SEC Filing | Couchbase, Inc.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________

FORM 10-Q

__________________________________

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2024


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-40601

__________________________________

Couchbase, Inc.

(Exact name of registrant as specified in its charter)

__________________________________


Delaware		26-3576987
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
	3250 Olcott Street Santa Clara, California 95054
	(Address of principal executive offices and Zip Code)

(650) 417-7500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.00001 per share

BASE

Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of May 31, 2024, the registrant had 50,309,880 shares of common stock outstanding.

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		Page
Part I.	Financial Information
Item 1.	Financial Statements (unaudited)	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Comprehensive Loss	6
	Condensed Consolidated Statements of Stockholders’ Equity	7
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36
Part II.	Other Information	38
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68
Item 3.	Defaults Upon Senior Securities	68
Item 4.	Mine Safety Disclosures	68
Item 5.	Other Information	68
Item 6.	Exhibits	69
Signatures		70

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Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future plans or events, management's expectations and opinions or our future financial or operating performance, intentions, designs, expectations or objectives. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “would,” “intend,” “target,” “project,” “forecast,” “contemplate,” “believe,” “estimate,” “predict,” “seek,” “pursue,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about our expectations regarding:

•our future financial performance, including our expectations regarding our revenue, cost of revenue, operating expenses, period of benefit for deferred commissions, our ability to determine reserves and our ability to achieve and maintain future profitability;

•the sufficiency of our cash, cash equivalents and short-term investments to meet our liquidity needs;

•the demand for our products and services or for data management solutions in general;

•our ability to attract and retain customers and partners;

•our ability to develop new products and features and bring them to market in a timely manner and make enhancements to our offerings, as well as market acceptance of new products and features;

•our expectations regarding future developments with respect to Couchbase Capella, our fully-managed database-as-a-service (“DBaaS”) offering;

•our ability to compete with existing and new competitors in existing and new markets and offerings;

•macroeconomic conditions, foreign exchange fluctuation, inflation concerns, increased interest rates and recessionary fears, on our business and results of operations;

•our expectations regarding the effects of existing and developing laws, rules, regulations and other legal obligations, including with respect to taxation and data privacy and security;

•our ability to manage risk associated with our business;

•our expectations regarding new and evolving markets, as well as the impact of artificial intelligence ("AI") in business, including development of Capella iQ, our generative AI-powered developer’s coding assistant built into Couchbase Capella;

•our ability to maintain, develop and protect our brand;

•our ability, and our customers’ and our third-party service providers’ ability, to maintain the security and availability to each of our technological and physical infrastructures;

•our expectations and management of future growth;

•our expectations concerning relationships with third parties;

•our ability to obtain, maintain, defend and enforce our intellectual property;

•our use of third-party open source software in our solutions and the availability of portions of our source code on an open source basis;

•our ability to successfully acquire and integrate companies and assets; and

•the increased expenses associated with being a public company.

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q. You should not rely upon forward-looking statements as predictions of future events.

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We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, assumptions, uncertainties and other factors, including those described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely upon these statements.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and achievements may be different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

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Risk Factor Summary

Our business is subject to significant risks and uncertainties that make an investment in us speculative and risky. Below we summarize what we believe are the principal risk factors but these risks are not the only ones we face. You should carefully review and consider the full discussion of our risk factors below this summary, together with the other information in this Quarterly Report on Form 10-Q. If any of the following risks or if any of those listed elsewhere in this Quarterly Report on Form 10-Q actually occur, our business, reputation, financial condition, results of operations, revenue and future prospects could be seriously harmed. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business.

•We have a history of net losses, may not achieve or maintain profitability in the future and may not continue to grow on pace with historical rates.

•We face intense competition and if we are unable to compete effectively, our business, financial condition and results of operations would be adversely affected.

•We may fail to cost-effectively acquire new customers or obtain renewals, upgrades or expansions from our existing customers, which would adversely affect our business, financial condition and results of operations.

•The market for our products and services is relatively new and evolving, and our future success depends on the growth and expansion of this market.

•If we fail to innovate in response to changing customer needs, new technologies or other market requirements, our business, financial condition and results of operations could be harmed.

•We have a limited operating history, which makes it difficult to predict our future results of operations.

•Our future results of operations and key business metrics may fluctuate significantly, and if we fail to meet the expectations of analysts or investors, the market price of our common stock and the value of your investment could decline substantially.

•We recognize a significant portion of revenue from subscriptions over the term of the relevant subscription period, and as a result, downturns or upturns in sales are not immediately reflected in full in our results of operations.

•We depend on our sales force, and we may fail to attract, retain, motivate or train our sales force, which could adversely affect our business, financial condition and results of operations.

•Our sales strategy to target larger enterprises involves risks that may not be present or that are present to a lesser extent with respect to smaller enterprises, such as long and unpredictable sales cycles and sales efforts that require considerable time and expense, particularly in the current macroeconomic environment.

•If we are not able to maintain and enhance our brand, especially among enterprise architects, application developers and other key functions that support them, our business and results of operations may be adversely affected.

•Real or perceived errors, failures or bugs in our products or interruptions or performance problems associated with our technology and infrastructure could adversely affect our growth prospects, business, financial condition and results of operations.

•Our ability to maintain and increase sales with our existing customers depends, in part, on the quality of our customer support, and our failure to offer high-quality support would harm our reputation and adversely affect our business and results of operations.

•We track certain key business metrics with internal systems and tools and do not independently verify such metrics. Certain of these metrics are subject to inherent challenges in measurement, and any real or perceived inaccuracies in such metrics may adversely affect our business and reputation.

•Our company culture has contributed to our success and if we cannot maintain this culture as we grow, our business could be harmed.

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•We may be unable to make acquisitions and investments or successfully integrate acquired companies and assets into our business, and our acquisitions and investments may not meet our expectations, any of which could adversely affect our business, financial condition and results of operations.

•Use of AI, including in our products and services, combined with an uncertain regulatory environment, may result in reputational harm, liability, or other adverse consequences to our business.

•Our business could be adversely affected by economic downturns.

•If we are unable to maintain successful relationships with our partners, our business, financial condition and results of operations could be harmed.

•Certain estimates and information we refer to publicly are based on information from third-party sources and we do not independently verify the accuracy or completeness of the data contained in such sources or the methodologies for collecting such data, and any real or perceived inaccuracies in such estimates and information may harm our reputation and adversely affect our business.

•Our use of third-party open source software in our solutions, the availability of core portions of our source code on an open source or source available basis and contributions to our open source projects could negatively affect our ability to sell our products and provide our services, subject us to possible litigation and allow third parties to access and use software and technology that we use in our business, all of which could adversely affect our business and results of operations.

•Our distribution and licensing model could negatively affect our ability to monetize and protect our intellectual property rights.

•Because of the rights accorded to third parties under open source licenses, there may be fewer technology barriers to entry in the markets in which we compete and it may be relatively easy for new and existing competitors, some of whom may have greater resources than we have, to compete with us.

•We could incur substantial costs in obtaining, maintaining, protecting, defending and enforcing our intellectual property rights and any failure to obtain, maintain, protect, defend or enforce our intellectual property rights could reduce the value of our software and brand.

•We have been and may in the future become subject to intellectual property disputes which may be costly to defend, subject us to significant liability, require us to pay significant damages and limit our ability to use certain technologies.

•If our security measures, or those of our service providers or customers, are breached or unauthorized parties otherwise obtain access to our or our customers’ data or software, our products and services may be perceived as not being secure, customers may reduce or terminate their use of our products and services and we may face claims, litigation, regulatory investigations, significant liability and reputational damage.

•A portion of our revenue is generated by sales to heavily regulated organizations, which are subject to a number of challenges and risks.

•Our executive officers, directors and holders of 5% or more of our common stock continue to have substantial control over us, which will limit your ability to influence the outcome of important transactions, including a change in control.

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Part I – Financial Information

Item 1. Financial Statements (unaudited)

COUCHBASE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(in thousands, except share and per share amounts)


	As of		As of
	April 30, 2024		January 31, 2024
Assets
Current assets
Cash and cash equivalents	$	51,975	$	41,351
Short-term investments	108,220		112,281
Accounts receivable, net	34,580		44,848
Deferred commissions	13,233		15,421
Prepaid expenses and other current assets	10,307		10,385
Total current assets	218,315		224,286
Property and equipment, net	6,113		5,327
Operating lease right-of-use assets	4,135		4,848
Deferred commissions, noncurrent	12,562		11,400
Other assets	1,446		1,891
Total assets	$	242,571	$	247,752
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	4,071	$	4,865
Accrued compensation and benefits	8,939		18,116
Other accrued expenses	3,814		4,581
Operating lease liabilities	3,106		3,208
Deferred revenue	89,619		81,736
Total current liabilities	109,549		112,506

Operating lease liabilities, noncurrent	1,388		2,078
Deferred revenue, noncurrent	2,572		2,747

Total liabilities	113,509		117,331
Commitments and contingencies (Note 9)
Stockholders’ equity
Preferred stock, $0.00001 par value; 200,000,000 shares authorized as of April 30, 2024 and January 31, 2024; zero shares issued outstanding as of April 30, 2024 and January 31, 2024	—		—
Common stock, $0.00001 par value; 1,000,000,000 shares authorized as of April 30, 2024 and January 31, 2024; 50,220,260 and 49,079,876 shares issued and outstanding as of April 30, 2024 and January 31, 2024, respectively	—		—
Additional paid-in capital	640,931		621,024
Accumulated other comprehensive (loss) income	(215)		56
Accumulated deficit	(511,654)		(490,659)
Total stockholders’ equity	129,062		130,421
Total liabilities and stockholders’ equity	$	242,571	$	247,752

The accompanying notes are an integral part of these condensed consolidated financial statements.

