Q4 2025 Couchbase Inc Earnings Call

Edward Parker: It is now my pleasure.

Edward Parker: Edward Parker, Head of Invest Thank you.

Head of Investor Relations. Thank you you may begin.

Edward Parker: You may Good afternoon and welcome to Couchbase's fourth quarter 2025 earnings call. We'll 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.

Matt: Good afternoon, and welcome to Couch basis fourth quarter 2025 earnings call, we'll be discussing the results announced in our press release issued after the market close today with me are cost basis Chair, President and CEO, Matt <unk> and CFO, Greg Henry today's call will contain forward looking statements, which include statements concerning financial and business trends and strategies market size.

Edward Parker: Today's call will contain four 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.

Matt: Our capabilities are 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.

Edward Parker: 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.

Matt: 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 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.

Edward Parker: 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.

Matt: 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.

Matthew Cain: With that, let me turn the call over to Matt. Thanks, Edward, and good afternoon, everyone. I'm pleased to report that we ended fiscal 2025 on a high note with a great Q4. We delivered fourth quarter revenue, non-gap operating loss, and ARR adjusted for in-quarter FX ahead of the high end of our guidance ranges. Highlights include robust renewals and expansions and continued strong Capella adoption and consumption growth, which resulted in our highest ever quarterly net new ARR. In addition, we recorded our second quarter of positive free cash flow and our first quarter of positive non-GAAP net income.

Matt: Thanks, Edward and good afternoon, everyone.

Matt: I am pleased to report that we ended fiscal 2025 on a high note with a great Q4, we delivered fourth quarter revenue non-GAAP operating loss and are are adjusted for in quarter. FX ahead of the high end of our guidance ranges highlights include robust renewals and expansions and continued.

Matt: Capella adoption and consumption growth, which resulted in our highest ever quarterly net new E. R. R.

Matt: In addition, we recorded our second quarter of positive free cash flow and our first quarter of positive non-GAAP net income.

Matthew Cain: I'm pleased with the operational performance from all teams across the company and the momentum in the business headed into fiscal 2026. Total ARR was $237.9 million, up 17% year over year, and up 8% sequentially. Net new ARR was $17.6 million, up 14% year-over-year. Excluding the in-quarter impact of currency fluctuations, net new ARR was $19.5 million, up 26% year-over-year. Revenue in Q4 was $54.9 million, up 10% year-over-year. We had $144,000 non-GAAP operating loss in Q4. We added 44 new logos, up from 34 in the fourth quarter of fiscal 2024. Capella now represents 16.2% of our total ARR and 33% of our customer base.

Matt: I am pleased with the operational performance from all teams across the company and the momentum in the business headed into fiscal 2026.

Matt: Total <unk> was $237 9 million up 17% year over year and up 8% sequentially.

Matt: Net new air or was $17 6 million up 14% year over year.

Matt: Excluding the in quarter impact of currency fluctuations net anywhere or was $19 5 million up 26% year over year revs.

Matt: Revenue in Q4 was $54 9 million up 10% year over year, we had $144000 non-GAAP operating loss in Q4, we added 44, new logos from 34 in the fourth quarter of fiscal 2020 for Capella.

Matt: Capella now represents 16.2% of our total air R and 33% of our customer base.

Matt: In Q4, we saw broad strength in both our core enterprise and capella businesses with exceptional performance across renewals and expansions.

Matthew Cain: In Q4, we saw broad strength in both our core enterprise and Capella businesses with exceptional performance across renewals and expansion. Momentum continued with Capella, driven by strong new logos and migrations, including a seven-figure conversion from a Community Edition customer. We continue to see solid uptake and growing consumption of Capella, which bodes well for the long-term growth and durability of our business. Throughout the year, we've discussed the significant progress we've been making with a set of strategic accounts where Couchbase is emerging as a long-term platform provider to power their critical applications. I'm pleased to report that we saw much of that progress come to fruition in the quarter, which contributed to our strong net new ARR performance.

Matt: Momentum continued with capella, driven by strong new logos and migrations, including a seven figure conversion from a community addition, customer.

Matt: We continue to see solid uptake and growing consumption of capella, which bodes well for the long term growth and durability of our business.

Matt: Throughout the year, we've discussed the significant progress we've been making with a set of strategic accounts were couch space is emerging as a long term platform provider to power their critical applications.

Matt: I'm pleased to report that we saw much of that progress come to fruition in the quarter, which contributed to our strong net new air our performance.

Matthew Cain: We now have 50 greater than $1 million customers up 11% year over year, including a growing number of customers with over 5 million in ARR, as well as our second customer above the 10 million ARR mark, demonstrating the commitment large enterprises are making to our developer data platform.

Matt: We now have 50 greater than $1 million customers up 11% year over year, including a growing number of customers with over 5 million and a R. As well as our second customer above the 10 million aramark demonstrating the commitment large enterprises are making to our develop our data platform.

Matt: To share some customer highlights from the quarter, we delivered strong expansions in migrations across travel and hospitality banking E Commerce gaming and media.

Matthew Cain: To share some customer highlights from the quarter, we delivered strong expansions and migrations across travel and hospitality, banking, e-commerce, gaming, and media. In Q4, a leading global financial firm expanded with Couchbase due to the flexibility of our platform. With this expansion, among the largest in Couchbase history, and part of a broader database vendor consolidation initiative that includes replacing both legacy relational and competitive NoSQL technology, we will unify this customer's data across platforms with our multimodal capabilities over an expanding set of applications. Other major expansions include a global telecommunications company, which is continuing to grow their use of Couchbase across multiple teams and applications.

Matt: In Q4, a leading global financial firm expanded with couch space due to the flexibility of our platform.

Matt: With this expansion among the largest in couch based history and part of our broader database vendor consolidation initiative that includes replacing both legacy relational and competitive no sequel technology.

Matt: We will unify this customer's data across platforms with our multimodal capabilities over an expanding set of applications.

Matt: Yeah.

Matt: Other major expansions include a global telecommunications company, which is continuing to grow their use of couch space across multiple teams and applications, our global airline, which is increasing its use of our edge capabilities for supporting its operations to reduce flight delays and a global technology conglomerate.

Matthew Cain: A global airline, which is increasing its use of our edge capabilities for supporting its operations to reduce flight delays, and a global technology conglomerate, which is leveraging Couchbase to power its programmatic advertising system. Turning to Capella, we want a significant expansion with a leading cruise line, which is using Capella to power its guest ID and mobile wallet application, and a leading mobile game developer, which is using Capella to store its gamer data, improve scalability, reduce latency, and improve throughput for one of its most popular games. We also want a significant Capella migration with the major European telecommunications and media company, which will use our platform to support its suite of identity and access management solutions used for managing digital identities, authentication, and access control across a variety of digital services.

Speaker Change: Which is leveraging couch base to power its programmatic advertising systems.

Speaker Change: Turning to Capella, we want a significant expansion with a leading cruise line, which is using capella to power its guest I D and mobile wallet application and a leading mobile game developer, which is using capella distort its game or data improve scalability reduce latency and approved.

Speaker Change: Throughput for one of its most popular games.

Speaker Change: We also want a significant capella migration with a major European telecommunications and media company, which will use our platform to support its suite of identity and access management solutions used for managing digital identities authentication and access control across a variety.

Speaker Change: <unk> of digital services.

Matthew Cain: We're honored by the commitment our largest customers are making with Couchbase, and it's gratifying to see the increasing relevance of our platform as we meet the growing application needs across a wide range of use cases and industries. Importantly, these large strategic opportunities represent a significant portion of our pipeline and opportunity set in the new fiscal year and beyond, inclusive of the growing influence of AI. At the same time, we continue to grow our install base. We saw notable wins across a variety of industries, including consulting, cybersecurity, entertainment, industrial, travel and hospitality, and technology. These include a major gas station chain with over 1,000 locations which selected Capella to power its in-store mobile kiosks because of its edge capabilities, and an APAC-based streaming platform which transitioned from Community Edition to Enterprise because of its high-performance, cost-effective storage.

Speaker Change: We are honored by the commitment of our largest customers are making with couch space and it's gratifying to see the increasing relevance of our platform as we meet the growing application needs across a wide range of use cases and industries Inc.

Speaker Change: Importantly, these large strategic opportunities represent a significant portion of our pipeline and opportunity set in the new fiscal year and beyond inclusive of the growing influence of AI.

Speaker Change: At the same time, we continue to grow our installed base. We saw notable wins across a variety of industries, including consulting cyber security Entertainment industrial travel and hospitality and technology.

Speaker Change: These include a major gas station chain with over 1000 locations, which selected capella to power its in store mobile kiosks because of its edge capabilities and an APAC based streaming platform, which transitioned from community addition to enterprise because of its high perf.

Speaker Change: <unk> cost effective storage.

Speaker Change: We also won a global leader in industrial automation, and information technology, which required a database with offline first mobile capabilities and peer to peer sink for its mobile app that will be used by its maintenance repair and operations personnel for real time alerts in order to serve.

Matthew Cain: We also won a Global Leader in Industrial Automation and Information Technology, which required a database with offline-first mobile capabilities and peer-to-peer sync for its mobile app that will be used by its maintenance, repair, and operations personnel for real-time alerts in order to serve up-to-date information for any ongoing issues that could disrupt business operations.

Speaker Change: They're up to date information for any ongoing issues that could disrupt business operations.

Matthew Cain: Turning to product, as you all know, Couchbase was born to be the developer data platform for critical applications. and our architectural advantages have never been more relevant than in today's AI driven world. As enterprises race to build intelligent applications, our platform uniquely unifies transactional, analytical, mobile, and AI workloads into a seamless, fully managed solution. This means enterprises can innovate faster, scale effortlessly, and optimize costs, all while ensuring high performance from cloud to edge.

Turning to product as you all know couch space was born to be the developer data platform for critical applications in our architectural advantages have never been more relevant than in todays AI driven world.

Speaker Change: As enterprises race to build intelligent applications, our platform uniquely unifies transactional analytical mobile and AI workloads into a seamless fully managed solution.

Speaker Change: This means enterprises can innovate faster scale effortlessly and optimize costs, all while ensuring high performance from cloud to edge.

Matthew Cain: With that in mind, let's dive into some of our latest advancements. This week, we announced the expansion of our analytics services to select Google Cloud regions, extending its availability beyond AWS. As the first JSON-native analytic solution of its kind, it is purpose-built to help developers and architects unlock real-time insights from semi-structured data, without complex ETL or rigid schemas. Our real-time JSON analytics is a key pillar of our vision for the AI app tech stack of the future, powering intelligent applications with seamless integration across workloads. By expanding to GCP, we are further empowering enterprises to analyze operational JSON data at scale, driving faster, smarter decisions.

Speaker Change: With that in mind, let's dive into some of our latest advancements.

Speaker Change: This week, we announced the expansion of our analytics services to select Google cloud regions, extending its availability beyond AWS as.

Speaker Change: As the first caisson native analytics solution of its kind. It is purpose built to help developers and architects unlock real time insights from semi structured data without complex E. T L. A rigid schemas.

Speaker Change: Our real time, Jason on analytics is a key pillar of our vision for the AI App Tech stack of the future powering intelligent applications with seamless integration across workloads.

Speaker Change: By expanding the G. C. P. We are further empowering enterprises to analyze operational JSON data at scale driving faster smarter decisions.

Speaker Change: Just yesterday, we announced we are working with Nvidia to deploy Nvidia inference micro services or NIM and Capella AI models services.

