Earnings call transcript Q1 2024

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Operator

Greetings, and welcome to the Couchbase First Quarter Fiscal 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference call is being recorded.

It is now my pleasure to introduce your host, Edward Parker, Head of Investor Relations. Mr. you, Thank begin. may Parker, you

Edward Parker

Good afternoon, call. quarter earnings Couchbase's welcome to first XXXX and

We in are results issued the and will discussing be Henry. announced and Matt market today. CFO, Greg President after close our With Chair, me Couchbase's CEO, Cain; the release press

contain only which reflect and at our to not performance financial call subsequent trends condition, not concerning and business our for include upon and views representing statements financial future date statements. do and today will as of These Today's strategies, relied should future market business statements as and we guidance periods. and update these size forward-looking statements and expected duty be our any undertake views any financial and

that that from and to matters Forward-looking are subject could actual materially differ statements, uncertainties by expectations. to results risks nature, cause their address

and and SEC. For important today's please to a XX-Q the other risks actual the report filed report on our factors Form quarterly that release most material of in results, the affect our on Form refer our with discussion discussed XX-K, recent annual risks could press

which During prepared the financial Generally most accordance is as how comparable will metrics other available call, in Accounting these non-GAAP these our and are Accepted releases in of A on GAAP metrics, Principles. included reconciliation with measures, Investor measures which are Relations earnings to discuss as well financial non-GAAP certain measures, we the financial not website. directly also press we define our

me that, the Matt. turn let call to over With

Matt Cain

XXXX and I'll of our first a as as and QX everyone. start today's few financial Greg on off will good guidance. results. our full-year I with provide well afternoon, And details results, Edward. fiscal On you, second quarter our highlights Thank quarter call,

on or was XX% with Couchbase team's was outperforming up on year-over-year. delivered $XXX.X recurring topline revenue XX% difficult year-over-year. Total execution strategy the million, pleased all QX our I'm ARR Revenue momentum, strong to while up all economic across environment. profitability against annual in deliver a our guidance metrics. a beating quarter million, $XX

gross performing million margin best-in-class of X is continued the XX.X%. model. despite non-GAAP guidance business operating we we an exciting before. driving strategically placing margin control, non-GAAP increased future, leverage expense operating aligned and above percentage I Indeed, more on factors we rigor there was midpoint external expense focus points macro the operating I'm Non-GAAP our Innovating on of focus are demonstrating discipline environment. And $XX.X can range, than Our was while at for our to how investing are ever while in remains loss outside what proud on of our and control. our believe our implied continue and the discipline.

results. we growth, mix quarter, Focus Capella, they're details and in impact of for provide further on leverage the will progress growth our leverage model. laid Greg sales efficiency marketing our fiscal drive out top increase last comment that having on XXXX. key and our more Recall line and on accelerate Capella the on go-to-market priorities and our of pace and I'll the

with Capella. Starting

build features by developers for a Studio This developer Capella. development applications easier and team Capella, of be Netlify to newest more and the will innovating to platform accessible extension. modern release barriers it R&D for Our which and value our is Last popular to our makes release we adoption New Code deliver on rapidly reduce Visual announced offering, week, enhance customers. even teams

a of data and We also broader including to extended Capella's support cases. enterprise capabilities deployability, use time set new features series

the improving forward, enterprise-grade all our core continue customers been Looking of DNA. our while innovation have for product focus more that on experience, the delivering will towards capabilities to the we Capella accessible making developer and

drive growth. enabling and that existing initiatives Capella power new product-led to more users efficiently both discover continue of for Couchbase customers. we to drive and accelerating adoption In These growth sooner innovation, in are are invest addition and to the developer

workshops. Customers for important we're are As of customers and content are feedback to a customers revamped efforts, due result on unique long-term Capella scalability speed, our cloud modernization our more developer developer engagement and consumption some during selecting for strategies and meet-ups Capella's valuable this. enjoying value of and best-in-class cost-conscious a most like from proposition its flexibility advantages. developer times higher and their website especially at strategic at conferences, performance, increased TCO visibility differentiators

side, On marketing we Microsoft further our adopt and of ecosystem. efficiency month, the process and in cloud improvements Capella announced on for by customers deploy investing applications ongoing Last the to availability of marketplace on sales we the further go-to-market partner Capella to and their simplifying create choice. driving continue operational Azure

about are the opportunity organizations. partnership of Azure We excited the of our and the to for Capella accelerate Couchbase adoption power more to bring

