Couchbase, Inc. (BASE) Earnings Call Transcript & Summary

Good morning, everyone. Welcome. Thank you all for coming. And welcome to, everyone who's joining us today, on the webcast. I'm Edward Parker. I serve as Head of Investor Relations for Couchbase. Very excited to be with you all here today in New York for our first Analyst Day as a public company. If you will indulge me, I'd like to quickly go through the obligatory remarks. Today's discussion will contain forward-looking statements, which include statements concerning financial business, trends and strategies, market size, product capabilities and our expected future business and financial performance and financial condition, among other things, further shown on the disclaimer slide. Actual results may differ materially. These statements reflect our views as of today only, and we have no duty to update these statements. Forward-looking statements are subject to risks and uncertainties for a discussion of the risks and other important factors that could affect our actual results, please refer to the risks discussed in our most recent annual report on Form 10-K or quarterly report on Form 10-Q filed with the SEC. We will also discuss certain non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures as well as how we define these metrics and other metrics is included in the deck and will be available on our Investor Relations website. Okay. I first met Matt and Greg about 6 years ago during my former life as an analyst and now have had the privilege of working for them for over 3 years now. And so I've seen firsthand how the company has grown and evolved and all the hard work it's taken to get us to where we are today. So I am personally thrilled that today, that all of you will have an opportunity to get a deeper and hopefully richer appreciation of what we've built and where we are going. So we have an outstanding agenda for you today. Matt Cain, our Chair, President and CEO will kick us off, dive into why now is the time for Couchbase? We'll then hear from Gopi Duddi SVP of Engineering; and Scott Anderson, SVP of Product Management to talk our technology and our innovations; then Huw Owen, our Chief Revenue Officer, will talk about our go-to-market motion and everything we're doing to drive efficient growth. We'll have a quick break. Then John Kreisa, our CMO, will host a panel of some of our outstanding customers. And finally, Greg Henry, our CFO, will close us out and will discuss how this translates to the financials of the business. We will then have plenty of time for Q&A. So kindly request that you hold questions until then. And afterwards, I hope that you can all join us for lunch. Okay, let's go. With that, my pleasure to introduce Matt Cain, President and CEO of Couchbase.

Good morning. Right around 7 years ago that I got an email from an investor [indiscernible] the time I had been talking to about a lot of potential opportunities. This investor was the first investor at Couchbase and our lead investor time. He wrote an email that said, I want to talk to you about making the best company that [ Technical Difficulty ]. May be the best company you have never heard of. And I was talking about a lot of things, and it was like, wow, that's a very powerful introduction. Now in the meantime, I was in a little bit of a crossroads trying to figure out like what kind of company do I want to join. And I have friends given me advice and basically putting the fear of death into me and men do not take the wrong job, right? You pick the wrong thing, it could be career suicide. And so it's like excitement on one end and fear on the other. And so I said -- I thought to myself, well, I need to take this pretty carefully and really start to dig in. How could this be the best company I've never heard of. And so I started to get stuck in on anything I could get my hands on. research reports, white papers, technical architecture, stuff by academics, digging into what is the database? What is it going to mean on a go-forward basis? What is it that Couchbase has that other people don't as a starting point to take advantage of this big market. And after all that research, I came to the conclusion that I think that investor knew at the time, which was Couchbase had 3 magic ingredients. The first was a massive market that was poised for disruption. The second was core differentiated technology that could be extended and could be sustained. And the third was a group of people that were committed to build something truly special. Now I'm so glad I came to that conclusion because I stepped in to couch base, it's the best decision I've made. One of the values we have at our company is to make tomorrow better than today, starting now. And because of the hard work of so many people, those 3 things are more true now than they were 7 years ago. In fact, I might have used that very introduction with some of the speakers you're going to hear from today. And they've gone through their journey of evaluating the opportunity, the technology and the team. And so I thought it's only appropriate that I would take you through that perspective as I think about it today. Now when I think about opportunity, people often want to jump into the total addressable market, and that's certainly important. But as somebody who spent multiple decades in technology, I like to think about, well, what is it about the technology and how is it impacting the world? What unmet underserved need are we enabling for customers? I live in a small town called Los Gatos in Silicon Valley. And one of the great joys I have is driving one of my daughters to work, it's only -- to school. It's only about a 2-mile drive. And we leave our house and we go through a couple of medical facilities. We pass by mid part of town, there's about a bunch of banks and financial institutions, and we roll through this classic downtown that's filled with retail stores. And in one particular morning we're getting into, what does dad do every day at work? And so I have the challenge of explaining NoSQL distributed databases to my 13-year-old. And I started to say, well, Isabella, let's think about what we just drove through. You see those medical buildings over there? Do you realize that one day, me or you or one of the other family members could be in an operating room and the procedure that you're having is depending on a Couchbase database? It's analyzing what's happening with you in your body, it's helping the surgeon with the very things that they're trying to do, and that's powered by software and robotics that are enabled by a Couchbase database. How about those banks that we went by? When your mom and I help you open a new account and give you money to pay for whatever you need to pay for, all the fraud prevention and digital payments? There's a good chance that's running through Couchbase. Now at this point of my impassioned speech on the importance of database, as I'm losing her attention, she's on her phone, pulls up a game, and I said, Isabella, that game that you're playing right there, that too could be powered by Couchbase. The way you're interacting with your friends, the thing that's allowing you to move up the next level and progress as a gamer, that could be powered by Couchbase. And oh, by the way, I would be willing to bet you that you've already asked your mom that you want to go shopping downtown after school, all the experiences that you have when you walk in and you've already shopped online, but the person greets you, the associate with the mobile device and helps you work through the inventory, that's enabled by Couchbase. The very experience that you're having throughout your day is powered by the work that we do. We have the potential to change the world with our technology, and it's one of the core reasons that we're so excited about what we do. And I would be willing to bet that many of you have interfaced with an application powered by Couchbase many times today and will do so many more times before the day is over. When we think about these applications, we think about them as the gateway between the physical and the digital world. But the thing about applications is they are nothing without databases to power them. And so people get really excited about big total addressable markets. In fact, IDC suggests that by 2027, this is $136 billion total addressable market. Some people talk about this as the most exciting layer in the modern tech stack because of its sheer size and magnitude. What gets us excited, not only are we not opportunity constrained, but the disruptive nature of this is aligned to the very problem that we decided to solve. And if you look at the fastest-growing segments of this $136 billion TAM, the drivers include high performance and scalability for modern applications. Some of the fastest-growing segments, non-schematic data sets and cloud databases. Now I'd ask you the following question. In a world of AI, are we going to need more databases that power high-dense, mission-critical, data-driven applications, or less? And as suggested here, AI only further accelerates this total addressable market. Now one of the great things about Couchbase is we don't have to get too specific because this opportunity is so big. In fact, our biggest challenge is deciding which problem we want to solve. Now before I get into that, I want to hit on a few critical market drivers that we think about on a daily basis. It's one thing to build technology. It's another thing to do so in service of the customers you're supporting. First thing, cloud. This is no longer about strategy. This is about execution. We talk to customers on a daily basis, you're going to hear from several of them today. There's not a single one of them that isn't obsessing over their cloud strategy. Which applications need to be cloud native? What is my multi-cloud strategy? How do I support hybrid cloud? When we think about cloud, it's not just the thing in the sky. I've got to extend that to the edge. All of these things are central to every decision that companies are making as it pertains to their technology. While we all know the importance of applications and that we're living in a world of digital transformation, the number of people to build and modernize applications is far less than the demand to do so. And so companies have to think about their own developer productivity. And while we're focused on building new solutions, how do we repurpose a labor force that's out there that wants to build modern stuff with new tools? So you have to be mindful of developer productivity. Now at the same time, you can't just throw a new tool at every single problem. The technology ecosystem has never been more complex, and one could argue it continues to increase almost exponentially. So companies need to be mindful about the platforms that they make strategic decisions in and be able to do more with less, empower developers with more tools, empower the back-end teams to manage things more efficiently, ensure that cost-benefit analysis makes sense. And we sit here on probably the single biggest market transition that any of us will ever experience in our lives, and that is artificial intelligence. So how do I have a platform that solves all these needs, but future proofs and enables me in a world of AI? At Couchbase, our mission is to simplify how organizations develop, deploy and run modern applications wherever they are. And that includes at the edge. This is a pretty audacious mission, and we've been committed to it. And what have we done? We've taken a platform approach to solving these problems. We've built the cloud database platform for modern applications, which we define as mission-critical applications that our customers are running their businesses on. At the core is Couchbase enterprise, which is both our server and mobile product, a high-performance, highly scalable, multimodal database that brings to bear many, many services in an integrated architecture and platform. It can be deployed anywhere and is available in a subscription model. Now we've very carefully architected our managed offering that we all know as Capella. And we're going to spend a lot of time today on the benefits and the importance of Capella. But we were very intentional in ensuring that when you use Capella, you get the full power of Couchbase. All of those capabilities that we worked so hard and stayed so committed to, with the consumption model that reduces barriers to entry and makes it that much easier for customers to use. Now as we've navigated this, we have stayed committed to architectural differentiation. And there's things that make Couchbase unique. And I would argue that these unique attributes are never more relevant than they have been. And the product teams are going to spend time digging into this. But we think about incredible scale and performance. How do we do that? Because we have an in-memory shared nothing architecture amongst other things. Developers need a highly flexible data model. At Couchbase, we chose a schemaless data model. JSON that supports ingest data from multiple sources, structured data, unstructured data, proprietary, public. This world lives in a diverse, dynamic and distributed data model, and we have that as part of our core architecture. Now at the same time, managing all that complexity cannot come at the expense of developer efficiency. And so every decision that we've made is ensuring that developers will harness the full power of this platform, but do it in a way that's easy for them. In the very early days, we made a radical commitment to supporting the de facto language of databases called SQL, which stands for structured query language, and we figured out the computer science to map that to an unstructured database. These are the types of problems that we've solved because it's in service of the very customers we want to support. And we continue to add capabilities for developer productivity, like IQ, the copilot that we launched just recently inside of Capella. We believe that modern applications are going to exist in a cloud-to-edge architecture. And if I were to ask every one of you to imagine an application that you depend on that's going to be fundamentally better with AI, and I ask you, where do you think you're going to be accessing that application? I'd be willing to bet that most of you are doing that at the edge. And it's one thing to try to replicate data at the edge or push an application there. It's quite another to have a thought-through architected architecture inherently designed for cloud to edge with the data movement and distribution technologies that we've committed to from the beginning, and enabling that at scale and performance levels that meet the demands and the SLAs of the applications we're going to depend on. And because of our underlying architecture and things like separation of resources, we're able to have the highest scale in performance but with the best TCO. And so we often talk about architectural differentiation and everything starts with our technology, but these things are never more relevant than they have been today. And so when I talked about that e-mail, those 3 things: huge opportunity, differentiated technology and did we have the people to build something special. Well, we're very proud of what we've built up to this point. And these numbers reflect our results as of last week's third quarter announcement, $189 million ARR business. Very healthy growth rates. 115-plus net retention rate. Amazing renewal rates. A customer base that we are extremely proud of. A land-and-expand model that shows our product market fit with the most important applications and the most important enterprises. And future growth vectors like Capella, AI and leverage that we're going to get out of our investments. Now what's interesting, and I talked to many of you over the course of the last week you said that was a really great quarter, you all continue to execute. But something feels different. I'm sensing just a little bit more excitement in what I'm hearing from you all. And in fact, you picked up on something right. And what is that thing? It's that we believe that this is just the beginning. We're just getting started. And, so what we're here to talk about today is the following thing. We have worked so hard from the very beginning of our company to be maniacally focused on a foundation that we could build a generational company on. And our speakers today are going to take you through more detail on the underlying technology and why the differentiation is so unique and so important. We're going to follow that up with a discussion on how we've built a highly orchestrated go-to-market model. We've got some of our go-to-market leaders in the room, and they would all tell you that selling databases is hard. But to have the level of predictability we have comes because of our instrumented go-to-market model, which is going to benefit us as we go forward. We are now at the point of inflection with Capella. And we want to talk a lot about that today. What is the offering unlocking for us, not just for our customers, but how does it make our jobs easier? How is it easier to build product? How is it easier to support our customers? Equally important, how does it make the job of selling and getting the value proposition of Capella into the hands of our developers and customers that much easier? And then we're going to talk about the leverage in our model that's coming as a result of this foundation and the inflection. And that leverage is product development, go-to-market and, more importantly, the financials. And what I think you're going to hear today is ongoing excitement about this generational market opportunity, our core differentiation, but the fact that now is the time for Couchbase and our future has never been brighter. And at some point, later today or tomorrow, when I'm talking to somebody to come join us, I will be talking about this massive market opportunity, differentiated technology and a core of committed people to build something truly special. And that's what we believe our future is. You're going to hear from the team, you're going to hear the enthusiasm, and we are really excited to share the details today. So to get us going, I'm very excited to announce our next speaker our Senior Vice President of Engineering, Gopi to take us through our technology foundation. Gopi.