Matthew Cain: Just yesterday, we announced we are working with NVIDIA to deploy NVIDIA Inference Microservices, or NIM, in Capella AI model services. This will provide enterprises with a powerful solution for privately running Gen-AM models. The collaboration combines GPU-accelerated performance and enterprise-grade security to bring LLMs closer to the data, minimizing latency and enhancing Capella's agentic AI and RAG capabilities, empowering organizations to operate their AI workloads. Capella AI Model Services with NIM provides our customers with a cost-effective solution that accelerates agent delivery while maximizing resource utilization and performance. I commend our product and engineering teams on delivering breakthrough innovations that are redefining what's possible for developers and enterprises in our AI world.

Speaker Change: This will provide enterprises with a powerful solution for privately running Gen. A M models.

Speaker Change: The collaboration combines GPU accelerated performance and enterprise grade security to bring <unk> closer to the data minimizing latency and enhancing capella is a gentex AI and rack capabilities empowering organizations to operate their AI workloads.

Speaker Change: Capella AI model services with NIM provides our customers with a cost effective solution that accelerates agent delivery, while maximizing resource utilization and performance.

Speaker Change: I commend our product and engineering teams on delivering breakthrough innovations that are redefining what is possible for developers and enterprises and our AI world.

Matthew Cain: With Couchbase Mobile with Vector Search, Capella Perpetual Free Tier, Capella JSON Analytics, Capella IQ, and now Capella AI Services, we are powering the future of AI-driven applications. These are fundamental advancements that give developers control over their data and the freedom to build and deploy AI powered agents at scale from ideation to production across cloud to edge. Looking ahead, our innovation agenda is laser-focused on simplifying how developers harness these capabilities. enabling them to push the boundaries of what's possible while delivering premium application experiences without compromising on functionality, performance, operational costs, or connectivity.

Speaker Change: With couch based mobile with vector search Capella perpetual free tier capella, Jason on analytics, Capella IQ and now Capella AI services, we are powering the future of AI driven applications.

Speaker Change: These are fundamental advancements that give developers control over their data and the freedom to build and deploy AI powered agents at scale.

Speaker Change: From ideation to production across cloud to edge.

Speaker Change: Looking ahead, our innovation agenda is laser focused on simplifying how developers harness these capabilities enabling.

Speaker Change: Enabling them to push the boundaries of what's possible, while delivering delivering premium application experiences without compromising on functionality performance operational costs or connectivity.

Matthew Cain: In conclusion, I'm proud of how our team's executed in the quarter and it's especially gratifying to see the effort and progress made all fiscal year manifest in our Q4 results. Our product and engineering teams are innovating at a rapid pace, and company-wide, we continue to improve our operational efficiency and rigor, resulting in the profitability milestones I mentioned earlier. As I look to fiscal 2026, we will continue to focus on sustained growth, driving Capella uptake, accelerating the pace of leverage in our model, and further enhancing our support for agentic and artificial intelligence use cases. As the world becomes more AI-driven, our customers are focused on building the next generation of intelligent applications.

Speaker Change: In conclusion, I am proud of how our teams executed in the quarter and it's especially gratifying to see the effort and progress made all fiscal year manifest in our Q4 results are.

Speaker Change: Our product and engineering teams are innovating at a rapid pace and companywide, we continue to improve our operational efficiency and rigor, resulting in the profitability milestones I mentioned earlier.

Speaker Change: As I look to fiscal 2026, we will continue to focus on sustained growth driving capella uptake accelerating the pace of leverage in our model and further enhancing our support for a gentex and artificial intelligence use cases.

Speaker Change: As the world becomes more AI driven our customers are focused on building. The next generation of intelligent applications to do this they need a unified data platform that integrates seamlessly with the future application Tech stack.

Matthew Cain: To do this, they need a unified data platform that integrates seamlessly with the future application tech stack. While our core strengths, performance, caching, flexibility, scale, mobility, and affordability are crucial, it's our ability to unify operational, AI, analytics, and mobile data management on a single platform that truly sets us apart. This positions Couchbase as the ideal long-term strategic partner helping enterprises tackle their data challenges and powering their most critical applications. As always, we will continue to attack hard problems driven by customer outcomes.

Speaker Change: While our core strengths performance caching flexibility scale mobility and affordability.

Speaker Change: Our crucial it's our ability to unify operational AI analytics and mobile data management on a single platform that truly sets us apart.

Speaker Change: This positions couch space as the ideal long term strategic partner, helping enterprises tackle their data challenges and powering their most critical applications.

Speaker Change: As always we will continue to attack hard problems driven by customer outcomes.

Matthew Cain: Finally, as you all may have seen in today's 8K filing, after eight plus years, Greg Henry will be leaving Couchbase to pursue a new opportunity. Greg joined Couchbase right around the same time I did and has been at my side every step of the way as a trusted colleague and dear friend. He's been a key part of our leadership team and has been instrumental in our journey to the public markets, overseeing the building of our world-class financial organization, scaling our business, driving leverage, and guiding our ongoing evolution to a consumption business.

Speaker Change: Finally, as you all may have seen in todays 8-K filing after eight plus years, Greg Henry will be leaving couch space to pursue a new opportunity.

Speaker Change: Greg joined Couch face right around the same time I did and has been at my side every step of the way as a trusted colleague and Dear friend.

Speaker Change: He's been a key part of our leadership team and has been instrumental in our journey to the public markets overseeing the building of our World class financial organization scaling our business driving leverage and guiding our ongoing evolution to a consumption business craigs.

Matthew Cain: Greg's last official day is today, but he'll stay on as an advisor to the company through May 31st to ensure a seamless transition process.

Speaker Change: Craig's last official day as today, but it will stay on as an advisor to the company through may 31st to ensure a seamless transition process Bill.

Matthew Cain: Bill Carey, who has been our chief accounting officer since 2023, and has been with Couchbase since 2019, will serve as interim CFO starting tomorrow. We've initiated a search for Greg's successor, and I look forward to updating you when we've identified our next CFO. On behalf of everyone at Couchbase, I want to thank you, Greg, for your dedication to the company.

Speaker Change: Bill Carey, who has been our chief accounting officer since 2023 and has been with couch based since 2019 will serve as interim CFO starting tomorrow.

Speaker Change: We've initiated a search for Greg's successor, and I look forward to updating you when we've identified our next CFO.

Speaker Change: On behalf of everyone at Couch base I want to thank you Greg for your dedication to the company. We're excited to see what you accomplish in your next chapter.

Matthew Cain: We're excited to see what you accomplish in your next chapter.

Gregory Henry: With that, I'll now hand the call over to Greg to walk you through our financial results in more detail. Greg? Thanks, Matt. And thanks for the kind words. My sentiment is mutual. My time at Couchbase has been the most rewarding of my career. And I'm incredibly proud of everything we've accomplished as a team. We've built an incredible public company coming from a barely known startup. I leave knowing that Couchbase will continue to build value in the years to come based on all that hard work, and I look forward to what the future brings. Thanks to our customers, partners, employees, management team, and board of directors that have supported me along the way.

Speaker Change: With that I'll now hand, the call over to Greg to walk you through our financial results in more detail Greg.

Speaker Change: Thanks, Matt and thanks for the kind words my sentiment is mutual my time, a couch based has been the most rewarding of my career and I'm incredibly proud of everything we've accomplished as a team.

Speaker Change: We've built an incredible public company coming from a barely known startup.

Speaker Change: I leave knowing that couch base will continue to build value in the years to come based on all that hard work and I look forward to what the future brings.

Speaker Change: Thanks to our customers partners employees management team and board of directors that have supported me along the way.

Gregory Henry: Now, turning to our results, we had a strong finish to fiscal 2025, delivering a great quarter with all key metrics above our outlook. I'm pleased with our execution, strong renewals and expansions, momentum with Capella, and operating in free cash flow margin performance. I'll now walk you through our fourth quarter and full year fiscal 2025 financial results in more detail. We ended the fourth quarter with total annual recurring revenue, or ARR, of $237.9 million, representing 17% growth year-over-year and 8% sequentially. Net new ARR was $17.6 million, up 14% year-over-year. Like many of our peers, we experienced the impact of foreign currency fluctuations in the quarter.

Speaker Change: Now turning to our results we had a strong finish to fiscal 2025, delivering a great quarter with all key metrics above our outlook.

Speaker Change: I'm pleased with our execution strong renewals and expansions momentum with capella and operating and free cash flow margin performance.

Speaker Change: I'll now walk you through our fourth quarter and full year fiscal 2025 financial results in more detail.

Speaker Change: We ended the fourth quarter with total annual recurring revenue or <unk> of $237 $9 million, representing 17% growth year over year and 8% sequentially.

Net new air are with $17 $6 million up 14% year over year.

Speaker Change: Like many of our peers, we experienced the impact of foreign currency fluctuations in the quarter realm.

Gregory Henry: Relative to currency rates underpinning our Q4 and full-year guidance, we delivered $239.8 million in total ARR, up 17% year-over-year and 9% sequentially, and above the high end of our guidance. This equates to net new ARR of $19.5 million, up 26% year over year. This represents our highest ever net new AR number and reflects the execution of large strategic deals that we've discussed throughout the year, continued growth in Capella contribution, and overall progress across industries and geographies with both Capella and Enterprise. At the end of the quarter, Capella ARR was $38.5 million, an increase of 16% from last quarter and 76% year-over-year.

Speaker Change: Relative to currency rates underpinning, our Q4 and full year guidance, we delivered $239.8 million in total are are up 17% year over year, and 9% sequentially and above the high end of our guidance.

Speaker Change: This equates to net new air are of $19 $5 million up 26% year over year.

Speaker Change: This represents our highest ever net new air number and reflects the execution of large strategic deals that we've discussed throughout the year continued growth in capella contribution and overall progress across industries and geographies with both Capella and enterprise.

Speaker Change: At the end of the quarter Capella, <unk> with $38 $5 million, an increase of 16% from last quarter and 76% year over year.

Gregory Henry: Capella now represents 16.2% of our total ARR, up from 15.1% last quarter, and up from 10.7% at the end of fiscal 2024. Turning to revenue, total revenue for the fourth quarter was $54.9 million, an increase of 10% year-over-year and 6% sequentially. Software revenue was $52.8 million, up 10% year-over-year and 7% sequentially. Professional services revenue was $2.1 million, growing 6% year-over-year and down 8% sequentially.

Speaker Change: Capello now represents 16, 2% of our total air are up from 15, 1% last quarter and up from 10, 7% at the end of fiscal 2024.

Speaker Change: Turning to revenue total revenue for the fourth quarter was $54 $9 million, an increase of 10% year over year, and 6% sequentially software revenue was $52.8 million up 10% year over year, and 7% sequentially professional services revenue was $2 1 million.

Speaker Change: Dollars growing 6% year over year and down 8% sequentially.

Gregory Henry: For the full year, we deliver $209.5 million in total revenue, an increase of 16% from fiscal 2024. Full year software revenue was $200.4 million, up 17% year-over-year. We finish the year with $9.1 million in professional services revenue, up 7% year over year. Q4 ARR per customer was $251,000, down from $273,000 in Q4 2024 and up from $244,000 in the third quarter. The year-over-year and sequential changes reflect the increasing mix of Capella offset by the significant renewals and expansions of large strategic accounts in Q4. Our dollar-based net retention rate, or NRR, was greater than 114%, compared to the greater than 115% we've typically delivered since going public over three years ago.

Speaker Change: For the full year, we delivered $209 $5 million in total revenue an increase of 16% from fiscal 'twenty 'twenty four full.

Speaker Change: Full year software revenue was $204 million up 17% year over year.

Speaker Change: We finished the year with $9 $1 million and professional services revenue up 7% year over year.

