Couchbase, Inc. (BASE) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary and Q&A indicate strong financial performance with 17% ARR growth, a significant Capella migration, and record free cash flow. Despite a slight decline in gross margin and NRR, the company raises its revenue guidance and remains optimistic about future growth and profitability. The departure of the CFO and unclear management responses introduce some risk, but overall, the positive developments and improved guidance outweigh these concerns, suggesting a likely positive stock price movement.
Key Financial Performance
Total ARR $237.9 million, up 17% year-over-year and up 8% sequentially.
Net New ARR $17.6 million, up 14% year-over-year; excluding currency fluctuations, it was $19.5 million, up 26% year-over-year.
Revenue $54.9 million, up 10% year-over-year.
Non GAAP Operating Loss $144,000, compared to an operating loss of $4.1 million a year ago.
Gross Margin 89.4%, down from 90.4% a year ago.
Operating Cash Flow $4.4 million for Q4.
Free Cash Flow $4 million, representing a free cash flow margin of 7.3%, the highest quarterly free cash flow in company history.
Total Revenue (Full Year) $209.5 million, up 16% from fiscal 2024.
Software Revenue (Full Year) $200.4 million, up 17% year-over-year.
Professional Services Revenue (Full Year) $9.1 million, up 7% year-over-year.
Dollar Based Net Retention Rate (NRR) Greater than 114%, compared to greater than 115% historically.
Customers 947 customers, an increase of 44 net new customers from last quarter.
Capella ARR $38.5 million, an increase of 76% year-over-year.
Remaining Performance Obligations (RPO) $251.1 million, an increase of 4% year-over-year.
Cash, Cash Equivalents and Short Term Investments $147.2 million.
Operating Loss (Full Year) $14.4 million, compared to an operating loss of $31.3 million in the prior fiscal year.
Net Loss (Full Year) $10.4 million, or negative $0.20 per share.
Free Cash Flow (Full Year) Negative $18.8 million, improved from negative 17.6% in fiscal 2024.
Operating Highlights
Capella Adoption: Capella now represents 16.2% of total ARR and 33% of the customer base, with significant growth in consumption and new logos.
Analytics Services Expansion: Couchbase announced the expansion of its analytics services to select Google Cloud regions, enhancing its capabilities for real-time insights from semi-structured data.
Capella AI Model Services: Collaboration with NVIDIA to deploy NVIDIA Inference Microservices in Capella AI model services, enhancing performance and security for AI workloads.
Customer Growth: Couchbase added 44 new logos in Q4, with a total of 947 customers, reflecting strong market positioning.
Strategic Accounts: Couchbase is emerging as a long-term platform provider for critical applications, with significant expansions in various industries including finance, telecommunications, and gaming.
Free Cash Flow: Couchbase recorded its second quarter of positive free cash flow, achieving $4 million in Q4, the highest in company history.
Sales and Marketing Efficiency: Sales and marketing expenses reduced from 69% of revenue in fiscal 2022 to 57% in fiscal 2025, indicating improved operational efficiency.
Leadership Transition: Greg Henry, CFO, is leaving Couchbase after eight years, with Bill Carey appointed as interim CFO, indicating a strategic shift in leadership.
Risk or Challenges
Competitive Pressures: Couchbase faces competitive pressures from both legacy relational databases and other NoSQL technologies, as evidenced by a major financial firm's decision to consolidate its database vendors.
Regulatory Issues: No specific regulatory issues were mentioned, but the company acknowledges the potential impact of regulatory changes on its operations.
Supply Chain Challenges: No direct supply chain challenges were discussed, but the company may face indirect impacts from broader economic conditions.
Economic Factors: The company experienced fluctuations in foreign currency rates, which affected its financial results and guidance.
Customer Retention and Growth: The dollar-based net retention rate (NRR) was reported at greater than 114%, which is lower than historical levels, indicating potential challenges in retaining and expanding existing customer accounts.
