Revenue and Growth
- Q3 2025 revenue: $51.6 million, up 13% year over year (YoY). Sequential revenue change: flat QoQ.
- ARR: $220.3 million, up 17% YoY; sequentially up 3% and above midpoint of guidance.
- Capella ARR: $33.2 million, representing 15.1% of total ARR, up from 13.5% last quarter; Capella ARR grew 15% sequentially.
- Customers and land-and-expand: 903 customers (+34 QoQ); Capella customers +27 QoQ; new logos: 34 in Q3 (vs 24 in Q3 2024).
- ARP per customer: $244,000, down modestly from $246,000 last quarter and down from $264,000 in Q3 2024.
Profitability and Margins
- Gross margin: 88.2% in Q3, down from 89.5% a year ago and 88.3% in the prior quarter, reflecting higher Capella mix with inherently lower margins.
- Non-GAAP operating loss: ($3.5) million, with an operating margin of about (7.0%). This is 3.1 percentage points above the implied midpoint of guidance, reflecting ongoing investments in Capella and AI capabilities.
- Net income: ($2.4) million; diluted EPS: ($0.05).
- EBITDA: ($16.7) million (EBITDA margin: approximately (32.3)%).
Liquidity, Cash Flow and Balance Sheet
- Cash and equivalents + short-term investments: $141.9 million.
- Remaining Performance Obligations (RPO): $211.3 million, up 29% YoY; ~61% ($128.7 million) expected to be recognized as revenue in the next 12 months (YoY growth ~15%).
- Operating cash flow: ($16.9) million; free cash flow: ($17.5) million; free cash flow margin: (33.9%).
- Total assets: $222.5 million; total liabilities: $95.7 million; total stockholders’ equity: $126.8 million.
- Net cash position: net debt of ($27.2) million (i.e., net cash position is negative; the company carries net debt of this magnitude after considering cash and investments).
Guidance and Outlook
- Q4 2025 guidance: Revenue $52.7–$53.5 million (+6% YoY at midpoint); ARR $236.5–$239.5 million (+17% YoY at midpoint); non-GAAP operating loss ($4.7) to ($5.7) million.
- Full-year 2025 guidance: Revenue $207.2–$208.0 million (+~15% YoY); non-GAAP operating loss ($19) to ($20) million.
- Management commentary emphasizes a large pipeline of strategic opportunities and increasing Capella momentum, but notes macro headwinds and variability in renewal timing and migration timelines; there is an explicit expectation that Q4 will be the strongest revenue quarter due to pre-contracted ARR and renewal activity, with some potential upside in Q1 2026 from non-Q4 closings.
Operational Highlights and Other Notes
- Capella share of ARR is expanding, with Capella at 15.1% of total ARR and still only one-third of customers on Capella, suggesting substantial future mix shift opportunity.
- Capella migrations and large enterprise wins continue to accumulate, including a Fortune 500 hospitality company migration that is expected to triple Couchbase spend in Capella over time.
- Announced Capella AI Services, including model hosting, vectorization, unstructured data pre-processing, and AI agent catalog services, designed to accelerate AI-enabled application development within Capella and reduce latency and cost concerns for LLM deployments.