Speaker Change: Q4 are our per customer was $251000 down from $273000 in Q4, 2024 and up from $244000 in the third quarter.

Speaker Change: The year over year and sequential changes reflect the increasing mix of capella offset by the significant renewals and expansions of large strategic accounts in Q4.

Speaker Change: Our dollar based net retention rate or enter our was greater than 114% compared to the greater than 115%. We've typically delivered since going public over three years ago.

Gregory Henry: While we expect our NRR to return to historical levels in the second half of this fiscal year, given the trailing 12-month nature of this metric, we believe NRR could be below 115% until we anniversary the anomalous loss and downsell we experienced and discussed earlier in fiscal 2025. We exited the year with 947 customers, an increase of 44 net new customers from last quarter. Our Capella customer count grew by 10 in the quarter.

Speaker Change: While we expect our <unk> to return to historical levels in the second half of this fiscal year given the trailing 12 month nature of this metric, we believe enter or could be below 115% until we anniversary the anomalous loss in down sell we experienced and discussed earlier in fiscal 2025.

Speaker Change: We exited the year with 947 customers an increase of 44 net new customers from last quarter, our capella customer count grew by 10 in the quarter.

Gregory Henry: In discussing the remainder of the income statement, please note that unless otherwise stated, all references to expenses, results of operations, and share count are on a non-GAAP basis. In Q4, our gross margin was 89.4%. This compares to 90.4% a year ago and 88.2% last quarter. Our full year gross margin was 88.9% compared to 88.5% in fiscal 2024.

Speaker Change: In discussing the remainder of the income statement. Please note that unless otherwise stated all references to expenses results of operations and share count are on a non-GAAP basis.

Speaker Change: In Q4, our gross margin was 89, 4%. This compares to 94% a year ago and 88, 2% last quarter.

Speaker Change: Our full year gross margin was 88, 9% compared to 88, 5% in fiscal 2024.

Gregory Henry: Turning to Expenses. Fourth quarter sales and marketing expenses were $28.3 million or 51% of revenue. For the full year, sales and marketing expenses were $118.4 million. We are pleased with the progress we've been making in improving sales and marketing efficiency, having reduced our spend from 69% of revenue in fiscal 2022 to 57% in fiscal 2025. We remain focused on driving further improvements in fiscal 2026. Q4 research and development expenses were $13.3 million or 24% of revenue. Full-year research and development expenses were $52.7 million or 25% of revenue. Fourth quarter general and administrative expenses were $7.7 million or 14% of revenue.

Speaker Change: Turning to expenses.

Speaker Change: Fourth quarter sales and marketing expenses were $28 $3 million or 51% of revenue for.

Speaker Change: For the full year sales and marketing expenses were $118 $4 million. We are pleased with the progress we've been making in improving sales and marketing efficiency, having or reduce our spend from 69% of revenue in fiscal 'twenty 'twenty, 2% to 57% in fiscal 2025.

Speaker Change: We remain focused on driving further improvements in fiscal 2026.

Speaker Change: Q4 research and development expenses were $13 $3 million or 24% of revenue full year research and development expenses were $52 $7 million or 25% of revenue.

Speaker Change: Fourth quarter general and administrative expenses were $7.7 million or 14% of revenue.

Gregory Henry: Full year general administrative expenses were $29.6 million, also 14% of revenue. Operating loss for Q4 was $144,000 or negative 0.3% operating margin compared to an operating loss of $4.1 million or negative 8% operating margin a year ago. Operating loss for the full fiscal year was $14.4 million or negative 7% operating margin compared to an operating loss of $31.3 million or negative 17% operating margin in the prior fiscal year. Net income attributable to common stockholders for Q4 was $78,000 or 0 cents per share. For the full fiscal year, net loss was $10.4 million, or negative 20 cents per share.

Speaker Change: Full year general administrative expenses were $29.6 million also 14% of revenue.

Speaker Change: Operating loss for Q4 was $144000 or a negative 0.3% operating margin.

Speaker Change: Compared to an operating loss of $4 $1 million or negative, 8% operating margin a year ago.

Speaker Change: Operating loss for the full fiscal year was $14 $4 million or a negative 7% operating margin compared to an operating loss of $31 $3 million or negative 17% operating margin in the prior fiscal year.

Net income attributable to common stockholders for Q4 was $78000 or zero cents per share for.

Speaker Change: For the full fiscal year net loss was $10 $4 million or negative <unk> 20 per share.

Speaker Change: Turning to the balance sheet and cash flow statement, we ended Q4 with $147 $2 million in cash cash equivalents and short term investments, we remain well capitalized to execute against our long term growth strategy.

Gregory Henry: Turning to the balance sheet and cash flow statement, we ended Q4 with $147.2 million in cash, cash equivalents, and short-term investment. We remain well capitalized to execute against our long-term growth strategy. Our remaining performance obligations, or RPO, total $251.1 million at the end of Q4, an increase of 4% year-over-year. We expect to recognize approximately 63% or $158 million of total RPO as revenue over the next 12 months, representing growth of 7% year-over-year. As a reminder, we experience fluctuations in our RPO balances due to a host of factors, including renewal timing, as well as changes in the average contract duration.

Speaker Change: Our remaining performance obligations or our P O totaled $251.1 million at the end of Q4, an increase of 4% year over year, we expect to recognize approximately 63% or $158 million of total RP O as revenue over the next 12 months representing growth of 7% year over year.

Speaker Change: As a reminder, we experienced fluctuations in our RP O balances due to a host of factors, including renewal timing as well as changes in the average contract duration.

Gregory Henry: Operating cash flow for Q4 was $4.4 million and for the full year was negative $15.8 million. Free cashflow for Q4 was $4 million, representing a free cashflow margin of 7.3%. This is our highest quarterly free cashflow in company history, as well as our second positive quarterly free cashflow this year, indicative of the strong progress we've made towards achieving positive free cashflow. Free cashflow for the full year was negative $18.8 million, or a negative 9% free cashflow margin, up from negative 17.6% in fiscal 2024, and negative 30.2% in fiscal 2023.

Speaker Change: Operating cash flow for Q4 was $4 $4 million and for the full year was negative $15 $8 million for.

Speaker Change: Free cash flow for Q4 was $4 million, representing a free cash flow margin of seven 3%.

Speaker Change: This is our highest quarterly free cash flow in company history as well as our second positive quarterly free cash flow. This year indicative of the strong progress we've made towards achieving positive free cash flow free cash flow for the full year was negative $18 $8 million or a negative 9% free cash flow margin up from negative $17 six per.

Speaker Change: Sent in fiscal 'twenty, 'twenty, four and negative 32% in fiscal 2023.

Gregory Henry: Now, I will provide our guidance for Q1 and the full year of fiscal 2026. As Matt discussed, we are entering fiscal 2026 with strong momentum and a growing pipeline of large strategic opportunities. In addition, we continue to be pleased with the growth of Capella and expect migrations, as well as growing consumption to continue to be significant drivers for us in the coming fiscal year, along with ongoing investments in product capabilities and strengthening our partner ecosystem. As a reminder, several dynamics that we discussed this fiscal year, including the timing and composition of a renewal pool, have been contributing to the relative strength and visibility of our ARR outlook, and we expect these dynamics to continue to play out in Q1.

Speaker Change: Now I'll provide our guidance for Q1 and the full year fiscal 2026.

Speaker Change: As Matt discussed we are entering fiscal 'twenty 'twenty, six with strong momentum and a growing pipeline of large strategic opportunities.

Speaker Change: In addition, we continue to be pleased with the growth of Capella and expect migrations as well as growing consumption to continue to be significant drivers for us in the coming fiscal year, along with ongoing investments in product capabilities and strengthening our partner ecosystem.

Speaker Change: As a reminder, several dynamics that we discussed this fiscal year, including the timing and composition of our renewal pool have been contributing to the relative strength and visibility of our outlook.

Speaker Change: And we expect these dynamics to continue to play out in Q1.

Gregory Henry: As an additional reminder, compared to fiscal 2025, our 2026 renewal pool is both larger and more evenly distributed between the first and second half of the year. With these factors in mind, for the first quarter of fiscal 2026, we expect total revenue in the range of $55.1 million to $55.9 million, or year-over-year growth of 8% at the mid-term. We anticipate ARR in the range of $242.9 million to $245.9 million, which represents 18% growth year-over-year at the midpoint. We expect a non-GAAP operating loss in the range of negative $5.4 million to negative $4.4 million. For the full year fiscal 2026, we expect total revenue in the range of $228 million to $232 million, or year-over-year growth of 10% at the midpoint.

Speaker Change: As an additional reminder, compared to fiscal 'twenty, 'twenty, five or 'twenty 'twenty six renewal pools, both larger and more evenly distributed between the first and second half of the year.

Speaker Change: With these factors in mind for the first quarter of fiscal 2026, we expect total revenue in the range of $55 1 million to $55 $9 million or year over year growth of 8% at the midpoint. We anticipate are are in the range of $242 9 million to $245 $9 million, which represents 18%.

Speaker Change: Rent growth year over year at the midpoint.

We expect our non-GAAP operating loss in the range of negative $5 4 million to negative $4 $4 million.

Speaker Change: For the full year fiscal 'twenty 'twenty six we expect total revenue in the range of 228 million to $232 million or year over year growth of 10% at the midpoint, we expect air or in the range of $273 6 million to $278.6 million or year over year growth of 16% at the midpoint.

Gregory Henry: We expect ARR in the range of $273.6 million to $278.6 million, or year-over-year growth of 16% at the midpoint. And finally, we expect a non-GAAP operating loss in the range of negative $13.4 million to negative $8.4 million.

Speaker Change: And finally, we expect a non-GAAP operating loss in the range of negative $13 4 million to negative $8 $4 million.

Gregory Henry: Lastly, we remain committed to improving our efficiency and driving continued leverage in our model. While we believe that we continue to have the opportunity to deliver free cash flow breakeven this fiscal year, as we discussed during our December 2023 Analyst Day, given the more back and loaded ARR performance in fiscal 2025, as well as certain timing elements, our first full year of positive free cash flow could be fiscal 2027. However, we remain committed to driving free cash flow improvement in fiscal 2026 and being operating income positive by fiscal 2027.

Speaker Change: Lastly, we remain committed to improving our efficiency and driving continued leverage in our model.

Speaker Change: While we believe that we continue to have the opportunity to deliver free cash flow breakeven. This fiscal year as we discussed during our December 2023 analyst day, given the more backend loaded are our performance in fiscal 2025, as well as certain timing elements. Our first full year of positive free cash flow could be fiscal 'twenty 'twenty. Seven however, we were.

Speaker Change: Main committed to driving free cash flow improvement in fiscal 2026, and being operating income positive by fiscal 2027.

Speaker Change: Finally, as this is my last earnings call with Couch space I want to take a moment to thank all of you listening on the call today I have enjoyed working with you and appreciate the sport over these past several years, while I will miss everything about couch pace I leave knowing that the company is in great hands and is set up for continued success for years to come. Thank you.

Gregory Henry: Finally, as this is my last earnings call with Couchbase, I want to take a moment to thank all of you listening on the call today. I've enjoyed working with you and appreciate this sport over these past several years. While I will miss everything about Couchbase, I leave knowing that the company is in great hands and is set up for continued success for years to come.

Gregory Henry: Thank you all.

Operator: With that, Matt and I are happy to take your questions. Operator. Thank you. We will now be conducting a question and answer. If you would like to ask a question, please press star 1 on your telephone. A confirmation tone will indicate a line is in the way. You may press star 2 to remove your...

Speaker Change: Paul.

Speaker Change: With that Matt and I are happy to take your questions operator.

