On Thursday, Oppenheimer adjusted its price target on shares of Couchbase Inc (NASDAQ: BASE), reducing it to $25.00 from the previous $30.00 while maintaining an Outperform rating on the stock.
The firm anticipates Couchbase to deliver second-quarter fiscal year 2025 revenue that slightly surpasses the company's guidance range of $50.6-51.4 million, which would represent an 18.2% increase at the midpoint compared to the previous year's quarter. This projection is also slightly above the consensus estimate of $51.1 million.
Oppenheimer's stance is based on conservative guidance from Couchbase, which factored in various negative assumptions such as ongoing macroeconomic challenges, extended sales cycles, increased scrutiny of deals, and a gradual uptake of Capella customers. Despite these headwinds, the firm noted Couchbase's robust deal momentum and ongoing migrations to its Capella database-as-a-service offering.
Couchbase has reported growth in its customer base with annual recurring revenue (ARR) over $100,000, now at 301 customers. The company has also maintained a dollar-based net retention rate (DBNRR) over 115%. The Capella service witnessed triple-digit year-over-year growth last quarter and now represents 11.5% of the company's ARR. Oppenheimer believes that this momentum can continue to capture customer interest.
From a financial perspective, continued operational expenditures are expected to keep Couchbase in an operating loss in the near term. Still, these investments are seen as vital for enhancing Capella's capabilities and securing market share in the competitive NoSQL database sector. Oppenheimer projects that these strategies could lead to a re-acceleration of revenue growth exceeding 20% annually.
Looking ahead, Couchbase's targets for achieving positive free cash flow in fiscal year 2026 and positive non-GAAP operating margin in fiscal year 2027 are deemed attainable by the firm. The revised price target reflects lower group multiples, according to Oppenheimer.
In other recent news, Couchbase, Inc. reported strong financial results for the first quarter of 2025, with a significant 21% year-over-year increase in annual recurring revenue (ARR) to $207.7 million and a 25% rise in quarterly revenue to $51.3 million.
The company also added 58 new customers, increasing the total to 807. Despite facing some challenges, Couchbase's new product features were well-received, with the company projecting Q2 total revenue to be between $50.6 million and $51.4 million.
In terms of future expectations, Couchbase anticipates a 17% growth in ARR for the full fiscal year. However, the company reported a non-GAAP operating loss of $6.7 million and expects to remain cash flow negative for the rest of the year. Despite these challenges, many deals that were delayed into Q2 have since closed, some with increased size, indicating resilience and potential for growth.
These are among the recent developments for Couchbase, which continues to focus on operational efficiency and growth through its go-to-market motion, while also driving increased adoption of its Capella service.
InvestingPro Insights
As Couchbase Inc (NASDAQ: BASE) navigates the competitive landscape of the NoSQL database sector, real-time data from InvestingPro provides a nuanced picture of the company's financial health. With a market capitalization of $936.27 million, the company's impressive gross profit margin stands at 88.53% for the last twelve months as of Q1 2025, signaling strong operational efficiency in generating revenue. This aligns with Oppenheimer's observation of Couchbase's robust deal momentum.
Still, the company's journey towards profitability is still in progress. The InvestingPro data indicates a negative P/E ratio of -11.26, with adjusted figures from the last twelve months showing a ratio of -12.3. This reflects the analysts' expectations, as they do not anticipate Couchbase to be profitable this year. Moreover, the company's liquid assets surpassing short-term obligations speaks to its financial stability, which is crucial for supporting ongoing investments in its Capella service.
For investors considering Couchbase's potential, two InvestingPro Tips are particularly relevant: the company holds more cash than debt on its balance sheet, and 11 analysts have revised their earnings upwards for the upcoming period. These insights may offer confidence in the company's ability to navigate near-term challenges and capitalize on growth opportunities.
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