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COUCHBASE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share amounts)


	Three Months Ended April 30,
	2024		2023
Revenue:
License	$	6,859	$	4,943
Support and other	42,179		33,599
Total subscription revenue	49,038		38,542
Services	2,289		2,454
Total revenue	51,327		40,996
Cost of revenue:
Subscription	3,957		3,673
Services	1,725		2,249
Total cost of revenue	5,682		5,922
Gross profit	45,645		35,074
Operating expenses:
Research and development	17,847		15,383
Sales and marketing	37,755		32,553
General and administrative	12,583		9,625
Restructuring	—		46
Total operating expenses	68,185		57,607
Loss from operations	(22,540)		(22,533)
Interest expense	—		(25)
Other income, net	1,531		1,433
Loss before income taxes	(21,009)		(21,125)
Provision (benefit) for income taxes	(14)		750
Net loss	$	(20,995)	$	(21,875)
Net loss per share, basic and diluted	$	(0.42)	$	(0.48)
Weighted-average shares used in computing net loss per share, basic and diluted	49,788		45,843

The accompanying notes are an integral part of these condensed consolidated financial statements.

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COUCHBASE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(unaudited)

(in thousands)


	Three Months Ended April 30,
	2024		2023

Net loss	$	(20,995)	$	(21,875)
Other comprehensive loss:
Net unrealized (losses) gains on investments, net of tax	(271)		317
Total comprehensive loss	$	(21,266)	$	(21,558)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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COUCHBASE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(unaudited)

(in thousands, except shares)


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance as of January 31, 2024	49,079,876	$	—	$	621,024	$	56	$	(490,659)	$	130,421
Issuance of common stock upon exercise of stock options	406,055	—		3,294		—		—		3,294
Issuance of common stock in connection with employee stock purchase plan	123,778	—		1,795		—		—		1,795
Vesting of restricted stock units	610,551	—		—		—		—		—

Stock-based compensation	—	—		14,818		—		—		14,818
Net unrealized losses on investments	—	—		—		(271)		—		(271)
Net loss	—	—		—		—		(20,995)		(20,995)
Balance as of April 30, 2024	50,220,260	$	—	$	640,931	$	(215)	$	(511,654)	$	129,062


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance as of January 31, 2023	45,432,029	$	—	$	561,547	$	(807)	$	(410,476)	$	150,264
Issuance of common stock upon exercise of stock options	389,377	—		1,917		—		—		1,917
Issuance of common stock in connection with employee stock purchase plan	74,113	—		847		—		—		847
Vesting of restricted stock units	259,980	—		—		—		—		—

Stock-based compensation	—	—		9,480		—		—		9,480
Net unrealized gains on investments	—	—		—		317		—		317
Net loss	—	—		—		—		(21,875)		(21,875)
Balance as of April 30, 2023	46,155,499	$	—	$	573,791	$	(490)	$	(432,351)	$	140,950

The accompanying notes are an integral part of these condensed consolidated financial statements.

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COUCHBASE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)


	Three Months Ended April 30,
	2024		2023
Cash flows from operating activities
Net loss	$	(20,995)	$	(21,875)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	400		890


Stock-based compensation, net of amounts capitalized	14,627		9,276
Amortization of deferred commissions	4,096		4,540
Non-cash lease expense	765		772
Foreign currency transaction losses (gains)	283		(84)
Other	(824)		(746)
Changes in operating assets and liabilities
Accounts receivable	10,165		(2,274)
Deferred commissions	(3,070)		(4,824)
Prepaid expenses and other assets	31		1,405
Accounts payable	(792)		5,458
Accrued compensation and benefits	(9,179)		(4,060)
Other accrued expenses	(813)		(1,256)
Operating lease liabilities	(843)		(826)
Deferred revenue	7,708		6,423
Net cash provided by (used in) operating activities	1,559		(7,181)
Cash flows from investing activities
Purchases of short-term investments	(19,454)		(7,821)
Maturities and sales of short-term investments	24,144		19,423
Additions to property and equipment	(995)		(1,288)
Net cash provided by investing activities	3,695		10,314
Cash flows from financing activities



Proceeds from exercise of stock options	3,294		1,917
Proceeds from issuance of common stock under ESPP	1,795		847




Net cash provided by financing activities	5,089		2,764
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(262)		(103)
Net increase in cash, cash equivalents and restricted cash	10,081		5,794
Cash, cash equivalents and restricted cash
Beginning of period	41,894		40,989
End of period	$	51,975	$	46,783
Cash and cash equivalents	$	51,975	$	46,240
Restricted cash included in other assets	—		543
Total cash, cash equivalents and restricted cash	$	51,975	$	46,783
Supplemental disclosures of cash activities
Cash paid for income taxes	$	591	$	294
Cash paid for interest	$	—	$	25
Non-cash investing and financing activities:
Stock-based compensation capitalized as internal-use software costs	$	191	$	204
Net change in unrealized gains or losses on available-for-sale debt securities	$	(271)	$	317

The accompanying notes are an integral part of these condensed consolidated financial statements.

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COUCHBASE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Description of Business

Couchbase, Inc. provides a leading cloud database platform for modern applications. Couchbase was incorporated in the State of Delaware in 2008 and is headquartered in Santa Clara, California. In these notes to the unaudited condensed consolidated financial statements, the “Company,” “Couchbase,” “we,” “us” and “our” refers to Couchbase, Inc. and its subsidiaries on a consolidated basis.

2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The Company’s unaudited condensed consolidated financial statements and accompanying notes have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”), regarding interim financial reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted, and accordingly the balance sheet as of January 31, 2024, and related disclosures, have been derived from the audited consolidated financial statements at that date but do not include all the information required by GAAP for complete consolidated financial statements. These unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements and, in the opinion of management, reflect all adjustments (consisting of only normal recurring adjustments) that are necessary for the fair statement of the Company’s condensed consolidated financial information. The results of operations for the three months ended April 30, 2024, are not necessarily indicative of the results to be expected for the year ending January 31, 2025, or for any other interim period or for any other future year.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes contained in the Company’s Annual Report on Form 10-K for the year ended January 31, 2024, as filed with the SEC on March 26, 2024.

Fiscal Year

The Company’s fiscal year ends on January 31. Unless otherwise stated, references to year in these condensed consolidated financial statements relate to fiscal year rather than calendar year.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of Couchbase, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts stated in the financial statements and accompanying notes. Such estimates include, but are not limited to, standalone selling prices for each distinct performance obligation, capitalized internal-use software costs, expected period of benefit for deferred commissions, valuation of stock-based awards, the determination of allowance for credit losses, the incremental borrowing rate used to measure operating lease liabilities, and accounting for income taxes. The Company bases its estimates on historical experience and assumptions that management considers reasonable.

The Company assesses these estimates on a regular basis; however, actual results could differ from these estimates. Estimates and assumptions about future events and their effects, including the impact of macroeconomic conditions such as inflation and foreign exchange fluctuations, cannot be determined with certainty and therefore require increased judgment. These estimates and assumptions may change in future periods and will be recognized in the condensed consolidated financial statements as new events occur and additional information becomes known. To the extent the Company’s actual results differ materially from those estimates and assumptions, the Company’s future financial statements could be affected.

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Significant Accounting Policies

There have been no material changes to the Company's significant accounting policies described in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2024, that have had a material impact on its condensed consolidated financial statements and related notes.

Deferred Commissions

The Company capitalizes certain sales commissions, including related payroll taxes, earned by the Company’s sales force, which are considered to be incremental costs that would not be incurred absent of the contract. On an annual basis, the Company assesses the expected period of benefit by taking into consideration its customer contracts, its technology and duration of customer relationships. Based on our most recent assessment, the Company determined the expected period of benefit for incremental costs of customer contracts should be increased from three to four years. This change in accounting estimate was effective February 1, 2024 and is accounted for prospectively in the Company's unaudited condensed consolidated financial statements. Commissions for renewal contracts are not commensurate with the commission paid for initial acquisition of a contract and are amortized based over the related contractual renewal period. This change in the period of benefit did not have a material impact to our unaudited condensed consolidated financial statements.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to credit risk primarily consist of cash, cash equivalents, restricted cash, short-term investments and accounts receivable. The Company maintains its cash and cash equivalents, restricted cash and short-term investments with high-quality financial institutions. Cash equivalents consist of money market funds which are invested through financial institutions in the United States (“U.S.”). Deposits, including those held in foreign branches of global banks, may exceed the amount of insurance provided on such deposits. The Company has not experienced any losses on these deposits.