Speaker Change: Thank you we will now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two to remove yourself from the queue for participants using speaker equipment. It may be necessary to pick up the handset before pressing the star.

Operator: Participants Using Speaker Equipment, It May Be Necessary To Pick Up The Hands One moment, please, while we pull.

Keith: Keith one.

Speaker Change: One moment, please while we poll for questions.

Speaker Change: Our first question comes from the line of Sanjay Singh with Morgan Stanley. Please proceed with your question.

Sanjit Singh: Our first question comes from the line of Sanjit Singh with Morgan Stanley. Please proceed. Yeah, thank you for taking the questions. And Greg, it's been a pleasure working. It's been a pleasure working with you and really excited to see what the next chapter of your career.

Speaker Change: Yeah. Thank you for taking the questions and Greg it's been a.

Speaker Change: Our pleasure working.

Speaker Change: Excuse me, it's been a pleasure working with you and really excited to see what your low the next chapter of your career.

Matthew Cain: And I guess with that, just sort of thinking about Q4, Matt, really awesome performance on a cost-efficiency basis. I was wondering if you could sort of unpack for us the strength in Q4, was it a function of executing on these strategic deals that you guys have been calling out for most of the year, was it just better execution, was macro improving, just a little color on the strength in Q4. Hey, Sanjit, great to hear from you and appreciate the acknowledgement. We're certainly proud of the execution across the company. Look, the result itself is great. What gives me a lot of confidence is the balance with which we delivered it.

Speaker Change: And I guess with that.

Matt: Just sort of thinking about Q4, Matt.

Matt: Really awesome performance on a constant currency basis I was wondering if you could unpack for us.

Matt: Strength in Q4 or was it a function of executing on these strategic deals that you guys have been calling out for most of the year was it.

Matt: He just better execution was macro improving just a little color on on the strength in Q4.

Sanjay Singh: Hey, Sanjay great to hear from you and I appreciate the acknowledgement were certainly proud of the execution across the company.

Matt: Look.

Matt: The the result itself is great.

Matt: It gives me a lot of confidence as the balance with which we delivered it.

Matthew Cain: Certainly, we've been talking about the very healthy pipeline of these large strategic accounts where we have the opportunity to emerge as a true platform winner. A big part of the quarter was executing against several of those. We've talked about the number of customers now over a million ARR. We crossed the $10 million threshold with a second customer. Simply put, I don't think you get to those levels if you're not truly viewed as a strategic platform provider. We're really excited to be able to talk about some of those results. But it wasn't just that. We saw strength with other expansions, Capella migrations, some excellent new logo lands in both Enterprise and Capella.

Matt: Certainly we've been talking about the very high healthy pipeline of these large strategic accounts, where we have the opportunity to emerge as a true platform winter.

Matt: A big part of the quarter was executing against several of those and we've talked about the number of customers now over 1 million a are we crossed the $10 million threshold with a second customer.

Simply put I don't think you'd get to those levels, if you're not truly viewed as a strategic platform provider and we're really excited to be able to talk about some of those results, but it wasn't just that we saw strength with other expansions capella migrations.

Matt: Some excellent new logo lands in both enterprise and Capella.

Gregory Henry: We had one customer in particular that started out as a community addition that is already over the million ARR mark in Capella. I think it was really balanced execution. I think what we've been talking about is we've been building towards this and knew we had the pipeline to do it. It's great to have put this one up, quite frankly. Awesome.

Matt: We had one customer in particular that started out as a community addition that you know is already over the 1 million Mark in Capella and so I think it was really balanced execution and I think what we've been talking about is we've been building towards this and knew we had the pipeline to do it and it's great to have.

Matt: To put this one up quite frankly.

Speaker Change: Awesome, and then I guess, a follow up for for Greg. It's a topic that I think we revisit a couple of times every year drag just the general kind of the spread between.

Gregory Henry: And then I guess a follow-up for Greg. It's a topic that I think we revisit a couple of times every year, Greg, just the delta, the spread between your revenue outlook and your ARR guidance for growth. Is that a function of more migration activity and sort of the timing of revenue on the consumption side versus the migration impact on the subscription side of the house? Just any color on the spread between the ARR outlook and the revenue outlook. Yeah, thanks, Sanjit, and obviously, thanks for your comments. Yeah, you hit it right in the head. There's two things that are happening.

Speaker Change: Your revenue outlook and your there our guidance for for growth.

Speaker Change: Is that a function of more migration activity and sort of the timing of our revenue on the consumption side versus the migration impact on the on the subscription side of the house just any any color on the spread between the or our outlook.

Speaker Change: Our revenue outlook.

Speaker Change: Yeah, Thanks, Angie and obviously, thanks for your comments.

Speaker Change: Yeah, you you hit it right on the head there is and there's two things that are happening as we continue to move further into capella, obviously, because that is a as a service offering our services business is starting to contract and we'll see that again coming this year.

Gregory Henry: As we continue to move further into Capella, obviously, because that is a as-a-service offering, our services business is starting to contract, and we'll see that again coming this year. And obviously, that's in the revenue number, not in the ARR number. But the biggest part is the transition to Capella, the migrations. We did see an increase in migration in Capella this year in fiscal 25. We think we'll see a step up in 26, which is driving some of the divergence.

Speaker Change: And obviously, that's in that revenue number and not an ear of a number but the biggest part is the transition to capello. The migrations. We are we did see an increase.

Speaker Change: In migration and Capella this year in fiscal 'twenty five we think we'll see a step up in 'twenty, six which is driving some of that divergence. However, once we get through that I think you'll start seeing when we get to fiscal 'twenty seven that the growth rates of <unk> and revenue will start converging and we will also see that manifest itself in the room.

Gregory Henry: However, once we get through that, I think you'll start seeing when we get to fiscal 27 that the growth rates of ARR and revenue will start converging, and we'll also see that manifest itself in the rule of 40. We've made tremendous progress on the bottom line, as you've seen. We haven't quite got that same pickup on the top line. That should be coming in fiscal 27. Appreciate the thoughts. Thanks. Thank you.

Speaker Change: All of 40, we've made tremendous progress on the bottom line as you've seen we haven't quite got that same pick up on the top line that should be coming in fiscal 'twenty seven.

Speaker Change: Appreciate the thoughts thanks.

Rob Oliver: Thank you. Our next question comes from the line of Rob Oliver with Baird. Please proceed with your question.

Rob Oliver: Our next question comes from the line of Rob Oliver with Baird. Please proceed with your question. Great. Thanks, guys. I appreciate it.

Speaker Change: Great.

Speaker Change: Thanks, guys I appreciate it Greg.

Rob Oliver: Greg, ditto to Sanjit's comments. I really enjoyed working with you and wish you all the best. I guess first question for you guys is just, you know, Sanjit asked about the macro in Q4. I'll ask about it relative to this new fiscal year. Seems that there's a lot of cross currents out there in the market. So just would be curious to hear from you guys as you look at the pipeline of opportunities this year, the renewal cohorts that you have, you know, how you kind of factor that into your guidance and specifically on some of those renewal cohorts, obviously an opportunity to cross sell.

Speaker Change: The E Commerce side really enjoyed working with you and wish you all the best.

Speaker Change: I guess first question for you guys is just it.

Speaker Change: It sounds you'd asked about the macro in Q4, I'll ask about it relative to <unk>.

Speaker Change: This new fiscal year, it seems that theres a lot of cross currents out there in the market. So just would be curious to hear from you guys. As you look at the pipeline of opportunities. This year. The renewal cohorts that you have you know how you.

Speaker Change: Factored that into your guidance and specifically on some of those renewal cohorts, obviously, an opportunity to cross sell you talked about the uptick in capella migrations, but if you could break down some more color around what you're seeing specific or what you expect to see specifically in those cohorts that would be helpful. And then I had a quick follow up.

Rob Oliver: You talked about the uptick in Capella migrations. If you could break down some more color around what you're seeing specific or what you expect to see specifically in those cohorts, that would be helpful. And then I had a quick follow-up.

Speaker Change: Okay.

Matt: Hey, Rob this is Matt I'll start.

Matthew Cain: Hey, Rob. This is Matt. I'll start. Look, a big dynamic that we've been articulating is the pipeline of large strategic accounts and executing through those. And I think it's important to note that that's a continuing dynamic as we go forward. There are several large accounts that we're still working with on the next level of expansion. And I think we've earned that right with the work that we've done to really build a differentiated platform, which has never been more relevant. So, I'd say that's very healthy. As we've articulated, when we go into certain years, a renewal base can have a different look to it.

Speaker Change: A big dynamic that we've been articulating is the pipeline of large strategic accounts and executing through those and I think it's important to note that that's a continuing dynamic as we go forward.

Speaker Change: There are several large accounts, we're still working with on the next level of expansion and I think we've earned that right with the work that we've done.

Speaker Change: You know to really build a differentiated platform, which has never been more relevant.

Speaker Change: So I'd say.

Speaker Change: That's very healthy.

Speaker Change: As we've articulated when we go into certain years of renewal base.

Speaker Change: Can have a different look to it and we're pretty excited about the one that we're walking into this fiscal year.

Matthew Cain: And we're pretty excited about the one that we're walking into this fiscal year. The size of it, quite frankly, is large and the shape is more balanced than was the case last year. So, our ability to go execute against that and drive growth is an important factor as we look forward. I would tell you that we've never had a better pipeline of customers set up for Capella migrations. And we are not shy about talking to every customer about that and figuring out the right moment for them to move either a subset of their workloads or the entirety of their estate into the Capella offering.

Speaker Change: The size of it quite frankly is it.

Speaker Change: As large in the shape is more balanced than was the case last year. So our ability to go execute against that and drive growth.

Speaker Change: Is is an important factor that.

Speaker Change: As we look forward I would tell you that we've never had a better pipeline of customers set up for Capello migrations and we are not shy about talking to every customer about that and figuring out the right moment for them to move.

Speaker Change: Either a subset of their workloads or the entirety of their estate into the capella offering.

Matthew Cain: And we're not in a hurry to do unnatural things for our customers at the same time walking them through the TCO advantages that come with Capella. And I think that's another factor that's going to drive incremental business for us. As it pertains to the buying environment, I think we maintain prudence as we think about all factors. These are very big decisions that enterprises are making, and we take pride in working hard at articulating the value of our offering. I think there is a lot of attention being paid in large enterprises on spend levels, but at the same time, customers have to invest in platforms that are going to unlock the next phase of applications, particularly in AI.

Speaker Change: We're not in a hurry to do you want unnatural things for our customers at the same time walking them through the T. C O advantages that come with Capella.

Speaker Change: And I think that's another factor that's going to drive.

Speaker Change: Incremental business for us as it pertains to the buying environment I think we maintain prudence as we think about all factors.

Speaker Change: These are very big decisions that enterprises are making and we.

Speaker Change: Take pride in working hard at articulating the.

Speaker Change: The value of our offering I think there is a lot of attention being paid in large enterprises on spend levels, but at the same time customers have to invest in platforms that are going to unlock the next phase of applications, particularly in AI and we love how we're positioned.

Rob Oliver: And we love how we're positioned in the world of agentic-based applications with the scale and performance of our platform. So, I'd say those are all balanced factors that we consider when we lay out the numbers for the future year. Got it. Super helpful. Thanks, Matt.

Speaker Change: In the world of Gentex based applications with the scale and performance of our platform. So I'd say those are all balanced factors that we consider when we.

Speaker Change: Lay out the numbers for the future year.

Speaker Change: Got it Super helpful. Thanks, Matt and then just one quick follow up I think this is the second quarter in a row or at least the last few quarters, where you guys have called out a meaningful community.