Leadership Transition: The departure of CFO Greg Henry may pose risks related to continuity and strategic execution during the transition period.
Guidance & Outlook
Total ARR: Total ARR was $237.9 million, up 17% year-over-year and up 8% sequentially.
Net New ARR: Net new ARR was $17.6 million, up 14% year-over-year.
Capella Growth: Capella now represents 16.2% of total ARR and 33% of the customer base.
Customer Expansion: Couchbase added 44 new logos, up from 34 in Q4 of fiscal 2024.
Strategic Accounts: Couchbase is emerging as a long-term platform provider for critical applications, with 50 customers generating over $1 million in ARR.
Product Innovations: Couchbase announced the expansion of analytics services to Google Cloud and collaboration with NVIDIA for AI model services.
Q1 FY 2026 Revenue Guidance: Expected total revenue in the range of $55.1 million to $55.9 million, representing 8% year-over-year growth at the midpoint.
Q1 FY 2026 ARR Guidance: Expected ARR in the range of $242.9 million to $245.9 million, representing 18% growth year-over-year at the midpoint.
FY 2026 Revenue Guidance: Expected total revenue in the range of $228 million to $232 million, representing 10% year-over-year growth at the midpoint.
FY 2026 ARR Guidance: Expected ARR in the range of $273.6 million to $278.6 million, representing 16% growth year-over-year at the midpoint.
FY 2026 Operating Loss Guidance: Expected non-GAAP operating loss in the range of negative $13.4 million to negative $8.4 million.
Free Cash Flow Outlook: First full year of positive free cash flow could be fiscal 2027, with improvements expected in fiscal 2026.
Shareholder Return Plan
Free Cash Flow for Q4: $4 million, representing a free cash flow margin of 7.3%. This is the highest quarterly free cash flow in company history.
Free Cash Flow for the full year: Negative $18.8 million, or a negative 9% free cash flow margin, improved from negative 17.6% in fiscal 2024.
Guidance for fiscal 2026: Expecting to deliver free cash flow breakeven in fiscal 2026, with the first full year of positive free cash flow potentially in fiscal 2027.
Key Q&A
Earnings Word Cloud
BASE Transcript
The earnings call presents a mixed picture. Strong ARR growth and strategic account expansion are positives, but concerns over churn, foreign currency impacts, and declining margins weigh negatively. The Q&A reveals management's confidence in market positioning and strategic improvements, but also highlights macro pressures and revenue guidance uncertainties. The lack of a share repurchase program and continued operating losses add to a cautious outlook, resulting in a neutral sentiment for the stock price movement over the next two weeks.
The earnings call summary and Q&A indicate strong financial performance with 17% ARR growth, a significant Capella migration, and record free cash flow. Despite a slight decline in gross margin and NRR, the company raises its revenue guidance and remains optimistic about future growth and profitability. The departure of the CFO and unclear management responses introduce some risk, but overall, the positive developments and improved guidance outweigh these concerns, suggesting a likely positive stock price movement.
The earnings call summary shows strong financial performance with a 17% increase in ARR and 13% revenue growth. The Q&A session highlights confidence in future growth, especially with AI integration and record pre-contracted ARR. Despite operational risks and macroeconomic concerns, guidance remains strong with a focus on achieving positive cash flow by 2026. The absence of a share buyback program is a minor negative, but overall, the strategic positioning and growth prospects, particularly with Capella and AI, suggest a positive sentiment, likely leading to a stock price increase of 2% to 8%.
The earnings call summary highlights positive revenue growth and improvements in operating efficiency, despite some churn and downsell issues. The Q&A section reveals strong new customer acquisitions, strategic initiatives, and a healthy retention rate, which are encouraging. Although there are concerns about churn, management's confidence in ARR guidance and strategic deals for Q4 is promising. The improvement in gross margin and reduced operating loss further support a positive outlook. However, the lack of a share buyback program and cash flow challenges slightly temper the sentiment, resulting in an overall positive rating.
BASE Report
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