For its accounts receivable, the Company is exposed to credit risk in the event of nonpayment by customers to the extent of the amounts recorded on the consolidated balance sheet. Generally, credit risk with respect to accounts receivable is diversified due to the number of entities comprising the Company’s customer base and their dispersion across different geographies and industries. The Company performs ongoing credit evaluations on certain customers and generally does not require collateral on accounts receivable. The Company maintains an allowance for credit losses and historically bad debts have not been material.

No customer accounted for 10% or more of total revenue for the three months ended April 30, 2024 and 2023. Two customers accounted for approximately 16% and 13% of gross accounts receivable as of April 30, 2024, respectively. No customer accounted for 10% or more of gross accounts receivable as of January 31, 2024.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

There were no significant changes to the Company’s significant accounting policies disclosed in “Note 2 – Basis of Presentation and Summary of Significant Accounting Policies” of the Company’s Annual Report.

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which is intended to improve reportable segment disclosure requirements. ASU 2023-07 expands segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. Additionally, the amendments require disclosure of the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. All disclosure requirements of ASU 2023-07 are required for all entities including entities with a single reportable segment. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is in the process of evaluating the impact of the adoption on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires companies to disclose additional information about income taxes, primarily their rate reconciliation information and income taxes paid. The new guidance requires companies to disclose in their rate

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reconciliation table additional categories of information about federal, state and foreign income taxes and to provide more details about the reconciling items in some categories if the items meet a quantitative threshold. Additionally companies will be required to disclose annually income taxes paid (net of refunds received) disaggregated by federal (national), state and foreign taxes and to disaggregate the information by jurisdiction based on a quantitative threshold. The guidance is effective for the Company for the fiscal year ending January 31, 2026, and early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-09 on its consolidated financial statements and related disclosures.

Under the Jumpstart Our Business Startups Act (the “JOBS Act”), the Company meets the definition of an emerging growth company and can delay adopting new or revised accounting standards issued after the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the Company is no longer an emerging growth company or until the Company affirmatively and irrevocably opts out of the extended transition period.

3. Cash Equivalents and Short-Term Investments

The following tables summarize the Company’s cash equivalents and short-term investments (in thousands):


	As of April 30, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Cash Equivalents
Money market funds	$	37,117	$	—	$	—	$	37,117
Total cash equivalents	37,117		—		—		37,117
Short-Term Investments
U.S. government treasury securities	83,723		1		(157)		83,567
Corporate debt securities	13,804		2		(49)		13,757
U.S. government agency securities	5,999		—		(12)		5,987
Commercial paper	4,909		—		—		4,909

Total short-term investments	108,435		3		(218)		108,220
Total	$	145,552	$	3	$	(218)	$	145,337


	As of January 31, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Cash Equivalents
Money market funds	$	32,895	$	—	$	—	$	32,895

Total cash equivalents	32,895		—		—		32,895
Short-Term Investments
U.S. government treasury securities	85,525		58		(7)		85,576
Corporate debt securities	13,712		14		(1)		13,725
U.S. government agency securities	7,999		—		(8)		7,991
Commercial paper	4,845		—		—		4,845
Asset-backed securities	144		—		—		144
Total short-term investments	112,225		72		(16)		112,281
Total	$	145,120	$	72	$	(16)	$	145,176

During the three months ended April 30, 2024 and 2023, the Company did not reclassify any amounts to earnings from accumulated other comprehensive income (loss) related to unrealized gains or losses in other income (expense), net in the condensed consolidated statements of operations.

As of April 30, 2024, the Company’s short-term investments consisted of $88.8 million and $19.4 million with a contractual maturity date of less than one year and greater than one year, respectively. As of January 31, 2024, the Company’s short-term investments consisted of $97.6 million and $14.7 million with a contractual maturity of less than one year and greater than one year, respectively.

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The Company’s gross unrealized losses and fair values for short-term investments that were in an unrealized loss position as of April 30, 2024 and January 31, 2024 aggregated by investment category and the length of time that individual securities have been in a continuous loss position were as follows (in thousands):


	As of April 30, 2024
	Less Than 12 Months				12 Months or Greater				Total
	Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value
U.S. government treasury securities	$	(157)	$	77,620	$	—	$	—	$	(157)	$	77,620
U.S. government agency securities	(12)		5,987		—		—		(12)		5,987
Corporate debt securities	(49)		9,826		—		—		(49)		9,826

Total	$	(218)	$	93,433	$	—	$	—	$	(218)	$	93,433


	As of January 31, 2024
	Less Than 12 Months				12 Months or Greater				Total
	Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value
U.S. government treasury securities	$	(7)	$	22,746	$	—	$	—	$	(7)	$	22,746
U.S. government agency securities	(8)		7,991		—		—		(8)		7,991
Corporate debt securities	(1)		5,008		—		—		(1)		5,008
Asset-backed securities	—		—		—		144		—		144
Total	$	(16)	$	35,745	$	—	$	144	$	(16)	$	35,889

As of April 30, 2024, the Company had 19 short-term investments in an unrealized loss position. As of January 31, 2024, the Company had 13 short-term investments in an unrealized loss position. As of April 30, 2024, the Company determined that the declines in the market value of its investment portfolio were not driven by credit related factors. During the three months ended April 30, 2024, there were no credit or non-credit related impairment charges recorded by the Company.

4. Fair Value Measurements

The Company accounts for certain of its financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:

Level 1: Observable inputs, such as quoted prices in active markets for identical assets or liabilities.

Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying amounts reflected on the condensed consolidated balance sheets for cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value due to the short maturities of those instruments.

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The following tables present the fair value hierarchy for the Company’s assets measured at fair value on a recurring basis (in thousands):


	As of April 30, 2024
	Level 1		Level 2		Total
Cash Equivalents
Money market funds	$	37,117	$	—	$	37,117
Total cash equivalents	37,117		—		37,117
Short-Term Investments
U.S. government treasury securities	—		83,567		83,567
Corporate debt securities	—		13,757		13,757
U.S. government agency securities	—		5,987		5,987
Commercial paper	—		4,909		4,909

Total short-term investments	—		108,220		108,220
Total	$	37,117	$	108,220	$	145,337


	As of January 31, 2024
	Level 1		Level 2		Total
Cash Equivalents
Money market funds	$	32,895	$	—	$	32,895

Total cash equivalents	32,895		—		32,895
Short-Term Investments
U.S. government treasury securities	—		85,576		85,576
Corporate debt securities	—		13,725		13,725
U.S. government agency securities	—		7,991		7,991
Commercial paper	—		4,845		4,845
Asset-backed securities	—		144		144
Total short-term investments	—		112,281		112,281
Total	$	32,895	$	112,281	$	145,176

The Company classifies its money market funds within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. The Company classifies its U.S. government agency securities, asset-backed securities, commercial paper, U.S. government treasury securities, and corporate debt securities within Level 2 because they are valued using inputs other than quoted prices which are directly or indirectly observable in the market, including readily available pricing sources for the identical underlying security which may not be actively traded.

5. Balance Sheet Components

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):


	As of April 30,		As of January 31,
	2024		2024
Prepaid expenses	$	4,720	$	4,793
Prepaid software	4,390		4,429
Other current assets	1,197		1,163
Total prepaid expenses and other current assets	$	10,307	$	10,385

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Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):


	As of April 30,		As of January 31,
	2024		2024
Computer equipment	$	3,744	$	3,736
Furniture and fixtures	418		418
Capitalized internal-use software	8,743		8,743
Leasehold improvements	1,903		1,903

Construction in progress—capitalized internal-use software	3,749		2,571
Total gross property and equipment	18,557		17,371
Accumulated depreciation and amortization	(12,444)		(12,044)
Total property and equipment, net	$	6,113	$	5,327

Depreciation and amortization expense was $0.4 million and $0.9 million for three months ended April 30, 2024 and 2023, respectively. Included in these amounts were the amortization of capitalized internal-use software development costs of $0.2 million and $0.7 million in the three months ended April 30, 2024 and 2023, respectively.