This conjunction partnership our with are we launch the the through with the to their making partner reducing program on ISV modernize and Factory. ISV on it and Also enhanced Starter applications. ISVs of additional supports tools of relationship resources front, complexity expanded and building with for their easier modernize our and Capella AWS, on migrate applications momentum our with in to AWS program build recently organizations

excited summits with and are closely asset creation, activities AWS world. with the remain of These around We participate aligned joint number them. AWS in to go-to-market increasing include engagement developer and an

grow and accelerate broaden continue in the organizations will application our and journey evolve market. their partner to ecosystem in order our help reach development We to

Starting healthcare with wins we're of service turning activity I and industries, and pleased from a offering. of engagement with seeing breadth across of quarter. to as Now Capella, a our technology, uptake broad range customer am our increasing travel. the the including e-commerce,

the we triple-digits Capella milestone growing quarter, in a year-over-year. now the the number customers crossed of During with key dramatically

company, company NextGen and Some health management exciting pet company. a new software technology fast-growing wins included a and wellness revenue estate real cycle a

to deals migrate see estate This continue a decided deal existing greater TCO application A in leverages meaningful large Capella. our its its Capella. how capabilities XXX six-figure our inherent the while also in full to migrating portion demonstrating main quarter our customer Capella customers to that of efficiency We was one to largest customers offering. field leverage flexibility, on-demand Fortune can enterprise for enjoying Couchbase to the energy of Couchbase of the

expansion online company, during came public quarter Capella indexing based which Couchbase for the really media engine. power to its uses search A is from and query its and

As competitor business, scale because cost it's Capella, efficiencies its see public solutions. compared its continues to compelling investment in expanding to they

every open On over the enterprise longer second million published at to peak. profiles spotlight address article existing front, the platform serves could over an LinkedIn resulted Couchbase of centralized a They a tail year. selection more LinkedIn, cost XX% than want trim infrastructure, in who storage no cash as their and annually. its on tier X.X outlining to storage doubling source loads latencies XX% how by per recently their we was serve the in which reduction

environment. on near-term Now turning thoughts to some the

said we One things as and out course, for control control things we into we, variable the cannot control. heading environment. As quarter both there I macro is are we played were can We have cannot prepared expected. of largely before, QX and the

of extra smaller as customers spending. technology and As the approval you've we discussed We're present volatility in last layers buy for peers, to and quarter deal seeing uncertainty IT been our cycles, hearing electing to from longer scrutiny headwinds increments. continues of and and many

feel what headwinds. am through pipeline. pleased can extremely trends about At the to while navigate persisted time, field preparing these control we same These and with end and driving our quarter includes by building good which the the I our of operational ability we for efficiency the future capacity

healthy demand levers the profitability to cloud and of see and are if transformation, improving our right remain have indicators we deals platform. The still innovation We're and to database of That our and the and necessary in said, continue a cloud model pipeline our our at interest accordingly. the strong committed of further secular acceleration in leverage find to favor. big trends react digital in edge

mention the minds. I'd be if dominating I remiss everyone's topic didn't

me our and touching aligned that range internally power leverage both offer the across a opportunities increase a on Let to to how not of business. exploring various applications we're strengths. accelerate initiatives At secular if of fast-moving aspects specific our of with the externally tailwinds wave efficiencies will wide spend AI-driven Couchbase, AI moment

how data and exploring our drive efficient. research, adoption Capella making examples and and Some can of of developer code, tests operationally productivity more test this generating platform include AI generative for

next-generation exciting, while applications for enterprises, the models. real-time Couchbase benefits building believe require time decision-making data are to mission the the AI and a in and real-time and for of becoming Consider is of run business predictive events AI-driven to data for when models improved processing; And collides efficiency productivity we series this are in closer following: implications insights unstructured applications are personalization; specifically their our faster and control real the necessity; and the the increasing more into the processing and insights who to for broadly alone. profound modern are and private leverage industry more moving

It's ever that's at this where how concepts I require generative of these the opportunity, you, because this enterprise often Couchbase, is they high-performance is capitalize today combination who me recently making has operational opportunity with being functionality as understood. this been. for we say the many database Clearly, for analytical promise exciting that as more to a are Much point, heard are to will built But do Couchbase this foundational of have elements AI it's an of all following you've of to true architected. of Couchbase. will only be core and been but on there think been familiar moment

on our our on in committed a year had can control business behind the we secular cannot we drivers we to to start areas closing, progress nimble initiatives, are We're and and our solid focusing remained control. navigating strong. In what making the

of problems want At that Before attack Couchbase, by values Greg, we many to driven times. call our handing over emphasize to hard one I core I've customer repeated the outcomes.

walk results more hand our I'll to you to call Greg that, Greg? through detail. the With over in

