compete. It is possible that customer adoption of our new products, such as Couchbase Cloud,Capella, may replace a portion of customer spend on our existing products. If the market for database solutions, and for NoSQL database solutions in particular, does not continue to grow as expected, or if we are unable to continue to efficiently and effectively respond to the rapidly evolving trends and meet the demands of our customers, achieve more widespread market awareness and adoption of our products and services or otherwise manage the risks associated with the introduction of new products and services, our competitive position would weaken and our business, financial condition, results of operations and prospects would be adversely affected.For example, in June 2020, we announced the generally available release of a fully-managed DBaaS offering, Couchbase Cloud, and asAs a relatively new product offering, it is uncertain whether Couchbase CloudCapella will be widely adopted or how well it will be received by our existing and potential customers. If our investments in new products and services, including Couchbase Cloud,Capella, are not successful, our business, financial condition and results of operations would be adversely affected.Cloud,Capella, will increase our compliance and other expenses, including personnel and security and cloud infrastructure expenses. Any new features that we develop may not be introduced in a timely or cost-effective manner or may not achieve the market acceptance necessary to generate sufficient revenue to justify the related research and development and other related expenses. It is difficult to predict customer adoption of new features. Such uncertainty limits our ability to forecast our future results of operations and subjects us to a number of challenges, including our ability to plan for and model future growth. If we are unable to successfully develop new product features, enhance our existing product features to meet customer requirements, gain market acceptance or otherwise manage the risks associated with the development of new products and features, our business, financial condition and results of operations would be adversely affected. If new technologies emerge that enable others to deliver competitive products and services at lower prices, more efficiently, more conveniently or more securely, such technologies could adversely impact our ability to compete effectively.
•accurately forecast our revenue and plan our expenses;•accurately forecast our revenue and plan our expenses;
•increase the number of new customers and retain and expand relationships with existing customers;•increase the number of new customers and retain and expand relationships with existing customers;
•successfully introduce new products and services;•successfully introduce new products and services;
•successfully compete with current and future competitors;•successfully compete with current and future competitors;
•successfully expand our business in existing markets and enter new markets and geographies;•successfully expand our business in existing markets and enter new markets and geographies;
•anticipate and respond to macroeconomic and technological changes and changes in the markets in which we operate;•anticipate and respond to macroeconomic and technological changes and changes in the markets in which we operate;
•maintain and enhance the value of our reputation and brand;•maintain and enhance the value of our reputation and brand;
•maintain and expand our relationships with partners;•maintain and expand our relationships with partners;
•maintain and expand our relationships with enterprise architects, application developers and other key functions that support them;•maintain and expand our relationships with enterprise architects, application developers and other key functions that support them;
•successfully execute on our sales and marketing strategies;•successfully execute on our sales and marketing strategies;
•adapt to rapidly evolving trends in the ways consumers interact with technology;•adapt to rapidly evolving trends in the ways consumers interact with technology;
•hire, integrate and retain talented technology, sales, customer service and other personnel; and•hire, integrate and retain talented technology, sales, customer service and other personnel; and
•effectively manage rapid growth in our personnel and operations.•effectively manage rapid growth in our personnel and operations. price and the value of your investment could decline substantially.•market acceptance and the level of demand for our products and services;•the quality and level of our execution of our business strategy and operating plan;•the effectiveness of our sales and marketing programs;
•market acceptance and the level of demand for our products and services, including new products and services we offer;
•the quality and level of our execution of our business strategy and operating plan;•the length of our sales cycle, including the timing of renewals;
•the effectiveness of our sales and marketing programs;•our ability to attract new customers, particularly large enterprises;
•the length of our sales cycle, including the timing of renewals;•our ability to retain customers and expand their adoption of our products and services, particularly our largest customers;•our ability to successfully expand internationally and penetrate key markets;
•our ability to attract new customers, particularly large enterprises;•our failure to maintain the level of service uptime and performance required by our customers with certain of our products;
•our ability to retain customers and expand their adoption of our products and services, particularly our largest customers;•technological changes and the timing and success of new or enhanced product features by us or our competitors or any other change in the competitive landscape of our market;
•our ability to successfully expand internationally and penetrate key markets;•our product mix and the revenue recognition related to such products;
•our failure to maintain the level of service uptime and performance required by our customers with certain of our products;•changes in the timing of renewals, average contract term or the timing of software revenue recognition, any of which may impact implied growth rates;
•technological changes and the timing and success of new or enhanced product features by us or our competitors or any other change in the competitive landscape of our market;•changes to our packaging and licensing models, which may impact the timing and amount of revenue recognized;
•our product mix and the revenue recognition related to such products;•increases in and the timing of operating expenses that we may incur to grow our operations and to remain competitive;
•changes in the average contract term or the timing of revenue recognition, any of which may impact implied growth rates;•pricing pressure as a result of competition or otherwise;
•changes to our packaging and licensing models, which may impact the timing and amount of revenue recognized;•seasonal buying patterns;
•increases in and the timing of operating expenses that we may incur to grow our operations and to remain competitive;•delays in our sales cycles, decreases in sales to new customers and reductions in upselling and cross-selling to existing customers due to the impact on global business and IT spending as a result of the COVID-19 pandemic;
•pricing pressure as a result of competition or otherwise;•the implementation of cost-saving activities as a result of the COVID-19 pandemic;
•seasonal buying patterns;•the impact and costs, including those with respect to integration, related to the acquisition of businesses, talent, technologies or intellectual property rights;
•delays in our sales cycles, decreases in sales to new customers and reductions in upselling and cross-selling to existing customers due to macroeconomic conditions;•our inability to enforce our licenses associated with our products;
•the implementation of cost-saving activities, longer deal cycles, extra layers of scrutiny and approval, and customers electing to buy in smaller increments as a result of macroeconomic conditions;•our ability to successfully hire and retain employees and key members of our management team;
•the impact and costs, including those with respect to integration, related to the acquisition of businesses, talent, technologies or intellectual property rights;•changes in the legislative or regulatory environment;
•our inability to enforce our licenses associated with our products;•adverse litigation judgments, settlements or other litigation-related costs; and