Accrued Compensation and Benefits

Accrued compensation and benefits consisted of the following (in thousands):


	As of April 30,		As of January 31,
	2024		2024
Accrued bonus	$	2,784	$	7,056
Accrued commissions	2,150		4,852
Accrued payroll and benefits	3,304		4,690
Employee contributions under the ESPP	701		1,518
Total accrued compensation and benefits	$	8,939	$	18,116

Other Accrued Liabilities

Other accrued liabilities consisted of the following (in thousands):


	As of April 30,		As of January 31,
	2024		2024
Accrued professional fees	$	937	$	1,190
Sales and value added tax payable	287		517
Income taxes payable	137		173

Other	2,453		2,701
Total other accrued liabilities	$	3,814	$	4,581

6. Deferred Revenue and Remaining Performance Obligations

The following table presents the deferred revenue balances (in thousands):


	As of April 30,		As of January 31,
	2024		2024
Deferred revenue, current	$	89,619	$	81,736
Deferred revenue, noncurrent	2,572		2,747
Total deferred revenue	$	92,191	$	84,483

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Changes in the deferred revenue balances during the three months ended April 30, 2024 and 2023 were as follows (in thousands):


	Three Months Ended April 30,
	2024		2023
Beginning balance	$	84,483	$	74,991
Performance obligations satisfied during the period that were included in the deferred revenue balance at the beginning of the year	(34,359)		(29,061)
Increases due to invoicing prior to satisfaction of performance obligations	42,067		35,484
Ending balance	$	92,191	$	81,414

Remaining performance obligations (“RPOs”) represent the amount of contracted future revenue that has not yet been recognized, including both deferred revenue and non-cancelable contracted amounts that will be invoiced and recognized as revenue in future periods.

As of April 30, 2024, the Company’s RPOs were $220.0 million. The Company expects to recognize revenue of $137.0 million of these remaining performance obligations over the next twelve months with the remaining balances recognized thereafter.

7. Debt

Loan and Security Agreement

On February 7, 2024, the Company entered into a loan and security agreement with MUFG Bank, Ltd., as lender, for a three-year senior secured revolving loan facility of up to $25.0 million, including a letter of credit sublimit of up to $5.0 million, with an original maturity date on February 7, 2027 and a uncommitted accordion feature that provides up to $25.0 million of additional borrowing capacity (the “Credit Facility”). Borrowings under the Credit Facility accrue interest at a floating per annum rate based on secured overnight financing rate ("SOFR"), plus 3.0% for the applicable interest rate period. Accrued interest on the Credit Facility will be paid at the end of the applicable interest rate period, but at least every three months. The Company is also obligated to pay other customary fees and expenses, including an unused revolving line facility fee of 0.25% per annum of the average daily unused portion of the Credit Facility.

Under the Credit Facility, the Company is subject to a minimum consolidated adjusted EBITDA covenant, tested quarterly. The Credit Facility also contains certain customary affirmative and negative covenants as well as customary events of default, subject to certain exceptions, including restrictions on the ability of the Company and its subsidiaries to, among other things, incur debt, grant liens, make acquisitions, suffer changes in control, make investments, make certain dividends or distributions, repurchase or redeem stock, dispose of or transfer assets, and enter into transactions with affiliates, in each case, subject to customary and other agreed limitations and exceptions. To date, the Company has an outstanding letter of credit of $0.5 million against the $5.0 million sublimit in connection with a lease arrangement.

The Company did not have any debt outstanding under the Credit Facility as of April 30, 2024 and was in compliance with the financial covenants associated with the Credit Facility as of April 30, 2024.

8 . Leases

The Company leases facilities under non-cancelable operating leases, primarily for rent of office space. The Company's leases have various expiration dates through November 2027, some of which include options to extend the leases for up to three years. The Company does not have any finance leases.

The components of lease costs were as follows (in thousands):


	Three Months Ended April 30,
	2024		2023
Operating lease costs	$	765	$	772
Variable lease costs	$	157	$	146

Short-term lease costs were immaterial during the three months ended April 30, 2024 and 2023.

The following table presents supplemental cash flow information related to leases (in thousands):

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	Three Months Ended April 30,
	2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	843	$	823
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	—	$	—

The following table presents supplemental balance sheet information related to operating leases (in thousands, except for lease term and discount rate):


	April 30, 2024			January 31, 2024
Operating lease right-of-use assets	$	4,135		$	4,848
Operating lease liabilities	$	3,106		$	3,208
Operating lease liabilities, noncurrent	1,388			2,078
Total operating lease liabilities	$	4,494		$	5,286
Weighted-average remaining lease term	1.8 years			2.0 years
Weighted-average discount rate	4.4		%	4.4		%

As of April 30, 2024, remaining maturities of operating lease liabilities were as follows (in thousands):


Period	Operating Leases
Remaining for Fiscal 2025	$	2,514
Fiscal 2026	1,481
Fiscal 2027	437
Fiscal 2028	245
Fiscal 2029 and thereafter	—
Total lease payments	4,677
Less: imputed interest	(183)
Total	$	4,494

9. Commitments and Contingencies

Other Contractual Commitments

Other contractual commitments relate to third-party cloud infrastructure agreements and subscription arrangements.

There were no material contractual commitments that were entered into during the three months ended April 30, 2024 that were outside the ordinary course of business.

Legal Matters

From time to time, the Company may be a party to various legal matters, threatened claims, or proceedings in the normal course of business. Legal fees and other costs associated with such actions are expensed as incurred. The Company assesses, in conjunction with its legal counsel, the need to record a liability for litigation and contingencies. Legal accruals are recorded when and if it is determined that a loss related to a certain matter is both probable and reasonably estimable. The Company is not currently a party to any legal proceedings that, if determined adversely to it, would, in management’s opinion, have a material and adverse effect on the Company’s financial condition, results of operations, or cash flows.

Indemnification Agreements

In the ordinary course of business, the Company enters into agreements of varying scope and terms pursuant to which the Company agrees to indemnify customers, vendors, lessors and other business partners with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, services to be provided by the Company or from intellectual property infringement claims made by third parties. Additionally, the Company entered into

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indemnification agreements with the Company’s directors and officers that require the Company, among other things, to indemnify them against certain liabilities that may arise from their services as a director or executive officer in any capacity as the Company's director, trustee, general partner, managing member, officer, employee, agent or fiduciary or with respect to any employee benefit plans. The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements nor are we aware of any such claims that could reasonably be expected to incur material costs.

10. Stockholders’ Equity and Employee Incentive Plans

Redeemable Convertible Preferred Stock

As of April 30, 2024, there were no shares of redeemable convertible preferred stock issued and outstanding.

The Company’s Amended and Restated Certificate of Incorporation authorizes the issuance of 200,000,000 shares of undesignated preferred stock with a par value of $0.00001 per share with rights and preferences, including voting rights, designated from time to time by the board of directors.

Common Stock

The Company’s Amended and Restated Certificate of Incorporation authorized the Company to issue 1,000,000,000 shares of common stock at a par value of $0.00001 as of April 30, 2024 and January 31, 2024.

Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when and if declared by the board of directors, subject to the prior rights of holders of all classes of stock outstanding. As of April 30, 2024 and January 31, 2024, no dividends had been declared.

As of April 30, 2024, the Company has reserved common stock for future issuance as follows:


			Number of Shares
Stock options outstanding			5,465,173
Restricted stock units issued and outstanding			5,930,054
Remaining shares available for issuance under the 2021 Plan			3,565,156
Shares available for issuance under the 2023 Inducement Plan			955,779
ESPP			1,606,656
Common stock warrants			105,350
Total			17,628,168

Common Stock Warrants

In April, 2019, the Company issued warrants in connection with a term loan agreement with a certain lender to purchase 105,350 shares of the Company’s common stock at $7.48 per share, exercisable over 10 years. As of April 30, 2024, all warrants were outstanding and exercisable.

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Stock Options

The following table summarizes stock option activity under the Stock Plans for the three months ended April 30, 2024 (aggregate intrinsic value in thousands):


	Options Outstanding			Weighted- Average Contractual Term	Aggregate Intrinsic Value
	Number of Options	Weighted- Average Exercise Price
Balances as of January 31, 2024	5,889,938	$	10.38	4.84	$	86,742
Options exercised	(406,055)	$	8.11

Options cancelled	(18,710)	$	24.78
Balances as of April 30, 2024	5,465,173	$	10.50	4.55	$	75,355
Options vested and expected to vest as of April 30, 2024	5,465,173	$	10.50	4.55	$	75,355
Options vested and exercisable as of April 30, 2024	5,152,472	$	9.80	4.41	$	74,479

No stock options were granted during the three months ended April 30, 2024 and 2023.

The aggregate intrinsic value of options exercised during the three months ended April 30, 2024 and 2023 was $8.1 million and $4.2 million, respectively. Aggregate intrinsic value represents the difference between the exercise price of the options and the estimated fair value of the Company’s common stock.

The Company recognized stock-based compensation expense related to stock options of $0.9 million and $1.2 million during the three months ended April 30, 2024 and 2023, respectively.