Thank you, Matt. Good morning, ladies and gentlemen. It's great to be with you all today. As a quick intro, my name is Gopi Duddi, I'm the SVP for Engineering at Couchbase. I joined Couchbase about 2 years back. Prior to joining Couchbase, I was with AWS for a decade. And I had the good fortune of building some of their critical services like Redshift, Aurora and Globe. Today, Scott and I would be covering the themes for the product section. Scott will be going over the Capella and all things AI and what it means for our future leverage. And I will be going into our strong foundation and give you a glimpse into our architecture. Let's get started. In my opinion, the reason we need a database is to help developers like me to be able to build an app. When Matt called me to join Couchbase, the question I had was, why Couchbase? There are plenty of databases out there. Trust me, I'm no stranger to the database world. I've built 3 decades of databases for [indiscernible]. And coming from AWS, I had intimate knowledge of Dynamo as well as other NoSQL technologies. The way I rationalized my decision to join Couchbase was by putting myself in the mind space of a developer and looking at what couch base provides for me. As a developer, the single important thing for me is speed of development. Time is money. The next important thing for me is to make sure that I don't have schema limitations so that it doesn't stop me from making my progress. And third is that I need to be able to build it on my laptop, build and test it on on-prem system, then push it to the cloud for my production users. Let's assume these are my base requirements. Let's layer in some additional requirements I might have. The app needs to be able to run everywhere, including in the middle of the ocean. The app needs to be super responsive. And I need to leverage a platform that has built an analytics so that I can personalize my app for end-users as they wish in their own cohorts. And last but not the least, I need to be able to leverage the platform innovations that are happening so that I get to benefit out of that, so that my app becomes faster, better, cheaper over a period of time. So the way all this happens is by the architecture that we have. Primarily, the -- at a high level, the architecture of Couchbase can be broken down into 3 distinct layers. The top layer provides our users with multi-modal data access capabilities. This is built or powered by a foundational layer, which sits on top of a deployment layer, which seamlessly works between cloud and on-prem systems. The beauty of the architecture is that it can be shrunk to be run on cloud on mobile and edge devices as well, without sacrificing any performance or functionality, which is pretty cool. So as you are looking at this, at the architecture, the question I would ask myself is, why have a multi-modal data access layer? As a developer, I would like to get everything that I need from a single platform. I no longer need a Dynamo for key value store or an Elastic for full tech search. Couchbase comes with everything included. Why did we build our own foundational layer? One single reason, performance. For example, you get a 10x performance gain by using Magma storage as compared to everything -- every storage systems out there. So what did we see so far? I gave you a glimpse into the architecture. I'll also talk to you about why I would use Couchbase to build my app. Now what is that foundation principle that powers everything that we do at Couchbase? The first principle is we are a memory-first architecture which has shared nothing. Why is it important? Laws of physics. Writing to memory is 10x faster than writing to disk, even SSDs. Second, we have an amazing scale, which we get out of our [ XDCR ] proprietary technology. And we use it for applications between notes, is extremely simple. If you ask the customers, it will be extremely simple to scale Couchbase. You just add notes, nothing needs to be done by the developer. The system auto-scales by redistributing the workloads among the notes available. Third, we are a document database at our core. We are built for JSON and we do this really, really well. And finally, we have a unique architecture for mobile that allows us to work in environments that has no connectivity. As I said, in the middle of the ocean. That's a technology that makes it all work. In terms of competitive landscape, we can segment our competitors into 3 cohorts. The legacy RDBMS systems like Oracle and IBM. Listen, I've worked in some of these firms myself. They have a rigid architecture, which is kind of antiquated and no longer pertinent for modern app building. The second cohort is the purpose-built NoSQL technologies like Mongo and Redis. What we have heard from customers is the fact that these vendors have issues when performing at scale. Moreover, while they call them some databases, they lack basic functionalities like SQL to access that system. And finally, there is cloud-native vendors like Cosmos and Dynamo, which are purpose-built to solve one single problem. For example, Dynamo was extremely good at doing key value store. But if you want to bring in analytics, you need to bring in Redshift which adds to the overall complexity of the system and cost. And not to mention, you are getting into a vendor lock-in as well. With that, let me invite Scott to the stage.