•our ability to successfully hire and retain employees and key members of our management team;•general economic conditions in either domestic or international markets, including geopolitical uncertainty and instability., 93%, 95% and 93%92% of total revenue for fiscal 2021 and 2020 and the sixthree months ended July 31, 2021April 30, 2023 and 2020,2022, respectively.levels.levels or fluctuations in customer usage of consumption-based offerings. If our sales of new or renewal subscription contracts decline or if consumption-based customers consume Couchbase Capella at a slower rate than expected, our total revenue and revenue growth rate may decline and our business will suffer.by the constraints placed on our business as a result of the COVID-19 pandemic, including measures that we take proactively and those that are imposed upon us by government authorities.intense competition for talent. New hires require significant training and may take significant time before they achieve full productivity, and our remote and online onboarding and training processes may be less effective than in-person training and take longer. Further, hiring sales personnel in new countries requires additional set up and upfront costs that we may not recover if the sales personnel fail to achieve full productivity. If we are unable to attract, retain, motivate and train sufficient numbers of effective sales personnel, our sales personnel do not reach significant levels of productivity in a timely manner or our sales personnel are not successful in bringing potential customers into the pipeline, converting them into new customers or increasing sales to our existing customer base, our business, financial condition and results of operations would be adversely affected.expense.The global COVID-19 pandemic has harmed and could continue to harm our business and results of operations.The COVID-19 pandemic and efforts to mitigate its impact have significantly curtailed the movement of people, goods and services worldwide, including in the geographic areas in which we conduct our business operations and from which we generate our revenue. It has also caused societal, economic and financial market volatility, resulting in business shutdowns and reduced business activity. We believe that the COVID-19 pandemic has had a negative impact on our business and results of operations, primarily as a result of:•delaying or pausing digital transformation and expansion projects and negatively impacting IT spending, which has caused potential customers to delay or forgo purchases of subscriptions for our products and services, and which has caused some existing customers to fail to renew subscriptions, reduce their usage or fail to expand their usage of our products;•restricting our sales operations and marketing efforts, reducing the effectiveness of such efforts in some cases and delaying or lengthening our sales cycles;•delaying collections or resulting in an inability to collect accounts receivable, including as a result of customer bankruptcies; and•delaying the delivery of professional services and training to our customers.The COVID-19 pandemic may cause us to continue to experience the foregoing challenges in our business in the future and could have other effects on our business, including disrupting our ability to develop new offerings and enhance existing offerings, market and sell our products and services and conduct business activities generally.In light of the uncertain and rapidly evolving situation relating to the spread of COVID-19, we have taken precautionary measures intended to reduce the risk of the virus spreading to our employees, our customers and the communities in which we operate, and we may take further actions as required by government entities or that we determine are in the best interests of our employees, customers, partners and third-party service providers. In particular, governmental authorities have instituted shelter-in-place policies or other restrictions in many jurisdictions in which we operate, including in the San Francisco Bay Area where our headquarters arelocated, which policies require most of our employees to work remotely. Even once shelter-in-place policies or other governmental restrictions are lifted, we expect to take a measured and careful approach to have employees returning to offices and travel for business. These precautionary measures and policies could negatively impact product innovation and development and employee and organizational productivity, training and collaboration or otherwise disrupt our business operations. The extent and duration of working remotely may expose us to increased risks of security breaches or incidents. We may need to enhance the security of our products and services, our data and our internal IT infrastructure, which may require additional resources and may not be successful.In addition, the COVID-19 pandemic has disrupted and may continue to disrupt the operations of our customers and partners, particularly our customers in industries and segments, including consumer-facing travel and hospitality, in-store retail and in-person entertainment, that have been especially impacted by the pandemic. Other disruptions or potential disruptions resulting from the COVID-19 pandemic include restrictions on our personnel and the personnel of our partners to travel and access customers for training, delays in product development efforts and additional government requirements or other incremental mitigation efforts that may further impact our business and results of operations. The extent to which the COVID-19 pandemic continues to impact our business and results of operations will also depend on future developments that are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the disease, the duration and spread of the disease, including as a result of outbreaks and variants, the scope of travel restrictions imposed in geographic areas in which we operate, mandatory or voluntary business closures, the impact on businesses and financial and capital markets and the extent and effectiveness of the development of vaccines and other actions taken throughout the world to contain the virus or treat its impact. An extended period of global supply chain and economic disruption as a result of the COVID-19 pandemic could have a material negative impact on our business, financial condition and results of operations, though the full extent and duration is uncertain. To the extent the COVID-19 pandemic continues to adversely affect our business and financial condition, it is likely to also have the effect of heightening many of the other risks described in this “Risk Factors” section.Although recent vaccine approvals and rollouts have raised hopes of a turnaround in the COVID-19 pandemic, renewed waves and new variants as well as delays in vaccinations pose risks to our recovery and outlook, as well as the recovery and outlook of our customers and partners. Growth may slow if virus outbreaks (including from new variants) prove difficult to contain, infections and deaths mount rapidly before vaccines are widely available, and social distancing measures and/or lockdowns return and are more stringent than anticipated. Moreover, if economic policy support is insufficient or withdrawn before full economic recovery, bankruptcies of viable but illiquid companies could mount, leading to further or renewed employment and income losses and a more protracted recovery. Together, these uncertainties and risks could have a material adverse impact on our financial condition, business and results of operations.operations.operations and key business metrics. Negative conditions in the general economy in either the United States or abroad, including inflation and rising interest rate concerns, conditions resulting from financial and credit market fluctuations, changes in economic policy, trade uncertainty including changes in tariffs, sanctions, international treaties and other trade restrictions, the occurrence of a natural disaster or global public health crisis, such as the COVID-19 pandemic or armed conflicts, could continue to cause a decrease in corporate spending on IT offerings in general and negatively affect the growth of our business.depends,depend, in part, on our planned continued international expansion. We are continuing to adapt to and develop strategies to address international markets, but such efforts may not be successful.•greater difficulty in enforcing contracts and managing collections in countries where our recourse may be more limited, as well as longer collection periods;•higher costs of doing business internationally, including costs incurred in establishing and maintaining office space and equipment for our international operations;•differing labor regulations, especially in the European Union, or EU, where labor laws may be and often are more favorable to employees;•challenges inherent to efficiently recruiting and retaining talented and capable employees in foreign countries and maintaining our company culture and employee programs across all of our offices;•fluctuations in exchange rates between the U.S. Dollar and foreign currencies in markets where we do business;•management communication and integration problems resulting from language and cultural differences and geographic dispersion;•costs associated with language localization of our products and services;•risks associated with trade restrictions and foreign legal requirements, including any importation, certification and localization of our products and services that may be required in foreign countries;•greater risk of unexpected changes in regulatory requirements, tariffs and tax laws, trade laws, export quotas, customs duties, treaties and other trade restrictions;•costs of compliance with foreign laws and regulations and the risks and costs of non-compliance with such laws and regulations, including, but not limited to laws and regulations governing our corporate governance, product licenses, data privacy, data protection and data security regulations, particularly in the EU;•compliance with anti-bribery laws, including, without limitation, the U.S. Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, the U.S. Travel Act and the U.K. Bribery Act 2010, violations of which could lead to significant fines, penalties and collateral consequences for us;•risks relating to the implementation of exchange controls, including restrictions promulgated by the Office of Foreign Assets Control, or the OFAC, and other similar trade protection regulations and measures;•heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact our financial condition and result in restatements of, or irregularities in, financial statements;•the uncertainty of protection for intellectual property rights in some countries, particularly, those countries where we operate through a professional employer organization and do not have a direct contractual relationship with our service providers in such countries;•exposure to regional or global public health issues, such as the outbreak of the COVID-19 pandemic, and to travel restrictions and other measures undertaken by governments in response to such issues;•general economic and political conditions in these foreign markets, including political and economic instability in some countries;