As of April 30, 2024, there was $2.6 million of unrecognized stock-based compensation expense related to unvested stock options, which is expected to be recognized over a weighted-average period of 0.8 years.

Service-Based RSUs

During the year ended January 31, 2022, the Company began granting RSUs to its employees which have service-based vesting conditions. The service-based vesting condition for these awards is generally satisfied by rendering continuous service over two to four years, depending on the award, during which time the grants will vest either quarterly or after a one-year cliff with quarterly vesting thereafter.

The following table is a summary of service-based RSU activity for the three months ended April 30, 2024:


	RSUs Outstanding
	Number of RSUs	Weighted Average Grant Date Fair Value Per Share
Balances as of January 31, 2024	3,909,920	$	17.56
RSUs granted	1,743,216	$	27.48
RSUs vested	(531,351)	$	17.32
RSUs forfeited	(137,331)	$	18.93
Balances as of April 30, 2024	4,984,454	$	21.02

The aggregate fair value of the RSU awards granted was $47.9 million and $39.3 million during the three months ended April 30, 2024 and 2023, respectively. This represents the fair value of the common stock on the date the service-based vesting awards were granted.

We recognized $11.6 million and $6.8 million in stock-based compensation expense related to service vesting-based RSUs during the three months ended April 30, 2024 and 2023, respectively. As of April 30, 2024, there was $93.6 million of unrecognized compensation expense related to service-based RSUs expected to be recognized over a weighted-average vesting period of 1.8 years.

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Performance-based and Market-based Awards

Performance-based Awards

We recognized a total of $1.3 million and $0.7 million in stock-based compensation expense related to PSUs during the three months ended April 30, 2024 and 2023, respectively. As of April 30, 2024, there were 840,000 awards outstanding and a total of $4.7 million of unrecognized compensation expense related to PSUs expected to be recognized over an average vesting period of 1.4 years.

Market-based Awards

The Company recognized a total of $0.3 million and $0.2 million in stock-based compensation expense related to market-based awards during the three months ended April 30, 2024 and 2023, respectively. There were 79,200 awards vested during the three months ended April 30, 2024. As of April 30, 2024, there were 105,600 awards outstanding and a total of $0.5 million of unrecognized compensation expense related to market-based RSUs expected to be recognized over an average vesting period of 0.9 years.

Determination of Fair Value

The Company estimates the fair value of purchase rights issued to employees under the ESPP using the Black-Scholes option-pricing model, which is dependent upon several variables, such as the fair value of the Company’s common stock, the expected option term, expected volatility of the Company’s stock price over the expected term, expected risk-free interest rate over the expected option term, and expected dividend yield.

The fair value of employee stock purchase rights for the offering period under the 2021 ESPP was determined on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:


	Three Months Ended April 30,
	2024		2023
Employee Stock Purchase Plan:
Expected term (in years)	1.2		0.8
Expected volatility	60.1	%	66.9	%
Risk-free interest rate	5.0	%	4.8	%
Dividend yield	—		—

The Company recognized stock-based compensation expense related to the ESPP of $0.6 million and $0.3 million during the three months ended April 30, 2024 and 2023, respectively. As of April 30, 2024, $2.4 million of unrecognized stock-based compensation expense related to the ESPP is expected to be recognized over a weighted-average vesting period of 1.0 year.

During the three months ended April 30, 2024, 123,778 shares of common stock were issued under the ESPP.

Stock-Based Compensation

Stock-based compensation expense, net of amounts capitalized was as follows (in thousands):


	Three Months Ended April 30,
	2024		2023
Cost of revenue—subscription	$	266	$	193
Cost of revenue—services	141		145
Research and development	3,993		2,768
Sales and marketing	5,223		3,241
General and administrative	5,004		2,928
Restructuring	—		1
Total stock-based compensation expense	$	14,627	$	9,276

11. Income Taxes

Accounting for income taxes for interim periods generally requires the provision for income taxes to be determined by applying an estimate of the annual effective tax rate for the full fiscal year to income or loss before income

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taxes, adjusted for discrete items, if any, for the reporting period. The Company updates its estimate of the annual effective tax rate each quarter and records a cumulative adjustment in such period.

The Company recorded an immaterial amount of income tax expense for the three months ended April 30, 2024 and $0.8 million for the three months ended April 30, 2023, respectively. Income tax expense consists primarily of income taxes in foreign jurisdictions in which the Company conducts business. Due to the Company’s history of losses in the U.S., a full valuation allowance on the Company’s domestic deferred tax assets, including net operating loss carryforwards, research and development tax credits, capitalized research and development, and other book versus tax differences was maintained. The Company has deferred tax attributes for stock-based compensation and fixed assets in the United Kingdom, and has not recorded a valuation allowance on the deferred tax attributes as of April 30, 2024. The Company will continue to evaluate for any future developments.

12. Geographic Information

The following table depicts the disaggregation of revenue by geographic area based on the billing address of the customers (in thousands):


	Three Months Ended April 30,
	2024		2023
United States	$	34,682	$	25,991
International	16,645		15,005
Total	$	51,327	$	40,996

No individual foreign country contributed 10% or more of total revenue for the three months ended April 30, 2024 and 2023.

As of April 30, 2024 and January 31, 2024, the majority of the Company’s long-lived assets, including operating lease ROU assets, were located in the United States.

13. Net Loss per Share

Basic net loss per share attributable to the Company’s common stockholders is computed by dividing the net loss attributable to the Company’s common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is the same as basic net loss per share for all years presented because the effects of potentially dilutive items were anti-dilutive given the Company’s net loss position in each period presented.

The following table presents the calculation of basic and diluted net loss per share attributable to common stockholders (in thousands, except per share data):


	Three Months Ended April 30,
	2024		2023
Numerator
Net loss	$	(20,995)	$	(21,875)


Denominator
Weighted-average shares used in computing net loss per share, basic and diluted	49,788		45,843
Net loss per share, basic and diluted	$	(0.42)	$	(0.48)

The following potentially dilutive securities were excluded from the computation of diluted net loss per share for the periods presented because the impact of including them would have been anti-dilutive (in thousands):


	As of April 30,
	2024	2023
Stock options	5,465	7,388
RSUs	5,886	6,983
Employee stock purchase rights under the ESPP	141	118
Common stock warrants	105	105

Total	11,597	14,594

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the sections titled “Special Note Regarding Forward-Looking Statements” and “Risk Factors” for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. The last day of our fiscal year is January 31. Our fiscal quarters end on April 30, July 31, October 31 and January 31. Our fiscal years ended January 31, 2023, 2024 and 2025 are referred to herein as fiscal 2023, fiscal 2024 and fiscal 2025, respectively.

Overview

Couchbase provides a leading cloud database platform for modern applications. Our mission is to simplify how developers and architects develop, deploy and consume modern applications that span cloud, edge and everything in between. Enterprises rely on Couchbase to cost-effectively power the core applications their businesses depend on with the highest performance, reliability, scalability and versatility requirements for which there is no tolerance for disruption or downtime. Any compromise of these requirements could cause these applications to fail—stopping or delaying package delivery for shipping companies, interrupting reservations for travel companies or causing product shortages in stores for retailers.

Our database is versatile and works in multiple configurations, from fully-managed cloud to multi- or hybrid-cloud, to on-premises environments, and beyond the edge. We have architected our database to fuse the trusted strengths of relational databases with the flexibility, performance and scale of many NoSQL systems, across the cloud. Our database platform serves the needs of both enterprise architects and application developers. Combined with our performance at scale, we believe this power enables customers to run their most important applications with the effectiveness they require, with the efficiency they desire and in the modern infrastructure environments they demand.

With nearly every aspect of our lives being transformed by digital innovation, enterprises are charged with building applications that enable delightful and meaningful customer experiences. Enterprises are increasingly reliant on applications, which in turn rely on databases to store, retrieve and operationalize data into action. Today, applications are operating at a scale, speed and dynamism unheard of just a decade ago. There is an increasing diversity of application types, modalities and delivery and consumption models, and the volume, velocity and variety of data on which they rely is growing at an exponential rate. Looking forward, there is potential for AI to drastically transform business and the nature of modern applications as a whole. Consequently, the demand on enterprises and their databases is growing exponentially.

While legacy database technologies were built to the highest performance and reliability requirements of their generation, they are approaching the limits for which they were designed. The underlying architecture of these technologies has not changed significantly, while the requirements of the applications they need to support are changing dramatically, especially with the emergence of generative AI which relies heavily on real-time data. Legacy database technologies are buckling under the pressure of digital transformation, as they were not built to update and respond in microseconds, enable rich, customized user experiences and perform without latency.