Rob Oliver: And then just one quick follow-up. I think this is the second quarter in a row or at least the last few quarters where you guys have called out meaningful community migration. And I just wanted to get a sense for, you know, is that a function of where you guys are in your motion and being able to, you know, articulate sort of the compelling nature of kind of moving from community to you guys? Is it something about generative AI in the that to continue to be a driver for you guys? Thank you. Yeah, look, Rob, I think all of those can be factors.

Speaker Change: Migration and I just wanted to get a sense for is that.

Speaker Change: A function of where you guys are in your motion at being able to.

Speaker Change: Articulate sort of happening the compelling nature of kind of moving from community to you guys is it something about generative AI in the market what are some of the drivers of that and should we expect that to continue to be a driver for you guys. Thank you.

Rob Oliver: Yeah look Rob I think all of those can be factors I think fundamentally companies are evaluating.

Rob Oliver: I think fundamentally, companies are evaluating investment in technology and what return are they getting on that? Data security and reliability has never been more important, either as support as people are building the next set of applications. I think with the utility that comes with Capella, the ROI decision-making in somebody that may have been running Community Edition, evaluating Capella can accelerate the kind of movement to a paid offering. There are other factors in mind, but we think that that's going to continue to be a source of new business for us, along with many other avenues where we get customers started with the technology and see pretty dramatic growth as we unlock their developers' ability to build applications that much faster on a reliable platform from cloud to edge, and so on and so forth.

Speaker Change: Investment in technology, and what return are they getting on that.

Speaker Change: Data security and reliability has never been more important meter has support as people are building. The next set of applications I think with the.

Speaker Change: <unk> that comes with Capella.

Speaker Change: The ROI decision, making and somebody that may have been running community addition, evaluating capello can accelerate.

Speaker Change: Kind of movement to a paid offering.

Speaker Change: You know there are other factors in mind, but we do we think that that's going to continue to be a source of new business for us along with many other avenues, where we get customers started with the technology and see pretty dramatic growth as we unlock their developers ability to build applications that much faster on it.

Speaker Change: Reliable platform from cloud to edge.

Speaker Change: And so on and so forth yeah, Rob I'd, just jump in and say that the other thing that we hear from those who are on community coming over to Capella in particular are.

Rob Oliver: Yeah, and Rob, I'd just jump in and say that the other thing that we hear from those who are on Community coming over to Capella in particular are, hey, look, when I was on Community, the product worked. I didn't need support. That's what I would have been paying for. But I am willing to pay for the as-a-service and the management of the database. Particularly when you're talking about smaller customers that just don't have the ability to have big DBA teams and other things, they're willing to offload that, and that's where we can really, again, further monetize the Community Edition group.

Speaker Change: Look on when I was on community.

Speaker Change: <unk> worked I didn't need support that's what I would have been paying for but I am willing to pay for the as a service and the management of the database and particularly when you're talking about smaller customers that just don't have the ability to have big DBA teams and other things, they're willing to offload that and that's where we can really against further monetize.

Speaker Change: The Community addition group.

Rob Oliver: Very helpful. Thanks, guys. Appreciate it. Thank you, Rob. Thank you.

Speaker Change: Very helpful. Thanks, guys I appreciate it.

Thank you Rob.

Speaker Change: Thank you. Our next question comes from the line of Jason Ader with William Blair. Please proceed with your question.

Jason Ader: Our next question comes from the line of Jason Ader with William Blair. Yeah, thank you. Matt, I guess start with you. You guys have been growing steadily in the mid-teens, showing nice leverage. I think a lot of people don't believe you're going to do the Net New ARR that you did, so congrats on that.

Jason Ader: Yeah. Thank you.

Jason Ader: Maybe I can start with you you guys have been growing steadily in the mid teens showing nice leverage.

Jason Ader: I think a lot of people don't believe you're going to do the.

Jason Ader: Net new IRR that you did so congrats on that so I wouldn't take anything away from the trajectory and the history here, but.

Matthew Cain: I don't want to take anything away from the trajectory and the history here, but what needs to happen for you guys to kind of break out? of the of the range that you're in right now in terms of revenue growth, like, if you were to think about the next few years, what do you think needs to happen for the company to really accelerate the the top line growth until let's call it something with a two and Look, Jason, I appreciate the comments on the quarter and the focus on the future, quite frankly. Look, I think we have all the ingredients in place, and it's largely going to come down to execution.

Jason Ader: But what needs to happen for you guys to kind of break out.

Jason Ader: Of the range that you're in right now in terms of revenue growth like if you were to think about the next few years, what do you think needs to happen for the company to really accelerate the topline growth until let's call it something with a two in front of it.

Jason Ader: Well, Jason I appreciate the comments on the quarter end and the focus on the future quite frankly look I think we have all the ingredients in place and it's largely going to come down to execution. If I think fundamentally about where we said do we have a differentiated data platform that the next set of developers are going to rely upon for the application.

Matthew Cain: If I think fundamentally about where we sit, do we have a differentiated data platform that the next set of developers are going to rely upon for the applications they're building out? And are we continuing to innovate at extremely rapid pace to make that even more differentiated? The answer is yes. And we are extremely convicted on our strategic position and the roadmap ahead of us as we continue to emerge as a winning AI-native data platform. The work that we've done on the go-to-market side to refine our value proposition and how we articulate and open up funnel dynamics with things like perpetual free tier and articulating the value of Capella migrations, the leading indicators are all there for us to deliver on the commitments that we've made.

Jason Ader: <unk>, they're building out and are we continuing to innovate at extremely rapid pace to make that even more differentiated the answer is yes, and we are extremely convicted on our strategic position in the roadmap ahead of us as we are.

Jason Ader: Continue to emerge as a winning AI native data platform to work that we've done on the go to market side too.

Refine our value proposition and how we articulate and open up.

Jason Ader: Funnel dynamics with things like perpetual free tier in articulating the value of Capella migrations. The leading indicators are all there for us to deliver on the commitments that we've made and we continue to attract world class people in all aspects of the company. So.

Matthew Cain: And we continue to attract world-class people in all aspects of the company. So I am very convicted on the go-forward future, and it's up to us to execute against that. But if we look at, again, the leading indicators, the health of the pipeline, the buildup of customers who are fundamentally understanding the value proposition of Capella and the need for developers to think differently about the future applications stack with AI, we've never been better set up to execute on our commitment. So these things are largely in our control, and rest assured, we're going to do everything possible to make them happen.

Jason Ader: I am very convicted on the go forward future and it's up to us to execute against that.

Jason Ader: But if we look at again, the leading indicators the health of the pipeline the buildup of.

Jason Ader: Customers, who are fundamentally understanding the value proposition of capella and the need for developers to think differently about the future application stack with with AI, we've never been better set up to execute on our commitments. So.

Jason Ader: These things are are largely in our control and rest assured we're going to do everything possible to to make them happen.

Gregory Henry: And Jason, if I could just add, if I go back to looking at fiscal 23, our ARR reported growth rate was 23 percent. Fiscal 24 was 25 percent. Yes, this year was high teens. A lot of it goes back to the loss and down sell we saw in Q2 that was sort of unexpected and having a renewal base that wasn't quite as big. Otherwise, I think we could have probably seen our way to a 20 percent growth rate this year. As Matt said, the renewal and the rebuy of Capella gets bigger next year, more opportunity.

Jason Ader: And Jason if I could just add you know if I go back to looking at fiscal 'twenty three are our air our reported growth rate was 23% fiscal 'twenty four with 25% you got this year was high teens a lot of it goes back to the loss in down sell we saw in Q2 that was sort of unexpected and.

Speaker Change: And having a renewal base that wasn't quite as big otherwise I think we could have probably seen our way to a 20% growth rate. This year as Matt said the renewal the renewal in the revive Capella gets bigger next year more opportunity and so I think that's what gives us confidence that we can return to being a 20% grower.

Gregory Henry: And so I think that's what gives us confidence that we can return to being a 20 percent grower.

Speaker Change: Alright, and then Matt just a quick follow up on.

Jason Ader: All right, then, Matt, just a quick follow-up on the news today.

Speaker Change: The news today any observation.

Matthew Cain: Any observations on the IBM deal today to acquire data stacks in terms of what it means for the database industry and the competitive landscape? Yeah, look, if we look over the last two days, we've seen acquisitions from two important companies in the data world, Mongo's acquisition yesterday and IBM's today. And I think it speaks to the validation of what we've been talking about, the importance of databases and the combination of analytical and operational data platforms that can serve applications in an AI world.

Speaker Change: Any observations on the IBM deal today to acquire data stacks in terms of what it means for the database industry and the competitive landscape.

Speaker Change: Yeah look if we look over the last two days, we've seen acquisitions from two important companies in the data World Mangoes acquisition yesterday in Ibm's today, and I think.

Speaker Change: It speaks to the validation of what we've been talking about the importance of databases and the combination of analytical and operational data platforms that conserve applications and in an AI AI world. So.

Matthew Cain: So again, we think it reinforces our strategic positioning and how enterprises are needing to think very strategically about data platforms and again, are excited to execute on our strategy as a standalone company where we think there's immense value to unlock in front of us.

Speaker Change: Again, we think it reinforces our strategic positioning now enter bought prizes are needing to think very strategically about.

Speaker Change: About data platforms and again.

Speaker Change: Are excited to execute on our strategy.

Speaker Change: As a standalone company, where we think there's immense.

Speaker Change: You to unlock in front of us.

Speaker Change: Alright, and then just a final note Greg best of luck. It was great working with you hopefully cross paths again.

Jason Ader: All right, and then just a final note, Greg, best of luck. It was great working with you. Hopefully, cross paths. Absolutely, Jason. Thank you. Pleasure.

Speaker Change: Absolutely Jason Thank you pleasure.

Speaker Change: Thank you.

Mike Cikos: Our next question comes from the line of Mike Cikos with Needham and Company. Thanks for taking the questions here, guys.

Speaker Change: Our next question comes from the line of Mike <unk> with Needham <unk> Company. Please proceed with your question.

Speaker Change: Great. Thanks for taking the questions here, guys and I'll start off by thanking you Greg for the time together and good luck on your future endeavor here for Matt maybe if we could just kick off I know Capella AI services is early days here, but can you talk to the initial custom.

Mike Cikos: And I'll start off by thanking you, Greg, for the time together. And good luck on your future endeavor here. For Matt, maybe if we could just kick off, I know Capella AI Services is early days But can you talk? a handful of select customers before taking it into this private preview stage we're in today. What are customers telling you and what are their findings? And then I have a follow-up.

Speaker Change: The feedback I imagine you probably ran pilots or had this in even.

Speaker Change: A handful of select customers before taking get into this private previous stage we're in today.

Speaker Change: What are customers, telling you and what is their findings and then I have a follow up thank you.

Mike: Hey, Mike Yeah.

Matthew Cain: Hey, Mike. Yeah, as you can imagine, we obsess over customer input. And I would extend that to, you know, partners and other members of the ecosystem as we, you know, talk about our strategy, talk about some of the problem sets that customers and partners are facing, and evaluate that against our roadmap. Quite frankly, I think What's coming out first, Mike, is that the fundamental advantages of Couchbase, scale, performance, our cloud-to-edge architecture, our data reliability, some of the tooling that we've enabled for developers, those strengths have never been more relevant than they are today. And when you layer on what we're doing with AI services and bringing AI tools in a very efficient way to developers with the powerful data platform that we offer, they're starting to realize that we can be used as an even more strategic platform.

Speaker Change: You can imagine we.

Speaker Change:

Speaker Change: Obsess over customer input and I would extend that to partners on.