•greater difficulty in enforcing contracts and managing collections in countries where our recourse may be more limited, as well as longer collection periods;
•higher costs of doing business internationally, including costs incurred in establishing and maintaining office space and equipment for our international operations;•foreign exchange controls or tax regulations that might prevent us from repatriating cash earned outside the United States; and
•differing labor regulations, especially in the European Union (“EU”) where labor laws may be and often are more favorable to employees;•double taxation of our international earnings and potentially adverse tax consequences due to changes in the tax laws of the United States or the foreign jurisdictions in which we operate. may face fluctuations in currency exchange rates, which could adversely affect our financial condition and results of operations.operationalkey business metrics with internal systems and tools and do not independently verify such metrics. Certain of our operationalthese metrics are subject to inherent challenges in measurement, and any real or perceived inaccuracies in such metrics may adversely affect our business and reputation. operational metrics, including ARR, dollar-based net retention rate and number of customers, with internal systems and tools that are not independently verified by any third party and which may differ from estimates or similar metrics published by third parties due to differences in sources, methodologies or the assumptions on which we rely. Our internal systems and tools have a number of limitations, and our methodologies for tracking these metrics may change over time, which could result in unexpected changes to our metrics, including the metrics we publicly disclose. In addition, our ARR and dollar-based net retention rate calculations assume our customers will renew unless we receive notification of non-renewal and are no longer in negotiations prior to a measurement date, and will not increase or reduce, their subscriptions for our platform and services. If these assumptions prove to be incorrect, our actual ARR and dollar-based net retention rate may differ significantly from the metrics presented in this Quarterly Report on Form 10-Q. If the internal systems and tools we use to track these metrics undercount or overcount performance or contain algorithmic or other technical errors, the data we report may not be accurate. While these numbers are based on what we believe to be reasonable estimates of our metrics for the applicable period of measurement, there are inherent challenges in measuring these metrics. Limitations or errors with respect to how we measure data or with respect to the data that we measure may affect our understanding of certain details of our business, which could affect our long-term strategies. If our operatingkey business metrics are not accurate representations of our business, if investors do not perceive our operatingkey business metrics to be accurate or if we discover material inaccuracies with respect to these figures, we expect that our business, reputation, financial condition and results of operations would be adversely affected.WeIn addition, the recent move by companies to offer a remote or hybrid work environment may not be successful in attracting, retaining, training or motivating qualified personnel to fulfill our current or future needs. In particular, manyincrease competition for employees outside of our roles require highly-specialized skill sets that are hardertraditional office locations. Employee turnover rates and inflationary pressures in the labor market have increased and may continue to recruit forbe elevated compared to historic levels, which may lead to increased recruiting, training and the individuals with such skills sets are particularly sought after by larger technology companies that are able to offer compensation packages that we may not be able to compete with. retention costs.
•failure to identify, attract, reward and retain people in leadership positions in our organization who share and further our culture, values and mission;•failure to identify, attract, reward and retain people in leadership positions in our organization who share and further our culture, values and mission;
•the increasing size and geographic diversity of our workforce;•the increasing size and geographic diversity of our workforce;
•the continued challenges of a rapidly-evolving industry; and•the continued challenges of a rapidly-evolving industry; and
•the integration of new personnel and businesses from acquisitions.•the integration of new personnel and businesses from acquisitions.July 31, 2021,April 30, 2023, we had an aggregate principal amountmaintained a $40.0 million revolving line of $25.0 million of outstanding indebtedness incurred pursuant tocredit with the Credit Facility. Subsequent to July 31, 2021, we repaid the $25.0 million outstanding balanceformer Silicon Valley Bank (the “Credit Facility”), which was terminated on the credit Facility. We may incur indebtedness inJune 5, 2023. See Note 15 for further information. In the future, underwe may decide that it is advisable to replace the Credit Facilityrevolving line of credit with a new line of credit or otherwise.other debt financing with another lender. There is a risk that we may not be able to negotiate terms of the new line of credit or additional debt financing that are as favorable as the terms of our prior indebtedness. Furthermore, if prevailing interest rates or other factors at the time of negotiation of the new line of credit or additional debt financing result in higher interest rates, then the interest expense relating to that new line of credit or additional debt financing would increase. Our ability to pay interest and repay the principal for ourany indebtedness is dependent upon our ability to manage our business operations, generate sufficient cash flows to service such debt andOur debt obligations could adversely impact us. For example, these obligations could:•require us to use a large portion of our cash flow to pay principal and interest on debt, which will reduce the amount of cash flow available to fund working capital, capital expenditures, acquisitions, research and development expenditures and other business activities;•limit our future ability to raise funds for capital expenditures, strategic acquisitions or business opportunities, research and development and other general corporate requirements;•restrict our ability to incur additional indebtedness and to create or incur certain liens;•increase our vulnerability to adverse economic and industry conditions; and•increase our exposure to interest rate risk from variable rate indebtedness.We may also need to refinance a portion of our outstanding indebtedness as it matures. There is a risk that we may not be able to refinance existing debt or that the terms of any refinancing may not be as favorable as the terms of our existing indebtedness. Furthermore, if prevailing interest rates or other factors at the time of refinancing result in higher interest rates upon refinancing, then the interest expense relating to that refinanced indebtedness would increase.•unanticipated costs or liabilities associated with the acquisition, including claims related to the acquired company, its offerings or technology;•incurrence of acquisition-related expenses, which would be recognized as a current period expense;•inability to generate sufficient revenue to offset acquisition or investment costs;•inability to maintain relationships with customers and partners of the acquired business;•challenges with incorporating acquired technology and rights into our products and services and maintaining quality and security standards consistent with our brand;•inability to identify security vulnerabilities in acquired technology prior to integration with our technology and products and services;•inability to achieve anticipated synergies or unanticipated difficulty with integration into our corporate culture;•delays in customer purchases due to uncertainty related to any acquisition;
•unanticipated costs or liabilities associated with the acquisition, including claims related to the acquired company, its offerings or technology;
•incurrence of acquisition-related expenses, which would be recognized as a current period expense;•the need to integrate or implement additional controls, procedures and policies;