Thanks, Gopi. My name is Scott Anderson, I'm the Senior Vice President of Product Management at Couchbase. I joined Couchbase about 6.5 years ago. And when I joined Couchbase, Matt gave me a charter. And the charter was to define our cloud strategy and then execute on that cloud strategy. And I'm incredibly proud of what we've been able to accomplish, specifically over the last couple of years since we launched Capella. When we launched Capella, it was available on a single cloud AWS. And over the last 2 years, we proliferated that to GCP as well as Azure. We've extended it from just our core server technology to include our mobile solution with app services. We've also extended the number of enterprise features that we've added, which are critically important for our existing installed base, to give them the features that they need so that they can easily migrate into Capella. What I'm going to speak about today, I'm going to talk about 2 different topics. One, which is how Capella benefits our customers. Second, how it benefits developers, how it benefits Couchbase and gives us additional leverage. And then I'm going to speak about how we're going to extend the capabilities of our overall platform to ensure we have the best platform for the next generation of developers who are building AI-powered applications. So earlier this year, I traveled around the world for a couple of weeks, and we had 6 customer advisory board, some of our most strategic customers and leading technology companies. And some of those customers are Capella customers, other of them are on-prem. And what they told me about the benefits of Capella is it brings the full capabilities of our platform, the performance that you would expect, the ability to do millions of operations per second with millisecond response time. So Capella provides that same performance that customers expect when they're running self-managed in the cloud or on-prem. The other thing that they told me is it makes it much easier for the developers not only to build the technology, but for new developers who may have been programming using a relational database, having SQL as part of that gets them up to speed and makes them -- enables them to become an expert in Couchbase much more easily. And finally, the industry-leading price performance that we have. Customers who are moving to Capella are saving money. They're able to reduce the operational burden and reallocate those resources to building the next generation of applications, which will drive future operational efficiency and increase revenue for each one of those customers. If we look at how it benefits developers, it really comes down to 3 things. How do we simplify access to our technology? How do we give a world-class experience to all of the developers? And finally and probably most importantly, how do we make them more productive? When we look at access, a developer can come into Capella, and just a few clicks in a minute, they can get a database endpoint with Couchbase in Capella. And then we give them a world-class experience. We're maniacally focused on ensuring the UI that we've built continues to be enhanced to meet the needs of developers. At the same time, it's not just about the UI. It's about documentation. It's about sample applications. It's about code that they can leverage to get started. And finally, we're building a robust developer community where developers can learn from each other, to give them the utmost experience to accelerate their adoption of Couchbase and, more importantly, their ability to build that next-generation application. Now finally, productivity. We announced IQ on August 31, which is our coding assistant powered by AI, with our partnership with OpenAI, and we leverage their large learning model there. What that allows a developer to do, and you can imagine you're early in your career or maybe you're an experienced Oracle developer, how do you learn Couchbase? With IQ, you can interact in natural language in Capella to do common tasks like create an index, create sample data, create a ton of sample data potentially, write a SQL query, and most importantly, be able to get code in the development language of their choice, so they can integrate that with their IDEs that are building their application. We've gotten tremendous feedback from the developers that we've exposed IQ to, and this is going to be a critical component of the Capella platform as we knew move forward. Every new service that we bring will be IQ powered and will extend the capability beyond just developers, but also to operational teams. It also unlocks a ton of leverage in our overall model. And it allows Gopi and the team to develop faster. And more importantly, get that code in those new improvements faster to the developers and into Capella. If you look at most software companies who are on the subscription model or shipping bits out, typically, they're releasing new features every year or 18 months. In Capella, our pipeline is so fast that we can code things and have that deployed in Capella in just days, which allows us to take an incredible amount of feedback from our customers and respond to it incredibly rapidly and get them those new capabilities rapidly, in Capella. It makes it much more easy for us to go ahead and support the product. We gather thousands of metrics every single second for every cluster that is deployed in Capella. And what does that allow us to do? It flips the support model on its head. We're no longer reactive to an issue that a customer brings to us. We're proactive because we understand the health of the system, and we can proactively remediate problems before they happen. And that gives a better customer experience and lowers our cost of support. Finally, feedback-driven support. Because we are monitoring all the interactions in Capella, we understand what features are being adopted. We understand where people are making rage clicks because they're unhappy or they're confused about the application. This allows us to improve our documentation, update our UI and constantly get feedback from our customers. We also use Capella to introduce new features before their GA, which allows us to limit the number of customers who are exposed to that new feature, that gives us valuable feedback to ensure that we have product market fit and we have all the features we need when we make that product or that feature generally available to the broader community of Couchbase users. So I'm going to pivot right now and talk a little bit about the future and our long-term product vision. We first invested in our core architecture 12 years ago and extended the multi-modal capabilities of the platform. Then over the last few years, we've delivered that as a service, making it much easier for our customers to adopt and removing administrative cost of the overall solution. Our road map is going to make us even more relevant and applicable for the next generation of AI-powered adaptive applications. So let me go through the architecture. I'm going to break this down into 4 sections. I'm going to at the top, adaptive applications. So we look at adaptive applications, what are the requirements for them? They must support transactions. They must be able to provide real-time complex analytical queries. They need to support generative and predictive AI. And we do that with the Capella platform. If you look on the left side of the screen, you'll see OLTP Couchbase Enterprise Server, our multi-modal capabilities with KV, query, SQL support, full tech search, as well as our eventing service and time series. On the right is the new service that we just announced at AWS Reinvent 2 weeks ago. And I'm incredibly excited about the response that we've gotten from customers. This new Columnar service is fully optimized both from a query perspective and from a storage perspective. It allows the customer to have a separate service. And why is that so important? Because I do not want complex analytical queries to impact my application or my OLTP database. The other thing that is critically important with this new service, as you can see, is the arrow going to the right from OLTP. So you can take data from not just one Couchbase cluster, but multiple clusters, and ingest that into Columnar in real time doing memory to memory replication. The data latency is in milliseconds. This is not about batch processing where data moves once a week, once a day or once an hour. It's moving at millisecond speed. The other thing, and probably the most important arrow on this chart is the arrow to the left. We are unique in the industry. We can take the results of those analytical queries and pump that back into our database. And what does that mean? I can serve those responses in millisecond response time or millisecond latency, and I can process millions of operations per second. Analytical systems are not designed to do that. They cannot handle a high concurrency of request. That's what our KV engine is built to go ahead and do. Now all of this is incredibly important for Couchbase, but we work in a much broader ecosystem. And day one with Columnar, we announced a number of integrations, the ability to move data from relational systems directly into our Columnar service. Other NoSQL providers data can be ingested directly from the UI and Capella into our Columnar service, and we have full access to S3, which is really the dominant object store. That allows a customer to be able to combine data from multiple data sources, Couchbase as well as third-party data, and both batch that data as well as stream that data, which is incredibly powerful. The other thing that I'll say is as we release Vector search as another access method within our platform, which will be happening next year, we're also going to be doing a number of integrations with the ML and AI operations platforms, primarily focused on the cloud providers technology. And we're really looking forward to an announcement next year where we'll go through what we're doing with Vector as well as a broad set of integrations that we'll be doing in the overall ML and AI ecosystem. And so what does that all mean for customers at the end of the day? It means they now have a simple platform where they can build their AI-powered applications, and be able to do that in an incredibly cost-effective way. So let's get specific about what are the requirements for AI-powered applications. They need a data format that is universal, and JSON is that data format. We can store both data and the corresponding metadata about that JSON document. It needs to have real-time analytics, which we just announced with our Columnar service. And that Columnar service needs to be separate and distinct, as I mentioned before, so you do not disrupt your production application in your database. You need to have a multi-model capability. You cannot be accessing data from multiple systems and streaming that data. It brings complexity and latency in the system. And finally, you need to be able to support the edge and device. As Matt said, that is where data is created and consumed. And our ability to persist data and eventually be able to persist models as they continue to shrink, and we've seen that in the open source community to run the inferencing at the edge on the device is going to be critically important to reduce latency, be able to perform test in a disconnected mode if required. So applications leveraging Couchbase will be hyper-personalized and context-aware. They'll include the ability to have user-facing analytics, which is critically important, not just bringing kind of simplified data but complex data into the application. And finally, to the business owner and the application owner, the ability to provide robust insights about how their application is being used. Before Huw comes up to discuss our go-to-market strategy, let's have a look at what's possible in the future. Can you guys go ahead and roll the video? [Presentation]

