Couchbase Inc (BASE) Q1 2026 Earnings Call Highlights: Strong ARR Growth Amid Revenue Challenges
Total ARR: $252.1 million, up 21% year-over-year, 6% sequentially.
Net New ARR: $14.2 million, up more than 300% year-over-year.
Revenue: $56.5 million, up 10% year-over-year, 3% sequentially.
Non-GAAP Operating Loss: $4.2 million.
Capella ARR: $44 million, up 84% year-over-year.
Gross Margin: 88.7%.
Operating Cash Flow: Negative $6.8 million.
Free Cash Flow: Negative $8.6 million.
Cash, Cash Equivalents, and Short-term Investments: $141.8 million.
RPO (Remaining Performance Obligations): $239.6 million, up 9% year-over-year.
Q1 ARR per Customer: $269,000.
Dollar-based Net Retention Rate (NRR): Greater than 114%.
Customer Count: 937, a decrease of 10 net new customers from last quarter.
Warning! GuruFocus has detected 5 Warning Signs with BASE.
Release Date: June 03, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Couchbase Inc (NASDAQ:BASE) reported a strong start to fiscal 2026, exceeding guidance ranges for ARR, revenue, and non-GAAP operating loss.
The company saw substantial acceleration in net new ARR growth, driven by large strategic accounts and Capella adoption.
Capella ARR increased by over 80% year-over-year, now representing 17.4% of total ARR and 33% of the customer base.
Couchbase Inc (NASDAQ:BASE) continues to innovate with new product features, including the launch of Couchbase Edge Server and enhancements in AI capabilities.
The company has a growing pipeline of strategic opportunities, reinforcing confidence in maintaining momentum throughout the fiscal year.
Despite strong ARR performance, total revenue growth was slower than expected, partly due to migration dynamics affecting revenue recognition.
There was a decline in customer count, driven by churn in customers with starter packs, although this was offset by healthy gross retention.
Professional service revenue decreased by 27% year-over-year and 22% sequentially.
Operating cash flow for the first quarter was negative $6.8 million, with a free cash flow margin of negative 15.3%.
The company faces ongoing challenges with longer sales cycles and higher deal scrutiny due to macroeconomic pressures.
Q: Can you elaborate on how macroeconomic conditions affected Couchbase in Q1, and how customer conversations have been trending? A: Matthew Cain, President and CEO, explained that while there are pressures in the selling environment, such as longer sales cycles and higher deal scrutiny, Couchbase's strategic platform and pipeline health have offset these challenges. The company remains well-positioned in the market, particularly with the dynamics around AI and application development.
Q: How are go-to-market improvements and the new free Capella tier impacting Couchbase's pipeline and developer engagement? A: Matthew Cain highlighted the importance of strategic accounts and Capella adoption. The free Capella tier and enhancements like Capella IQ and social sign-on have increased trial volumes significantly, indicating strong future demand and application growth.
Q: What is causing the difference between ARR and revenue growth, and how do migrations affect this? A: Bill Carey, Interim CFO, explained that enterprise product migrations to Capella create a temporary revenue recognition delay. Capella's usage-based model and the ramp-up phase during migrations contribute to this dynamic. Despite this, ARR remains a better performance indicator.
Q: How does Couchbase view competition from Postgres databases, especially with recent acquisitions by Snowflake and Databricks? A: Matthew Cain stated that Couchbase focuses on critical applications requiring performance and scale, where downtime and complexity are costly. Couchbase's memory-first architecture and integrated data services differentiate it from competitors, and the company is confident in its platform's capabilities.
Q: How is Couchbase's strategic account growth impacting workload additions, and are customers leaning into Couchbase as a primary database? A: Matthew Cain noted that strategic accounts often involve multiple applications, and Couchbase is increasingly being adopted as a strategic platform. This results in significant expansion as customers deploy more applications and recognize Couchbase's value as a default platform.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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