•inability to generate sufficient revenue to offset acquisition or investment costs;•challenges caused by distance, language and cultural differences;
•inability to maintain relationships with customers and partners of the acquired business;•harm to our existing business relationships with partners and customers as a result of the acquisition;
•challenges with incorporating acquired technology and rights into our products and services and maintaining quality and security standards consistent with our brand;•potential loss of key employees;
•inability to identify security vulnerabilities in acquired technology prior to integration with our technology and products and services;•use of resources that are needed in other parts of our business and diversion of management and employee resources;
•inability to achieve anticipated synergies or unanticipated difficulty with integration into our corporate culture;•inability to recognize acquired deferred revenue in accordance with our revenue recognition policies; and
•delays in customer purchases due to uncertainty related to any acquisition;•use of substantial portions of our available cash or the incurrence of debt to consummate the acquisition.the ongoing COVID-19, pandemic, political crises, such as terrorist attacks, war and other political instability or other catastrophic events, whether in the United States or abroad, including the significant military action against Ukraine launched by Russia and any related political or economic response and counter responses or otherwise by various global actors or general effect on the global economy, can continue to adversely affect our operations or the economy as a whole. The impact of any natural disaster, act of terrorism or other disruption to us or our third-party providers’ abilities could result in decreased demand for our products and services or a delay in the provision of our products and services or could negatively impact consumer and business spending in the impacted regions or globally depending on the severity, any of which would adversely affect our business, financial condition and results of operations. All of the aforementioned risks would be further increased if our disaster recovery plans prove to be inadequate.Cloud Service Providers, or CSPs, Independent Software Vendors, or ISVs, Systems Integrators, or SIs,independent software vendors, systems integrators, technology partners, original equipment manufacturers, marketplaces, managed service providers and resellers, that further expand the reach of our direct sales force into additional geographies, sectors, industries and channels. We have entered, and intend to continue to enter, into reseller relationships in certain international markets where we do not have a local presence. We provide certain partners with specific training and programs to assist them in selling our products and services, but these steps may prove ineffective, and restrictions on travel and other limitations as a result of the COVID-19 pandemic or other causes may undermine our efforts to provide training and build relationships.relationships may be ineffective. In addition, if our partners are unsuccessful in marketing and selling our products and services, it would limit our planned expansion into certain geographies, sectors, industries and channels. If we are unable to develop and maintain effective sales incentive programs for our partners, we may not be able to successfully incentivize these partners to sell our products and services to customers. including the Enterprise Edition of our Couchbase platform, include software that is licensed to us by third parties under “open source” licenses. Use and distribution of open source software may entail greater risks than use of third-party commercial software, because open source projects may have vulnerabilities and architectural instabilities, and also because open source licensors generally provide their software on an “as-is” basis and do not provide support, warranties, indemnification or other contractual protections regarding infringement claims or the quality of the code. We have historically elected to make core portions of our source code available on an open source basis to facilitate adoption as well as collaboration and participation from our application developer communities. However, we may not be successful in this strategy, and our recent move toward source-available licensing, as well as the continued availability of our source code, may enable others to compete more effectively against us. In addition, the public availability of the source code for such software may make it easier for others to compromise our products. We expect to continue to incorporate such open source software in our products and allow core portions of our source code to be available on an open source or source-available basis in the future.Mostfromon the internet, including a substantial portion of our source code on open source or source available terms, and we may not know the parties that are utilizing our products and to what extent they are utilizing our products. Also, we domay not have direct visibility into how our software is being used, by licensees, so our ability to detect violations of our product licenses is extremely limited. If we are unable to manage the risks related to our licensing and distribution model, our business, financial condition and results of operations could be adversely affected.recently made a movemoved toward source-available licensing. The continued availability of our source code, among other things, may enable others to develop new software products or services that are competitive to ours without the same degree of overhead and lead time required by us, particularly if customers do not value the differentiation of our proprietary components. It is possible for new and existing competitors, including those with greater resources than ours, to develop their own open source software or hybrid proprietary and open source software offerings, potentially reducing the demand for, and putting price pressure on, our products. In addition, some competitors make open source software available for free download or use or may position competing open source software as a loss leader. We cannot guarantee that we will be able to compete successfully against current and future competitors or that competitive pressure or the availability of open source software will not result in price reductions, reduced revenue and gross margins and loss of market share, any one of which could adversely affect our business. Our use of open source software may also limit our ability to assert certain of our intellectual property and proprietary rights against third parties, including competitors, who access or use software or technology that we have contributed to such open source projects. to Couchbase Server 7.0 under a source-available license, the Business Source License versionBSL 1.1, may harm the adoption of our source code for Couchbase Server 7.0.In March 2021, wecode.willwould be licensing thecertain source code to Couchbase Server 7.0 under a source-available license, the Business Source License version 1.1, or BSL 1.1. Under our BSL 1.1 license, licensees can copy, modify and redistribute the source code for Couchbase Server 7.0 for any non-production purpose. Our BSL 1.1 license also permits use of our source code in a production deployment so long as the licensee is not creating commercial derivative works or offering or including our source code in a commercial product, application or service. After four years, our BSL 1.1 license automatically converts to Apache 2.0, an open source license. We believe that the move to BSL 1.1 enables us to fairly and transparently control commercialization of our source code. However, BSL 1.1 is not an open source license, which may negatively impact adoption of the source code, for Couchbase Server 7.0, reduce our brand and product awareness and ultimately negatively impact our ability to compete.we do not currently own or in-license any issued patents related to any of our products or technologies, and there can be no assurance that our patent applications will result in issued patents. We currently are the assigneeAs of aApril 30, 2023, we owned three issued U.S. patents, six U.S. non-provisional patent applications, one U.S. provisional patent application, threeone Patent Cooperation Treaty, or PCT, patent applicationsapplication, and a number of U.S. non-provisionalfive foreign patent applications. U.S. provisionalPending PCT patent applications are not eligible to become issued patents until, among other things, we file a non-provisional patent application within 12 months of filing of such provisional patent application. Our pending PCT patent application is not eligible to become an issued patent until, among other things, we file a national stage patent applicationapplications within 30 months in the countries in which we seek patent protection. If we do not timely file such nonprovisional patent application or national stage patent applications, we may lose our priority date with respect to our U.S. provisional patent application and PCT patent application and any patent protection on the inventions disclosed in such applications.insidein and outside the United States are less willing or unwilling to protect trade secrets and know-how.