Good morning. My name is Huw Owen. I'm Chief Revenue Officer here at Couchbase. I'm delighted to share with you some insight into what we do from a go-to-market perspective, but also how we're driving efficient market velocity. If there's 3 things you can take away from what I'm about to talk about, it's, firstly, we've got a great, strong foundation. The enterprise product that Gopi talked about really has set us up for success. We have a great customer base that we'll talk about in a moment, and you're going to hear from some of our customers shortly. And it really demonstrates the durability that we've got in this database space. Secondly, we really have reached the inflection point with our Capella offering. The ease of adoption, the ability to grow fast will be demonstrated through this presentation, and it'll explain why we're so excited about our Capella offering. And then thirdly, we've got future leverage. We've got the ability to do this more efficiently, and the windows that have been opened up by us going into Capella has really helped us and will help us going forward to drive further efficiency. So everyone's talked about the call they got from Matt. Mine was about 5.5 years ago. Matt gave me a call, we'd worked together in a multibillion-dollar company in the past. And he encouraged me to go and speak to some customers, slightly different to what he asked Gopi to do. Obviously, I was going to talk to customers, Gopi went and spoke to technical people. The 3 things that took me back when I spoke to these customers before joining. Firstly, the use cases that we were helping them to deliver were extraordinary. And we were massively technically differentiated as the only NoSQL database that could satisfy the requirements of these customers. Secondly, the customer advocacy was unbelievable. We had a community of customers who are prepared to speak openly about what they do with us, and they would help us on our journey. And then the third thing, which was super important to me, is in all of these accounts, we had a huge opportunity to grow and to sell them more. And I'm delighted to say those 3 organizations have gone on to be -- continue to be customers and have spent and invested a lot more with us over the years. This slide, I could literally have put up 4 or 5 versions of this slide, and I could spend all day talking about what we do for these organizations. Hopefully, you've already acknowledged what's super exciting is we're relevant in every vertical. We have customers, we have advocates in every vertical that exists. If I was to talk about 3 stories off this slide, and again, if you reflect on the video that we've just watched, if you take Domino's as an example, their personalized marketing campaigns and e-commerce analytics are leveraging Couchbase. You heard FICO get mentioned there in the video. FICO's fraud detection platform, their credit monitoring and reporting application is powered by Couchbase. They selected us because of the sub-millisecond response times that Scott referred to in his presentation. No other NoSQL technology could have provided that to FICO, and that's why it's such an exciting use case for us. And then finally, SkyTV, an organization that I've been privileged to spend a lot of time with over the years, Sky, Europe's biggest largest media company the use case was how do they provide the content available when there's huge demand where there's tens of millions of subscribers trying to access that content. Again, they chose Couchbase because of the reduced sign-in time that we enable them to deliver to their customers. As I say, I could literally spend all day talking about this slide. And we're excited that when John hosts the customer panel a little later on, you're going to hear from 4 of our customers about how we work with them. So as I mentioned, myself and Matt worked together in the past in a very large multibillion-dollar company. I've had the privilege over the years, I know it may not look like it, I've been in the industry for 25 years, and I've worked for large companies and smaller startups. What I would say, with our enterprise go-to-market engine, we've been really set up for success. By the nature of what we sell, we sell globally, and we've got teams set up globally in all the main hubs that you would imagine to help us service both our prospects and our customers. We've set up our sales team and our field technical team to support our customers, and we've organized them in a logical way with our strategic largest accounts getting a strong coverage from us, both from a selling account management, customer success perspective. We've got appropriate resources aligned to the major accounts that we've got up set around the world to help us leverage and extend what we're already doing with them, but also acquiring new customers. And then finally, we've got a team of people, mostly telephone-based, some field resources, who are helping us take advantage of the new opportunity that's opened up with Capella to service the opportunity that exists in what we call our growth mid-market space. So it's a very logical setup. We work very closely with our marketing colleagues who've got a fully integrated marketing machine, driving awareness, education and really supporting prospects through that decision-making process in ultimately selecting Couchbase. And we're highly instrumented. We've got an operational function that ensures that marketing, field sales and our partner teams are working very efficiently, again, to take advantage of this large opportunity that we've got ahead of us and that we're in. So let's talk about enterprise and the way we've seen our customers grow with us. So how it would operate is we would land the first application, whether that be an existing use case that's been running on some legacy technology that they've decided to move over to Couchbase, or indeed, it's a new application. The way we've operated is we've landed, we've made our customers successful with that first application. Historically, we've seen that application grow, which ultimately results in more technology being required from Couchbase. That's given confidence for us and the customers to then look at adding additional applications that we sell to them. And we see the account grow, which you see with these bubbles. And then ultimately, what we're trying to get to, which we've got with a number of our customers, is that we become a strategic platform. We become the NoSQL technology of choice. And indeed, we've got many customers who use us for literally tens of applications that they deliver both internally and externally to their customers. So this is the enterprise model that has helped us get to where we are now. And when we talk about the foundation, this is the foundation that we have. I've already touched on our partner ecosystem, but let me talk about it in a little more depth. As you can imagine, and I'm sure you've heard from us before, we work with the 3 cloud service providers. You're going to hear from a colleague in a little while about what we've done with AWS and why we believe we've built a really successful partnership with them. But we've got the same relationships with all 3 major cloud service providers. The second area of independent software vendors, the likes of Amdocs, where we work with them in a multifaceted way. So indeed, Couchbase is built into many of Amdocs' offerings as an example, that they've taken to market that we are built into that, which, in many cases, is invisible to that end-customer. But we also work with them to help them go to market and resell our technology into that telco space. The third area, global systems integrators, the likes of Infosys, where we work with them to build out applications that they build and ultimately run for their customers. We've also got a community of bespoke boutique, more local SIs that we work with as well that deliver our technology to those customers. And then finally, obviously, an area we're very focused on, is the technology ecosystem, to make sure that we're partnering with other technology companies to make sure we've got the relevant integrations that will support our customers in how they build applications with Couchbase. So takeaway, we've got a great partner ecosystem that gives us scale and reach to, again, drive more efficiency going forward. So when we talk about the inflection point of Capella, and again, you've heard Scott and Gopi talk about the product, it really has changed the game for us, both for our existing customers and acquiring new customers. Why? It's a more developer orientated product. Again, you've heard from Scott and Gopi on that already. It's much faster, and I'll talk about this in a bit more detail in a moment, but it enables you to start small and grow fast. The barrier to starting with a Capella customer is much lower than it would be on the enterprise side. We're very aligned with the cloud service providers. We've got highly incentivized starter packs that exist on the marketplace. So it's very quick, very easy for a prospect to start on their Capella journey with us. And then finally, it's a very strong TCO message. We've got a really, really strong message when we sit down with both our customers and our prospects in helping them drive TCO into their application by leveraging Couchbase. What you see on the screen here is a number of organizations, some of who are existing customers of enterprise that have made the decision to move across to be a Capella customer and other organizations that have started their journey with us on Capella. But it really has changed the game for us in what we're able to offer to our customers. So I've already alluded to, it's slightly different with Capella, and I thought it would be of interest for people to understand how the motion of acquiring a customer can be materially different between an enterprise prospect and a Capella prospect. So on the screen here, what you'll see is a few different stages of a given relationship that we would build with a prospect. So firstly, take the evaluation process. If we're selling enterprise software, there are multiple touch points that you have to have with a given prospect in that selling cycle. You might have to speak to many different teams to build out the solution, to understand what the requirements would be from that prospect. With Capella, it can quite literally be app developer who gets going on that journey. The volume of people that we have to interact with to acquire a Capella customer is dramatically smaller than what it would be in selling enterprise. Deal sizing. So one of the things that we have to do when we sit down with a prospect is to articulate what is their requirement, the sizing of what they need to purchase from Couchbase. Well, with enterprise, that can get quite complicated. We might have to interface with multiple different teams within that organization to come up with the best accurate sizing that would be needed for that prospect. Well, as you've heard me already say, with Capella, the starter packs that exist on the marketplace, it's as simple as pressing a button, there's no real sizing required, they can start on the journey with us. The sales cycle can be dramatically different. So on enterprise, again, it's a longer process, 12 to 18 months would not be unheard of within the enterprise space. Quite literally yesterday, we closed a new customer, the sales cycle was 6 days, from the first interaction to closing a transaction with them. It was that quick. The friction is much lower. Our ability to operate with pace and velocity with Capella is literally a game changer to what we've had historically with enterprise. I hear many of you ask questions of Matt and Greg about what we see in the market conditions. Well, if you think about when we're acquiring a new customer, the initial deal, by definition, with enterprise, is higher. It needs more approvals. It needs to go at higher levels within an organization for them to buy. So it takes longer. It's something we need to do from a very much an enterprise sales cycle. With Capella, much lower friction, much quicker, indeed, go back to it could quite literally be a developer starting off with us by just clicking on the marketplace. And then the final area, I think, which is of interest is around how quickly can we get to a follow-on deal. Well, with enterprise, regularly, the next follow-on deal comes at the anniversary of the first purchase. That's when we get the opportunity to upsell and potentially scope a wider opportunity for Couchbase. Well, with Capella, you start quicker and you get to the next deal much, much quicker. So indeed, you'll hear Greg talk about it a little later on, we've got multiple examples now that a customer could make 3, 4 purchases in the first 12 months of starting on that Capella journey with us, whereas with enterprise, it could be at the anniversary date. Hopefully, you found this slide insightful because I think it really demonstrates why we're excited. And when we talk about the inflection point, this is why. It is quite literally a game changer from a sales motion perspective. Now when we talk about customer growth and how it can accelerate with Capella, you've already heard me talk about the ease and speed of deployment, you've heard me talk about how you can accelerate new apps, and there is no anniversary because you just burn through the credits that you've bought. Another area I'd just like to acknowledge is, we call it leakage, right? Now what this is really about is being able to see what technology the customer is actually using. And this is a challenge always with enterprise software, that you don't actually know how much of your software is being used by that given customer. So we do have leakage because of the nature that customers can overuse the license that they may not be consciously doing, but might happen by accident. Well, with Capella, that doesn't happen because you're literally burning through credits continually. And so we talk about there is no leakage with Capella. So these 2 big numbers here, let me explain them. A customer on Capella goes from 0 to 100,000 twice as fast as a customer goes from 0 to 100,000 on enterprise. A customer goes from 100,000 to 0.5 million 4x quicker on Capella than it does on enterprise. So again, when we talk about the inflection point, the fact that Capella is a game changer, I'm sure you can appreciate why these 2 stats are very exciting for us. So prospects easier to acquire and they're growing much, much quicker with us when they're on the Capella offering. So you've heard me distinctly talk about a product-led growth approach to our customers at an enterprise selling motion. The key thing to take away is we are set up from a go-to-market perspective to service both motions. So whether that be using the alerts that we get from Capella, whether it's driving the work with our partner ecosystem, we're set up that a customer can join the family by going down a product-led approach with a trial, the development community and ultimately convert them to be a customer. Or if that prospect still wants to go through a more enterprise selling motion of doing a proof of concept, building a richer relationship to start with us, we have the resources, and we're set up, both ourselves and our partner ecosystem to get that prospect on board. So we can service both product-led growth and an enterprise selling motion. You've heard me talk about the efficiencies that come with Capella. And I just wanted to share a few points here that I think will be of interest. Within Capella, there's a lot of embedded product signals. So when a customer starts -- or prospect, excuse me, starts running a trial or starts on the beginning of the journey with us, we get a lot of information back. We can see what they're doing in the platform, and it enables us from a sales team perspective, to be very focused in where we allocate our resource through supporting that prospect to getting onboard with us. So we get a lot of product signals. From an observability and a telemetry perspective, we also have signals to see what our customers are doing with that product. So we can see if they're going down the wrong path, or we can see if they're trying to do something new. It enables our field technical teams to get ahead, to get involved to offer our support to that customer, to that prospect, to hold their hand through the early days of the adoption of Capella. It also enables us to work much tighter with our partner ecosystem. As an example, when we work with AWS, we work with them from a registration point of view to tell them we're working in one of their given customers. An analogy I would use, the telemetry we get enables us to know where we're putting the fishing line into the sea. It gives us the ability to be very targeted in how we allocate our resources and our partners' resources to make us much more accurate in where we win. And then finally, the streamlined marketing engine. We talk a lot about our ideal customer profile. Well, the marketing engine, you can imagine, if we've got this telemetry, we can see these signals. It enables us to be very targeted with our resources to make sure we're getting the right information into the hands of that prospect or the customer to make sure they understand the potential that they can get out of Couchbase Capella. So again, when we think about efficiencies that is going to come from Capella, and we're starting to see it already, it enables us to be much more accurate, it enables us to work with our partner ecos much more effectively in where we target our efforts. And again, this is why we get super excited about what comes from Capella. So without any further ado, what I'd like to do is just share a clip here from Chris Grusz at AWS, who is the managing director of their technology partnerships. If you can play the video. [Presentation]

So in summary, hopefully, you've taken away from my presentation, we have a strong foundation. What the enterprise product has done for us is enabled us to be engaged with many customers and it enables us to really build from that strong foundation that enterprise gave us. Capella is an inflection point. The opportunity that Matt talked about is huge, and Capella gives us the product to take advantage of that opportunity. And finally, with Capella, it enables us to be much more efficient in how we work with our time and our partner ecosystems' time to be more accurate in how we grow our relationships with our existing customers but also acquire more customers as well. So without any further ado, I think we've got time for a coffee and a quick bio. And if people could come back in 10 minutes, then we go on to the customer panel from there. Thank you very much for your time. [Break]

Okay. Let's go ahead and get settled back into the seats, please, try to keep the trains somewhat running on time. Thank you. Good morning to everybody, and good morning to everybody on the stream. I'm John Kreisa, I'm the Chief Marketing Officer here at Couchbase. I too had a call from Matt to come and join the company. It turns out, I've been in the data space for a long time, so I was aware of the great things that Couchbase had. So it was an opportunity that I very much looked forward to taking. I have the distinct pleasure of going through the industry leaders panel, our customer panel. Of course, you've heard from some of the great examples that Huw mentioned and some of the ones that Matt mentioned. And hopefully now, really, it's best heard from customers and some of the real live customer use cases and the impacts that Couchbase is having, in fact, on those customers. So it's all about those applications. So, Greg, if you give me a click, I'd like to welcome to the stage Steve Baker from Playgon Games. Steve, please come on up. Thank you. Jerome Benois from Doctolib. Jerome? Karthik Mani from Aptos Retail. Karthik? And Harveer Singh from Western Union. Thank you, gentlemen. We'll just settle in here. Firstly, just on behalf of Couchbase, thank you all for taking the time to come and be on the panel and share your stories. We really appreciate it. I think, first, we'll just start off with an easy one. We'll start with you, Harveer, just introduce yourself and your role at the company.

Good morning. My name is Harveer Singh. I am the Chief Data Architect, Head of Data for Western Union. I run data globally for Western Union, including all data platforms that support all critical applications, including risk, finance and core money transfer services and the digital bank.

Thank you. Karthik?

Karthik Mani, I'm responsible for the product organization. So I'm the Chief Product Officer and Chief Technology Officer at Aptos Retail. And Product management, engineering, architecture, all of those report to me. Aptos Retail is a smaller company among the folks that are here. We are a Goldman Sachs owned company, and our focus is on serving retailers, bring together store commerce and online commerce.

Thank you. You have some amazing customers. Jerome?

