Database as a service company Couchbase (NASDAQ: BASE) beat analysts' expectations in Q2 FY2024, with revenue up 8.41% year on year to $43.1 million. However, next quarter's revenue guidance of $43 million was less impressive, coming in 1.34% below analysts' estimates. Turning to EPS, Couchbase made a GAAP loss of $0.44 per share, down from its loss of $0.34 per share in the same quarter last year.
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Couchbase (BASE) Q2 FY2024 Highlights:
- Revenue: $43.1 million vs analyst estimates of $41.7 million (3.42% beat)
- EPS (non-GAAP): -$0.17 vs analyst estimates of -$0.22
- Revenue Guidance for Q3 2024 is $43 million at the midpoint, below analyst estimates of $43.6 million
- The company reconfirmed its revenue guidance for the full year of $173.2 million at the midpoint
- Free Cash Flow was -$1.59 million compared to -$8.47 million in the previous quarter
- Gross Margin (GAAP): 86.3%, down from 88% in the same quarter last year
Formed in 2011 with the merger of Membase and CouchOne, Couchbase (NASDAQ:BASE) is a database as a service platform that allows enterprises to store large volumes of semi-structured data.
Data is the lifeblood of the internet and software in general, and the amount of data created is growing at an accelerating pace. Likewise, the importance of storing the data in scalable and efficient formats continues to rise, especially as the diversity of the data and associated use cases expand from analyzing simple, structured data to high-scale processing of unstructured data, images, audio and video.
Sales GrowthAs you can see below, Couchbase's revenue growth has been strong over the last two years, growing from $29.7 million in Q2 FY2022 to $43.1 million this quarter.
Couchbase's quarterly revenue was only up 8.41% year on year, which might disappoint some shareholders. However, its revenue increased $2.14 million quarter on quarter, a strong improvement from the $627 thousand decrease in Q1 2024. This is a sign of acceleration of growth and very nice to see indeed.
Next quarter's guidance suggests that Couchbase is expecting revenue to grow 11.5% year on year to $43 million, slowing down from the 25.1% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 13.5% over the next 12 months before the earnings results announcement.
ProfitabilityWhat makes the software as a service business so attractive is that once the software is developed, it typically shouldn't cost much to provide it as an ongoing service to customers. Couchbase's gross profit margin, an important metric measuring how much money there's left after paying for servers, licenses, technical support, and other necessary running expenses, was 86.3% in Q2.
That means that for every $1 in revenue the company had $0.86 left to spend on developing new products, sales and marketing, and general administrative overhead. Couchbase's excellent gross margin allows it to fund large investments in product and sales during periods of rapid growth and achieve profitability when reaching maturity. It's also comforting to see its gross margin remain stable, indicating that Couchbase is controlling its costs and not under pressure from its competitors to lower prices.
Key Takeaways from Couchbase's Q2 Results Although Couchbase, which has a market capitalization of $790.3 million, has been burning cash over the last 12 months, its more than $165.8 million in cash on hand gives it the flexibility to continue prioritizing growth over profitability.
It was good to see Couchbase beat analysts' revenue and non-GAAP operating profit expectations this quarter. That really stood out as positives in these results. On the other hand, its revenue guidance for next quarter underwhelmed. For the full year, guidance was largely maintained, which shows that the business is on track and that there are no surprises. Overall, this was a mediocre quarter for Couchbase. The stock is up 3.33% after reporting and currently trades at $17.05 per share.
The author has no position in any of the stocks mentioned in this report.
