Couchbase, Inc.

Good afternoon, and welcome to CouchBase's fourth quarter 2024 earnings call. We will be discussing the results announced in our press release issued after the market closed today. With me are CouchBase's chair, 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. market size, product capabilities, 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 discussion of the material risk 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, 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 is included in our earnings press releases, which are available on our Investor Relations website. With that, let me turn the call over to Matt.

Good afternoon and welcome to CouchBase's fourth quarter 2024 earnings call. We will be discussing the results announced in our press release issued after the market closed today. With me are CouchBase's chair, 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, market size, product capabilities, 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 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'll 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 is included in our earnings press releases, which are available on our investor relations website. With that, let me turn the call over to Matt.

Thank you, Edward, and thank you all for joining us on the call today. I'm delighted to report that we have delivered a strong Q4 with all our key financial metrics exceeding our outlook. Highlights include growing Capella mix, continued big deal activity, including a particularly robust quarter for renewals and expansions, strong new customer logos, and overall excellent operational performance from all teams across the company. Total annual recurring revenue, or ARR, was $204.2 million, up 25% year over year. Revenue in Q4 was $50.1 million, up 20% year over year. Non-GAAP operating loss in Q4 was $4.1 million, representing a negative operating margin of 8.2%, 8.6 percentage points above the midpoint of our implied operating margin guidance range. We finished fiscal 2024 with strong momentum, capping off a historic year for Couchbase. We drove strong top-line growth in a challenging macroeconomic environment, including accelerating our net new ARR growth. We achieved important milestones with Capella, which now represents 11% of our ARR and over 25% of our customer base. We worked tirelessly to improve our operational rigor and improve our efficiency across the entire company, which resulted in meaningful operating profit outperformance in substantial operating and free cash flow margin expansion. We enhanced and refined our go-to-market motion across marketing, sales, and our partner ecosystems. Our product and engineering teams delivered multiple important enhancements and capabilities across our platform and did so at an accelerated pace. And we welcome many of you to our first Analyst Day as a public company just this last December in New York. I couldn't be more proud of the progress we made across all of our key strategic initiatives. Deliver top line growth, increase the mix at Capella, drive sales and marketing efficiency, and accelerate the pace of leverage in our model. Now, let me discuss some highlights of the quarter and the year. I'll start by reviewing the many innovations we have announced over the past few months. These have contributed to the inflection point we are seeing with Capella, and will be instrumental in unlocking future growth and leverage opportunities. From day one, we've architected our platform to enable demanding applications to not only deliver premium performance, but also provide rich, hyper-personalized, differentiated experiences for end users. Because of our differentiated architecture, our multi-purpose platform converges operational and analytical capabilities and seamlessly integrates advanced services like indexing, eventing, full-text search, and more in a single solution. This approach is why Couchbase can uniquely power adaptive applications for customers. We've built a strong foundation with differentiation we can sustain. And now we've taken that foundation and have layered on new features and capabilities that we have recently announced that position us well for how adaptive applications are evolving with AI. First, we increase developer productivity by introducing the Capella IQ Copilot into our database as a service. IQ allows developers to interact with Capella using natural language conversation, making database interactions more intuitive, efficient, and accessible for developers. They can go from an idea to code in just a few clicks. Next, we further extended our platform capabilities by announcing a columnar service for Capella, which converges operational and real-time analytic workloads into a single platform. Customers can ingest data from anywhere into Capella in real-time, reducing complexity and costs while increasing developer productivity. Initial feedback from the private preview has been exceptional, and we are excited about what this key new service will unlock. Finally, as you may have seen last week, we announced Vector Search as a new feature in our platform, optimized for running on-site, across clouds, and devices at the edge, including mobile and IoT. While vector database point solutions aim to solve the challenges of processing and storing data for LLMs, having multiple standalone solutions adds complexity to the enterprise IT stack and slows application performance. Our multipurpose capabilities eliminate that friction and deliver a simplified and unified architecture to improve the accuracy of LLM results. We also make it easier and faster for developers to build applications by using a single SQL++ query, which incorporates the vector index, removing the need to use multiple indexes or products. And we're the first vendor to announce vector search at the edge. enabling organizations to run AI applications