Jerome Benois. I joined Doctolib 4 years ago. Doctolib is a fast-growing scaleup in Europe. And our mission is to simplify the daily life of healthcare professionals. And to make it happen, we build booking management solution used by 80 million of patients to book appointment. And I'm general director and I'm in charge of financial services [indiscernible].

Thank you. And one of the hottest startups in Europe. Steve?

Hi. My name is Steve Baker, the COO of Playgon Games. And unlike my very highly technical compatriots here, I'm where the buck stops in our group.

I think you said you were the...

The official no department.

The official no department. So that's great. That's a little bit about who you are. Let's talk about the applications. I'll start -- I'll go back to you, Jerome, on the application. Can you give us a little more detail of how the application that were being powered by Couchbase?

Yes. Doctolib, we are a younger company. We are just 10 years. And at the beginning, we built a booking management solution as a first product, and today is used by 80 million of patients and 400,000 doctors in Europe, in France, Italy and Germany. We build a second product, a video consultation platform. We used during the lockdown, you can imagine it. And since 4 years, we decided to build a new product, a mission-critical product, to simplify the daily life of healthcare professionals and to provide a full operating system with the clinical part and financial part. And for this system, when we think about the architecture, we wanted to build a solution fully resilient when infrastructure is done or when the network is done. And we build our solution on Couchbase to move all data on desktop of -- in the medical practice or in the pocket, on mobile application, to allow our users to create invoices on the go when doctors go to patient visits.

That's great. Clearly, mission-critical, operational, data, transactions, and connecting -- and medical data, of course, connecting doctors and patients. That's great. Karthik.

So imagine you're sort of going into a retail store, you want to buy something or you want to pick up something that you ordered online. You want to buy something nice for your spouse. And you want to maybe order something on the other coast to your niece who is there, right? So all of those transactions can be done on a mobile device, you tap your card and you're ready to go, right? That is what is the magic that we try to create for direct-to-consumer brands. And what needs to happen for that one, right? Your entire catalog of products that you sell should be available on the device, whether you have internet connectivity or not, you should be able to transact. We are not mission-critical in the sense of somebody dying, but we are mission-critical in the sense of business die, right? They want to be able to transact on a Black Friday. If you have one outage, you will be reporting that to the Street. So you should be able to transact at very high reliability, and that's what we enable. So Couchbase helps us in terms of getting the data, price data, tax data, promotion data, any of those things on the cloud, and then make it available on demand, on the device off-line or online.

Yes, mission critical, both have talked about mobile, and we will definitely come back to that. Harveer?

So Western Union has been around for 170 years. We are probably the oldest company in this lot. We have been transformed -- we've transformed ourselves a few times. In terms of what we do with Couchbase is -- and from an end-to-end perspective, capture, in terms of capturing the funds, core money transfer services, which is computing what needs to be transferred on the other side, in terms of FX, in terms of pricing, statuses, et cetera, and then transferring the funds, and then working with the receiver fronts or the agent fronts on the other side. So all of that pipeline takes into account digital risk, fraud and analytics, predictability, as well as communication to the customers, and including preferences of customers. Couchbase offers all of that to our end-customers. So our motto is, let's move data fast so the money can move fast. So Couchbase helps us move the data fast.

Very good. So we'll go from the oldest company on the panel to the newest company on the panel, I believe, yes, Steve?

Oh, yes, by a mile. So for us, we provide a live dealer table game experience. So a lot of Baccarat, Roulette, Blackjack, globally 24 hours a day, 7 days a week, we are subject to pretty stringent regulations. So we need good capability. We need reliability. We need scalability. Because we're subject to anti-money laundering laws, we're KYC. So everything has to be very accurate. There can't be any latency. There can't be any on-prem, servers that can be hacked. So everything for us requires very exact tolerances. Otherwise, our business fails in a minute from a regulatory standpoint and from an integrity standpoint. So we have to rely on a very strong relationship with a very, very good partner.

That's great. And just if you sort of think about the story that Matt told when he started us off this morning about. The story he's telling his daughter about healthcare, financial services, and retail, sort of all represented here on stage. So quite proud of that. So Harveer, just in terms of the journey, you've been a Couchbase customer for a while, the company has been transforming. Can you just tell us a little bit where you are on your journey, your cloud kind of journey as you're moving towards Capella?

Yes. So we started our cloud journey in 2020 during, I think, the peak of COVID. Many different reasons. The cost of infrastructure and maintaining data centers becoming expensive. Retaining talent, extremely expensive. People like Couchbase, AWS, they're all stealing good talent. So it's hard to compete. I'm from a financial services company. I'm not an infrastructure company. I'm not into -- I'm a pseudo tech company. I want to be a fintech where I can bring the best of breed of software, to build end-solution for the customer, and not worry about is this database up, or is this server up? I don't want to be in that business of swapping in and out. I want to be in the business of serving our customers. That was one of our core decisions in 2020, where the leadership is like enough. Let's move to the cloud. And we actually -- we all rallied behind it. So today, a majority of our operations are on the cloud. We do still maintain a little bit on-prem, even with Couchbase because regulatory -- regulations are so stringent that we have to maintain some kind of -- what if AWS was to go down, right? It hasn't happened, like per se, but there's enough DR, but we have to maintain some of that stuff. So for Couchbase, we started with lifting and shifting whatever we had initially on our on-prem environment to the cloud. One thing we realized is we were taking the same mistakes -- we were doing the same mistakes of trying to manage it ourselves. And that's when we realized, Capella is a platform that we know data-as-a-service, that I don't need to worry about it. It's a 99.9999 uptime. And they've guaranteed and we have seen it. It's reducing my query performance by 50% to what I can tune. It's always available, and it is always DR ready because the data is available in multiple zones. Given the global nature which Western Union operates, we have huge data centers or huge requirements to store our data, both in the U.S. and internationally. The Couchbase basically obfuscates all that complexity behind the scene in the Capella platform, and it basically gives us no, I would say, no ops platform to work on. We've saved quite a bit, year 1, over $0.5 million, right, from infrastructure costs. And then over a period of time, we've been saving cost on removing redundant human talent that was basically sitting and doing nothing, I would say. So for us, it's been an interesting journey. Now we have about 10 applications running on Capella today. And we have a strong demand to move some other application consolidate our most equal databases in the future as well.

That's great. Very interesting. And thank you for the note on the TCO, like just how that's actually adding value. And also the platform approach, which I think you -- we heard Gopi and Scott referenced earlier, but how we've taken that platform approach to allow you to incorporate those additional services. So Karthik, I think you're on a journey as well. Do you want to kind of let everybody know where you are there?

So we are not 170 years old, but we are somewhere around that dose of...

Do I look that old? No.

No. So 5 years or so back, we started on a journey saying that we want to build a SaaS solution entirely from scratch, cloud-native application, and we chose Couchbase as our solution. Early on, we decided that we wanted to be platform-neutral, cloud-provider neutral. So we tried hosting everything, right, from Couchbase to our own commodities, everything, we tried hosting on ourselves. Then we realized that finally, our value proposition to our brands, like a North Face or somebody like that one, is how fast we can deliver functionality, not how well we run our infrastructure. So we decided that we are going to go to managed services from as many vendors as possible. So we moved to Aurora, we moved to EKS, all of these things. As part of that one, we also are in the process of moving to Capella for us to be able to deliver this kind of great capabilities around that one. But we have been using Couchbase and delivering solutions to some of the largest retailers today.

Yes. As I mentioned, we have some amazing customers. And similarly, that ability for Couchbase to provide that service helps you focus your resources, as you said, I think also for you, Harveer, on the appropriate value add that you can as an organization. Yes, absolutely. Jerome, I know there's lots of -- we hire lots of developers. We're talking about the number of developers that are joining Doctolib's amazing growth that you've had as a company. Can you just talk a little bit about the developer kind of experience, how you are bringing more developers on to using Couchbase and kind of what their approach is?

Yes. In 3 years, we go from 50 developers to 500 developer people in tech organization, tech employees organization. And the experience of a developer is really magic about -- one point, about data segregation. When we build a local first application, we -- as a developer, we doesn't write the code in charge of security and data isolation, and you keep -- sorry, you -- [ the middle one ], your database, takes this work in charge. The database middleware is in charge of replicate the data. Only the data for -- given authenticate users. Other developer, you just write new feature without in mind all the consideration regarding to security, data isolation. And this is a complex topic and it's source of a lot of stress. It's a huge responsibility for our developer. And just do nothing on this topic, it's just magic for the developer.

There's a reduced complexity from developing on a platform approach that has all the capabilities, we heard about it, obfuscate some of the complexity from Harveer and the things you're trying to do as a global business.

Yes. I do-- I'm sorry to interject, but our developers actually love the platform. Every time somebody in the new leadership comes and say, "What if we use this?" And they're like, no. We like it. It works. It's been performing well. And there's a strong, strong developer community behind it. And that's one of the reasons you're getting stronger adoption within the organization as well. So that's a key here.

That's great. And that kind of goes to some of the things that -- Huw was talking about how get in there and sort of build an app, prove how well the technology works, and then naturally, natively other developers want to come on to the platform to take advantage of what the...

I think what Gopi said was very resonated with me very well because that's what I heard from our developers, how quickly we can develop and how quickly we can scale. That's the key.

Yes, Steve, I want to come to you. So in terms of sticking kind of with your role, how does Couchbase help you at Playgon meet some of the business goals that you're trying to get to?

Yes. If I can just go back to back to Huw's presentation, one of the things that really appealed to us was the fact that you could join Couchbase at the enterprise level. So as you're launching a business and you can't take on some of the complexity and the expense that you would, as -- down the road, you can come in at that enterprise level, and really get your -- you can get used to the Couchbase base platform. You can get used to the people that you work with and you can start to scale your business from scratch very, very reasonably. And so we did that for 2 years. And now, just this year, we switched over to Capella. So that's just a testimonial that, as Huw said, that program works, it allows you to come in very poor and get your business off the ground and scale inside the Couchbase environment. So that was really important for us. And it builds loyalty, right, because it just gives you so much flexibility. You just -- you want to stay in the environment and grow your business inside the Couchbase environment. So it's worked out really well for us.

That's great. So that adoption pattern Huw was just describing perfectly fits kind of how you're seeing the platform for long. That's great. And this we can have anybody comment on this one, but I want to go back to mobile, right? Mobile, we heard about the offline seeing capability to be able to deliver services in the video. Gopi and Scott talked about it, but maybe I'll start with you, Karthik, on mobile, the importance of how that is helping you build a differentiated business and meet the customer need.