We designed Couchbase to give enterprises a database for the modern cloud world. Our platform combines the best capabilities of a relational database, like SQL transactions and ACID guarantees, with the flexibility and scalability of a NoSQL database. This allows enterprises to confidently accelerate strategic initiatives such as more quickly moving business-critical applications into the cloud, improving application flexibility and increasing developer agility. For our customers, we facilitate a seamless transition from legacy relational databases to our modern cloud database platform resulting in better application scalability, user experience and security at the pace that works for them. We believe our unique architecture is also well-suited to power AI applications which require exceptionally high performance and scalability. We deliver this cloud database platform both as a customer-managed product and as a fully-managed DBaaS that is managed by Couchbase. Our DBaaS, called Couchbase Capella, supports a broad set of use cases, reducing a customer’s need to buy, deploy and manage additional databases or supporting technologies.

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We sell our platform through our direct sales force and our ecosystem of partners. Our platform is broadly accessible to a wide range of enterprises, as well as governments and organizations. We have customers in a range of industries, including retail and e-commerce, travel and hospitality, financial services and insurance, software and technology, gaming, media and entertainment and industrials. We focus our selling efforts on the largest global enterprises with the most complex data requirements, and we have cloud-based, fully managed offerings for enterprises looking for a turnkey version of our platform.

We have achieved significant growth over our operating history. For the three months ended April 30, 2024 and 2023, our revenue was $51.3 million and $41.0 million, respectively, representing period-over-period growth rate of 25%. As of April 30, 2024 and 2023, our annual recurring revenue (“ARR”) was $207.7 million and $172.2 million, respectively, representing period-over-period growth of 21%. For the three months ended April 30, 2024 and 2023, our net loss was $21.0 million and $21.9 million, respectively, as we continued to invest in the growth of our business to capture the massive opportunity that we believe is available to us.

Our Business Model

We generate the substantial majority of our revenue from sales of subscriptions, which accounted for 96% and 94% of our total revenue for the three months ended April 30, 2024 and 2023, respectively. We derive a substantial majority of our subscription revenue from the Enterprise Edition of Couchbase Server and Couchbase Mobile. Couchbase Server is generally licensed per node, which we define as an instance of Couchbase running on a server. Our subscription pricing is based on the computing power and memory per instance, as well as the chosen service level. We offer three different support levels: the Platinum level offers 24/7 support and the shortest response time of 30 minutes; the Gold level offers 24/7 support with a response time of 2 hours; and the Silver level offers 7am-5pm local time support, 5 days a week. These response times are for incidents of the highest severity level, which we identify as level P1. The initial response time for levels P2 and P3 incidents, which are less severe, are longer.

We also derive subscription revenue from our DBaaS offering. Our DBaaS offering, called Couchbase Capella, is sold on a consumption basis, which removes the need to license different node types separately. Couchbase Capella pricing delivers superior customer flexibility relative to other Cloud Service Providers (“CSPs”) as on-demand pricing allows customers to pay only for what they use based on hourly pricing and the credits purchased through our annual credit model expire only at the end of a 12-month period, rather than ratably throughout the year. We also provide automatic conversion to on-demand consumption when annual credits expire or are exhausted. Couchbase Capella credits can be purchased upfront to provide cost savings with volume discounts available based on credit quantity. We offer three pricing levels for Couchbase Capella, based on the support response time.

The non-cancelable term of our subscription arrangements typically ranges from one to three years but may be longer or shorter in limited circumstances and is typically billed annually in advance. The timing and billing of large, multi-year contracts can create variability in revenue and deferred revenue between periods.

We also generate revenue from services, which represented 4% and 6% of our total revenue for the three months ended April 30, 2024 and 2023, respectively. Our services revenue is derived from our professional services related to the implementation or configuration of our platform and training. We have invested in building our services organization because we believe it plays an important role in customer success, ensuring that our customers fulfill their digital transformation agendas while leveraging our platform, accelerating our customers’ realization of the full benefits of our platform and driving increased adoption of our platform.

Our go-to-market strategy is focused on organizations that are modernizing existing applications or building net new applications. As an example, for large enterprises recognized as leaders in their respective industries, this could mean attempting to solve complicated business problems by digitally transforming their operations. For mid-size companies to start ups, this could be building a new product or service that seeks to disrupt an established market. As a result, Couchbase powers a wide variety of applications across a broad array of industries, from some of the largest and most complex enterprise applications worldwide to the next generation of personalized dynamic apps. Through our highly instrumented “sell-to” go-to-market motion, we have built a direct sales organization that understands the strategic needs of enterprises as well as a marketing organization that emphasizes our enablement of digital transformation through our no-compromises approach to performance, resiliency, scalability, agility and total cost of ownership (“TCO”) savings.

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We complement our “sell-to” go-to-market motion with a “buy-from” go-to-market motion, which is focused on targeting the application developer community to drive adoption of our platform. To accomplish this, we have and plan to continue to invest in Couchbase Capella. We also offer free Community Editions of some of our products, free trials of our Enterprise Edition of Couchbase Server and Couchbase Capella products and a web browser-based demonstration version of Couchbase Server to further accelerate application developer adoption. We believe these offerings lead to future purchases of our paid products. While our Community Edition includes the core functionality of Couchbase Server, it is not suited for mission-critical deployments, as it offers only limited functionality around the scaled performance and security that enterprises require and no direct customer support from Couchbase.

We also continuously grow and cultivate our cloud provider partner and technology provider ecosystem. A significant portion of our revenue in the three months ended April 30, 2024 and 2023 was attributable to our partner ecosystem.

We employ a land-and-expand model centered around our platform offerings, which have a rapid time to production and time to value for our customers, and our sales and customer success organizations, which proactively guide customers to realize strategic and transformative use cases and drive greater adoption of our platform and services. Our marketing organization is focused on building our brand reputation and awareness. Our marketing initiatives drive awareness and demand for Couchbase products, starting at the top of the sales funnel with trial experiences. As part of these efforts, we offer application developers robust educational resources including a robust and growing community to help them learn more about our platform, including access to on-demand instructional webinars.

Impact of Macroeconomic Conditions

Current macroeconomic conditions, including recessionary fears, inflation concerns, and increased interest rates as a result of government actions to combat inflation, as well as other geopolitical developments, have impacted and may continue to impact business spending and the economy as a whole. We continue to see deal cycles that are consistent with previous quarters, along with an elevation in degree of budget scrutiny, slower than expected product migrations, lower than expected expansions, and customers electing to buy in smaller increments. Additionally, effects from foreign exchange fluctuations have impacted and may continue to impact our results of operations.

The effects of these macroeconomic conditions on our business and operations remains highly uncertain, and it is not possible for us to predict the duration and extent to which they will affect our business, future results of operations, and financial condition. See the section titled “Risk Factors” for further discussion of these challenges and risks.

Factors Affecting Our Performance

Continuing to Acquire New Customers

We grow our subscription revenue by acquiring new customers. The size of our customer base may vary from period to period for several reasons, including the length of our sales cycle, the effectiveness of our sales and marketing efforts, enterprise application development cycles and the corresponding adoption rates of modern applications that require database solutions like ours. Additionally, our revenue has and will vary as new customers purchase our products due to the fact that we recognize a portion of such subscription revenue upfront. As digital transformation continues to accelerate, we believe that Couchbase Capella will become increasingly popular as a result of its compelling pricing model, ease of operation, lower TCO, time to market and flexibility. We will continue to offer Couchbase Capella and provide flexible, highly available and differentiated economical options to capture new customers.

Continuing to Expand Within Existing Customers

A significant part of our growth has been, and we expect will continue to be, driven by expansion within our existing customer base. Growth of our revenue from our existing customers results from increases in the scale of their deployment for existing use cases, or when customers utilize our platform to address new use cases. In addition, our professional services organization helps customers deploy new use cases and optimize their existing implementations. Our revenue from our subscription offerings varies depending on the scale and performance requirements of our customers’ deployments. We are focusing on growing our subscription revenue, particularly from enterprises, while delivering professional services and training to support this growth. We have been successful in expanding our existing customers’ adoption of our platform as demonstrated by our dollar-based net retention rate of over 115% in the past eight quarters.

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Our dollar-based net retention rate for any period equals the simple arithmetic average of our quarterly dollar-based net retention rate for the four quarters ending with the most recent fiscal quarter. To calculate our dollar-based net retention rate for a given quarter, we start with the ARR (“Base ARR”) attributable to our customers (“Base Customers”) as of the end of the same quarter of the prior fiscal year. We then determine the ARR attributable to the Base Customers as of the end of the most recent quarter and divide that amount by the Base ARR.

Continuing to Invest in Growth

We expect to continue to invest in our offerings, personnel, geographic presence and infrastructure in order to drive future growth, as well as to pursue adjacent opportunities. We expend research and development resources to drive innovation in our proprietary software to constantly improve the functionality and performance of our platform and to increase the deployment models available to our customers. We anticipate continuing to increase our headcount to ensure that our product development organization drives improvements in our product offerings, our sales and marketing organization can maximize opportunities for growing our business and revenue and our general and administrative organization efficiently supports the growth of our business as well as our effective operation as a public company.

