Couchbase, Inc.

Thank you for standing by, and welcome to CouchBase's third quarter fiscal 2022 earnings call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference may be recorded. Should you require any further assistance, please press star 0. I would now like to hand the conference over to your host. Edward Parker, Investor Relations. Please go ahead.

Good afternoon, and welcome to Couchbase's third quarter 2022 earnings call. We will be discussing the results announced in our press release issued after the market closed today. With me are Couchbase's President and CEO, Matt Cain, and CFO, Greg Henry. Today's call will contain forward-looking statements, which include statements concerning financial and business trends and strategies, our expected future business and financial performance and financial condition, and our guidance for future periods. These statements reflect our views as of today only and should not be relied upon as representing our views at any subsequent date, and we do not undertake any duty to update these statements. Forward-looking statements by their nature address matters that are subject to risks and uncertainties that could cause actual results to differ materially from expectations. For a discussion of the material risks and other important factors that could affect our actual results, please refer to the risk discussed in today's press release, our quarterly report on Form 10Q for the quarterly 2021 to be filed with the SEC and other periodic filings with the SEC. During the call, we will also discuss certain non-GAAP financial measures which are not prepared in accordance with generally accepted accounting principles. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, as well as how we define these metrics and other metrics that's included in our earnings press release and our final IPO prospectus, which are available on our investor relations website. With that, let me turn the call over to Matt.