Yes. For us, we are a mobile first company, and all of the transactions either happen on a tablet or an iPhone or an Android phone. That's how retailers want to do business. They want their associates to be walking around in the -- on the sales flow and be able to help customers buy the products that they need or any other information that they need right there so that they can be out of there rather than bring them over to a cash trap, and cash traps take a lot of space, retail space. So if you go to a new [ ballot ] store in Boston, for example, there's really no cash trap, right? It's somewhere in the corner, but full place is designed for customer experience. And cash trap is not the customer experience, right? So that's what we are trying to achieve. And with that one, the second point is you have a vast catalog. A portion of that product is in the store. So somewhere, you need to be able to help a buyer or help a consumer buy something that is not in the store. You can't keep all of that information in the store on that device. So you need to be able to go to the cloud. And for promotional calculation, price calculation, tax calculation, all of these things, you want to have the same code running on the mobile device as it happens in the cloud, and being able to have one database that is replicated, Couchbase like on the device, Couchbase in the cloud, and having the same code, being able to access both of these things, and it behaves the same way on both of those things is really, really important for us. So those are kind of capabilities that are helping us deliver the great experience that we want when the product information is available at the store. And if they need to go to the cloud for other products that are not at the store. That's our...

That's great. And it's a very definition of a modern application. You are helping retailers with their brick-and-mortar compete with online, right, by giving them an experience that's more streamlined plus optimization of their sales space, like a lot of different benefits.

No, we don't look at it as competing. We look at it as seamlessly going through both of those experience.

Sure. Fair, fair. Jerome, your company relies heavily -- couldn't deliver the services without the mobile capabilities. Just want to talk a little bit about the importance of mobile to Doctolib?

Yes. As I said, we build mission-critical application as a mobile first, but not only mobile first. We build our application based on [indiscernible] Mobile technology on desktop. And we have the capability to be resilient when the network shutdown is in medical practice. And we built an unique solution in our market with the capability to move the data from medical practice to patients [indiscernible] on the doctor through the [indiscernible] mechanism. And it's really a powerful use case for our user.

Yes. Critical.

Yes, yes. And it's unique. We have no competitor with an equivalent solution.

Thank you for mentioning. I did -- so there are other providers out there. Did you evaluate other providers when you looked?

Yes, since 4 years, we evaluated Realm technology, just before the acquisition by MongoDB. And the technology was built uniquely on the mobile. And we want to build one -- to build an application. When you have such application, working on the desktop, on the window, [ Atlas ] on mobile application. And we chose [indiscernible] for the capability to customize and to extend the technology. In all use case, we manage sensitive data because we are -- we use health data for patients. And we want to build the capability to have end-to-end encryption on device. And we work closely with [indiscernible] team to contribute to cost specify a new feature in [indiscernible] mobile to be able to plug our end-to-end encryption technology to [indiscernible] -- in order to encrypt and decrypt sensitive data on device. And it's clearly a game changer for us to use.

A critical capability, obviously, medical record, something that we all want kept safe. And we're providing that for you. And in both cases here, the ability to have the same database running on the edge, on the mobile as well as back in -- on the servers, whether you're hosting it or we are hosting in Capella, it's critical capability, just that ability to have that seamless. Yes. So Steve, gaming, a huge growing area. Maybe if you could just talk a little bit about the importance also. I mean, as you build and expect that business to grow their Playgon. We were talking yesterday about some of the sort of the size and scale that you see and what potential is. Maybe you can talk about how you see Couchbase enabling that.

Sure. And by the way, our service is mobile only.

Please comment on that.

Yes. So it's designed specifically for that. Not designed for the desktop, so -- and it's global. So latency is very important to us. So being partnered with AWS is very helpful to all of this, for everything we do, and the transactions, the number of people that are making bets and playing multiple games at the same time, whether it's roulettes and anybody who's ever played roulette, you're putting money all over a board and you're double -- I mean, the number of transactions can be tremendous. You get a lot of people who will wager the equivalent of $0.25 at a time, and you get some people who will wager $1 million in less than 24 hours across your platform. So everything is very, very critical, and it has to be reliable. That can be latency, it has to be mobile. As a matter of fact, we don't even have ours designed in landscape, it's designed for one-handed portrait use. And so everything has to fit on -- into that screen, and there's a lot of information from game history, all kinds of the bets, all of that has to be secured. So yes, having the right partner is critical for us in this.

Yes. Yes. And I mean, clearly, with all of the business-critical data that is going through those games, you have to make sure that it's -- and the scale, you said -- you're saying, yes, I think, it can be billions of bets made in the course of time.

Yes, right, for us, and we're a very, very small inconsequential company in the space. But we've already had, I think, $1.025 billion bet across our platform already this year. We have to do 10x that to have a breakeven, right? So this is a massive industry that does big dollars, big numbers of transactions and you have to be able to scale quickly and reliably to be able to break into this business and be successful.

Yes. Yes. No, understood. And it sounds like we're powering that well for you. We'll drop back to just a little bit of technical just to kind of validate some of the critical capabilities that are in the database. So I'll start with you, Harveer, just in terms of critical capabilities, what would you say your top three critical capabilities are in the database that we're delivering?

Yes. So the effectiveness of the database to provide millisecond based responses. It's critical for us because in terms of our customer base, you can imagine somebody standing in a retail store and trying to send like $100 to his mom or someone, his family in Mexico or in India or in Bangladesh or whatever. They don't have time to spend -- stand there for like hour to wait for a decision to happen on that transaction. They want to see if the money is sent already. And sometimes the person on the other side is actually waiting to the pickup because that's the time. And for us, making -- capturing that funds, making sure the agent that is doing the transaction, his limits are -- he within his limits to do that transaction, because they also have like a credit that we give them, then making a decision based on our risk applications, understanding the AML laws because this person could have been going around like 5 places, placing some money. So we have to do all of that stuff. And then finally, on the receiver side, taking their information, gathering their information, making sure they're the right person for pickup. All of this happen -- needs to happen in a few minutes. So for us, that's very, very critical.

That's the customer experience right there.

That's a customer experience, the agent experience as well because these agents and all of them are not exclusive. Sometimes, they have like four money transfer terminals, one for MoneyGram, one for Western Union, one for Ria, one for something else. This doesn't work. He'll -- I have lost the customer. He's not going to come back again. So that's, for us, it's very, very critical. So that's one. The second one is no ops. For me, I reiterate, I'm not a technology company, I'm a fintech company. Yes, I'd like to call myself a technologist, but I'm not as smart as the people in this -- in the Couchbase area, we can do a better job in building that platform. I think I can do a better job in using the platform. I can bring my -- I can bring that to my customers. I can put together that solution for my customers. So I rely on that, on their engineering help to do that. So having a strong engineering support is extremely important. And the third piece is the ease of use. It's not technical in nature, but it's so critical. I always use this example. When I first wanted to give my parents a phone, the first phone that came to mind is like, let me go to an Apple, an iPhone, Why? It's easy to use, right? Do they really need to know all the intricacies? No, they're a user of that phone. Same way, my customers are a user of my platform. They don't need to know if this server is failing and that service. Even the developers, why do I have that limitation that they have to figure out all of that stuff. Go build the application, do the best you can, test it out and make sure you can deliver it fast. So it's like I'm building that Apple of the fintech industry to get it out to the customer. It may not be very technical, but it works. And then finally, the resiliency. They're having the data available in multiple zones because of our global nature helps us a lot.

That's great. That's a bonus. That's true. Thank you. Karthik?

Yes. For us, there are only two things that matter, right? One is customer experience. And when a store associate is standing there and a customer is right in front of them, that's a high-pressure situation for entry-level person that is trying to serve them. The more they have to overwrite price, the more they have to overwrite promotions and stuff like that, it makes it worse for them. So making sure that the information that they have is the right information, and it is there reliably, is really, really important. The second most important thing for us is the developer experience, right? We want to be able to quickly move. There are competitors of ours that are trying to build all of these things into their product, and that makes them slower in terms of the development. We want to be able to leverage best-in-class and move faster. And so that -- and within the developer experience, as I said before, having the same code that runs both in the cloud and the device, rather than having to say that, okay, the device it behaves this way, I need to have it here and then the price calculation needs to be different there because I use a different technology there, that is a huge advantage for our developers. So that's customer experience, developer experience.

That's great. And we keep coming back to and hearing over and over again, developer experience consistently, which is just great. Jerome?

Yes. The first one is probably the consistency. When you use mobile database, you can have several thousands of local database on mobile device, and it's really important to have a consistency and didn't lose data. And the second one is probably the scalability. During the lockdown, we learned a lot about scalability. Let me share a story when the President, Emmanuel Macron talking through television and said to say, "hey, my dear friend citizen, we buy a lot of vaccine, please go to Doctolib, take an appointment on the vaccination center." Five minutes later. We -- I was a bit nervous with 20 million of people on the platform. And trust me, vertical scalability with [indiscernible]is our good data. This is not possible with this level of traffic. And also in terms of scalability it's mandatory. And the soft capability is probably the developer experience and we appreciate a lot, the mixed model of [ Couchbase ] with the access to the open source code base. It's helped a lot our developer to build tooling and to understand [indiscernible] and its already powerful facilitate troubleshooting operation.

That's great. I had -- I mean, if your President is going to reference to your platform and you need to know that it's going to scale, and I'm glad that you've relied on us to get that -- get you for that. And I think the developer experience, again, is one that's critical. Maybe not in technical terms, Steve, but for you...

Don't embarrass me. Yes. So one of the things that I like to think about is reliability. And I was listening to Harveer a couple of seconds ago, and he was talking about, and he mentioned, listen, it's 99.99% reliable or 99999 and you go, we can't have 99999, like that's not good enough. And I'm not again, I'm not going to embarrass myself and try to recall the accuracy of this, but if any one of you has ever done what five 9s looks like in terms of the number of hours in a year, you'll find out that, that works out to about 30 hours of not being up. It's a big number, and I can't remember what it is, but it's too much. So we rely on both AWS, yourself to be up and reliability is very, very important for us. And just as another silly example, but you think, when you're working globally, and people are placing bets, it's never in U.S. dollars or euros. So we need to make sure that we have an accuracy component as well because every -- we're a B2B, so every operator, we need to be able to sync up and have both of our numbers at the end of every month to be the same so that when you do currency conversions, you're not all of a sudden out a whole bunch of money, that all the systems agree. And if they don't, which they don't sometimes, you need to be able to go back and draw and pull out all the data and say, let's go through it and figure out where there's a discrepancy. So from my perspective on the business side, I need that reliability and I need the accuracy.