Greg Henry

that all and We And our Matt. another with customers healthy ability the as to our level strong for of about, in are delivering loss guidance we beat had us. to joining navigate execution, our pleased talked across we scrutiny quarter Despite key our everyone our value outperformance elevated while metrics. environment, deal driving the to thanks Matt guidance. dedication Thanks, operating

the more an end guidance for the $XXX.X Total million the for second I'll first our of was Revenue of providing quarter, the first was in million, our year-over-year. year-over-year. increase representing before ARR at or XX% quarter and quarter quarter XX% walk revenue recurring first annual growth $XX now detail through full-year. you

million, professional $XX.X strength services Professional the expectations decline in million, outsized was following $X.X revenue consistent of Subscription for year-over-year. XX% quarter for was the our a of an in with XXXX. revenue first quarter first increase year-over-year, fiscal XX% services

a the in slightly levels. XXXX of as percentage We expect contribution recent revenue be fiscal below continue to to

from up in customers. quarter and $XXX,XXX, Our first the we growing with ARR $XXX,XXX have in customer share per was the performance the quarter wallet indicative of fourth large

As decline a grow could reminder, as growth or expect quarters. we customer revenue in future Capella in per continues contribution, to ARR moderate

continues to base dollar-based retention upsell exceed Our XXX%, of strong net driven our rate customers. larger enterprise across renewal activity by and

exited fourth customers, from customers an net new quarter We XXX increase the of four with the quarter.

consistent handful who of smaller QX Our addition customer saw did in who gross by longer including environment, but years, the challenges impacted no two we business. was mid-market with over are customers, in being levels a see past are some the we macroeconomic some count with

retention more by confident by ability strong expand and strength pipeline remain our reliably the new of consistent That encouraged evidenced and a said, environment. to logo metrics our ARR spending as our our challenging growth logos against in we're

stated of basis. references In XX.X% This QX, our and and In XX.X%. remainder discussing operations unless at expenses, on count of statement, of our compares strong were otherwise to quarter. margin please all the year gross ago income a note that a results gross to the XX.X% remained last non-GAAP a margin share

over mix we margin reminder, decline a gross As as expect increases, will Capella time.

Turning to expenses.

to to the growth. front us, we the our in focus see capture opportunity of but We efficiency improving on generational invest our continue of

initiatives benefits and operating are outperforming pleased cost with outlook. resulted savings our We early our expense discipline our front from execution loss in as this on

million year, $XX.X ago. year to this or QX last sales or and revenue sales a of virtual kickoff which $XX.X event, with our revenue, annual format. marketing compared in-person costs XX% of year's expenses associated XX% for were to compared Our included was QX million held

$XX.X compared Research XX% and million of for XX% QX development million $XX.X ago. or or year a revenue to expenses revenue, of were

in invest well as features as thoughtfully as-a-service to bolster continue offering, additional platform. We an to our our

operating guidance, QX for points XX% was $X.X XX% loss margin, our total net $X.XX common expenses General XX% of ago. XX% million $XX.X negative Non-GAAP and attributable compared year percentage administrative $XX.X a was loss of per for stockholders X ago. million from million revenue to higher was to margin of operating or from were $XX.X million Non-GAAP than negative the compared $X.X midpoint QX to million a an for loss year of revenue, or operating share. QX operating negative

cash the investments. short-term QX equivalents to to sheet with flow strategy. We long-term in well million balance $XXX.X Turning capitalized and execute against statement. and our ended cash cash, growth We remain

QX, end Our remaining performance X% $XXX.X obligations totaled of million a or year-over-year. of at RPO the decrease

to or XX% recognize million total $XXX.X the XX% which as year-over-year revenue expect next approximately XX represents of RPO growth. months, We over

As longer and have contraction electing macro the some our been multiyear incentivize to in has as plans performance terms by our year-over-year noted, due we customers total as contracts RPO billings shorter-term uncertainty are sales aggressively. a no impacted because contracts

negative cash was free million and $X.X or flow negative flow cash cash margin. Operating million negative QX XX% for free $X.X was flow

with we in to improvements. have pleased made further profile. free We progress committed We our are remain flow driving the cash

will XXXX. I the and full-year for guidance Now, QX provide fiscal

to momentum XXXX. As in remains we fiscal momentum our ecosystem we strong. go-to-market and investments in capabilities, anticipate our discussed, partner complement Matt Furthermore, continue and our solid see our product will motion that pipeline

retention said, and cycles, impact their macro conversion, acquisition the monitor That continue carefully expansion sales of on including and bookings, our sales to mindful productivity. sizes, we business, logo rates, headwinds deal are pipeline

impact elevated our the how outlook our uncertainty macro to maintains degree into of an conservatism lack visibility for as-a-service trends as these emerging well such, across all offering. the account As the for of metrics as consumption may