Speaker Change: Other members of the ecosystem as we talk about our strategy talk about some of the problem sets of customers and partners are facing.

Speaker Change: Evaluate that against our roadmap.

Speaker Change: Quite frankly I think.

Speaker Change: Whats coming out first Mike is that the fundamental advantage of a couch face scale performance, our cloud to edge architecture, our data reliability.

Speaker Change: The tooling that we've enabled for developers those strengths have never been more relevant than they are today.

Speaker Change: And when you layer on what we're doing with it and AI services, and bringing AI tools in a very efficient way to developers with the powerful data platform that we offer they're starting to realize that we.

Speaker Change: We can be used as an even more strategic platform.

Matthew Cain: And the ease at which we're doing that for developers and really bringing best-of-breed AI technology to the highest performing data platform from cloud-to-edge, we're getting a lot of validation. And you can appreciate when we're engaging in multi-year strategic discussions with some of the largest enterprises in the world, they're not just buying the technology and the Capel as-a-service offering that's available today, they're investing in a company to be a long-term partner, and as important, the roadmap of future services. And so when we can talk about not just AI services that are an early preview, but some of the other roadmap items that we have ahead of us over the next many quarters, I think the result that we put up in Q4 is a huge validation of our strategic positioning on a go-forward basis.

Speaker Change: And the ease at which we're doing that for developers and really bringing best of breed AI technology to the highest performing data platform from cloud to edge, we're getting a lot of validation.

Speaker Change: And you can probably appreciate when we're engaging in multiyear strategic discussions with some of the largest enterprises in the world, they're not just buying the technology and the capella as a service offering that's available today, they're investing in a company to be a long term partner and as important the roadmap of future.

Speaker Change: Services and so when we can talk about not just AI services that are an early preview, but some of the other roadmap items that we have ahead of us over the next many quarters.

Speaker Change: I think the result that we put up in Q4 is a huge validation of our strategic positioning on on a go forward basis.

Matthew Cain: So we love the feedback that we're getting. Our engineering teams are flying into the office every day, more excited to work on the next set of features than I've ever seen them. And I think we are really excited about the path forward and the role that we're gonna play as a data platform provider for enterprises for a long time.

Speaker Change: So we love the feedback that we're getting.

Speaker Change: Our engineering teams are flying into the office every day more excited to work on.

Speaker Change: The next set of features on I've ever seen them.

Speaker Change: And I think we are.

Speaker Change: Really excited about the path forward and the role that we're gonna play as a data platform provider for enterprises for a long time.

Speaker Change: That's great to hear and for the follow up here I think we're all aware of the benefit in Q1 last year to license based on that early renewal you guys had seen in Q4 fiscal 'twenty four.

Matthew Cain: to hear and for the follow-up here I think we're all aware of the benefit in Q1 last year to license based on that early renewal you guys for Can you provide additional detail? What gives you that confidence here in those Capella mics? Is there additional scrubbing of pipelines? gone into place, are you implementing more rigorous processes, just anything to help instill that confidence with the rest of my community. Mike, I'll comment and refer to Greg if he has anything to add on. I mean, look, we have every single customer from one to end mapped out and have a keen understanding of where they sit from a Capella perspective, whether they're all in on Capella today, if they've started a migration, if they have a plan one coming up, if they've done a subset of their estate.

Speaker Change: But just wanted to get a better sense. If we're talking about the size of this renewal pool. The confidence you guys have in the step up in anticipated Capella migrations as coming year can you provide additional detail what what gives you that confidence here and those capella migrations is there additional scrubbing the pipeline that's.

Speaker Change: Gone into place are you implementing more rigorous processes, just just anything to help instill that confidence with the rest of the year.

Speaker Change: Thank you.

Mike: Mike I'll comment then.

Speaker Change: Greg if he has anything to add on.

Speaker Change: I mean look we have every single customer from one to N mapped out and have a keen understanding of where they said from a capella perspective, whether they're all in on Capella today, if they've started a migration if they have a plan one coming up if they've done a subset of their state and so I think simply put.

Matthew Cain: And so I think, simply put, when we obsess over that pipeline, and the field teams have done an amazing job of progressing that, we just have more opportunities that are closer to ready to move to migration. And in some cases, Mike, we're being pleasantly surprised by things going faster than what customers would have previously told us. We have a major customer in the travel space that we talked about that, quite frankly, previously had articulated reasons why kind of at the beginning of the year. And over the course of a few quarters, new dynamics emerge, and they're solving a different set of problems. And we continue to articulate Capella.

Speaker Change: When we obsess over that pipeline in the field teams have done an amazing job of progressing that we just have more opportunities that are closer to ready to move to migration.

Speaker Change: And in some cases, Mike we've been pleasantly surprised by things going faster than what customers would have previously told us.

Speaker Change: We have a major customer in the travel space that we talked about that quite frankly previously had articulated reasons why kind of couch base traditional deployments, we're serving them at the beginning of the year and over the course of a few quarters, new dynamics emerge and they're solving different.

Speaker Change: Set of problems and we continue to articulate capella and were over seven figures of Capella would with an account that hadn't planned that for the year and so I think that's one example of how fast things can go along with you know ones the ones that we know about so Mike it's simply understanding our customers working with them on the specifics.

Matthew Cain: And we're over seven figures of Capella with an account that hadn't planned that for the year. And so I think that's one example of how fast things can go along with ones that we know about. So Mike, it's simply understanding our customers, working with them on the specifics of their estate, understanding where they are in their development lifecycle with next generation applications. And there's just much more of that opportunity that's further progressed than has previously been the case. And that's a separate dynamic from accounts that are up for renewal this year, where that renewal base is simply bigger than what we had to work with last year, and more balanced.

Speaker Change: Stayed understanding where they are in their development lifecycle cycle with next generation applications and if there's just much more of that opportunity. That's further progressed than has previously been the case and thats a separate dynamic from accounts that are up for renewal this year, where that renewal base is simply bigger.

Speaker Change: Then what we had to work with last year and more balanced we talked a lot about that dynamic last year.

Gregory Henry: We talked a lot about that dynamic last year. And that often presents one of the most important compelling events where we get an uptick of growth, because we're renegotiating agreements on a go-forward basis. So I'd say both those factors combined are where you're hearing the conviction come from. Yeah, Mike, I just echo the same things that, look, we're further progressed. We're going to have more shots on goal, if you will, next year. We also have, now we have several multimillion-dollar customers that have migrated as reference customers, which is also helpful. And we've also had a few of our advocates who have embraced Capella at certain customers.

Speaker Change: That often presents one of the most important compelling events, where we get an uptick of growth because.

Speaker Change: We're renegotiating agreements on a on a go forward basis. So I'd say, both those factors combined are.

Speaker Change: Where youre hearing that conviction come from yeah, Mike I'd, just I'd just add echo the same things that.

Speaker Change: Look we're further progressed, we're gonna have more shots on goal. If you will next year. We also have.

Speaker Change: Now we have several multimillion dollar customers that have migrated as reference customers, which is also helpful. And we've also had a few of our advocates who have embraced capella at certain customers, they're moving to other organizations. Sometimes those organizations are already customers of coach bases and in some cases, they may be new couch.

Gregory Henry: They're moving to other organizations. Sometimes those organizations are already customers of CouchBases. And in some cases, they may be new to CouchBase, but they're bringing in the, hey, I had a great experience with CouchBase and Capella, and I want to bring that into that organization. So it's all that.

Speaker Change: But they are bringing in the hay out of great experience with couch space, and Capella and I want to bring that into that organization. So it's it's all that.

Mike Cikos: Terrific. Thank you. Thanks, Mike. Thanks.

Speaker Change: Terrific. Thank you.

Speaker Change: Thanks, Mike.

Thank you.

Raimo Lenschow: Our next question comes from the line of Raimo Lenschow with Barclays. Perfect. Thank you. Congrats for me as well. And Greg, all the best. I wanted to stay on the Capella notion. So at the moment, there's a lot of kind of converting existing customers over to Capella. And that's going to be like a really nice multi-year opportunity. Where are we on that new customer ad front? Because obviously, you know, Capella as a cloud solution should enable kind of new logo growth to accelerate. Where are we there? And what are the initiatives for next year?

Speaker Change: Our next question comes from the line of Raimo <unk> with Barclays. Please proceed with your question.

Speaker Change: Perfect. Thank you and congrats from me as well and Greg all the best.

Speaker Change: Staying on the Capella.

Speaker Change: Notion so at the moment, there's a lot of kind of converting existing customers over to compare alone that's going to be like a multi multiyear opportunity where it'll be on that new customer adds from because obviously you know capello.

Speaker Change: As he called solutions should enable kind of new logo growth to accelerate where are we there and what are the initiatives for next year.

Speaker Change: Yeah, Hey, Raimo its Greg. Thanks, Thanks for the words, a kind word there yeah look we're continuing to make progress there we feel very good about it in terms of continuing to add new logos. I think you know I think we had a very strong year at capella continues to be the sort of the dominant new logo engine for the company.

Gregory Henry: Hey Raimo, it's Greg. Thanks for the words, kind words there. Yeah, look, we're continuing to make progress there. We feel very good about it in terms of continuing to add new logos. I think, you know, I think we had a very strong year. Capella continues to be the sort of the dominant new logo engine for the company. But there's obviously a lot of opportunities still out there for us. And the teams are out there and we've enabled them with things like starter packs and transition packs to get customers going in an easy, lightweight kind of way.

Speaker Change: But there's obviously a lot of opportunities still out there for us and the teams are out there and we've enabled them with things like starter packs and transition packs to get customers Boeing and an easy lightweight kind of way and you know.

Gregory Henry: And, you know, we're seeing some of that. That said, it will, you know, it may fluctuate from quarter to quarter, but I think the momentum and particularly the pipeline is good. And we feel good about how that new logo activity is going. And you saw overall, again, a quarter where we had, I know this isn't just Capella, but we had 44, you know, net new logos. And so we feel like we're, you know, of regular new logo ads. Yeah, perfect. Perfect. Thank you.

Speaker Change: We're seeing some of that that said it will you know it may fluctuate from quarter to quarter, but I think the momentum and particularly the pipeline.

Speaker Change: It is good and we feel good about how that new logo activities going in.

Speaker Change: So overall again, a quarter, where we had I know this isn't just capella, but we had 44 net new logos and so we feel like we're starting.

Speaker Change: Starting to get into that rhythm of having a higher amount of regular new logo adds.

Speaker Change: Yeah perfect perfect. Thank you and then.

Raimo Lenschow: And then if you think about that, Greg, now with you retiring, it's almost like a... It's not nice to ask a question, but like, if you think about the... balance between growth and profitability you kind of showed in Q4 when you go when to break even that that's achievable uh obviously you gave guidance but how do you if the market is recovering next year like how do you think about that growth versus margin balance thank you Yeah, thanks, Raimo. And I do need to correct one thing. I'm actually not retiring. I'm just moving on from Couchbase.

Speaker Change: If you think about that.

Speaker Change: Greg.

Speaker Change: Now with your retiring its almost like Oh.

Speaker Change: Nice to ask a question, but like if you think about the.

Speaker Change: Balanced between growth and profitability you kind of showed in Q4, when you went to breakeven that that's achievable.

Speaker Change: Obviously, you gave guidance, but how do you if the market is recovering next year like how do you think about that group versus March in Berlin.

Speaker Change: <unk>.

Yeah, Thanks, Raimo and I do need to correct, one thing I I'm actually not retiring I'm just moving on from couch base, but.