Yes. No, that's great. And sort of goes to what Jerome was saying about, if you've got those -- all those thousands of databases operating at the edge, you need to know that they're going to be able to come back, resolve and be consistent. I think it's probably -- and clearly, performance in all of these businesses is critical. It's critical for the user experience, right? And you -- and for you, Harveer, multiple competitors are sitting right there in front of the operators, right? So they can go. There's multiple games on their phones, probably, right? So it's a highly competitive environment that you need to operate in. So Harveer, maybe just a bit of a competitive question for you. Were there other technologies that you sort of snipped around at?

Yes. So we do have other technologies that exist today within the landscape of Western Union. A couple of your competitors also exist but at a very small footprint. I'll tell you this, they were brought in as challengers, but they failed to challenge. The reasons I told you, it's the strong developer community and the push from the business saying, we want this platform because of the reasons that I described above. We still have them, a little bit of a small footprint because wanted -- people have choices and people have opinions, and they will always act on those opinions. But the numbers don't lie. The actual performance doesn't lie. And then honestly, I can tell you, the amount of business we do with Couchbase doesn't lie, right? So I can see that comparison how Couchbase has been adopted within the organization, 10 plus critical applications versus one-off here and there, something that is being tested out for the last few years but hasn't seen the sun light, it's always going to be there. So from a competitive advantage, either things are, I would say, on the scale of way too expensive for what they do or cheap, but they don't scale. So finding that right balance is where, I would say, Couchbase is sitting in that fine balance, which is I don't think it's too expensive for what it does. I don't think it's too cheap for what it scales. So it's that right balance, and that's what our developer community likes.

We're right in a sweet spot there. Yes, I appreciate that. So let's -- just a few minutes left here. Let's just turn a little bit towards the future, just innovation. How do you think Couchbase is helping you innovate? As you look forward and kind of see things, obviously, meeting critical capabilities for you today. But as you think forward, what does that look like? And I'll start with you, Karthik, on that one.

Yes. For us speed, as I said before speed to market is the most important thing, right? And the more we can depend on partners, the better off we are going to be. And we need a trusted partner for us to be able to get there. From AWS is the first trusted partner, second most trusted partner is you guys. That's the reason why I'm spending the time to come here to present, which has nothing to do with my business in terms of... So that is important in terms of what -- how it is going to help us in terms of innovation. And we spent nearly 15%, 16% of our revenues in R&D. And a lot of that, we are going towards building solutions. We are a premium solution provider. We sell premium brands. Like if you go into a [ Coach ] store, they're utilizing our solution, right? So we need to be able to provide a premium experience to their sales associates. Some of them might be on commission. They need to be able to earn their commission. Their base pay is very little and their commission is the one that is going to feed them, feed their family. So we need to be able to provide that kind of experience for them. And we continue to improve or continue to add to our capabilities. We have a lot of capabilities around inventory, right? How do you make the inventory in the store visible online? So when somebody orders something, even if there's not in the warehouse, it is in one of their stores, and they can ship it to the consumer. And for a retailer, something that is stuck in a store in Miami when -- in middle of winter in the North, it's not going to help them in any way, correct? How did it get there? That's one question. But now it is there in the store. How do I get that visible on the online and be able to ship it to the consumer? So not only the price, promotion, tax and stuff like that, going down to the store and, but the inventory information that is there, somebody comes and returns it, you want to be able to immediately put it on the online and sell it, being able to get that information up. So a lot of these kind of replication capabilities are going to be critical for us.

That's great. So providing premium experiences, which is absolutely what you do, and continuing to innovate so that you have your customers grow with you is one of the critical things that Couchbase is helping with. Fantastic. Jerome, just in your growing -- very fast growing business in medical, how do we help innovate?

Yes. For me, there's a new product on Couchbase provides a capability to -- for the engineering team to be more focused on shipping of business-critical feature and not doing some technical work information. And building a system with data application and the conflict resolution is really a complex topic, and we are really happy to use Couchbase and the tool to be focused on the delivery future.

That's great. And you mentioned before that we've innovated around some open source projects. I know we've contributed together. Your team has contributed, and that has advanced the overall capability of what customers are able to do. So that's been great. Harveer, I'll come to you.

Yes. So for us, our innovation revolves around gathering more information about the customer. 20 years ago, we had a survey form with like 10 items, what do you think, give us a little bit more about you. Today, we collect more than 300 data points for our customer at any given point of time, whether it's activity on the mobile phone, whether it's foot traffic coming into the store, whether it's looking at your preferences. And it's only going to grow. Like the way industry is moving towards, it's only going to grow. So for us to be able to adapt to that, how does the human emotion play into a transaction, IoT, things can blow things out of the equation. Camera can very well pick up a human emotion while somebody is transacting on that screen. You can clearly understand what that person is going through and being able to communicate and relay back to that agent is like, "Hey, this person is sad because -- he's sending $100, but he's sad, ask him how is he doing." It's going to make a huge difference to his life. Maybe he has an unfortunate incident, you're sending money for some medical reason. I'm just talking about my use case because I really care about how Western Union operates in an environment which is -- it's not pretty when you see people trying to send $100, stand in line, like for an hour to stand. We want to do more better things for them. We want to make them digitally savvy. We want to have them the right -- that agent experience. But we also want to have that digital experience right together. How do we bring that along. A problem with other technology, some of the other technologies, it's too rigid of an architecture to change with time. This is where that innovation comes in place. No matter how and what I'm collecting, I can keep adding and building those blocks in a modular fashion. It becomes like a widget base. Okay. Today, I have four widget tomorrow, I can have a five widget that describes about customer personalization or is this score or is overall score, he's been happy, he's been sad, et cetera. To all of our agents, including customer service as well as the retail agent, it's very powerful. So for me, that modular approach is the real innovation. I don't want to innovate a new product, I just want to make sure my customer is happy. What can I do to make my customer happy?

Yes. I love that, all about the experience and the ability to continue to push. And I'd love to see a company at the age of Western Union just push and focus on that. It's really great. Steve, just a sort of similar -- the innovation side of it for you at Playgon?

Yes. Not to be flippant, I would just say, stay invisible. If our team starts coming to me and talking about our database provider, then there's something wrong, right? As long as you keep doing a great job, including bringing new products like Columnar that Gopi was talking about, things like that, but otherwise, have it so that it just, it's an engine that just runs, purrs in the background, that's the best thing, I think that's the best compliment we could give you.

That's fantastic. Well, I think with that, I will wrap our panel. Please join me, a big applause for a great panel. Thanks very much. Hopefully, you learned as much of it about it, and it was insightful to the applications, the breadth of companies, both in terms of age, and the markets that they play in, and how Couchbase is helping them drive innovation forward. So with that gentlemen, thank you very much. We'll excuse you from the stage. Thank you. And with that, I'll bring up our last presenter, which is Greg Henry, our Chief Financial Officer. Greg?

