Database as a service company Couchbase (NASDAQ: BASE) beat Wall Street’s revenue expectations in Q1 CY2025, with sales up 10.1% year on year to $56.52 million. On the other hand, next quarter’s revenue guidance of $54.8 million was less impressive, coming in 2.9% below analysts’ estimates. Its non-GAAP loss of $0.06 per share was $0.02 above analysts’ consensus estimates.
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Couchbase (BASE) Q1 CY2025 Highlights:
- Revenue: $56.52 million vs analyst estimates of $55.56 million (10.1% year-on-year growth, 1.7% beat)
- Adjusted EPS: -$0.06 vs analyst estimates of -$0.08 ($0.02 beat)
- Adjusted Operating Income: -$4.18 million vs analyst estimates of -$4.72 million (-7.4% margin, relatively in line)
- The company slightly lifted its revenue guidance for the full year to $230.3 million at the midpoint from $230 million
- Operating Margin: -33.3%, up from -43.9% in the same quarter last year
- Free Cash Flow was -$8.64 million, down from $4.16 million in the previous quarter
- Annual Recurring Revenue: $252.1 million at quarter end, up 21.4% year on year
- Market Capitalization: $990.6 million
"We had a great start to fiscal 2026, delivering the highest first quarter net new ARR in company history," said Matt Cain, Chair, President and CEO of Couchbase.
Company Overview
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.
Sales Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Over the last three years, Couchbase grew its sales at a 18.1% annual rate. Although this growth is acceptable on an absolute basis, it fell slightly short of our standards for the software sector, which enjoys a number of secular tailwinds.
This quarter, Couchbase reported year-on-year revenue growth of 10.1%, and its $56.52 million of revenue exceeded Wall Street’s estimates by 1.7%. Company management is currently guiding for a 6.2% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 10.4% over the next 12 months, a deceleration versus the last three years. Despite the slowdown, this projection is above the sector average and suggests the market is forecasting some success for its newer products and services.
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Annual Recurring Revenue
While reported revenue for a software company can include low-margin items like implementation fees, annual recurring revenue (ARR) is a sum of the next 12 months of contracted revenue purely from software subscriptions, or the high-margin, predictable revenue streams that make SaaS businesses so valuable.
Couchbase’s ARR punched in at $252.1 million in Q1, and over the last four quarters, its growth was impressive as it averaged 18.3% year-on-year increases. This alternate topline metric grew faster than total sales, which likely means that the recurring portions of the business are growing faster than less predictable, choppier ones such as implementation fees. That could be a good sign for future revenue growth. 
Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.
It’s very expensive for Couchbase to acquire new customers as its CAC payback period checked in at 947.1 months this quarter. The company’s slow recovery of its sales and marketing expenses indicates it operates in a highly competitive market and must invest to stand out, even if the return on that investment is low.
Key Takeaways from Couchbase’s Q1 Results
We enjoyed seeing Couchbase beat analysts’ annual recurring revenue expectations this quarter. We were also happy its EPS outperformed Wall Street’s estimates. On the other hand, its revenue guidance for next quarter missed despite the company upgrading it. Overall, this was a mixed quarter. The stock remained flat at $18.39 immediately following the results.
Big picture, is Couchbase a buy here and now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
