Cloud database provider Couchbase hit the trifecta in the second quarter: It beat performance estimates across the board, raised its outlook for the remainder of FY23, and said it’s not seeing a slowdown in demand going forward.
While many cloud and tech firms met or exceeded current numbers, many have reduced their outlook or cited softening demand amid two common factors: macroeconomic challenges and FX headwinds.
In Couchbase’s case, those factors are not dragging on its business, at least as far as company execs can see today.
“As our results suggest, we have not seen a material change in demand for our products or in the buying behavior of our customers,” CEO Matt Cain said on the company’s earnings call Wednesday. “In fact, save for a small amount of business in Russia, our EMEA business remains strong…Q2 was a record quarter in terms of pipeline generation.”
Cain was quick to point out the company’s not about to rest on its laurels: “We wake up every morning with a degree of healthy paranoia, and as such, we remain cognizant of, if not resolutely focused on, the uncertainty being felt across the economy, and this focus continues to inform how we are looking at the rest of the year.”
Focus on the Numbers
To be sure, Couchbase is a smaller company by revenue and ARR than many publicly-held cloud companies, so that point should be considered when discussing its growth rate and other financial metrics. Nonetheless, the company’s results speak to strong demand and strong execution:
- Total quarterly revenue was $39.8 million, an increase of 34% year-over-year. Subscription revenue for the quarter was $37.1 million, an increase of 32% year-over-year.
- Annual recurring revenue as of July 31 was $145.2 million, an increase of 26% year-over-year, or 30% on a constant currency basis.
- Loss from operations for the quarter was $15.2 million, compared to $14.0 million for the second quarter of fiscal 2022. Non-GAAP operating loss for the quarter was $8.4 million, compared to $12.0 million for the second quarter of fiscal 2022.
- The remaining performance obligations (RPO), as of July 31, 2022, was $166.5 million, an increase of 40% year-over-year.
Looking forward, the company raised its revenue guidance (now at $150 million at the midpoint), made a slight ARR adjustment, lowering it by $1 million at the high end due to FX, and reduced its expected non-GAAP operating loss.
“As our results suggest, we have not seen a material change in demand for our products or in the buying behavior of our customers. In fact, save for a small amount of business in Russia, our EMEA business remains strong…Q2 was a record quarter in terms of pipeline generation.”Couchbase CEO Matt Cain
“Due to revenue outperformance and continued expense discipline, we are raising our non-GAAP operating loss guidance and now expect a range of negative $51.8 million to negative $50.8 million,” CFO Greg Henry said.
Pipeline and Positioning Strength
Speaking about the go-forward outlook, officials were optimistic based on the pipeline and how their product positioning aligns with customers. “I’m happy to share that despite ongoing macroeconomic uncertainty, we had a record quarter for pipeline generation,” Cain said, adding that the company’s messaging around the cost-effectiveness of its cloud databases “is resonating with customers, especially at a time when organizations are looking for ways to consolidate their database investments and make more efficient use of their resources.”
CFO Henry added that the company’s products meet customers’ priorities today: “We continue to see solid momentum across our industry in support of broad-based digital transformation initiatives. That said, we are mindful of the macro headwinds impacting IT spending and are monitoring the environment closely.”
The company said it’s seeing strong momentum with key partners, including cloud hyperscalers AWS and Google Cloud. Specifically, new customer acquisition and bookings sourced by partners increased 38% year-over-year for the first half of fiscal 2023.
Cain summarized the company’s positioning and his team’s readiness to adapt as conditions warrant: “Our team is battle-tested, and I am highly confident in our ability to persevere and innovate, even in volatile markets.”
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