Gregory Henry: But I'm still far too young for retirement. Look, we're trying to balance that growth and profitability measure. But as I said, I think we knew we had opportunity to become more efficient. I think we've demonstrated that both on the non-GAAP op loss line as well as the free cash flow line. But we're still making very good investments on the R&D side to make sure we remain competitive in the market for years to come, particularly on the AI front. There's been a tremendous amount of dollars energy put towards that because we think that's where the growth is going to come from.

Speaker Change: I'm still far too young for retirement.

Speaker Change: Look we're trying to balance that growth and that growth and profitability measure, but as I said I think we knew we had opportunity to become more efficient I think we've demonstrated that both on the non-GAAP op loss line as well as a free cash flow line, and but we're still making a very good investments.

Speaker Change: On the R&D side to make sure we remain competitive in the market for years to come particularly on the AI front theres been a tremendous amount of dollars energy put towards that because we think that's where the you know the.

Speaker Change: The growth is going to come from and I think that you know we're going to start seeing that again next year as I was talking with with Jason before the last two prior years, where the low twenty's, we add a little loss in down sell this year that preclude us from being a 20% grower, but we think we can be back there in the revenue is going to converge the growth rate of our revenue is going to converge with.

Matthew Cain: And I think that we're going to start seeing that again next year. As I was talking with Jason before, the last two prior years were the low 20s. We had a little loss and downsell this year that precluded us from being a 20% grower. But we think we can be back there and the growth rate of revenue is going to converge with ARR. And I think we're going to see some really good things on both the growth and rule of 40. Look, Raimo, we're building for the long term here. And I think it's our job, quite frankly, to find leverage in the model.

Speaker Change: There are and I think we're going to see some really good things on on both the growth and rule of 40.

Speaker Change: Look grandma where were.

Speaker Change: Building for the long term here and I think it's.

Speaker Change: Our job quite frankly to find leverage in the model and we've been talking about the private which were you know te.

Matthew Cain: And we've been talking about the pride of which we're, you know, taking in demonstrating that that's going to continue on a go forward basis. Greg is right to call out the specific efficiency that we're seeing in R&D, but it spans to other parts of the organization, including go to market. And so, you know, we've been talking about that in a number of cases, and how we're thinking about, you know, go to market with strategic accounts and balancing that with growth areas. You know, we talked about the excitement of our new CMO that joined and, you know, the updated positioning.

Speaker Change: Taking in in demonstrating that that's going to continue on a go forward basis, Greg is right to call out the specific efficiency that we're seeing in R&D, but its fans to other parts of the organization, including go to market.

Speaker Change: And I think we've had a transformational year and a lot of cases on how we're thinking about go to market with strategic accounts and bowing that bouncing that with growth areas.

Speaker Change: We talked about the excitement of our new CMO that joined in the update of positioning and then if you. If you think about all the work we've done for developers with Capella IQ the perpetual free tier.

Matthew Cain: And then, if you think about all the work we've done for developers with Capella IQ, the perpetual free tier, you know, AI services, we think that we're going to be acquiring and expanding customers in a much more efficient way. So leverage is a big word that we that we use around here. And I think, like most great companies, we're going to figure out how to get that balance right and grow while investing wisely. Okay, perfect, yeah, makes sense. Thank you, congrats. Thanks, Raimo.

Speaker Change: <unk>.

Speaker Change: Services.

Speaker Change: We think that we're gonna be acquiring and expanding customers and in a much more efficient way. So leverages a big word that we that we use around here and I think.

Speaker Change: Like most great companies, we're going to figure out how to get that balance right and grow while investing wisely.

Speaker Change: Okay makes sense. Thank you congrats.

Speaker Change: Thanks very much.

Speaker Change: Thank you.

Howard Ma: Our next question comes from the line of Howard Ma with Guggenheim. Thanks, Greg.

Speaker Change: Our next question comes from the line of Howard <unk> with Guggenheim. Please proceed with your question.

Howard: Thanks, Greg it's been a pleasure and wish you the best on your next opportunity.

Howard Ma: It's been a pleasure and wish you the best on your next opportunity. Matt, I wanted to ask you about... Matt, I wanted to ask you about the, in your prepared remarks, you mentioned that the global financial services firm that the I believe that was an enterprise expansion. What I wanted to ask about is, it seems like that customer consolidated apps built on both relational databases and, and one or more competing NoSQL databases. And the question is, so how I guess number one is how common is this? Number two is how, how long did this consolidation take from start to finish?

Speaker Change: Matt.

Speaker Change: I wanted to ask you about.

Matt I wanted to ask you about the in your prepared remarks, you mentioned the global financial services firm.

Speaker Change: I believe that wasn't enterprise expansion and what I want.

Speaker Change: You're asking about is it so it seems like that customer consolidated apps built on both relational databases, and and one or more competing no sequel databases.

Speaker Change: So how I guess number one is how common is this.

Speaker Change: Number two is how how long did the consolidations take from start to finish and are there are there more deals like this in the pipeline.

Howard Ma: And are there, are there more deals like that? In the pipeline?

Speaker Change: Hey, Howard.

Matthew Cain: Hey, Howard, I appreciate you calling that out. Look, when I talk about emerging as a strategic platform, you know, that's no small statement. When we stand up in front of our enterprise customers and talk about the utility of our multi-modal platform, we are certainly in a position to do things that, quite frankly, other database solutions aren't built for. You know, the combination of operational, analytical, transactional, cloud-to-edge, we have taken a truly platform approach to... how we've architected Couchbase and Capella and will continue to do so. So this has been a big part of our value proposition.

Speaker Change: You can call on that call that out look when I talk about emerging as a strategic platform.

Speaker Change: That's no small statement when when we stand up in front of our enterprise customers and talk about the utility of our multimodal platform. We're certainly in a position to do things that quite frankly other database solutions aren't built for the.

Speaker Change: The combination of operational analytical transactional cloud to edge, we have taken a truly platform approach to.

Speaker Change: How we've architected couch base and Capella and will continue to do so.

Speaker Change: This has been a big part of our value proposition I think more and more we're.

Matthew Cain: I think more and more we're hearing from enterprises the need to pick fewer winners and drive consolidation as a kind of comprehensive data strategy is going to become so imperative in the world of AI. And so with our large accounts, this is a common discussion. I would say that the amount of it is probably increasing as we go forward on a relative basis, which I think serves our differentiation very well. To be able to carve off workloads that were once dependent on relational, do so with unstructured and semi-structured data is a big part of our strategic differentiation.

Speaker Change: We're hearing from enterprises, the need to pick fewer winners and drive consolidation as.

Speaker Change: A kind of comprehensive data strategy is going to become so imperative and in the world of AI.

Speaker Change: And so with our large accounts. This is a common discussion I would say that the amount of it is probably increasing as we go forward on a relative basis, which I think serves our differentiation very well.

Speaker Change: To be able to carve off workloads that were once dependent on relational do so with.

Speaker Change: Unstructured and semi structured data is a big part of our strategic differentiation, but yet to have this level of expansion. Howard. This is hundreds of applications now and into the future and when we get to these types of arrangements companies are making a multiyear bet on us as a platform at the <unk>.

Matthew Cain: But yeah, to have this level of expansion, Howard, this is hundreds of applications now and into the future. And when we get to these types of arrangements, companies are making a multi-year bet on us as a platform at the expense of others. And so this is a spot that is hard to earn and well worth fighting for. But to your question on are there more out there, without question, and I think this is a big part of how we're going to execute and continue to grow in a material way on a go-forward basis.

Speaker Change: Tens of of others.

Speaker Change: So this is a spot that is hard to earn and well worth fighting for but.

Speaker Change: To your question on are there more out there without question and I think this is a big part of how we're going to execute and continue to grow in a material way on a go forward basis.

Speaker Change: Thanks, that's really encouraging and as a follow up for Greg and sorry to cut you off earlier Greg.

Howard Ma: Thanks. That's really encouraging.

Gregory Henry: And as a follow-up for Greg, and sorry to cut you off earlier, Greg. I believe on the Capella side, correct me if I'm wrong, but contracts, and the question is really around how we should think about Capella bookings versus consumption. And I believe contracts can take kind of two forms, because with a migration deal, you have a large on-prem deal migrating to the cloud, and that deal size should be about unchanged, or it could be bigger, it could be a little smaller, but it's not going to shrink a lot. Versus if you start on-prem, and then that turns into a private marketplace deal, that usually grows over time, so can you help us think about what is the right way to think about bookings versus consumption for Capella?

Speaker Change: I I believe on the Capella side correct.

Speaker Change: Correct me, if I'm wrong, but contracts. So the question is really around how we should think about pellet capella bookings versus consumption and I I believe contracts can take two forms with the migration deal you have a large on prem deal migrating to.

Speaker Change: To the cloud and that that that deal size should be about unchanged or it could be bigger.

Speaker Change: It's not going to shrink a lot versus if you start on Prem and then that turns into a private marketplace to you alright. That's usually grows over time. So what is the can you help us think about like kind of like what is the right way to think about bookings versus consumption for capella.

Speaker Change: Yeah.

Gregory Henry: Yeah. So, I think both of those are actually similar. Anybody who's going from enterprise to Capella is going to grow. I don't see any, you know, any customers where they're shrinking, so it is going to grow. And you will see all of that show up for the most part in ARR immediately, right? So, when it gets booked, the ARR will show up. because of the way we have defined ARR, which is we take the booking value for the first 12 months, and then from an ARR perspective, after 12 months, it will turn into pure consumption.

Speaker Change: So I think both of those are actually similar anybody who's going from enterprise to Capella is going to grow.

Speaker Change: Don't see any.

Speaker Change: Any customers, where they're shrinking so it is going to grow.

Speaker Change: And you will see.

Speaker Change: All of that show up for the most part in <unk> immediately right. So when when it gets booked the AOR will show up.

Speaker Change: Because of the way we have defined a R. R, which is we take the booking value.

Speaker Change: For the first 12 months and then from an AUR perspective. After 12 months it will turn into pure consumption. The Rev. Rack, however, as pure consumption right out of the gate and which is which is part of the reason why it's trading this dislocation on the <unk> and the revenue growth rate, which is why we again tried to.

Gregory Henry: The REVREC, however, is pure consumption right out of the gate, which is part of the reason why it's creating this dislocation on the ARR and the revenue growth rate, which is why we, again, have tried to keep people focused on the ARR because it's the best near-term metric of what's in the business and the revenue will come up behind it, which is why I tried to articulate that we think by fiscal 27, you'll start seeing those growth rates come closer, much closer together. Does that answer it for you, Howard?

Speaker Change: Keep people focused on the air because it's the best near term metric of what's happening in the business and the revenue will come up behind it which is why I tried to articulate that we think by fiscal 'twenty seven you'll start seeing those growth rates sort of.

Speaker Change: You know come closer much closer together does that answer it for you Howard.

Gregory Henry: I'm sorry to ask another follow-up, but can I just ask it this way? Are Capella bookings, the growth rate in bookings and consumption, are those both accelerating? Again, the growth rate of consumption is 100% accelerating. I don't quite honestly focus on bookings as much. I focus on what we're delivering on ARR and what the revenue is going to come behind it from a consumption perspective. But rest assured that the growth of consumption year over year, quarter over quarter, continues to grow in Capella. Got it. Thank you. That's super helpful.

Speaker Change: I'm sorry to ask another follow up but can I just add.

Speaker Change: This way is are our capella bookings.

Speaker Change: Growth rate in bookings and consumption are those both accelerating.

Speaker Change: Again.

Speaker Change: The growth rate of consumption is 100% accelerating.

Speaker Change: I don't quite honestly focus on bookings as much I focus on what we are delivering on air are and what the revenue is going to come behind it and from a consumption perspective, but.