the for $XXX of fiscal the million the revenue XX% to quarter million $XX.X the of in million we mind, at growth the second ARR year-over-year midpoint. We to or XXXX, these in $XX.X in million, a $XXX range total growth at year-over-year factors expect With X% range midpoint. of which of anticipate represents

million. loss in million non-GAAP range We expect negative operating $XX.X of to $XX.X a the negative

loss. year raising and decreasing guidance of XXXX, ARR our we fiscal the For outlook while are operating full revenue our our maintaining

of expect at or We million total the XX% of a $XXX.X revenue range million midpoint. to year-over-year growth $XXX.X in the

historically migrated we've with revenue variability to reminder, seen which timing new respect certain a visibility Capella of our deals As customers. along with the enterprise impacts implementation or

our indicator as better than to continue the business. ARR therefore We of view a of revenue strength

the a of expect range in the operating at $XXX.X midpoint. loss non-GAAP million or the $XX to We negative XX% we negative ARR $XXX.X to of growth million finally, in expect And million. range million $XX

I and take your Matt that, happy With questions. to are Operator?

Operator

you. Thank

conducting Stanley. question-and-answer comes you. proceed Sanjit We [Operator session. Thank a will our And be now Please your Instructions] first from question Singh Morgan question. with with

Sanjit Singh

taking for growth look start start a Thank that you ARR questions. to this ARR And year guidance question congrats on did that and my sort first I at with growth. XX% wanted the nice of just quarter. to the you new net

actually year sort I year-over-year ARR down growth? little net a If ARR was of bit or half I of even think back that. better new flattish a it the look on I at basis than implies implies, think in the of what's terms net

than so -- a into days terms as the underlying see of it holding to wanted seeing what you XX did expectations year expect in of are deterioration sense you've assumptions QX, you or largely incremental saw come ago? this what guided sort to get of are approximately mean or you just you just it in And in coming versus the the year

Matt Cain

opening we QX. over we we hand things we some were remarks largely can't. out provide mentioned I stepped articulating in played This of And as is control that it I'll commentary on that we that can Hey. we year, Greg. particularly to think expected things in perspective Look, versus Matt. our the careful as Sanjit. and the then into as

be from to operationally excited everything we're Capella go continue the about to progress market. making to We

same that we we're the the rest to as the cognizant At time, we of about fact and macroeconomic be year. the want of responsible the situation that persists think with

nice on. some us that QX So -- anticipated around are things possible. enable There can number very and I we know Greg say to to have perspective year which are was we as a give level, would a as is the at some specifics progressing high the start

Greg Henry

Look, feel good Yes, thanks. overall and we Sanjit, about the look. QX again, very

QX have the renewals good particularly some relatively obviously see now into have We and closed expansion. deals visibility, we

trending consumption remains the for The of Some QX. pipeline healthy.

pleased -- guidance so in raised we're we for that conservatism. the full-year, we we elevated still QX the the that to beat And of see an maintain by and want level

overachieve as we've guidance not try go minimum And to year. stated, deliver through as always the to we established if at that a we

of sort off start. the posture. But think as pleased we Matt how we that's are good So said, maintain we're to things and

Sanjit Singh

comment type feather today? color. to application us of driving they them could helpful cap -- of evolution they customary nice the of, certainly context in all the their where And are where replace was to give start win, sort that What that a for users. to you That's sort then sort those core Couchbase, LinkedIn was they before any the get

Matt Cain

that their who managed of Sanjit, offered capabilities with all articulating. was subset And customers existing further the the conversations modernization next-generation multiple proposition on Couchbase that Yes, or then applications we're has value with for for totally with application into service are value the our Capella for having proposition we've been a aligned most enjoying an you that customer the as the eventuality imagine, their estate with aligned strategy. entire if existing can advantage taking of of not of it. And been leaning

Sanjit Singh

Very I the Thanks, appreciate Matt. color. exciting.

Operator

question. Oliver Please our your from Thank you. proceed Baird. And Rob with next question with is

Rob Oliver

had guys. a follow-up Hey, as Greg, you for one then afternoon. had I well. I Good thanks, Matt, And Great. for you.

just for on Capella. over were move a then template -- And if that become when done you help lighthouse and hump customer others So, guys to can that I the what understand a what a an you template sort way. them us have industry guys and I that within wondering of bit And had, little of the the of like went to off, obviously along decision And the some Capella could points conversion -- dive got you wanted for Matt, some that well was a the really which quick industry. on gas Capella that if the oil first that what into this in deeper had follow-up.