•investigations, enforcement actions, orders and sanctions;•investigations, enforcement actions, orders and sanctions;
•mandatory changes to our products and services;•mandatory changes to our products and services;
•disgorgement of profits, fines and damages;•disgorgement of profits, fines and damages;
•civil and criminal penalties or injunctions;•civil and criminal penalties or injunctions;
•claims for damages by our customers or partners;•claims for damages by our customers or partners;•termination of contracts;
•termination of contracts;•loss of intellectual property rights; and
•loss of intellectual property rights; and•temporary or permanent debarment from sales to heavily regulated organizations and governments.accidentalfailure in technological resources, failure to comply with policies or otherwise. We have experienced and may continue to experience security incidents and attacks of varying types and degrees, from time to time. For example, we were one of many of Codecov’s customers that wereincluding instances where our third-party providers have been impacted by a supply-chain attack on Codecov’s servers. This attack resulted inand instances where there has been exposure and unauthorized access to, and copyinguse of certaincredentials of our sourcepersonnel. In addition, we have identified and been required to remediate or mitigate vulnerabilities in our code repositories. Based on the contents of those repositories, we do not believe such unauthorized access and copying resultedin third-party code. We could be impacted by these and similar security incidents and vulnerabilities in the exposure offuture, and our material intellectual property or any customer data, or had any impact on our own products or services. Such breach does highlight, along with other recent supply-chain attacks against other companies such as Solar Winds,internal controls and operations regarding cybersecurity may not be effective in eliminating the growing risk of compromise of ownedour systems, data and third-party software. In the future, we could experience a similar style attack or could become the subject of one through a supply chain compromise. In addition, our accounts have been used without authorization to mine for cryptocurrency, send phishing emails and attempt to locate account credentials. Additionally, with our employees and many employees of our third-party service providers currently working remotely, due to the COVID-19 pandemic, we may be exposed to increased risks of security breaches or incidents. For example, we have seen an increase in phishing attempts and spam emails over time and it is possible this trend will continue. We anticipate needingAlso, due to enhancepolitical uncertainty and military actions associated with the securitysignificant military action against Ukraine launched by Russia, we and our third-party service providers are vulnerable to a heightened risk of cybersecurity attacks, phishing attacks, viruses, malware, ransomware, hacking or similar breaches from or affiliated with nation-state actors, including attacks that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our products and services, our data, our systemsas well as retaliatory cybersecurity attacks from Russian and our internal IT infrastructure, which may require additional resources and substantial costs and may not be successful. affiliated actors against companies with a U.S. presence.are generallycoordinated attacks, which may not be detected until after an incident has occurred, we may be unable to implement adequate preventative measures, anticipate, prevent or preventdetect attempted security breaches or other security incidents or react in a timely manner. If any of the foregoing were to occur, our customers and potential customers may lose trust in the security of our products or database software generally, which could adversely impact our brand, reputation and ability to retain existing customers or attract new customers.or credit card information and other confidential information such as personally identifiable information.unauthorized transferssecurity breaches involving certain types of personal data. Accordingly, security incidents that we, our competitors, our customers or our third-party service providers experience may lead to negative publicity and harm our reputation. Further, if a security incident or breach occurs with respect to us or a competitor or third-party service provider, our customers and potential customers may lose trust in the security of our products or services or database software generally, which could adversely impact our ability to retain existing customers or attract new customers, which could adversely affect our business, financial condition and results of operations. European Union, or EU. The EU has adopted the General Data Protection Regulation or GDPR,(“GDPR”), which went into effect in May 2018, and together with national legislation, regulations and guidelines of the EU member states, contains numerous requirements relating to the processing of personal data of EU data subjects, including the increased jurisdictional reach of the European Commission, more robust obligations and additional requirements for data protection compliance programs by companies. EU member states are tasked under the GDPR to enact, and have enacted, certain legislation that adds to or further interprets the GDPR requirements and potentially extends our obligations and potential liability for failing to meet such obligations. Among other requirements, the GDPR regulates transfers of personal data subject to the GDPR to the United States as well as other third countries that have not been found to provide adequate protection to such personal data. The GDPR also introduced numerous privacy-related changes for companies operating in the EU, including greater control for data subjects (for example, the “right to be forgotten”), increased data portability for EU consumers, data breach notification requirements and increased fines. In particular, under the GDPR, fines of up to 20 million euros or 4% of the annual global revenue of the noncompliant company, whichever is greater, could be imposed for violations of certain of the GDPR’s requirements. Such penalties are in addition to any civil litigation claims by customers and data subjects. The GDPR requirements apply not only to third-party transactions, but also to transfers of information between us and our subsidiaries, including employee information.European Court of Justice or CJEU,of the European Union (“CJEU”) in July 2020 struck down the EU-U.S. Privacy Shield framework, which provided companies with a mechanism to comply with data protection requirements when transferring personal data from the EU to the United States. In the same decision, the CJEU imposed additional obligations on companies when relying on standard contractual clauses, including that these clauses be considered on a case-by-case basis, in conjunction with an assessment as to whether national security laws conflict with the guarantees provided by the data importer under the standard contractual clauses. The European Commission has since issued new standard contractual clauses that account for the CJEU’s “Schrems II” decision. The Swiss Federal Data Protection and Information Commissioner also has stated that it no longer considers the Swiss-U.S. Privacy Shield adequate for the purposes of personal data transfers from Switzerland to the United States. These developments may resultOn March 25, 2022, the United States and the European Commission announced that they agreed in European data protection regulators applying differing standardsprinciple on a new Trans-Atlantic Data Privacy Framework, subsequently named the EU-U.S. Data Privacy Framework (the “Framework”), to replace the Privacy Shield. There can be no certainty that the Framework will be implemented or will serve as an appropriate mechanism for and requiring ad hoc verification of, transfers ofus to transfer personal data from Europe to the United States. We may be required to take additional steps to legitimize any personal data transfers impacted by these developments and be subject to increasing costs of compliance and limitations on our customers and