Guggenheim Reiterates Buy Rating on Couchbase Inc (BASE)

Guggenheim analyst Howard Ma reiterated a Buy rating and $30.00 price target on Couchbase Inc (NASDAQ: BASE).

The analyst commented: "Couchbase missed what we believe were elevated expectations going into F3Q earnings. Shares were up 28% since the last print (vs. IGV up 25%), despite that some investors pointed out potentially elevated F2H risk as F2Q was only in line. We thought the company would make up for the F2Q shortfall, especially since the New ARR required, seemed achievable. But F3Q Total ARR was again only in line with consensus/midpoint of guidance, while F4Q total revenue was below consensus and FY25 Total ARR guidance narrowed on both ends (lowered by $1M at the midpoint). We
calculate F3Q Total ARR declined 10% y/y and decelerated materially on a 2-year stack, and included a large multi-million dollar Capella migration (the largest in the company's history), which implies that organic growth and expansion were likely a bit light. F4Q implies New ARR grows 26%, which is not easy. Despite this, management expressed confidence in achieving guidance based on Couchbase becoming a more important part of long-term enterprise initiatives, due to a new generation of critical applications looking for platform providers, including wins during the quarter across a variety of verticals.
Heading into next year, management feels comfortable about visibility into ARR due to a larger renewal base from a year prior, and more evenly weighted year vs. heavy F4Q seasonality this year. Net new customers ticked down from a record 62 in F2Q to 34 during the quarter, while one-third of customers are now using Capella (15% of Total ARR vs. 13.5% in F2Q). While near-term results can be hard to predict, we believe in the value proposition and long-term positioning of Couchbase. We maintain our PT of $30 and Buy rating."

For an analyst ratings summary and ratings history on Couchbase Inc click here. For more ratings news on Couchbase Inc click here.

Shares of Couchbase Inc closed at $21.12 yesterday.

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