Matt Cain

Sure.

is has been account our have them time. been enterprise the one grow to addition having years in So And capabilities for capability, set. some customer advantage look, for feature over this they've Capella. us with into several mobile continued the We've of that our to of core discussions a been taking about moving and

think management I database to the became it only compelling ultimately, Rob, where able resources. and but for also not event they save money them internal the optimize offload were

state value with solution mentioned. that the quite of I fact either you the future bit TCO, that be very to And we've there productivity very and with with into again for value build enterprise having and blueprint but run to insatiable proposition Couchbase do on time applications proposition people thing. they right often them carefully in the better is our application resources architected the that Capella internal that. with their dynamics imagine foreseeable the with environment other many resonating move with power or customers is engaging and to that the This using a demand current additional the them new look, an is helps almost challenges better customers can modernize and and that we're others. a But to we're entire as the of full

Rob Oliver

for Great. just year That's you one contemplating guide. just helpful. And much. the full then Thank very Greg, you,

of to through it that of low I some churn quarter. out called customer think happened You the mid-range was kind that

might you you the portion most you. help through with -- about in that comfortable year? the throughout Are kind thinking the how where of -- you land Just just did that us Thank customer the as did what progress of guys scrubbed get that, guide, base, how of we can end? full-year you

Greg Henry

the question. case. Rob. Yes. Hey, think I the that's Appreciate Yes,

handful losses the the we in going historical we losses. customers several this said competitive gross QX. of driven We anomalous were we is are had by a of quarter. remarks, see and with them churn acquisitions on smaller were challenge said, The out the Like the business. think I customers prepared of had consistent I like no

logos say would was And last three thing the other seen average second the the about years. loss the we've the is lowest in I logo

you actually So lot we while a also new a times logo. and the count, dollar reasonable we the you of dollar is see with matter had that of share

it's terms in to how it's impact So it's not of -- play se, and per already the out the materially for in to year, contemplated the guide. year it's going going going to

we're I that landed. So comfortable where think

Rob Oliver

color. it. Appreciate Thanks, Okay. guys. Super helpful

Greg Henry

you. Thank

Operator

Thank our Hedberg question. question Matt you. from your And RBC proceed with Markets. next Please is Capital with

Unidentified Analyst

you about good Thanks us [Anita] in is the are Hedberg. (ph) there? remind improved here. It's the question what to This how to for for taking the the Hi. my and profitability model. Matt see path breakeven drivers to leverage you're Can thinking get

Matt Cain

Yeah, And the Thanks the Yeah, that. stated inefficiencies. to are pleased again for and discussions we're committed to continue were we question. other that continuing it's model do able in leverage our demonstrate to before, as to that we we

We haven't flow-through $X And $X.X we of to flow-through. delivered but we million terms given beat range our profitability. for long-term quarter. we are also in or in when the we Day, doing we million do the do saw that a on continuing of certainly The that committed hopefully, that breakeven the to plan outlook Investor cash in of that. year, one but And we full a

of We headwind against also FX another well. took million as expenses $X

about marching pretty efficiency and good going operationally here. towards to leverage the feeling we're just profitability continue will we're and that keep So gain to

Unidentified Analyst

Got more it. one me. And then from

the quantify business channel? across all Thanks. three talk can from three is the traditional about the is seeing more Now seeing new you there? that marketplaces? What traction coming more a way the hyperscalers, is Capella you're And there you're available to go-to-market

Matt Cain

they approach in edge they're that our hyperscaler, all where hyperscalers. one out our applications their anywhere do the dependent customers any not with big of value the our the big inclusive multi-cloud hyperscalers, Couchbase combine big allowing is our oftentimes, applications which part own proposition from deployments instances totally a have part And As to run consists of on of is mobile single to a run hybrid a of differentiator. with edge of that but the ability have cloud deployments to and a datacenters, devices, it way customers the of where pertains to inclusive and

out were excited which to we round of plan the with has addition portfolio of So the Azure, part roadmap. our been

we other to as specific and AWS, after and with then providers, go-to-market to movement the able we programs in have And indicated commentary cloud of frankly where allow with to choice now customers partnerships we're go solutions between freedom in solution. the market quite total

So it's proposition. even a of end our the had big some value about for before time part Capella market. market we thought way We that

of it's not think I about customers hard and being It's think our something we provide. supporting modern we for so on breakdown applications. the And database e-cloud that's an numbers, extension how

Greg, don't you have know if I any more.

