What Happened?

Shares of database as a service company Couchbase (NASDAQ: BASE) fell 23% in the morning session after the company reported weak third-quarter results and provided revenue guidance for the next quarter, which missed significantly - this matters much more as markets are forward-looking. The company provided conservative guidance due to macroeconomic challenges, limiting insights into upsell, migration timelines, and consumption trends. On the other hand, revenue and earnings came in ahead of expectations during the quarter. Overall, this was a challenging quarter.

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What The Market Is Telling Us

Couchbase’s shares are quite volatile and have had 17 moves greater than 5% over the last year. But moves this big are rare even for Couchbase and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 9 months ago when the stock gained 17.9% on the news that the company reported strong fourth-quarter results that blew past analysts' total revenue, ARR (annual recurring revenue), and EPS estimates this quarter as it generated more subscription revenue than expected. Next quarter's revenue guidance was also higher than Wall Street's estimates, though its full-year outlook was in line. 

Overall, this was a really good quarter that should please shareholders, especially with the broader software sector showing choppy full-year 2024 guidance.

Couchbase is down 21.8% since the beginning of the year, and at $16.52 per share, it is trading 43.5% below its 52-week high of $29.26 from March 2024. Investors who bought $1,000 worth of Couchbase’s shares at the IPO in July 2021 would now be looking at an investment worth $543.42.

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