Thank you, Edward and good afternoon everyone, thank you all for joining us today during today's call Greg and I will provide details on our third quarter results, as well as our fourth quarter and full year guidance. let's kick this off with a few highlights of our Q3 financial results our third quarter revenue was $30.8 million growing 20% year over year. Total annual recurring revenue, or ARR, was $122.3 million, which was up 21% year over year. RPO grew 41% to $124.3 million. Our gross margin remains best in class at 88.3%. We had a great quarter. In our core business, we saw ongoing big deal momentum, robust renewal activity, some significant expansions, and delivered accelerating year-over-year revenue and ARR growth ahead of our guidance. We also saw several COVID-impacted customers return to growth and were cautiously optimistic that others will follow, which would add a tailwind behind our accelerating ARR growth. But perhaps most importantly, we're seeing momentum in our cloud business, bolstered by positive reception and very strong initial uptake of our recently announced hosted Database as a Service offering, Capella, which I'll discuss more in a moment. Overall, our strong fiscal third quarter performance demonstrates how enterprises are turning to and investing in Couchbase as a key technology partner, supporting their digital transformation initiatives. I'm proud of the team, and I've never been more confident in our strategy, our technology, and our opportunity. Looking ahead, we're set up for what we believe will be a great fiscal fourth quarter and a landmark year for the company in fiscal 2023. At Couchbase, our mission is to empower enterprises with the ability to build, deploy, and maintain their mission-critical applications by delivering the world's most scalable, highest performing, and flexible modern databases. Enterprises are confronting the reality that relational platforms are fundamentally unable to accommodate the requirements of modern applications. While many emerging NoSQL technologies address these limitations, they struggle to do so at the mission-critical scale and performance levels required by the modern enterprise. And these technologies weren't architected to accommodate the wide spectrum of deployment and consumption modalities increasingly common across enterprise environments. Couchbase was born to bridge these critical gaps. Enterprises are choosing to build their most important applications on Couchbase because we offer the scalability, flexibility, and ease of adoption necessary to accommodate the incessant growth in data volume and variety that is at the core of digital transformation. We empower architects tasked with designing, building, and supporting applications on which their businesses depend. We also provide developers the tools they need to build software in a modern, agile, and elegant way. And we do this for both new applications and existing ones that need to be replatformed. We enable modern application design while leveraging the existing and ubiquitous knowledge of SQL. We can run anywhere from cloud to on-prem, from the data center to the edge, in managed or hosted deployments. We proudly do all these things with uncompromised performance, but in an approachable and familiar way. And we do all this in a single, carefully architected enterprise platform. Simply put, I remain confident that we have the opportunity to drive a generational rethink in the $60 billion database market. Turning to some of the developments in the quarter, in October we held our annual user conference, Couchbase Connect Online, with the theme of Modernize Now, which underscores the need for organizations to become more flexible and increase developer agility to expedite modern application initiatives. Connect was an impactful week as we raised awareness among key influencer audiences with a particular focus on developers. We saw over 5,200 registrations, and we educated customers and prospects about our modern database across more than 100 sessions, over half of which were for developers. Of course, the big news at Connect was our introduction of Couchbase Capella, our new fully-hosted database-as-a-service offering that delivers database flexibility and ease of adoption for developers and performance at scale for enterprise applications with the best price performance of any databases of service. Capella is available as a free trial for developers, enabling them to get up and running with Couchbase with just a few clicks in a matter of minutes. And it is now available on AWS, with additional cloud providers becoming available in the future. I want to take some time to talk through why the introduction of Capella is so significant. As you know, one of the core value propositions of Couchbase is that we are architected to run anywhere and in whatever consumption model an organization desires. Recall that our core platform is cloud native and more than 50% of our customers deploy Couchbase in any one of the major public clouds today. On top of that, we have had our virtual private cloud offering in market for over 18 months. And now with Capella, which is fully managed and automated, customers can focus exclusively on agile development of their most important applications instead of worrying about operational database management efforts. Though it is still early days for Capella, the feedback from customers has been overwhelmingly positive. We are excited by the leading indicators of our buy-from business. An example of this is developer trial activity. including account sign-ups and cluster creation. Overall, trial activity in the month since launch has meaningfully outpaced all other product launches in our history. More specifically, we had more than double the number of clusters deployed in the first month of Capella than we did in the previous three quarters. This is the activity we would hope to see. further reinforcing our confidence that this new offering will be a major growth driver for Couchbase and will greatly accelerate developer adoption. And we intend to keep our foot on the gas. We will maintain an aggressive investment cadence to support our ambitious product roadmap, and Capella will be a cornerstone within our buy-from sales motion, complementing our world-class sell-to motion. I look forward to updating you all on our progress with Couchbase Capella in the quarters to come. In Q3, we saw continued momentum across our partner ecosystem. I am pleased with the volume of partner deal activity. Of note, the partner sourced and influenced new business for the first three quarters of FY22 has already surpassed that of all our previous fiscal year. On the CSP front, we continue to work with all major cloud providers And in Q3, we specifically saw continued strong engagement and support from AWS. Beyond launching Capella on AWS with support from AWS SaaS factory team, we were invited to two new select go-to-market programs and qualified for multiple designations and integrations with AWS offerings. Now I'd like to spend a few minutes discussing some customer wins in the quarter, and how enterprises are leveraging the power of Couchbase to transform their business. A new G2K logo in Q3, Mgen Technologies, a leading insurance company in France, began its modernization journey by selecting Couchbase over another NoSQL solution to replace Oracle and Postgres to power their data hub, the system of record for the more than 4 million people they insure. The data hub must be able to continuously ingest a large volume of data, but also expose this data to consuming applications through REST APIs. Mgen chose Couchbase due to our ability to join a large volume of data, full-text search, scalability, and supporting a large number of transactions with low latency. Another new win from the quarter, which was also our largest Capella deal to date, was with the leading financial services provider that empowers billions of people and millions of merchants to buy and sell online across many emerging global markets. The company selected Capella on AWS over MongoDB Atlas to power its payment gateway. This customer's development team cited database performance and the familiarity of our SQL++ query language as the key factors in their decision to partner with Couchbase. Also in the quarter, Domino's Pizza significantly expanded with Couchbase. Domino's will be using Couchbase for real-time point-of-purchase customer segmentation and behavior analytics to determine customer lifetime value and to deliver personalized marketing campaigns. They were also able to take things that they already knew about their customers and then combine that with the new information to take action in hours versus weeks or months, as was previously the case. This is a great land and expand example. Once customers adopt our technology, they quickly find new use cases. With our platform, Domino's can deliver not only the perfect pizza, but also insights to its internal business partners in real time. As I take stock of Couchbase's first few months into our journey as a public company, I am very proud of all that we have accomplished in just a short period of time. It has been very encouraging to see the recognition and validation of our modern database for enterprise applications from across the industry, including partners, industry analysts, and customers. But I'm even more excited about the months and years to come. It is clear to me that enterprises are increasing the urgency by which they modernize their application stacks, which intensifies the need for a modern database like Couchbase and is the reason why we are so excited to come to work every day. And while we are not completely back to a normal enterprise buying and selling environment, as pandemic protocols are still impacting our business, we are seeing spending from some of our key customers in our distressed industries recover. And our go-to-market organization is starting to get back in front of our customers in face-to-face engagements. I'm encouraged by these developments, and I remain cautiously optimistic that the recovery will continue with increasing momentum in the coming months. From a technology perspective, our product portfolio has never been stronger. Drafting off the momentum of our release of Couchbase Server 7 in the second quarter and building off our current virtual private cloud offering, the release of Couchbase Capella hosted database as a service offering in the third quarter marks the beginning of a new chapter in the Couchbase story. Enterprises are increasingly looking to offload the management and tuning of database systems so they can fully focus on the applications that run their business. And Capella provides this capability while offering all the mission-critical attributes customers have come to expect from Couchbase. Bigger picture, Capella enhances one of the core value propositions of Couchbase. the ability to enable enterprises to leverage our modern database in whatever deployment and consumption model that that business requires, while at the same time fundamentally changing how developers can access the platform. With Capella, this access is just a matter of a few clicks away. We've invested an enormous amount of time into this offering, and as I discussed earlier, we're thrilled with the customer feedback we've received so far. We have a robust Capella roadmap ahead of us, and you can expect more announcements next year, including support for additional cloud providers, more features, and more capabilities. Needless to say, we have very high ambitions for our as a service portfolio. And of course, our product investments go beyond Capella. Couchbase is built for a world where the applications are delivered as a continuously running service. from the cloud and consumed at the edge on occasionally connected devices as mobile applications. As you know, early on we uniquely made investments in our mobile and edge database capabilities to completely round out our ability to run anywhere. We are currently investing in the next release of Couchbase Mobile, our full featured embedded NoSQL database for mobile and edge computing. The forthcoming innovations will make our capabilities more easily embeddable and programmable at the edge, catering to a vast variety of industrial, retail, healthcare, and IoT applications. You'll also see focus on secure management and operations from cloud to edge and simplify administration to make remote databases at scale significantly easier for customers. We look forward to sharing more about the next phase of our mobile and edge offerings. Stay tuned. The next release of our core platform is also coming next year. And with it, we are making it even easier to migrate from relational databases. We are the only modern database for enterprise applications that makes it easy to seamlessly combine operational capabilities and analytical insight. And the next Couchbase server release will feature important updates to our analytics features. You will also see us extending our core platform support to additional processing architectures, which will reduce the cost for both our customers as well as Capella in the future. In summary, we had a strong quarter. We wouldn't have had this opportunity without the extraordinary team we have in place, as well as the core values that guide us in what we do every single day. At Couchbase, we aim to be good humans always, to act with uncompromised integrity, and to allow all our employees to serve their families. This allows us to attack hard problems for our customers and play to win together so that we make tomorrow better than today. We achieved that in Q3 and expect to do so in Q4. The best of Couchbase is yet to come. I will now turn the call over to Greg to talk about our financial results. Greg?