Greg Henry

marketplaces. on mean, Yes. through and their the Matt I both were as with all hyperscalers stated, Capella working we

all but So vendor. good we traction around haven't given to on see we continue specifics by

Unidentified Analyst

you. Thank it. Got

Greg Henry

you. Thank

Operator

next you. Thank proceed Kash our with is from And Please your Goldman question. Sachs. question Rangan with

Kash Rangan

conclude wanted Hello, enough Since of some to analysis contributing very you've quarter. revenue couple Not quantified thank to years, added to cohort for how patterns understand seeing you're just consumption if much. sure pattern. it with have been probably is you Capella. the we you budget. I a Nice

level that are not visibility as you getting model consumption relative cohorts, granted subscription. So contracting curious what It's the to visible. your of study much doing so itself that how that ensure But into consumption more continue the a you're you things to from Thank have visibility one model as you're standpoint of And much. the that you Capella contracts ramp. some to conclusions?

Matt Cain

into starting we trends we see we've to you Capella, on the so said, Hey, like Kash. now. Yeah, obviously the journey for, at given that get question. look is been consumption can it for or customers once And a some some sometimes from begin half We're healthy consume first Thanks rate and having to their a Capella originally year overall, get insights tend they seeing their are once lot at customers consume and that least times consumption. a had they than faster before are a a anticipated. at of anniversary to of at our to they or very rate buy multiple a them

get And all under very trends we look, we the help closely have we We can they're real over-consuming reasons We whether up and customer. faster. We going get see over-consuming. time, monitoring, for consuming can can so sure time obviously consumption make and they're see and it they're can the and know customers them of spend running where right by obviously not to go are surprised.

non-Capella healthy yet. we share seeing to we in the it the believe starting are is our although, theory the out And Capella I there. cohorts think we So play is probably greater net But metric will trends do be cohorts. for rate customer customer that than retention

Kash Rangan

your have long-term? achieve me. it in that you that's somewhere alongside much. in obviously. case, Capella And in you scaling that, that can still you of should increase too also agree so larger the that's the And if as expenses company how the the from of probably result proper business you so targets are if not a the part that structural And lift becomes a the growth consumption with rate the you that Thank

Matt Cain

Yes. and we've through year late we -- current, even on starting Look, as we're last talked profitability are about efficiency. rule focused XX

we So gain go that so the which to and absolutely we continue are can with go. as topline the and it, we're monitoring moderating growing pace leverage and it's that efficiency at we expenses the to

our all resources and that while Capella closely. really be it around development shifted we So we've now really will a of from a talked for Obviously, we've focus perspective. monitoring

are to same and are as time. as that mind focused go again all we we in to the So at But on fast we Capella efficiency try there going we're to can. keeping in on and leverage continue

Operator

And you. Raimo question. Lenschow question is with your Please proceed next Thank Barclays. from with our

Raimo Lenschow

I of Capella. of have certain on you Congrats in development of from versus focusing terms terms in well. any Greg. on a areas? like in terms Do you. kind then use as follow-up production cases see Capella that see test kind quick are and emerging Thank And Thank you particularly test you. me for question what on of do And The clients patterns some development there of workloads?

Matt Cain

that new I customers that kind of signing think to up a new dynamic to or are in access with get new database. end, have Couchbase is about we Capella entree the their Raimo, the spectrum two logos to as to way to would attention Capella you the of to And bring and customers brand on are sides general as the one Couchbase.

logo the largest pretty of the managed eventual that a varies started side, some think our in we On of growth And the enjoy customer Capella. other that I the smallest it service. some see new you deals seeing get that evaluating and the into people are just the want how to of applications acquisition customers of adopts a we significantly have migration existing we're from dynamics

and vertical that's everything in important any very from our customers going it And probably between. run testing specific as case. and or services people fortunate that more eventually We're quite Capella. than largest everything on they financial cloud-first, dynamic other to concept to of say, NextGen transformation before frankly use side, -- a the specific I we're through and robust move would Healthcare and where be we're gaming the more -- our services probably proof driving are to into pretty And platform

unquote of wouldn't the the which on and how ramp I into managed quote And on the support consumption be different Capella our offering. so setup the to we're again, about getting it is So spectrum, model customers say side operationally can thinking more that changing a both. depending dynamic vertical

Raimo Lenschow

terms of transition for you And more one that in you. handling then do of? After create Capella there maybe how to structure Makes started, the big’s get sense. changes has been that be the like you. in and are -- selling that Thank New of terms does any Year Greg, follow-up. how incentive we should you in you Thank headwinds aware

Greg Henry

like Yes. Hey, clearly think comment terms that's to what a going to of shift drive. I of level Capella, Raimo. on more made trying Yes, compensation at I we're was if sales to sort year, we this focus in high

be business. new on the for on But we're this there sell. the is was to obviously than team clearly, focus So still a incentive business growing the last Capella there sales to more and We're Capella year looking is motivated year. go focused and where even

Raimo Lenschow

Perfect. you. Okay. Thank

Greg Henry

Thank you.

