Couchbase Inc Q3 2025 Earnings Call Transcript

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

Question: Raimo Lenschow - Barclays PLC - Analyst : Perfect. Congrats on the solid Q3 guys. I wanted to focus on Q4 a little bit. You kind of keep talking for like now the second quarter about like the opportunity for the fourth quarter with kind of interesting relationships evolving. How should we think about how that translates into ARR and then -- well, then eventually revenue like in terms of -- is that kind of then you signed a contract in Q4, and then we should get -- we should see it more in the numbers in the next year? Or how does that kind of translate your excitement into the numbers? Because I think that's the disconnect at the moment a little bit.

Question: Raimo Lenschow - Barclays PLC - Analyst : Okay. Perfect. And then, Matt, on the AI comments that you made on the call, like what are you hearing in terms of customer conversations, how Capella kind of fits in or like Couchbase as a whole fits into that kind of AI blueprint that people are thinking about going forward?

Question: Michael Cikos - Needham & Company LLC - Analyst : To circle up on Raimo's first question there, but maybe for Matt to start, good to hear about the progress made with that large set of key accounts. Just wanted to get a better understanding, what is the visibility that you guys have as far as time line for closing those deals? And I'm just trying to get a better sense, should we expect that in Q4? Or is there -- it's not as cut and dry as that some deals could push or some of these were expected to always be maybe more of a fiscal '26 event? Just wanted to see if we could get some greater granularity with those deals. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 03, 2024 / 9:30PM, BASE.OQ - Q3 2025 Couchbase Inc Earnings Call

Question: Michael Cikos - Needham & Company LLC - Analyst : Very good. And maybe a follow-up for Greg as well. I think in the prepared comments, you had cited this greater amount of precontracted ARR that we have here today. Would it be possible to quantify or maybe provide some qualitative commentary as to how significant that is versus historical precedent?

Question: Matthew Hedberg - RBC Capital Markets - Analyst : Sticking on the same topic, it's great to hear the confidence on 4Q renewals and the opportunity there. And Greg, I appreciate being too early to talk about '25. But is there some way to think about the relative opportunity set for next year from that renewal or new business, could it be multiple times as big as this year? And I guess from a linearity perspective, this year was second half weighted. Is it right to assume next year will also be second half weighted in terms of those bigger renewal opportunities? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 03, 2024 / 9:30PM, BASE.OQ - Q3 2025 Couchbase Inc Earnings Call

Question: Matthew Hedberg - RBC Capital Markets - Analyst : Congrats on the results and best of luck in 4Q.

Question: Harshil Thakkar - Oppenheimer & Co Inc - Analyst : This is Harshil on for Ittai. Greg, I'm trying to square away the 4Q revenue growth guide with the RPO and ARR growth in the quarter. Could you maybe just shed some color on kind of what are the underlying mechanics that is causing the divergence there? And what it will take in the time line for revenue growth to kind of come back in line with ARR and RPO growth? And then with Capella becoming a larger part of the mix, is it possible that the divergence in growth will remain given the time it takes for Capella customers to kind of ramp up their consumption?

Question: Robert Oliver - Baird Capital - Analyst : Matt, one for you to start. Just on the migrations, nice momentum there. And I know you guys, as you've been calling out, have been spending a lot of time with these strategic accounts. I was wondering if you could just help us understand how you think about kind of your preparedness as you head into next year with a bunch of contracts up for renewal. learnings you've had or your preparedness to migrate those customers at that time. Obviously, you guys just notched your largest migration ever. So clearly, some learnings from that. And also, I know you called out a community migration as well, which is enticing. And is there a driver out there that's sort of getting people to reconsider free versus stepping up to actually commit to Couchbase? And then I had a quick follow-up for Greg.

Question: Robert Oliver - Baird Capital - Analyst : Great. That's helpful. And then, Greg, just one for you. I know last quarter, you guys had called out some churn and downsell pressure. It sounds -- that was not called out this quarter. So it sounds like that was not an issue for you guys this quarter, which is great. But just particularly headed into an important Q4, which has been the subject, I think, of a lot of the questions on this call, what sort of initiatives or what you guys did internally to help to mitigate that risk as you come into some of these contracts?

Question: Andres Miranda Lopez - DA Davidson & Co - Analyst : This is Andres for Rudy. I just have one at a higher level. How should we think about the conservatism embedded in your ARR guidance? I mean you guys have been sounding positive about your performance in Q3, but ARR was just a couple of hundred thousand ahead of the midpoint of your Q3 guidance, and that follows a couple of misses from Q1 and Q2. And if we go back to '23, '22 or fiscal '24, fiscal '23, I think we got more used to seeing more upside. So if anything, those -- is there anything that we should call any onetimes that we should call that happened in Q3 that maybe accounted for the conservatism going forward?

Question: Andres Miranda Lopez - DA Davidson & Co - Analyst : Yes, that makes sense. And I have a quick follow-up, if I may. Understanding that you have some precontracted net new ARR contribution for Q4, the guide still implies a little -- a big net new ARR number. Could you maybe talk about the assumptions that you have around close rates, upsell, capital conversions and all of that? Just trying to understand a little bit how much risk there is still hitting that large number for Q4.

Question: Theodor Thun - Morgan Stanley & Co LLC - Analyst : You got Theo Thun on for Sanjit. Maybe on the exciting announcements that you made in the quarter, if you could sort of articulate on the vector search and AI Services announcements, what capabilities you are really differentiated from your competitors? And then as it relates to the momentum of those, what specific use cases or verticals are you seeing that are showing early adoption signals where you've really found an outsized opportunity? And then as a second question for Greg, just sort of double-clicking once more on the Q4 net new ARR. Anything you can sort of qualify around the mix between precontracted ARR and the composition of the renewal pool? And then in response to Raimo's question, it sounded like you were talking about Q1 early renewals being factored into the guide. Are those factored into the guide? Or are those just an area of upside that you sort of called out?