Speaker Change: Rest assured that the growth of consumption year over year quarter over quarter. It continues to grow and capella.

Speaker Change: Got it. Thank you that's super helpful.

Speaker Change: Thank you.

Gregory Henry: Thank you.

Speaker Change: Thank you.

Rudy Kessinger: Our next question comes from the line of Rudy Kessinger with DA Davidson, please proceed. Hey, guys, thanks for taking my questions. Congrats on hitting the ARR for the quarter. And Greg, certainly a pleasure working with you. And best of luck on what's next.

Speaker Change: Our next question comes from the line of Rudy Kasinger with D. A Davidson. Please proceed with your question.

Rudy Kasinger: Hey, guys. Thanks for taking my questions.

Speaker Change: Congrats on <unk> for the quarter and Greg.

Speaker Change: Certainly bad pleasure working with you and best of luck on what's next.

Gregory Henry: I'd like to start maybe just on this initial 26 ARR guide, just curious about the guidance philosophy that went into it as compared to the initial fiscal 25 ARR guide, just your assumptions around pipeline conversion rates, renewals, expansions, new logos, et cetera. Should we think of it as roughly similar to the guidance philosophy used last year, anything more conservative or different? I think it's relatively the same as how we do it. Rudy, we don't sort of alter our guidance philosophy materially unless there's specific known things. And when we're talking about a full year, you know, we look at the renewal pool, our ability to upsell, migration conversions.

Speaker Change: I'd like to start maybe just on this initial 26 <unk> guide just curious.

Speaker Change: About the guidance philosophy that went into it as compared to the initial fiscal 'twenty five there are guide just your assumptions around pipeline conversion rates.

Speaker Change: Renewals expansions, new logos et cetera.

Speaker Change: Is it should we think of it as roughly similar to the guidance philosophy used last year anything more conservative are different.

Speaker Change: I think it's relatively the same as how we do it Rudy we don't we don't sort of alter our guidance philosophy materially unless theres specific known things and when we're talking about a full year.

Speaker Change: We look at the renewal pool, our ability to up sell migration conversions I think if anything.

Gregory Henry: I think if anything, you know, as I mentioned earlier, I think we've seen a step up in migrations the last couple years as we're continuing to move through our Capella journey. I think that's one thing that we would expect to happen, a slightly higher migration conversion next year. But just in terms of overall guidance philosophy, nothing has changed with how we sort of come up with that for the year.

Speaker Change: As I mentioned earlier I think we've seen a step up in migrations. The last couple of years as we're continuing to move through our Capella journey I think that's one thing that we would expect to happen are slightly higher migration conversion next year, but just in terms of overall guidance philosophy nothing.

Speaker Change: Nothing has changed with how we sort of.

Speaker Change: Come up with that for the year.

Speaker Change: Yeah.

Gregory Henry: Okay, and then obviously... you guys a message prior to this and as evident by the Q1 error guide it certainly seems like it's going to be a more balanced year but could you talk about maybe just a bit more about the linearity that we should expect on ARR, kind of one half versus second half, or, you know, kind of Q1, Q2, Q3, sequentials and whatnot. Yeah, so if you go back to fiscal 23 and 24, we were kind of like 40% first half 60% second half from an ARR. This past year, as we knew it was going to be more back and loaded, we were more like 30% first half, 60%, 70% second half.

Speaker Change: Okay, and then obviously.

Speaker Change: You guys had messaged prior to this and as evidenced by the Q1 guide it certainly seems like it's going to be a more balanced year, but could you talk about maybe just.

Speaker Change: A bit more about the linearity that we should expect on air are kind of one half versus second half or you know kind of Q1, Q2, Q3 sequential and whatnot.

Speaker Change: Yeah. So if you go back to fiscal 'twenty three 'twenty four we were kind of like 40% first half, 60% second half from an IRR.

Speaker Change: This past year as we knew was going to be more backend loaded we're more like 30% first half 60% 70%.

Speaker Change: Second half I think what youre going to find will probably be somewhere within that range, but more much more balanced.

Gregory Henry: I think what you're going to find will probably be somewhere within that range, but more much, you know, more balanced for the year. That's how to think about it. But it's not 70% in the second half, like we did last Got the top, okay, thanks guys. Thank you, Rudy.

Speaker Change: For the year, that's how to think about it but it's not 70% in the second half like we did last year.

Speaker Change: Got it okay. Thanks, guys.

Rudy Kasinger: Thank you Rudy.

Speaker Change: Okay.

Operator: Thank you.

Speaker Change: Thank you.

Miller Jump: And our last question comes from the line of Miller Jump with Truer Securities, please proceed. Great, thank you for squeezing me in, and Greg, best of luck with your next chapter. I think just on the go-to-market side, maybe just, you know, you've made some comments on recent calls about potentially moving to more of a hunter-farmer type model. Obviously, you've made some comments today about expanding the strategic account program. Can you talk about maybe the kind of the scale of evolution that we would expect to see in go-to-market this year, and maybe any potential hiring implications on that?

Speaker Change: And our last question comes from the line of Mueller jump with Chewy Securities. Please proceed with your question.

Speaker Change: Great. Thank you for squeezing me in and Greg Best of luck with your next chapter.

Speaker Change: On the go to market side.

Speaker Change: Maybe just.

Speaker Change: Made some comments on recent calls about potentially moving to more of a hunter farmer type model. Obviously, you've made some comments today about expanding the strategic account program. I guess can you talk about maybe the kind of the scale of our evolution that we would expect to see in go to market. This year and maybe any potential hiring implications on that.

Speaker Change: Yeah.

Matt: Hey, Matt This is Matt.

Matthew Cain: Hey, Miller, this is Matt. Look, if we think about the diversity of our business, we're dealing with some of the largest enterprises in the world on the one hand doing, as we've noted in a couple cases, over 10 million ARR. Dynamics of that buying and selling environment, as you can appreciate, is very different than a net new Capella logo that we're learning about in the quarter that we're starting with maybe a couple thousand dollar starter pack and getting them on their journey. And we're constantly learning as an organization on how to best articulate the value of the technology that we're bringing to market.

Speaker Change: Look good.

Speaker Change: If we think about the diversity of our business, we're dealing with some of the.

Speaker Change: Largest enterprises in the world on the one hand doing as we've noted in a couple of cases over 10 million <unk> dynamics of that buying and selling environment. As you can appreciate is very different than a.

Speaker Change: Net new Capello logo that we're learning about in the quarter that were starting with maybe a couple of thousand dollars starter pack and getting them on their journey.

Speaker Change: And we're constantly learning as an organization on how to.

Speaker Change: Best articulate the value of of the technology that we're bringing to market.

Matthew Cain: What we talked about is investing in a smart way in strategic accounts because of how big those are and the opportunity that represents and quite frankly supporting those customers on their data platform journey. And I think we're able to invest differently in kind of the broader part of the funnel where we're seeing more of that kind of buy from perpetual free tier motion complement what we're doing from a cell two perspective. And how we're able to drive leverage is in being smart about the allocation of resources across kind of those different motions. Let's not forget that we're doing business around the world.

Speaker Change: We talked about is investing in a smart way in strategic accounts.

Speaker Change: Because of how big those are and the opportunity that represents and quite frankly.

Speaker Change: Supporting those customers on there.

Speaker Change: <unk> data platform journey.

Speaker Change: And I think we're able to invest differently in kind of a broader part of the funnel where you.

Speaker Change: We're seeing more of that kind of buy from perpetual free tier motion complement what we're doing from a from a sell to perspective.

Speaker Change: And how we're able to drive leverage as you know in being smart about the allocation of resources across.

Speaker Change: Those those different motions what's.

Speaker Change: Let's not forget that we're doing business around the world. So we have you know.

Matthew Cain: So we have, you know, regional differences in the model that we take into account. And I think fundamentally what we're really excited about is how we're marketing the solution and driving demand with digital spend in an even more efficient and an exciting way as people understand our value proposition and how well it's aligned to the market transition that we're seeing. And so, you know, we take pride in constantly reviewing results and figuring out how to get better. As we move into the fiscal year, we've made sense. We feel great about the capacity that we have across the various functions, everything from quota carriers to SEs to, you know, cloud specialists and, you know, are often running in the new fiscal year with modifications that we think are going to serve us as we go forward.

Speaker Change: Regional differences in the model that we take into account.

Speaker Change: And I think fundamentally what we're really excited about is how we're marketing the solution and driving demand with digital spend in an even more efficient in an exciting way as people understand our value proposition and how well it's aligned to the market transition that were seeing and so we take pride in constantly re.

Speaker Change: Viewing results and figure out how to get better.

Speaker Change: As we move into the fiscal year, we've made.

Speaker Change: We feel great about the capacity that we have across the various functions everything from quota carriers to S ease to.

Speaker Change: You know cloud specialists.

Speaker Change: And you know are often running in the new fiscal year with modifications that we think are going to service as we go forward, but we feel.

Matthew Cain: But we feel great about changes we've made and the path forward.

Speaker Change: Great about changes, we've made and the path forward.

Miller Jump: That's great, Keller. Thanks.

Speaker Change: That's great color. Thanks, if I could just squeeze in one quick one for Greg.

Gregory Henry: If I could just squeeze in one quick one for Greg. Greg, just an update on anything you saw in turn activity in the quarter versus your expectations going in that were implied in guidance. Right in line on lost and down sell, Miller, again, I would only call out Q2 of this year, which we previously talked about. If anything that was what we view as anomalous, the rest is all in line. And I think, you know, we'll keep putting these quarters up and hopefully further demonstrating that Q2 is anomalous because we do have a very strong customer base that is, you know, tends to highly renew with us.

Speaker Change: Greg.

Speaker Change: An update on anything you saw in touring activity in the quarter versus your expectations going in that were implied in guidance.

Speaker Change: Right in line on an Los in down sell Miller.

Speaker Change: Again, I would only call out Q2 of this year, which we previously talked about it as anything that was what we view as anomalous. The rest is all in line and.

Speaker Change: I think we'll you know, we'll keep putting these quarters up and hopefully further demonstrating that Q2 was anomalous because we do have a very.

Speaker Change: Strong customer base that is you know tends to highly renew with us so nothing unusual.

Gregory Henry: So nothing unusual here this quarter. Thank you. Great to hear it. Thank you.

Speaker Change: Usual here in this quarter.

Speaker Change: Great to hear thank you.

Speaker Change: Thank you and.

Operator: And we have reached the end of the question and answer session.

And we have reached the end of the question and answer session.

Matthew Cain: And I would like to turn the floor back to CEO Matt Cain. Thanks, operator. And thanks to everyone for joining us today. We're thrilled with our Q4 performance and excited with the opportunities in front of us in fiscal 2026.

Speaker Change: And I would like to turn the floor back to CEO, Matt Kane for closing remarks.

Matt Kane: Thanks, operator, and thanks to everyone for joining US today, we're thrilled with our Q4 performance and excited with the opportunities in front of US in fiscal 2026, we look forward to speaking with you again next quarter.

Matthew Cain: We look forward to speaking with you again next quarter.

Speaker Change: And ladies and gentlemen. This concludes today's conference you may disconnect. Your lines at this time, we thank you for your participation.

Operator: And ladies and gentlemen, this concludes today's conference and you may disconnect your line.

Matt Kane: Okay.

Matt Kane: Yes.

Yeah.

Matt Kane: Yeah.

Matt Kane: Okay.

Matt Kane: Yes.

Matt Kane: Yes.

Matt Kane: Yeah.

Matt Kane: Yeah.

Matt Kane: Yes.

Matt Kane: [music].

Matt Kane: Yeah.

Matt Kane: Okay.

Matt Kane: [music].