Operator

question. from And is with you. proceed your our Guggenheim next Securities. Please question Thank with Ma Howard

Howard Ma

your Thank the new number think that that with you. take Can adds? sharing of you at if are the available? And customer triple-digit these of that's so since the customers Capella reconcile the server of for now But Capella growth net triple-digit you I implies part imply existing guess been that you of that can and you customers number pace it Capella set. And limited pace XXX on XX% Capella if thanks one customer -- growth. customers. of has comment I least

of then will so, future new looking most will or a or we come for And foreseeable year net -- meaningful the like Capella base. the customers ahead, that customer contribution expect acceleration Capella should existing in for next from

Matt Cain

set. customer get Yeah. of XX% Hey, least to Yes, and pleased mark so Howard. Thanks for you'd very you're that take triple-digit our if reach the right you the question.

lot have as align we can a say that now, that, Capella there. some cases -- So a there I reminder, is in would of non-Capella. both and And have And both. we cases customers just

So we customer healthy acquisition. Capella still see very

that So for seeing we're sure.

I all count it the consider grow, you customer It existing think new migration is, Capella as when of to see customers doesn't well. have can the the thing through grow other acquisitions. to

side. on the Capella healthy again, So

did migrations the times look, year for QX Capella year. this we migrations, X QX last in versus fact, In

delivering good feel as we're well. of also about customers feel about that we the the we good over So pace migrating and add

Greg Henry

I could on. Howard, hop if

number net in was Capella there. combination QX it of of a sort enterprise different stories the think two and really I is and

very and we that's of that pretty we be Capella this transparent the an that. we've will business been frank, expectations biggest is largely that To we expected. be out high as for of know the can have and area playing driver better we So do Capella

as continue the we so with expect forward And business. to we move that

going the move the more with to is timing large faster decide customers going as which customers, existing with new new to To your that of our that Capella. think we're on a But we higher I if into net to dynamic big be to migrating dollar new question versus number Capella. that start on go customers back percentage logos logos see logos, customers of get correlated at of I contribution are the

an having have before those we you same What that in And ready At event or customers right see and they determine our don't are can't it is the want try compelling with I large time, we're for the the eventuality. conversations to reflected and numbers them. customers. to up that push believe they it's lined resources that the

we of it's artificially particularly of business. and work threshold making economic times important we're decisions mid XX-year prospects really quickly three, for to more to over on so And the two, are these economics. trying them, alongside the Then in of that get to as five percentage customers of long-term current focused us some

dynamics we're that are share aware of we'll we forward. as say more I'd managing of So and those go very and that

Howard Ma

Okay. clarify into Matt, you of what be I Thank what just last that Can follow-up. a you're guidance clear case? Greg Great. To said on heightened a And guidance, adding in that's for actually level that just you you're think if was quarter to baking you. still Thanks Greg, to the color, conservatism explaining. quick seeing. relative

Greg Henry

Yes, Howard. just results quarter under QX. quite belt Obviously, be got to perfectly we've from we've seen honest. and similar one the It's our

beat if I be can world very of go not the minimum in want an we we're guidance through in elevated as happening meet conservatism say think the go because we we I out remarks, we and we a today to forward. have position So the earlier, of where, stated we're continuing as year prepared in to cognizant level a at as what's it the

ago. So I think stated as had things a continuing we quarter are

Operator

from And Kessinger Rudy our question Difficulty] with you. is [Technical next Thank

Rudy Kessinger

my taking customer start wanted on questions. for you commentary. the to I with Greg, and Thanks churn Great. double-click

-- was was said you think you in Could dollar you last a second-lowest basis, said thrown years. think had there? the in few what it the it on you I I just comments clarify

any specific banks said you their that color share that these further call know could some verticals with you out churn. smaller any enterprises mid-market I just other business. regional any to then and where customers, And went out of

color can churn? you the customer on more any Just give

Greg Henry

Yes. No Rudy. problem,

all, at dollar seen And per three in no I of was, -- lowest stated we've loss years. first regional loss average there the were of second banks was what this. customer, it I if before part the So looked

said the quite they business So the were with things, they challenged out many of in what's on or were business. to them And honestly a I out of we're path macro very side going put of go that SMB on on today were small customers. as that either

was the while dollar churn was why impacted new by that the count picture logo share so with piece, relatively of was But actually but was dollar you for we pretty those component quarter referencing doesn't net low, which that was and dollar reasonable. the that the it the that is tell I whole And always the you the -- count churns.

