Couchbase, Inc.

Ladies and gentlemen, thank you for standing by and welcome to Couchbase's fourth quarter 2022 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your first speaker today, Edward Parker, head of investor relations. Thank you. Please go ahead.

Good afternoon and welcome to Couchbase's fourth quarter and full year fiscal 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 risks discussed in today's press release and our most recent annual report on Form 10-K or quarterly report on Form 10-Q filed 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. the 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 is included in our earnings press release, which is 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 you details on our fourth quarter results, as well as our first quarter and full year fiscal 2023 guidance. I'm delighted to report that we finished the year on an excellent note, with revenue, annual recurring revenue, and non-GAAP operating profit all beating guidance. Revenue in Q4 was $35.1 million, an increase of 19% year-over-year, while ARR ended the year at $132.9 million, representing 23% growth and an acceleration from prior year's growth. Net new ARR was a record 10.6 million, up 65% year over year. RPO grew 58% to 161.6 million. We added 22 net new logos in the quarter, signifying that more businesses are choosing our modern database for their business-critical applications. Our gross margins remain best in class at 88.7%. Greg will go into more details on Q4 in a moment, but first I'd like to highlight some of our accomplishments over the past year, including some exciting Q4 wins. I'll then lay out what our focus will be for fiscal 2023. In fiscal 2022, we invested heavily to scale the business for long-term growth, further building out our differentiated product portfolio, enhancing our go-to-market organization, expanding our world-class team, all while successfully completing our IPO in July. We delivered on our innovation agenda, enhancing our core server offering while launching our highly anticipated managed service. Specifically, we launched Couchbase Server 7 in July, which combines the best aspects of relational technology with the flexibility of a modern database, further increasing Couchbase's capability as a relational offload. And we introduced Couchbase Capella, our fully hosted database as a service offering at our Couchbase Connect conference in October. As most of you remember, our highly anticipated database as a service offering provides flexibility and ease of adoption for developers and performance at scale for enterprise applications with the best price performance of any database as a service. I'm thrilled that leading indicators for this new offering continue to be very strong, including the engagement from developers within Trials. We are seeing strong pipeline generation across multiple segments of existing Couchbase customers and new logo opportunities, and I am confident we will see meaningful revenue contribution this fiscal year. We enhanced our go-to-market organization by investing in both our buy-from and our complimentary world-class sell-to sales motion. Coordinated investments across top-of-funnel marketing, developer tools, sales capacity, and customer success, to name a few, extend our reach and effectiveness across a variety of enterprise personas, from systems architects to developers. We're seeing great results on both sides of these investments, On the buy from side, we're seeing continued interest in our free trial, strong engagement from existing customers, and great responses to our Capella workshops. On the sell to side, we're seeing strength in new deals, including 22 new logos in Q4. At the same time, we're expanding our wallet share within existing customers and driving big deal momentum. we're enjoying robust and increasing demand from the largest enterprises driven by very healthy renewal and expansion activity. Additionally, I'm pleased to see that our investments in our partner ecosystem are contributing to our growth, both in terms of awareness and directly in terms of revenue. Q4 was the largest quarter ever for partner-sourced and influence new business. All of this contributed to ARR growth of 23% in Q4, and an acceleration from prior year's growth. This is how we expected the business to progress, and we believe we are poised to continue this trend into fiscal 2023. And we've achieved all this despite persistent pandemic-related headwinds that have impacted many of our customers as well as how we go to market. Looking back at fiscal 2022, I am so proud of the entire Couchbase organization for the tremendous accomplishments across every level of our company. We have a world-class team. And as I have always said, our people are our greatest strength. Speaking of the team, I'm excited to welcome Gopi Doody, who we recently announced has joined as our Senior Vice President of Engineering. Gopi will oversee all product development and delivery for Couchbase. He brings nearly 25 years of database and cloud experience from industry-leading companies. Gopi has been with AWS for the past decade, where he was most recently a general manager, and has been a leader in AWS's database, analytics, and observability product teams, helping scale solutions such as AWS Glue, AWS CloudWatch, DynamoDB, and Amazon Relational Database Service. Gopi's unique combination of cloud and database experience at scale makes him an outstanding fit for Team Couchbase. Welcome, Gopi. Now I'd like to spend a few moments discussing some customer wins during the quarter, which were strong across new lands as well as expands, and included some very exciting Couchbase Capella deals. In what is now the largest deal in company history, a Fortune 500 shipping and logistics company significantly expanded its more than five-year partnership with Couchbase. This customer relies on Couchbase for numerous mission-critical applications, many of which require global availability, sub-millisecond response times, and zero downtime. Dow Chemical was a G2K new logo win for Couchbase in Q4. Dow, along with the Accenture manufacturing team, selected Couchbase to power its Connect Field professional modern mobile application. which streamlines and improves the workflow and experience of DAO colleagues working in a manufacturing environment. Couchbase was selected due to the maturity of our differentiated mobile product set, our offline capability, and our overall vision for mobile computing. Another new customer in the quarter was Five9, a leading provider of cloud contact center software. As part of their continued global expansion and growth, Five9 needed a more modern database that can handle the massive