3 Reasons to Avoid BASE and 1 Stock to Buy Instead

August 29, 2025 at 00:02 AM EDT

BASE Cover Image

Couchbase has had an impressive run over the past six months as its shares have beaten the S&P 500 by 29%. The stock now trades at $24.40, marking a 38.2% gain. This was partly due to its solid quarterly results, and the performance may have investors wondering how to approach the situation.

Is there a buying opportunity in Couchbase, or does it present a risk to your portfolio? Get the full stock story straight from our expert analysts, it’s free.

Why Is Couchbase Not Exciting?

We’re glad investors have benefited from the price increase, but we're swiping left on Couchbase for now. Here are three reasons why BASE doesn't excite us and a stock we'd rather own.

1. Weak Billings Point to Soft Demand

Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.

Couchbase’s billings came in at $55 million in Q1, and over the last four quarters, its year-on-year growth averaged 6.6%. This performance was underwhelming and suggests that increasing competition is causing challenges in acquiring/retaining customers.

2. Long Payback Periods Delay Returns

The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.

It’s very expensive for Couchbase to acquire new customers as its CAC payback period checked in high 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.

3. Cash Burn Ignites Concerns

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Couchbase’s demanding reinvestments have consumed many resources over the last year, contributing to an average free cash flow margin of negative 12.8%. This means it lit $12.75 of cash on fire for every $100 in revenue.

Couchbase Trailing 12-Month Free Cash Flow Margin

Final Judgment

Couchbase’s business quality ultimately falls short of our standards. With its shares beating the market recently, the stock trades at 5.5× forward price-to-sales (or $24.40 per share). While this valuation is reasonable, we don’t really see a big opportunity at the moment. We're pretty confident there are more exciting stocks to buy at the moment. We’d recommend looking at one of our top software and edge computing picks.

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