us. For example, we anticipate being required to engage in new contract negotiations with third parties that aid in processing data on our behalf and entering into the new standard contractual clauses.clauses approved in the EU and United Kingdom, respectively, both of which are required to be implemented over time. More generally, we may find it necessary or desirable to modify our data handling practices, and this “Schrems II” decision or other legal challenges relating to cross-border data transfer may serve as a basis for our personal data handling practices, or those of our customers and vendors, to be challenged and may otherwise adversely affect our business, financial condition and results of operations.Further, following a referendum in June 2016 in which voters in theor U.K., approved an exit from the EU, the U.K. government has initiatedadopted a process to leave the EU known as Brexit. Brexit has created uncertainty with regard to the regulation of data protection in the United Kingdom. In particular, while the Data Protection Act of 2018, which implements and complements the GDPR, achieved Royal Assent on May 23, 2018 and is now effective in the United Kingdom, the impact of Brexit in the medium to longer term remains to be seen. As of January 1, 2021, and the expiry of transitional arrangements agreed to between the United Kingdom and EU, data processing in the United Kingdom is governed by a U.K. version of the GDPR (combining the GDPR and the Data Protection Act 2018), exposing us to two parallel regimes, each of which potentially authorizes similar fines and other potentially divergent enforcement actions for certain violations. On June 28, 2021, the European Commission issued an adequacy decision under the GDPR and the Law Enforcement Directive, pursuant to which personal informationdata generally may be transferred from the EU to the U.K.United Kingdom without restriction; however, this adequacy decision is subject to a four-year “sunset” period, after which the European Commission’s adequacy decision may be renewed. During that period, the European Commission will continue to monitor the legal situation in the U.K.United Kingdom and may intervene at any time with respect to its adequacy decision. The U.K.’sUnited Kingdom’s adequacy determination therefore is subject to future uncertainty and may be subject to modification or revocation in the future, with the United Kingdom potentially being considered an “inadequate third country” under the GDPR and transfers of data from the European Economic Area or EEA,(“EEA”) to the United Kingdom requiring a “transfer mechanism,” such as the EU’s standard contractual clauses. Furthermore, there will be increasing scope for divergence in application, interpretation and enforcement of the data protection law between the U.K.United Kingdom and EEA. We continue to monitor and review the impact of any resulting changes to EU or U.K.United Kingdom law that could affect our operations. We may incur liabilities, expenses, costs and other operational losses under the GDPR and privacy laws of the applicable EU member states and the U.K.United Kingdom in connection with any measures we take to comply with them. Other countries have also passed or are considering passing laws requiring local data residency or restricting the international transfer of data.or CCPA,(“CCPA”) took effect in January 2020. The CCPA imposes obligations on companies that process California residents’ personal information, including an obligation to provide certain new disclosures to such residents and creates new consumer rights, including relating to the access to, deletion of and sharing of personal information collected by covered businesses, including a consumer’s right to opt out of certain sales of their personal information. The CCPA provides for civil penalties for violations, as well as a private right of action for certain data breaches that result in the loss of personal information. This private right of action may increase the likelihood of, and risks associated with, data breach litigation. Additionally, a new privacy law, the California Privacy Rights Act or CPRA,(“CPRA”) was approved by California voters in the November 3, 2020 election. Effective starting January 1, 2023, the CPRA will significantly modifymodified the CCPA, including by expanding consumers’ rights with respect to certain sensitive personal information. The CPRA also createscreated a new state agency that will be vested with authority to implement and enforce the CCPA and the CPRA.Further, on March 2, 2021,Governor of Virginia signed into law the Virginia Consumer Data Protection Act, or VCDPA. The VCDPA creates consumer rights, similar to theCPRA and CCPA, but also imposes security and assessment requirements for businesses. In addition, on July 7, 2021, Colorado enacted the Colorado Privacy Act, or CPA, becoming the third state to pass comprehensive consumer privacy legislation in the United States. The CPA closely resembles the VCDPA, and the CPA and VCDPA will be enforced by the respective states’ Attorney General and district attorneys, although the twoall these laws differ in many ways and once they become enforceable in 2023, we must comply with each if our operations fall within the scope of these newly enacted comprehensiveor the EAR,(the “EAR”) and the U.S. trade and economic sanctions maintained by the U.S. Department of Treasury’s OFAC as well as the U.S. import laws and regulations. The U.S. export control laws and economic sanctions prohibit the export, re-export and in-country transfer of our offerings, including software and services, to certain U.S. embargoed or sanctioned countries and territories, governments and persons, as well as for prohibited end-uses. Further, we incorporate encryption functionality into certain of our products, and as a result, we may need to make filings with the U.S. Department of Commerce’s Bureau of Industry and Security to ensure that our exports, re-exports and transfers are in accordance with the EAR. Also, in certain cases, it is possible that a license may be required to export or re-export our products to certain countries, end-users and end-uses. Obtaining the necessary export license for a particular sale or offering may be time-consuming, may not be possible and may result in the delay or loss of sales opportunities. In addition, various countries regulate the import of certain encryption technology, including through import permit and license requirements, and have enacted laws that could limit our ability to distribute our products or could limit our customers’ ability to implement our products in those countries.Changes in tax laws or regulations, or changes in interpretations of existing laws and regulations, could materially affect our financial condition and results of operations. For example, the Tax CutsInflation Reduction Act (the “IRA”) was signed into law on August 16, 2022, and Jobs Act, or the Tax Act, which contains significant changes to U.S.was effective beginning in fiscal 2024. The IRA imposes a 15% minimum tax law, including a reduction in the corporatefor large corporation on global adjusted financial statement income for tax rateyears beginning after December 31, 2022, and a transition to a new territorial system of taxation. The primary impact of1% excise tax on certain share repurchases occurring after December 31, 2022. We do not currently expect that the new legislation on our provision for income taxes was a reduction of the future tax benefits of our deferred tax assets as a result of the reduction in the corporate tax rate. However, since we have recorded a full valuation allowanceagainst our deferred tax assets, these changes did notIRA will have a material impact on our consolidated financial statements. The impact of the Tax Act will likely be subject to ongoing technical guidance and accounting interpretation, which weincome tax liability, but will continue to monitor this change in future periods. We are unable to predict what changes to the tax laws of the U.S. and assess.or the OECD,(the “OECD”) and unilateral measures being implemented by various countries due to a lack of consensus on these global initiatives. As an example, the OECD has put forth