performance scalability required to continue to deliver the high quality of experience its customers are used to. Five9 chose Couchbase Capella because of our superior performance delivered in the convenience of a service. Additionally, in Q4, a global communications API company renewed and expanded their Couchbase estate while transitioning their consumption to Capella, making them our first seven-figure Capella customer. Capella on AWS supports real-time communication, session management, and recording SMS messages for this company's clients. This customer credits the scalability, availability, and performance of Couchbase as the reason for increasing their Couchbase investment. Now, let me talk about fiscal 2023. We are dedicated to building on our momentum to make 2023 a landmark year for Couchbase. We believe emphatically that this will be a remarkable year for Couchbase, given the strength of our platform, expanding go-to-market capabilities, and numerous tailwinds at our back. First, our product portfolio is as strong as it ever has been, and we're going to continue to consolidate our gains. Couchbase Capella is off to a great start, and we believe it will become an important contributor to our business this year. It's well known that the cloud database market is accelerating. Industry analysts forecast that this year, cloud database management service revenue will account for 50% of the total database market revenue, and we are now in a great place to participate in this growth. This mirrors what we see in our customer base, as there is hardly a customer conversation that does not include cloud. Because of this trend, we believe we are well positioned with Capella and continue to have very high expectations for the offering. This year, you'll see us invest more in Capella, including extending it to more cloud service providers. I do want to reiterate that our cloud offering is part of a larger set of capabilities enterprises are demanding as they press forward with their digital transformation initiatives. Customers choose Couchbase in part due to the ability to enable applications across a wide spectrum of deployment and consumption models, from cloud to on-prem, from the data center to the edge, and everything in between. We released Couchbase Mobile 3 just last month, which delivers a single universal platform for mobile developers. empowering developers to move data and compute closer to where it's being used, making mobile applications faster and more resilient by eliminating dependencies on distant cloud data centers. These unique capabilities make Couchbase more easily embeddable and programmable at the edge, catering to a vast variety of industrial, retail, healthcare, and IoT applications. The next release of our core platform is also coming this year. And with it, we will enhance our single unified platform to further eliminate the need for point solutions so customers don't have to manage separate technologies and independent data models. We are the only modern database for enterprise applications that makes it easy to seamlessly combine relational and operational capabilities with analytical insights. The next Couchbase server release will have many important updates, such as 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. Our differentiated technology will always be at the heart of who we are, and we continue to aggressively invest in our innovation agenda. Second, we believe our expanding go-to-market capabilities and investment in our buy-from sales motion will continue to broaden our reach to a wider audience of professionals tasked with modernizing their organizations, including developers. Furthermore, we have allocated dedicated Capella resources and cross-functional initiatives that will be deployed across our entire go-to-market organization to further drive our as a service adoption. These targeted investments have been carefully added to enhance our well instrumented enterprise sales organization to support our growth and acceleration agenda. Third, we remain cautiously optimistic that pandemic related headwinds will continue to diminish in the coming months. we continue to see customers in COVID impacted industries show signs of recovery as spending has improved across this cohort after a challenging 18 months. And on balance, our sales productivity continues to recover. That said, we are not completely back to a normal enterprise buying and selling environment. The world is still very much working itself back to what life was like pre-pandemic. I know how eager our world-class enterprise sellers and support teams are to get back to what they do best, getting in front of customers, having face-to-face engagements, and sitting side-by-side with them to help modernize their architectures. And finally, and perhaps most critically, we're seeing digital transformation initiatives and the litany of activities required to support them receiving increasing attention and prioritization at the highest levels of organizations. I am hearing this from business leaders far and wide, and our conversations with customers increasingly revolve around how Couchbase can play an essential role in driving multi-year strategic transformation journeys. It's this accelerating digital transformation backdrop that has me so excited about Couchbase and our opportunity to drive a generational rethink in the $62 billion database market. CEOs, CTOs, and CIOs are all telling me that relational systems are too expensive and ill-suited for the task and that other emerging NoSQL solutions lack the performance and scale requirements they need. They are asking for a platform that can accommodate the incessant growth in data volume and variety that is at the core of digital transformation, but with uncompromised reliability and performance. Couchbase does precisely that in a fast, flexible, and familiar way. I can share with you all that day by day our customers and prospective customers are increasingly gaining an appreciation for what Couchbase does and how we do it differently. In summary, we had a great quarter and a strong year. And in looking to FY 2023, there are some very big trends in our favor. I hope that you all detect the high expectations we have for ourselves for the coming year. The best of Couchbase is yet to come. We wouldn't have 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. We are especially mindful of our values as we watch the tragic events unfolding in Ukraine. Our thoughts and prayers go out to all those who have been impacted by the crisis. Like so many others, we are hoping that we return to a peaceful and safe environment as soon as possible. With that, I will now turn the call over to Greg to talk about our financials. Greg?