Rudy Kessinger

as there thought we more -- that? an might kind intermediate today. in free can those their helpful. volatile be flow an you’ve they call our some some that's long-term you to any just hat some have on getting when the our we some in in And targets mentioned And with target or it I you hang of past some potentially in of cash or looking conversations at targets Day to on. breakeven are operating when But operating are certainly Investor expect then I’d say in Okay, that could mentioned hesitancy you're put profitability? speak and macro Matt, that Investors holding this give you've Investor of then date And certainly breakeven future. understand I Day kind point longer-term for

Greg Henry

generating do We It's the that line. that to terms we hitting Investor your in to intend the will fully and Rudy. efficiency ability to seeing path customer macro, still that metrics, about take as the year. we getting to but the doing really long-term see I'll an in hopefully, yes, Hey, we're To we absolutely this of leverage the trying the a of which has out bottom lay Look, is want obviously go Day Capella we this Capella where we disclosed start considering is on why this account. Yes. model Investor one. share the are Day through profitability to profitability. on and digits Greg. point to later some that path go going begun when today we to some letting triple model flow our And we

will on So good. like And as Day. we we all Investor certainly on land I And as an is still soon you know. we doing said, let we, date, plan a

Operator

Please with Securities. from our your Thank next proceed question. Taz you. And question is with Koujalgi Wedbush

Taz Koujalgi

an customer in the usage. or spend seen moving impact, I offering But success that's mentioned us the is understand from you to from customer capacity point. to taking kind a see Capella. assuming Capella goes Hey, is Capella, to guess is, uptake when on a obviously of Can on-prem Capella guys. Thanks guess customer you've spend? higher a customers for in I lot uptick my on-prem price I'm of like-for-like, What question that question. the help from a when I a have you moves would from customer on-prem you've like-for-like the

Greg Henry

Appreciate if go was the $X.XX dollar $X Capella, and they -- of spending move it is Capella to to flavor to self-managed Greg. It's a on enterprise Yes, Couchbase on Taz. which Hey, Yes. question. customer depending chose. how stated they a before I think would we they like

uplift of consumption pure over. sort or So assuming again the additional that's no and volume like-for-like moving that's just

Taz Koujalgi

Got it. And Very helpful. one just follow-up.

on for QX because was Your revenues down believe looks Usually, better revenue versus saw this like revenue your linearity usual revenue, seasonality. quarter improve. it we QX -- comment are that any than I

your QX. think were better revenues your I than subscription QX revenues in

linearity out versus This on the quarter. comment a does lower front than How quarter? quarter better more and play were Was Any other quarters? it last linearity?

Greg Henry

grow will revenue to we Yes. continue subscription time. over Look, would expect

with the when involved you timing obviously is way in accounting term is start around there non-Capella the think the accounting particular rules. the that the and for with piece I subscription

to timing we continue guidance drive can difference. very in the the the Again, it But good feel and for that we QX expect the to that full-year. maintaining of grow. of we're performance some some So nonetheless, about

will you timing noise, past recognition being lot can but more see -- So has to some around start it with of I how dates it a that really about through think cut timing again, based talked ARR some we rules of that's revenue we've and it differences important, about the of measure the in do work. why because on think those some the the is

Taz Koujalgi

Got it.

this I were uptake bit year-over-year. the lighter a why a I Just year? there think, if Services one reason for may. Should What expecting last quarter, rest to that they or light quarter? this revenue we one, the of is a down little is bit little are

Greg Henry

that a good We Yes, year had outperformance it's a backlog We than a to tried higher and an last healthy people to demand normal share on with services. question. was service. had deliver customer

mix just, is business outperformance and would going -- not which below be maybe we're last was that be year a on even to down year we'd year can't it last that repeat that. the potentially year services little to our around And had of we this around we a X%. because normal, a So X% and bit expect

rest that be So for a still year. of year the the continue should expect way maybe you is headwind should us about X% to see the but the you think it, to for

Taz Koujalgi

very you Thank it. Got much.

Greg Henry

Taz. Thanks,

Operator

are further and Cain Matt closing for turn There CEO you. I at Chairman, like to no questions to Thank over back this the floor time. would comments.

Matt Cain

the We quarter start the opportunity the big year. of very believe also excited while strong sharply due some what this, cloud, Capella, our favor and be will about exciting our very to times a trends a macro focused innovation during and with acceleration we like cognizant to remain We're at transformation, the on future. AI. building like and had we edge execution for recap, digital in To operator. Thanks, environment of are

for us you you all forward joining quarter. to Thank with we speaking look and next

Operator

This Thank conclude does teleconference. today's you.

your lines time. for disconnect participation. your Thank You may this you at

Couchbase (BASE) 6 Jun 232024 Q1 Earnings call transcript