anywhere in connected or disconnected modes. I'm also pleased to announce that we are extending our AI partner ecosystem with Lang Chang and Llama Index integrations, enabling a common API interface to converse with a broad library of LLMs while providing developers with choices for LLMs. Taken together, we're embracing the opportunity to enable hyper-personalized, high-performing, and adaptive applications powered by AI that deliver exceptional experiences to their end users. Customers are responding very positively to how our approach is aligned to their AI-powered adaptive application journey. As you can see, we've achieved a lot in a short amount of time on both product innovation and customer uptake. and it's gratifying to see our efforts bearing fruit. As our Capella base continues to grow, we're seeing favorable consumption dynamics emerge as both existing and new customers realize our platform's unique performance and scale. We're seeing increased consumption across our customer base, which is indicative not only of the value we bring, but also gives us confidence in our ability to deliver sustainable growth. As such, We are committed to taking advantage of this recent inflection we've seen. We fully expect Capella to become an increasingly meaningful driver behind ARR and net retention, as well as an important engine for new logo acquisition. And it will contribute to leverage across our entire business. Now I'd like to turn to customer wins. In Q4, we saw new Capella wins across many industries, including manufacturing, media, fintech, technology, retail, and telco. Array is a financial innovation platform that helps digital brands, financial institutions, and fintechs get compelling consumer products to market faster. Array's offerings helps its partners drive revenue, increase engagement, and empower millions of consumers to achieve their financial goals. This quarter, Array selected Capella to support profile management for its privacy application because of the compelling value and impressive database performance. In Q4, a leading cloud communications provider expanded its investment in Capella to continue supporting its real-time communications platform. This platform connects widely used applications to carriers worldwide, with all conversations being managed and recorded with our cloud database platform. This customer initially began migrating to Capella because of the scalability and benefits that a fully managed service provided to its developer team. They gained the ability to step away from database management and focus on developing core business applications. Another Capella expansion from the quarter came from a premier provider of life insurance in the Asia Pacific region, Couchbase powers customer 360 data for this provider's many millions of customers. The customer decided to expand its investment in Capella on Google Cloud for cost optimization and to continue modernizing their architecture and database management in the cloud. Of note, this was our first multimillion dollar Capella migration. We also continue to see robust large deal activity with the strong foundation of our enterprise server. A new enterprise logo for us this quarter came from a multinational financial services company and one of Europe's leading banks, BBVA. They selected Couchbase to replace another NoSQL database at a worldwide level because of the price performance our platform offered, and they will be using Couchbase to power profile management for its entire customer base. Finally, as I previously mentioned, we saw robust renewal and expansion activity in the quarter with some of our largest customers. This includes a Fortune 500 shipping and logistics company, which saw the largest expansion in our history, and a major multinational technology company that provides software solutions for the global travel and tourism industry. Both customers rely on Couchbase for multiple applications and deployment modalities, and we're honored to continue their journey with them. As we look ahead towards fiscal 2025, we have a massive opportunity in front of us. Our foundation rests upon a carefully architected platform, purpose-built to enable mission-critical adaptive applications that are often being deployed at the edge in an increasingly AI-powered world. I strongly believe that our foundational tenets of scale, performance, and flexibility have never been more relevant as we continue to leverage our core innovations while adding new ones. These include our new real-time analytic and vector search capabilities, both of which together have the potential to make a meaningful impact to our business. Our priorities going forward are to continue to drive sustained growth, capitalize on the inflection we're seeing across the business, and accelerate the pace of leverage in our model. If I were to emphasize one of these priorities, it's the forthcoming leverage that I see building across all aspects of our business. This spans from how we innovate and deliver new capabilities and services, to how we go to market, growing our outstanding customers while also acquiring new ones, to driving more efficiency in our P&L and model. Having held our annual kickoff last month, I can say confidently that we have a strong, motivated, and highly aligned team in place to achieve our ambitions in fiscal 2025. At Couchbase, we're inspired by the generational opportunity that is in front of us and in being a trusted advisor for our customers, partners, and the broader industry. It's an honor to be a strategic technology provider to so many organizations that are changing the way we interact through their modern applications. We have work to do and it won't be easy, but at Couchbase, we pride ourselves on attacking hard problems driven by customer outcomes. With that, I'll hand the call over to Greg to walk you through our results in more detail. Greg.