Key Business Metrics

Annual Recurring Revenue

We define ARR as of a given date as the annualized recurring revenue that we would contractually receive from our customers in the month ending 12 months following such date. Based on historical experience with customers, we assume all contracts will be renewed at the same levels unless we receive notification of non-renewal and are no longer in negotiations prior to the measurement date. For Capella products, ARR in a customer's initial year is calculated as the greater of: (i) initial year contract revenue as described above or (ii) annualized prior 90 days of actual consumption; and ARR for subsequent years is calculated with method (ii). ARR excludes services revenue.

Prior to fiscal 2025, ARR excluded on-demand revenue and, for Capella products in a customer's initial year, ARR was calculated solely on the basis of initial year contract revenue. The reason for these changes is to better reflect ARR where usage rates or timing of purchases may be uneven and to better align with how ARR is used to measure the performance of the business. ARR for prior periods has not been adjusted to reflect this change as it is not material to any period previously presented.

ARR should be viewed independently of revenue, and does not represent our revenue under GAAP on an annualized basis, as it is an operating metric that can be impacted by contract start and end dates and renewal dates. ARR is not intended to be a replacement for forecasts of revenue. Although we seek to increase ARR as part of our strategy of targeting large enterprise customers, this metric may fluctuate from period to period based on our ability to acquire new customers, expand within our existing customers and consumption dynamics. We believe that ARR is an important indicator of the growth and performance of our business.

As of April 30, 2024, ARR for Couchbase Capella products was approximately $23.9 million.


	As of April 30,
	2024		2023

	(in millions)
ARR	$	207.7	$	172.2

Customers

We calculate our total number of customers, which also includes customers of Couchbase Capella, at the end of each period. Each customer account that has an active subscription contract with us or with which we are negotiating a renewal contract at the end of a given period is included in the calculation of total customer count, and the Couchbase Capella customer count includes customers who have a subscription of Couchbase Capella. Beginning in fiscal 2025, customers who used our products through an on-demand arrangement are included in the calculation of total customer count. The reason for this change is to align with our revised ARR methodology. As of April 30, 2024, we had 236 Couchbase Capella customers. Each party with which we enter into a subscription contract is considered a unique customer and, in some cases, a single organization may be counted as more than one customer. Our customer count is subject to

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adjustments for acquisitions, consolidations, spin-offs and other market activity. We believe that our number of customers is an important indicator of the growth of our business and future revenue trends.


	As of April 30,
	2024	2023
Customers	807	679

Non-GAAP Financial Measures

In addition to our financial information presented in accordance with GAAP, we believe certain non-GAAP financial measures are useful to investors in evaluating our operating performance. We use certain non-GAAP financial measures, collectively, to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, may be helpful to investors because they provide consistency and comparability with past financial performance and meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, results of operations or outlook. Non-GAAP financial measures are presented for supplemental informational purposes only, have limitations as analytical tools and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP and may be different from similarly-titled non-GAAP financial measures used by other companies. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.

We define the non-GAAP financial measures below as their respective GAAP measures, excluding expenses related to stock-based compensation expense, employer payroll taxes on employee stock transactions, restructuring charges and impairment of capitalized internal-use software. We use these non-GAAP financial measures in conjunction with GAAP measures to assess our performance, including in the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance.

Beginning with the fourth quarter of fiscal 2024, we have excluded the impairment of capitalized internal-use software, a non-cash operating expense, from our non-GAAP results as it is not reflective of ongoing operating results. This impairment charge relates to certain previously capitalized internal-use software that we determined would no longer be placed into service. Prior period non-GAAP financial measures have not been adjusted to reflect this change as we did not incur impairment of capitalized internal-use software in any prior period presented.

Non-GAAP Gross Profit and Non-GAAP Gross Margin

We define non-GAAP gross profit and non-GAAP gross margin as gross profit and gross margin, respectively, excluding stock-based compensation expense and employer taxes on employee stock transactions. We use non-GAAP gross profit and non-GAAP gross margin in conjunction with GAAP financial measures to assess our performance, including in the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance.


	Three Months Ended April 30,
	2024		2023

	(dollars in thousands)
Total revenue	$	51,327	$	40,996
Gross profit	$	45,645	$	35,074
Add: Stock-based compensation expense	407		338
Add: Employer taxes on employee stock transactions	70		10
Non-GAAP gross profit	$	46,122	$	35,422
Gross margin	88.9%		85.6%
Non-GAAP gross margin	89.9%		86.4%

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Non-GAAP Operating Loss and Non-GAAP Operating Margin

We define non-GAAP operating loss and non-GAAP operating margin as loss from operations and operating margin, respectively, excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, restructuring charges and impairment of capitalized internal-use software . We use non-GAAP operating loss and non-GAAP operating margin in conjunction with GAAP measures to assess our performance, including in the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance.


	Three Months Ended April 30,
	2024			2023

	(dollars in thousands)
Total revenue	$	51,327		$	40,996
Loss from operations	$	(22,540)		$	(22,533)
Add: Stock-based compensation expense	14,627			9,275
Add: Employer taxes on employee stock transactions	1,216			267
Add: Restructuring(1)	—			46
Non-GAAP operating loss	$	(6,697)		$	(12,945)
Operating margin	(44)		%	(55)		%
Non-GAAP operating margin	(13)		%	(32)		%

______________

(1) For the three months ended April 30, 2023, an immaterial amount of stock-based compensation expense related to restructuring charges was included in the restructuring expense line.

Non-GAAP Net Loss and Non-GAAP Net Loss Per Share

We define non-GAAP net loss attributable to common stockholders as net loss attributable to common stockholders, excluding stock-based compensation expense, employer payroll taxes on employee stock transactions and restructuring charges. We use non-GAAP net loss attributable to common stockholders and non-GAAP net loss per share attributable to common stockholders in conjunction with GAAP measures to assess our performance, including in the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance.


	Three Months Ended April 30,
	2024		2023

	(in thousands, except per share data)
Net loss	$	(20,995)	$	(21,875)
Add: Stock-based compensation expense	14,627		9,275
Add: Employer taxes on employee stock transactions	1,216		267
Add: Restructuring(1)	—		46
Non-GAAP net loss	$	(5,152)	$	(12,287)
GAAP net loss per share	$	(0.42)	$	(0.48)
Non-GAAP net loss per share	$	(0.10)	$	(0.27)
Weighted average shares outstanding, basic and diluted	49,788		45,843

______________

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(1) For the three months ended April 30, 2023, an immaterial amount of stock-based compensation expense related to restructuring charges was included in the restructuring expense line.

Free Cash Flow

We define free cash flow as cash used in operating activities less additions to property and equipment, which includes capitalized internal-use software costs. We believe free cash flow is a useful indicator of liquidity that provides our management, board of directors and investors with information about our future ability to generate or use cash to enhance the strength of our balance sheet and further invest in our business and pursue potential strategic initiatives.


	Three Months Ended April 30,
	2024		2023

	( in thousands)
Net cash provided by (used in) operating activities	$	1,559	$	(7,181)
Less: Additions to property and equipment	(995)		(1,288)
Free cash flow	$	564	$	(8,469)
Net cash provided by (used in) investing activities	$	3,695	$	10,314
Net cash provided by financing activities	$	5,089	$	2,764

Components of Results of Operations

Revenue

We derive revenue from sales of subscriptions and services. Our subscription revenue is primarily derived from: (1) term-based software licenses sold in conjunction with post-contract support (“PCS” or “Support”) and (2) a consumption-based DBaaS offering. PCS bundled with software licenses includes internet, email and phone support, bug fixes and the right to receive unspecified software updates and upgrades released when and if available during the subscription term. The software license is presented as “License.” PCS and DBaaS revenue are presented as “Support and other” in our condensed consolidated statements of operations. License revenue is recognized upon transfer when our customer has received access to our software. The PCS is recognized ratably over the term of the arrangement beginning on the date when access to the subscription is made available to the customer and represents a substantial majority of our revenue. The DBaaS revenue is recognized on a consumption basis. The non-cancelable term of our subscription arrangements typically ranges from one to three years but may be longer or shorter in limited circumstances.

Our services revenue is derived from our professional services for the implementation or configuration of our platform and training. Services revenue is recognized over time based on input measures for professional services and upon delivery for training.

We expect our revenue may vary from period to period based on, among other things, the timing and size of new subscriptions, the proportion of term license contracts that commence within the period, the rate of customer renewals and expansions, the length of sales cycles and timing, delivery of professional services and training and fluctuations in customer consumption of our DBaaS offering.

Cost of Revenue

Cost of subscription revenue primarily consists of personnel-related costs associated with our customer support organization, including salaries, bonuses, benefits and stock-based compensation, expenses associated with software and subscription services dedicated for use by our customer support organization, third-party cloud infrastructure expenses, amortization of costs associated with capitalized internal-use software related to our DBaaS offering and allocated overhead. There is no cost of revenue associated with our license revenue. We expect our cost of subscription revenue to increase in absolute dollars as our subscription revenue increases and as we continue to amortize capitalized internal-use software costs related to our DBaaS offering.

