Couchbase Inc at Robert W Baird Global Consumer, Technology & Services Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Rob Oliver - Robert W. Baird & Co. - Analyst : What -- and I realize there's various levels technicality we could go to in databases, but I guess maybe going to a medium depth for my own purposes so I can understand. What is it about NoSQL, and in particular about what Couchbase provides where getting to know your customers over the years, some incredibly complex real-time things happening. Why are traditional databases not set up to do that?

Question: Rob Oliver - Robert W. Baird & Co. - Analyst : Maybe let's talk about some of the use cases. And I mentioned how going back many years, I've had a great chance to talk to many of your customers. And it feels like there's some great use cases that come out of where customers like, whether it be United Airlines or others are using your software in a way where they really felt they couldn't get at that sort of platform database approach to drive their critical business anywhere else. So maybe just help investors here understand maybe some use cases, so they can put some meat on the bones here.

Question: Rob Oliver - Robert W. Baird & Co. - Analyst : Got it. You guys just reported your quarter and I want to talk about that. But want to also just first dive into the -- your average contract values have been pricing like fairly consistently, which new lands are getting bigger, but also expand. So the use cases you laid out sounds like it was like a particular pain point or a particular problem for a company. What I've seen following you guys for over the years is that customers will often find that pain point and solve it with you, but then realize there's others that could do too. So talk a little bit about that expansion motion and how this is an extensible database solution that could solve a lot of problems for the customer.

Question: Rob Oliver - Robert W. Baird & Co. - Analyst : Got it. Yeah. Vendor consolidation is an issue that's been coming up with a lot of our companies. I think it's natural when you get into tougher budgetary environments that people say, okay, do we really need all these vendors? It's probably another element of it too, which is that like, hey, we can actually get better performance, better scalability, and more simplicity if we're on a handful of vendors versus many. Is that something that you're seeing? Is that coming up a lot in your renewals? Are you seeing this kind of like, hey, trying to consolidate more around vendors and that's an opportunity for you guys?

Question: Rob Oliver - Robert W. Baird & Co. - Analyst : Got it. You've mentioned Capella a couple of times. And I think that's obviously a super important thing for Couchbase for you guys. So I want to dive into that a little bit. A couple of questions in. Keep them coming and send to the emails there. So I'll get to a few here in the second half. Just on on Capella. So first of all, if you could just walk, for the purposes of the audience, walk through what is Capella. What is Capella? How is it different from the core platform that got Couchbase to where it is today? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 08, 2023 / 1:05PM, BASE.OQ - Couchbase Inc at Robert W Baird Global Consumer, Technology & Services Conference And you guys have said, hey, this is really the future of the company. It's going to be the majority of the new logo additions. We're already seeing some of that momentum now, but talk about why Capella is so important for Couchbase.

Question: Rob Oliver - Robert W. Baird & Co. - Analyst : That's great. And on Capella, and I know you guys had -- you talked about on your call this week like one large, I think it was energy services or energy, or EMP company that was preparing to now move to Capella. What are the economic implications for that that investors need to be aware of? How does pricing work for Capella? Is it -- obviously, you're moving from a -- to a transaction-based or consumption-based model. But is it like a subscription -- is it like a transition where there's a trough and then an uptick? How should we think about that?

Question: Rob Oliver - Robert W. Baird & Co. - Analyst : Got it. Got it. And I would assume that free version in that community, and I know you guys have invested a little last few years a lot in that community, and we logged on and track it and stuff like that. And it sounds like that's a really nice minor leagues for you guys to build that mindshare and usage and understanding around Capella. Do you have metrics you track in terms of free-to-pay conversions? Or is that a way -- is this -- or still too early to think about that?

Question: Rob Oliver - Robert W. Baird & Co. - Analyst : Got it. Bunch of questions rolling. There's a common theme to both of them, competition and ChatGPT. So maybe we can start with the competition question. Who are your competitors? Who do you see out there most often in bake-offs. And I know there's a lot -- the NoSQL landscape is vast if you just look at the players, but maybe talk about how you guys think about that. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 08, 2023 / 1:05PM, BASE.OQ - Couchbase Inc at Robert W Baird Global Consumer, Technology & Services Conference

Question: Rob Oliver - Robert W. Baird & Co. - Analyst : Got it. Yeah, no, that comes up a lot when I'm meeting with investors. It's about people look at Mongo and they look at the growth rate, but the Database-as-a-Service offering is newer for you guys. And obviously, you have a lot of investment there. But -- so is that the right way to think about it? It's like, hey, we have this group of customer is extremely loyal. They're expanding naturally on the use cases. And now, we have this new growth engine, so an opportunity to catch up there.

Question: Rob Oliver - Robert W. Baird & Co. - Analyst : Got it. If I knew how to trade volatility, I'd probably make a lot of money or stock in addition to the fundamental investing that we do. But are we advise on -- but you -- so you guys did just report your earnings. The stock was very volatile. Around both into that, you're doing really well. But that begs the question around -- it feels to me like your stock got caught up in some ChatGPT winners-and-losers buckets that were driving it. But fundamental to what's important to Couchbase and the future of Couchbase, talk a little bit about generative AI, what it means to you guys and how it impacts your product road map, and maybe potential use cases for your customers.

Question: Rob Oliver - Robert W. Baird & Co. - Analyst : Got it. Got it. Exciting. One of the things that struck us that you guys have down as an important software company motion, which companies would need to work on I'll have down is that sort of customer success initiative you guys, I think ARR of customers over $1 million grew 46% this past year, really telling. Can you talk about what's driving that success and the way you guys work with your customers at scale to get them to use more of your product and incentivize them to do so?

Question: Rob Oliver - Robert W. Baird & Co. - Analyst : Got it. Just a few minutes left. Thanks for the questions. I'm going to work a few financial ones in as well. You guys are exemplary gross margin company. And -- but there are some moving pieces, and I think you've called out that with the ramp of Capella, there will be some modest pressure on that gross margin line. So walk us through that a little bit and help us understand that. And also, as we think about the potential importance or rise that maybe generative AI, are there other things down the road that could impact that gross margin line?

Question: Rob Oliver - Robert W. Baird & Co. - Analyst : Got it. On the efficiency side, just touching on profitability and profitability trajectory. When you guys came public, not profitable, you weren't alone, a lot weren't. You guys have clearly shown an ability to drive improved unit economics, profitability over the most recent five, six quarters. So impressive. You recently went through a small workforce reduction as well. Maybe talk a little bit about optimizing for profitability and how do you think about the trade-off of some of these. You guys are in a rapidly growing market with the chance to accelerate revenue growth and stuff. So how do you think about the investment, generating free cash flow, and profitability trade-off?

Question: Rob Oliver - Robert W. Baird & Co. - Analyst : You guys are now in the ball of the Infrastructure-as-a-Service clouds, or how -- you're in all three, right?

Question: Rob Oliver - Robert W. Baird & Co. - Analyst : Yeah. So is that a way to think about efficiency relative to, say, the partner channel and being able to avail yourself of these different channels as well? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 08, 2023 / 1:05PM, BASE.OQ - Couchbase Inc at Robert W Baird Global Consumer, Technology & Services Conference

Question: Rob Oliver - Robert W. Baird & Co. - Analyst : Early-stage opportunity, big tailwinds, marquee customers. Sounds exciting.

Question: Rob Oliver - Robert W. Baird & Co. - Analyst : Really. Join me in thanking Greg Henry from Couchbase for joining us here.