two proposals, Pillar One and Pillar Two, that revise the existing profit allocation and nexus rules (profit allocation based on location of sales versus physical presence) and ensure a minimal level of taxation, respectively. Further, unilateral measures such as Pillar Two and the global minimum tax, digital services tax and corresponding tariffs in response to such measures are creating additional uncertainty. If these proposals are passed, it is likely that we will have to pay higher income taxes in countries where such rules are applicable.2021,2023, we had federal and state net operating losses or NOLs,(“NOLs”) of $240.7$324.4 million and $132.4$178.5 million, respectively, which may be available to offset taxable income in the future. A lack of future taxable income would adversely affect our ability to utilize these NOLs before they expire. Unused U.S. federal NOLs for taxable years beginning before January 1, 2018, may be carried forward to offset future taxable income, if any, until such unused NOLs expire. Under the Tax Act, as modified by legislation enacted on March 27, 2020, the Coronavirus Aid, ReliefCuts and Economic Security Act, or CARESJobs Act, U.S. federal NOLs arising in tax years beginning after December 31, 2017 can be carried forward indefinitely, but the deductibility of such U.S. federal NOLs in taxable years beginning after December 31, 2020 is limited to 80% of current year taxable income. The CARES Act temporarily suspends this 80% taxable income limitation, allowing an NOL carryforward to fully offset taxable income in tax years beginning before 2021. Not all states conform to the Tax Act or CARES Act and other states have varying conformity to the Tax Act or CARES Act.theour U.S. federal NOLs, no amount may be carried forward indefinitely with no limitations when utilized, and $71.9$155.6 million may be carried forward indefinitely with utilization limited to 80% of taxable income. The remaining $168.8 million will begin to expire in 2028. TheOur state NOLs carryforwards begin to expire in 2026.We have completed aA Section 382 study and have determined that none of the NOLs will expire solely due to Section 382 limitations. However, we may experience ownership changes as a result of our initial public offering or in the future as a result of subsequent shifts in our stock ownership, some of which may be outside of our control. Thischange could limit the amount of NOLs that we can utilize annually to offset future taxable income or tax liabilities.income. Subsequent ownership changes and changes to the U.S. tax rules in respect of the utilization of NOLs may further affect the limitation in future years. or the IRS, and other tax authorities in various domestic and foreign jurisdictions. As a result, we may receive assessments in multiple jurisdictions on various tax-related assertions. Taxing authorities may challenge our tax positions and methodologies on various matters, including our positions regarding the collection of sales and use taxes and the jurisdictions in which we are subject to taxes, which could expose us to additional taxes. We assess the likelihood of adverse outcomes resulting from any ongoing tax examinations to determine the adequacy of our provision for income taxes. These assessments can require considerable judgments and estimates. The calculation of our tax liabilities involves uncertainties in the application of complex tax laws and regulations in a variety of jurisdictions. There can be no assurance that our tax positions and methodologies or calculation of our tax liabilities are accurate or that the outcomes from taxor GAAP,("GAAP") are subject to interpretation by the Financial Accounting Standards Board, or FASB, the SEC and other various bodies formed to promulgate and interpret appropriate accounting principles. Changes in accounting principles applicable to us, or varying interpretations of current accounting principles, in particular with respect to revenue recognition, could have a significant effect on our reported results of operations and could affect the reporting of transactions completed before the announcement of the change. Further, any difficulties in the implementation of changes in accounting principles, including the ability to modify our accounting systems, could cause us to fail to meet our financial reporting obligations, which could result in regulatory discipline and harm investors’ confidence in us.or SSP, for each distinct performance obligation, capitalized internal-use software costs, expected period of benefit for deferred commissions, valuation of our common stock prior to our IPO, valuation of stock-based compensation,awards, determination of allowance for doubtful accounts, incremental borrowing rate used to measure operating lease liabilities, and accounting for income taxes. If our assumptions change or if actual circumstances differ from those in our assumptions, our results of operations could be adversely affected, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the market price of our common stock. develop and maintain proper and effective internal control over financial reporting, and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value of our common stock.Securities Exchange Act of 1934, as amended, or the Exchange Act, the Sarbanes-Oxley Act of 2002 or the Sarbanes-Oxley Act,(the “Sarbanes-Oxley Act”), and the listing standards of the Nasdaq Global Select Market. Our management and other personnel devote a substantial amount of time to compliancecomply with these requirements. Moreover, these laws, regulations and standards are subject to varying interpretations and their application in practice may evolve over time as regulatory and governing bodies issue revisions to, or new interpretations of, these public company requirements. Such changes could result in continuing uncertainty regarding compliance matters and higher legal and financial costs necessitated by ongoing revisions to disclosure and governance practices. We will continue to invest resources to comply with evolving laws, regulations and standards and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be adversely affected. develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers. We are also continuing to improve our internal control over financial reporting. We have expended, and anticipate that we will continue to expend, We are not currently required to comply with the SEC rules that implement Section 404 of the Sarbanes-Oxley Act and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. We are required to provide an annual management report on the effectiveness of our internal control over financial reporting commencing with our Annual Report on Form 10-K for fiscal 2023.is notwill be required to formally attest to the effectiveness of our internal control over financial reporting until afterwhen we are no longer an “emerging growth company.” At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed or operating. Any failure to maintain effective disclosure controls and internal control over financial reporting could have an adverse effect on our business, financial condition and results of operations, and could cause a decline in the market price of our common stock.As such,Accordingly, our management team may not successfully or efficiently manage our transition to being a public company subject to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors. These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial condition and results of operations.Accounting Standards Update 2016-02, Leases (Topic 842), which establishes a principle for recognitionthe adoption of assets and liabilities from leasing arrangements.new accounting pronouncements. Any difficulties in implementing these pronouncements could cause us to fail to meet our financial reporting obligations, which could result in regulatory discipline and harm investors’ confidence in us. We may take advantage of these exemptions for so long as we are an “emerging growth company,” which could be for as long as five full fiscal years following the completion of our initial public offering.IPO. We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and the market price of our common stock may be more volatile.