Cost of services revenue primarily consists of personnel-related costs associated with our professional services and training organization, including salaries, bonuses, benefits and stock-based compensation, costs of contracted third-party partners for professional services, expenses associated with software and subscription services dedicated for use by our professional services and training organization, travel-related expenses and allocated overhead. We expect our cost of services revenue to fluctuate from period to period depending on the timing and delivery of professional services and training.

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Gross Profit and Gross Margin

Our gross profit and gross margin have been and will continue to be affected by various factors, including the average sales price of our subscriptions and services, the mix of subscriptions and services we sell and the associated revenue, the mix of geographies into which we sell and transaction volume growth. We expect our gross profit and gross margin to fluctuate in the near term depending on the interplay of these factors, and to the extent the revenue from our DBaaS offering increases as a percentage of total revenue, we expect our gross margin will decline over time.

Operating Expenses

Our operating expenses consist of research and development, sales and marketing, general and administrative and restructuring expenses. Personnel-related costs are the most significant component of operating expenses and consist of salaries, bonuses, benefits, sales commissions and stock-based compensation expenses.

Research and Development

Research and development expenses consist primarily of personnel-related costs, expenses associated with software and subscription services dedicated for use by our research and development organization, depreciation and amortization of property and equipment and allocated overhead. We expect that our research and development expenses will increase in absolute dollars as we continue to invest in the features and functionalities of our platform. We expect research and development expenses to fluctuate as a percentage of revenue in the near term, but to decrease as a percentage of revenue over the long term as we achieve greater scale in our business.

Sales and Marketing

Sales and marketing expenses consist primarily of personnel-related costs, expenses associated with software and subscription services dedicated for use by our sales and marketing organization, costs of general marketing and promotional activities, amortization of deferred commissions, fees for professional services related to sales and marketing, travel-related expenses and allocated overhead. We expect that our sales and marketing expenses will increase in absolute dollars as we continue to expand our sales and marketing efforts to attract new customers and deepen our engagement with existing customers. We expect sales and marketing expenses to fluctuate as a percentage of revenue in the near term as we continue to invest in growing the reach of our platform through our sales and marketing efforts, but to decrease as a percentage of revenue over the long term as we achieve greater scale in our business.

General and Administrative

General and administrative expenses consist primarily of personnel-related costs associated with our finance, legal, human resources and other administrative personnel. In addition, general and administrative expenses include non-personnel costs, such as fees for professional services such as external legal, accounting and other professional services, expenses associated with software and subscription services dedicated for use by our general and administrative organization, certain taxes other than income taxes and allocated overhead. We expect that our general and administrative expenses will increase in absolute dollars as we continue to invest in the growth of our business and operate as a publicly-traded company. We expect general and administrative expenses to fluctuate as a percentage of revenue in the near term, but to decrease as a percentage of revenue over the long term as we achieve greater scale in our business.

Restructuring

Restructuring expenses primarily consist of efforts we have undertaken to improve operational efficiency. Restructuring activities include employee severance and related costs and stock-based compensation expense from modifications of vested awards granted to certain employees impacted by our restructuring plan, which was completed during fiscal year 2024.

Interest Expense

Interest expense consists primarily of unused Credit Facility fees for the three months ended April 30, 2023.

Other Income (Expense), Net

Other income (expense), net consists primarily of foreign currency gains and losses related to the impact of transactions denominated in a foreign currency and interest income.

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Provision (benefit) for Income Taxes

Provision for income taxes consists primarily of income taxes in certain foreign jurisdictions in which we conduct business. We recorded a full valuation allowance against our U.S. deferred tax assets as we have determined that it is not more likely than not that the deferred tax assets will be realized. The cash tax expenses are impacted by each jurisdiction’s individual tax rates, laws on the timing of recognition of income and deductions and availability of NOLs and tax credits. Our effective tax rate could be adversely affected to the extent earnings are lower than anticipated in countries that have lower statutory rates and higher than anticipated in countries that have higher statutory rates.

Results of Operations

The following table sets forth our condensed consolidated statements of operations for the periods indicated (in thousands):


	Three Months Ended April 30,
	2024		2023
Revenue:
License	$	6,859	$	4,943
Support and other	42,179		33,599
Total subscription revenue	49,038		38,542
Services	2,289		2,454
Total revenue	51,327		40,996
Cost of revenue:
Subscription(1)	3,957		3,673
Services(1)	1,725		2,249
Total cost of revenue	5,682		5,922
Gross profit	45,645		35,074
Operating expenses:
Research and development(1)	17,847		15,383
Sales and marketing(1)	37,755		32,553
General and administrative(1)	12,583		9,625
Restructuring(1)	—		46
Total operating expenses	68,185		57,607
Loss from operations	(22,540)		(22,533)
Interest expense	—		(25)
Other income, net	1,531		1,433
Loss before income taxes	(21,009)		(21,125)
Provision (benefit) for income taxes	(14)		750
Net loss	$	(20,995)	$	(21,875)

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(1)Includes stock-based compensation expense as follows:


	Three Months Ended April 30,
	2024		2023

	(in thousands)
Cost of revenue—subscription	$	266	$	193
Cost of revenue—services	141		145
Research and development	3,993		2,768
Sales and marketing	5,223		3,241
General and administrative	5,004		2,928
Restructuring	—		1
Total stock-based compensation expense	$	14,627	$	9,276

The following table sets forth our condensed consolidated statements of operations data expressed as a percentage of revenue:


	Three Months Ended April 30,
	2024		2023
Revenue:
License	13	%	12	%
Support and other	82		82
Total subscription revenue	96		94
Services	4		6
Total revenue	100		100
Cost of revenue:
Subscription	8		9
Services	3		5
Total cost of revenue	11		14
Gross profit	89		86
Operating expenses:
Research and development	35		38
Sales and marketing	74		79
General and administrative	25		23
Restructuring	—		*
Total operating expenses	133		141
Loss from operations	(44)		(55)
Interest expense	—		*
Other income, net	3		3
Loss before income taxes	(41)		(52)
Provision (benefit) for income taxes	*		2
Net loss	(41)	%	(53)	%

* Represents less than 1%

Note: Certain figures may not sum due to rounding.

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Comparison of Three Months Ended April 30, 2024 and 2023

Revenue


	Three Months Ended April 30,
	2024		2023		$ Change		% Change

	(dollars in thousands)
Revenue
License	$	6,859	$	4,943	$	1,916	39	%
Support and other	42,179		33,599		8,580		26	%
Total subscription revenue	49,038		38,542		10,496		27	%
Services	2,289		2,454		(165)		(7)	%
Total revenue	$	51,327	$	40,996	$	10,331	25	%

Subscription revenue increased by $10.5 million, or 27%, during the three months ended April 30, 2024 compared to the three months ended April 30, 2023. The increase in subscription revenue was primarily driven by growth in revenues from existing customers. Approximately 99% of the increase in revenue was attributable to growth from existing customers. The remaining increase was attributable to new customers as we increased our customer base from 679 customers as of April 30, 2023 to 807 customers as of April 30, 2024.

Services revenue decreased by $0.2 million, or 7%, during the three months ended April 30, 2024 compared to the three months ended April 30, 2023 primarily due to a decrease in delivery of professional service hours.

Cost of Revenue, Gross Profit and Gross Margin


	Three Months Ended April 30,
	2024			2023			$ Change		% Change

	(dollars in thousands)
Cost of revenue:
Subscription	$	3,957		$	3,673		$	284	8	%
Services	1,725			2,249			(524)		(23)	%
Total cost of revenue	$	5,682		$	5,922		$	(240)	(4)	%
Gross profit	$	45,645		$	35,074
Gross margin	88.9		%	85.6		%
Headcount (at period end)	63			67

Cost of subscription revenue increased by $0.3 million, or 8%, during the three months ended April 30, 2024 compared to the three months ended April 30, 2023. This change was primarily due to an increase of $0.6 million related to the computing infrastructure costs associated with Couchbase Capella, partially offset by a $0.4 million decrease in the amortization of capitalized internal-use software due to certain costs that were fully amortized in the prior fiscal year.

Cost of services revenue decreased by $0.5 million, or 23%, during the three months ended April 30, 2024 compared to the three months ended April 30, 2023. This was primarily due to a decrease of $0.4 million in personnel-related costs due to lower headcount.

Gross margin increased during the three months ended April 30, 2024 compared to the three months ended April 30, 2023 primarily due to changes in the mix of subscription and service revenue.

Table of Contents

Research and Development


	Three Months Ended April 30,
	2024		2023		$ Change	% Change

	(dollars in thousands)
Research and development	$	17,847	$	15,383