•price and volume fluctuations in the overall stock market from time to time;•price and volume fluctuations in the overall stock market from time to time;
•volatility in the market prices and trading volumes of technology stocks;•volatility in the market prices and trading volumes of technology stocks;
•changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;•changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;
•sales of shares of our common stock by us or our stockholders;•sales of shares of our common stock by us or our stockholders, as well as the anticipation of lock-up releases;•failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company or our failure to meet these estimates or the expectations of investors;
•failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company or our failure to meet these estimates or the expectations of investors;•the financial projections we may provide to the public, any changes in those projections or our failure to meet those projections;
•the financial projections we may provide to the public, any changes in those projections or our failure to meet those projections;•announcements by us or our competitors of new offerings or platform features;
•announcements by us or our competitors of new offerings or platform features and market acceptance of such new offerings or platform features;•the public’s reaction to our press releases, other public announcements and filings with the SEC;
•the public’s reaction to our press releases, other public announcements and filings with the SEC;•rumors and market speculation involving us or other companies in our industry;
•rumors and market speculation involving us or other companies in our industry;•short selling of our common stock or related derivative securities;
•short selling of our common stock or related derivative securities;•actual or anticipated changes in our results of operations or fluctuations in our results of operations;
•actual or anticipated changes in our results of operations or key business metrics or fluctuations in our results of operations or key business metrics;•actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally;
•actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally;•announced or completed acquisitions of businesses, offerings or technologies by us or our competitors;
•announced or completed acquisitions of businesses, offerings or technologies by us or our competitors;•developments or disputes concerning our intellectual property or other proprietary rights;
•developments or disputes concerning our intellectual property or other proprietary rights;•litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors;
•litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors;•new laws, regulations, rules or industry standards or new interpretations of existing laws, regulations, rules or industry standards applicable to our business;
•new laws, regulations, rules or industry standards or new interpretations of existing laws, regulations, rules or industry standards applicable to our business;•changes in accounting standards, policies, guidelines, interpretations or principles;
•changes in accounting standards, policies, guidelines, interpretations or principles;•any significant change in our management; and
•any significant change in our management; and•general economic conditions and slow or negative growth of our markets.the COVID-19 pandemic.global economic conditions, such as recessionary fears, inflation concerns and rising interest rates, and other geopolitical developments. Furthermore, the market price of our common stock may be adversely affected by third parties trying to drive down the price of our common stock. Short sellers and others, some of whom post anonymously on social media, can negatively affect the market price of our common stock and may be positioned to profit if the market price of our common stock declines. These broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance.occur at any time beginning in December 2021 on the third trading day following the announcement of our earnings for the third quarter of fiscal 2022.occur. If our stockholders sell, or the market perceives that our stockholders intend to sell, a substantial number of shares of our common stock in the public market, the market price of our common stock could decline and our ability to raise capital through the sale of additional equity securities could be impaired. Many of our existing equityholdersequity holders have substantial unrecognized gains on the value of the equity they hold, and may take, or attempt to take, steps to sell, directly or indirectly, their shares or otherwise secure, or limit the risk to, the value of their unrecognized gains on those shares.•our board of directors will be classified into three classes of directors with staggered three-year terms, and directors will only be able to be removed from office for cause;•certain amendments to our amended and restated certificate of incorporation will require the approval of at least 66 2/3% of our then-outstanding common stock;•our stockholders will only be able to take action at a meeting of stockholders and will not be able to take action by written consent for any matter;•our amended and restated certificate of incorporation will not provide for cumulative voting;•vacancies on our board of directors will be able to be filled only by our board of directors and not by stockholders;•a special meeting of our stockholders may only be called by the chairperson of our board of directors, our Chief Executive Officer or a majority of our board of directors;•certain litigation against us can only be brought in Delaware;•our amended and restated certificate of incorporation authorizes undesignated preferred stock, the terms of which may be established and shares of which may be issued without further action by our stockholders; and•advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.
•our board of directors will be classified into three classes of directors with staggered three-year terms, and directors will only be able to be removed from office for cause;Act of 1933, as amended, or the Securities Act. We note, however, that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder, and that there is uncertainty as to whether a court would enforce this exclusive forum provision. If a court were to find either exclusive-forum provision in our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could harm our results of operations.Additionally, our ability to pay cash dividends on our common stock is limited by restrictions under the terms of the Credit Facility. As a result, stockholders must rely on sales of their common stock after price appreciation, if any, as the only way to realize any future gains on their investment in our common stock.ITEMUNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSIssuance of Common Stock upon Conversion of Redeemable Convertible Preferred StockOn July 26, 2021, upon the closing of our IPO, all shares of our then-outstanding redeemable convertible preferred stock automatically converted into 26,710,600 shares of common stock. The common stock was issued pursuant to the exemption from the registration requirements of the Securities Act provided by Section 3(a)(9) or Section 4(2) of the Securities Act.JulyJanuary 31, 2021,2022, all $4.9 million of offering expenses incurred in connection with our IPO of $2.1 million have not beenwere paid.After JulyIn the year ended January 31, 2021,2022, we used $25.0 milliona portion of our IPOnet proceeds to repay the $25.0 million outstanding debt under the Credit Facility. Further, we may use a portion of the net proceeds to acquire or invest in businesses, products, services, or technologies. All the shares issued and sold in our IPO were registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-257205), which was declared effective by the SEC on July 22, 2021. The representatives of the underwriters of our IPO were Morgan Stanley & Co. LLC, Goldman Sachs & Co LLC, Barclays, RBC Capital Markets, LLC, William Blair, Stifel, Baird and Oppenheimer & Co. No payments were made by us to directors, officers or persons owning ten percent or more of our common stock or to their associates, or to our affiliates, other than payments in the ordinary course of business to officers for salaries and to non-employee directors pursuant to our director compensation policy.initial public offeringIPO as described in our final prospectus filed with the SEC on July 22, 2021, pursuant to Rule 424(b).ITEMDEFAULTS UPON SENIOR SECURITIESITEMMINE SAFETY DISCLOSURESITEMOTHER INFORMATIONNone.
On June 5, 2023, the Company terminated the Credit Facility pursuant to Section 12.1 thereof. Any termination fee owed by the Company as required by Section 2.5(c) thereof has been waived by Silicon Valley Bank. At the time of termination, no borrowings were outstanding under the Credit Facility. Concurrently with the termination of the Credit Facility, all liens securing the Company’s obligations under the Credit Facility were released. Silicon Valley Bank has also been one of the Company’s commercial banks. The termination of the Credit Facility was for convenience, as the Company did not expect to use the Credit Facility.ITEMEXHIBITS*The certification attached as Exhibit 32.1
NumberDescription Form File No. Exhibit Filing Date Filed Herewith 31.1 X 31.2 X 32.1* X 10.1* X 101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. X 101.SCH Inline XBRL Taxonomy Extension Schema Document. X 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. X 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. X 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. X 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. X 104 Cover Page Interactive Data File (formatted as inline XBRL and contained in such filing.Exhibits 101) - the cover page interactive data is embedded within the Inline XBRL document or included within the Exhibit 101 attachments.X
______________________COUCHBASE, INC.COUCHBASE, INC. Date: September 10, 2021June 7, 2023By:By: /s/ MATTHEW M. CAIN Date: September 10, 2021Vice-PresidentVice President and Chief Financial OfficerOfficerOfficer)By: /s/ BILL CAREY Bill Carey Vice President and Chief Accounting Officer (Principal Accounting Officer) 74