John, thank you very much. To the achieving profitable growth section. I'd like to again say good morning to everybody in the room. We've got a very full room here. It's very exciting. Again, good morning to all those who are joining us on the live streaming. I'm very excited to be here. I've been looking forward to this since I joined Couchbase 7 years ago. I'm going to spend my time taking all these great updates you've heard today and tell you why from my position as CFO, I have never been more excited about what's to come with Couchbase. Like we've been saying today, our best days are ahead. We have a very strong foundation. We have built this enterprise model now for over a decade. It's well instrumented. The margin position, we come from a position of strength as we move into Capella. We have a net retention rate that's been over 115% for a long time since we've been public, and that's been driven by the enterprise business, the foundation of our business. From a Capella inflection point, I want to talk about the NRR for Capella, I'm going to share that with you today, how -- what we achieved in the last quarter and show you how that's performing along with customer count and our total ARR. From faster time to monetization, you heard from Huw, right, customers are growing 2x faster, 0 to 100,000, 4x faster 100,000 to 500,000. And I'm going to show you a couple of examples of that as well. And on consumption, we're still seeing the very early days, the benefits of having the consumption model. Again, customers can no longer overuse without paying. From future leverage, we will get much efficiency. Huw demonstrated this. We're already starting to see this with the go-to-market, but there's more to come. On a free cash flow perspective, we've made a good move this year. We will continue that, and we'll be declarative today on when we'll get to free cash flow positive. And from Rule of 40, look, we've just changed the whole mindset, the culture of the business. We're very focused on that. We will be a Rule of 40 positive. And we think, in the midterm, we can actually become a Rule of 40 company. So with that, I want to highlight some of our foundational strengths. We're 90% software revenue. We've been that way for a long time. In fact, we're probably closer to 95%, and that won't change with Capella, highly predictable model. $189 million of ARR as the last quarter, our guidance at the midpoint would suggest we'll be a $200 million ARR company by the end of the year. And we have one of the most enterprise ARPU in all of software, and we continue to see that grow very nicely. Our customer count of over 1 million customers has grown 30% year-over-year as of the end of Q3, which again highlights the enterprise strength of our model. I've talked about the land and explode. We've been 115% plus, and we think it's only going to get better from here. And our non-GAAP gross margin of 90% at the end of last quarter, again, best in class. We have some of the largest and best enterprises as customers and delivered a very solid growth rate of 24% CAGR over the last couple of years. And our fiscal '24 year-to-date net new ARR is actually up 33% on a reported basis. And that's despite the macro challenges that all of us have been facing this year. On an ARR per customer, I hit on this a little bit. If you look at our total customer, we still grew this very nicely, up to $264,000 per customer. But on our over $100,000 customers, our larger customers, we've now grown that from sub [ $500,000 to $600,000 ] in about 2 years. It's pretty amazing what we've been able to do building off of our foundation. And our customer ARR base grows rapidly and consistently. I've talked about this [ land ] and explode model. So to accentuate this, I want to show you our ARR customer cohort for the first time. This will be by fiscal year since fiscal '17. All the customers acquired in each respective year. And I just want to be clear that this customer cohort assumes all the customers acquired in that year and all their upsell, down-sell, and if they're lost over the period. So full complete ARR throughout that period. You'll see that we've grown each cohort nicely, mid- to upper 20s percent growth rates with the exception of fiscal '21, which was the COVID year. And you can see in fiscal '22, we're starting to see some really nice traction. That's really the first year that Capella became meaningful. But the point about the foundation here is that this has all been without Capella for the most part. Only most recently that we've been growing mid-20s without it. And obviously, the fiscal '23 is not complete yet because we have to wait for the full fiscal '24. And even our largest customers continue to grow. I'll show you a couple of examples that we actually showed at the IPO road show and how they progressed. Note that these customers grow due to continued growth of the apps that they're already running, plus new applications that they've been building over the period. So this is a travel and entertainment customer. We showed, they landed $500,000 in fiscal '19. And at the IPO period, 2 years later, they were a $2 million customer, they've grown 4x since their initial purchase. And where are they today? Just 2 years later, they're nearly $4 million customer, having grown 8x since their initial purchase, and this is just a couple of years after our IPO. So even large customers continue to grow. And lastly, our logistics customer started with a $100,000 deal, one single application back in fiscal '17. They're now running tens of applications. At the IPO time, we showed you, that was a $5 million customer had grown 50x since their initial purchase. I'm happy to say that as of today, they are nearly a $10 million customer, and have grown 100x and continue to grow on applications. And we believe we have potential to grow this customer even further. Massive opportunity continues even with these large customers. Now as I get into Capella metrics and dynamics, showing the inflection, I've obviously gotten a lot of questions about Capella, so I'm happy to finally share some of the good news and what we've been seeing around Capella. I'm going to talk about a couple of things, how are potentials already being realized. We see that in the model today, and I'm going to share that with you. And I'm going to give you 2 examples of how we're driving faster growth and customer footprint. One example is a new logo, another one is a customer that has migrated to Capella. So without further ado, I want to share with you that we're very proud that as of currently, we are at -- over 10% of our total ARR is Capella today. And that is just 2 years after initially launching Capella. And just earlier this year, did we actually get our third cloud vendor up and running. So this isn't even what we believe the full potential is once we get all those ramped up very nicely. We have 22% of our total customers using Capella today. Again, that's in a mere 2 years and only getting, again, the last cloud vendor up earlier this year. And as we talked about on the earnings call, that grew 20% from Q1 to Q2, and over 25% from Q2 to Q3. Amazing traction. And finally, I want to give you some perspective on how Capella is growing. In Q3, this is the in-quarter Q3, the net retention rate for Capella was 167%. We've been talking about it for some time, we talked about it in Q2, and alluded to a little of Q3 that we've had some of our best in-quarter net retention rates we've seen as a company in years. We have a great foundation, Capella is now pulling that along and inflecting. So with that, let me give you a couple of examples. So this is the new logo example coming into Capella. So -- and just as a reminder, for ARR, for the enterprise business, our ARR is whatever is running at the end of the period, plus what's ever contractually committed for 12 months out. For Capella, ARR is fixed in the first year based off their initial purchase. And then after year, moves to full consumption. So you'll see here, this customer made an initial purchase in the low 6 figures in Q3 of what was there at year 1. And you can see, the consumption line, the quarterly consumption line progress over time. As you would imagine, a new customer, it takes a little time to get up and running on consumption. But once they do, they start growing. And you can see it grew nicely. So what happened? They actually came back and made a couple of additional purchases because of the consumption. They were not only growing the application that they were using, but they actually brought more applications onto the platform. So in the beginning of year 2, they made another purchase. And based on the quarterly consumption, they actually made a second purchase, a second additional purchase before the end of year 2. The first initial purchase was 3x their initial buy, and the second was 5x their initial buy. So you can see the growth. And again, as Huw alluded to, these larger customers grow faster. So how did it play out from an ARR perspective? If you follow the red line through, you see that first year, it's fixed. It's based on their first purchase. And after that, the consumption model kicks in. And where we sit today based on the consumption, they are actually running ARR at 7x their initial purchase after about just 2 years. I've also added in a dashed orange line in the middle, which shows what our average enterprise new logo would have looked like just running it out on average. And you can see, it's multiples of where we would have had enterprise. It's an amazing journey. Now, I want to show you what a migration looks like. So this is a large existing customer. They said they want to go all in on Capella. We've talked about them on some of the earnings calls anonymously. So here's what happened. They actually made a multi-year purchase, they made 2 years. They're like, we're going all in. We're going to make a year 1 purchase and a year 2 purchase. So they did that all upfront. And you can see the quarterly consumption again. And you can see by the time we got to year 2 there, the quarterly consumption was at half the rate of the year 2 purchase. Why? Because again, they brought on certain applications to begin, more was being used within those applications and they added new additional applications along the way. So how did this play out? Well, because of their consumption, they actually had to do a little top-up just before they got to the year 1, and then they made 2 additional purchases in year 2 because of the consumption. So how does it look from an ARR perspective? Again, you've got the initial phase in the red bar staying flat the first year. It moves up to the consumption phase. And today, they're running at a little over 3x our initial purchase from an ARR perspective. Again, we've added in the orange line to say if this was a regular enterprise customer, what would they have expanded after the same period. And you can see again we're way beyond that. This is showing you the power of Capella and how we're seeing this inflection in the model. Now let's talk about this. You've been seeing, I've been focused on ARR. We've said for a long time, ARR is our North Star. That's how we run the business. And revenue does trend differently. And we get a number of questions, obviously, about why is there a difference in growth rates on ARR and revenue, and we want to leave you with a few examples today, some generic scenarios just to show you why you see some dislocation from time to time. So I'm going to show you 3 examples. One is an enterprise new logo with a future start date and upsell. Second one will be a Capella new logo with multiple rebuys. And lastly, will be an enterprise account with a full migration to Capella. And again, the material will be posted, so you'll get this all after the show. So first, our future start date, 50% upsell. I'm going to show you the ARR line first. So this is a $0.5 million new logo. It was purchased in, actually, we'll call it, before year 1. So at this point, we have $500,000 of ARR in the quarter was purchased, we have no revenue because it's a future start date. The customer came back and expanded 50% in the second year and grew to $750,000, and we got a 50% ARR growth rate in the second year. On revenue, however, we had a mid-quarter start, so it's enterprise. So I get the ASC, the license upfront, $150,000 and then pro rata for the rest of the year. They upsold in year 2. And again, I get the license revenue upfront at the year 2 purchase and then pro rata for the rest of the year. But you can see at the beginning, I told you we had ARR and no revenue. Now in Q1 of year 2, the growth rate on ARR is 50% but the growth rate on the revenue was 83%. And then it all smooths out after that. So that's why we get some differences on the enterprise side. Now if we look at Capella, new logo with multiple rebuys. Again, ARR initial phase for the first year, then it moves to consumption. So this was a $100,000 initial deal. They started consuming because they were using more because of the growth in data and applications. And they did $150,000 rebuy even before the end of the first year, and then they came back and did a $200,000 rebuy at the end of the second year. So you can see the growth rate of the ARR here. It exits at $170,000 of ARR. And the growth rates, 40%, 55%, 65% and 70%. So the revenue for this, however, start small because it's auto consumption right out of the gate and it's a new logo, so it takes time to ramp. So you can see it's $10, $26,$30 and it ramps over time, but they're nice consumption. And then you get to the second year, and you see the annual growth rates. The annual growth rate, again, Q1, 250%, where the ARR growth rate was 40%, and then it comes down. And then by the end, the revenue growth rate is actually below the ARR growth rate. However, we exit the year both at $170,000 of annualized either revenue or recurring revenue. After that, because we're built on consumption, the growth rates will be consistent. Lastly, an enterprise account with a full migration. Again, $500,000 enterprise renewal. And before the end of the first year, they decided they want to go all in on Capella. So they did that. And as we've talked about, we get a typical uplift when we go to Capella, somewhere between $1.50 to $2. So you see there that at this point, they got a 70% uplift in this example. We stay on the initial phase for the first year with Capella. And then we go to consumption. And again, same thing, enjoying Capella, seeing the inflection, some nice growth there on the consumption, and the ARR is now 2.6x the initial enterprise deal or the renewal. How will revenue go? So revenue, again, first year is on enterprise, so I get a little bit of the license upfront and pro rata, now they switch to consumption. And because it's consumption, we don't get the upfront revenue, and it takes a little while for the consumption to get going. So you can see at that point, I have a 70% growth on the Capella migration for ARR, but the revenue was actually down year-over-year. And even in Q1, same thing. The consumption is still ramping. So I actually have negative year-over-year revenue of 22%. But from there, it gets growing and the revenue normalizes. And once we get to a consumption phase, the growth rates and the revenue and the ARR will align. So we just want to give you some examples since there's a lot of questions, and this will hopefully clarify why we're seeing some of the differences. Now with that, I'm confident by this point. You will now see why we're so excited about what the future holds for Capella. We have a great foundation, which we've demonstrated over the last year and what we've guided to this year in terms of growing 20%, best-in-class margins and continuing our journey to profitability, both free cash flow and of income. While it's still early days of Capella, what we want to show you is our midterm view, which is a 4- to 6-year time frame. We believe that we can grow 20-plus percent over this period, driven by Capella. Gross margins will be approximately 80% based on our scale and efficiencies. And on sales and marketing, R&D and G&A, we will continue to get more efficient, both through what Huw talked about, PLG, what Scott and Gopi talked about on the product innovation and what the G&A teams will drive on scale and innovation and automation. Now for Capella mix, we would be disappointed if by the end of this medium term, we were not at least 1/3 of ARR on Capella. And we certainly believe, we could be -- have the majority of the business be Capella by the time we get to this end of this 4- to 6-year journey. And the driver of how we ultimately land here really is the pace of our migrations because we have a very tremendous installed base. And as that moves, that will grow, which we've demonstrated today. Now, I'd like to leave you with this. We expect to deliver a 20-plus percent growth over the next several years, as I talked about. We expect to be free cash flow positive by fiscal '26, and we expect to be op income positive by fiscal '27. And I also remain confident that in the long term, beyond this, we expect to deliver the 20-plus percent operating margins we talked about at the IPO time. We are on that journey, tracking nicely. So as we stated throughout the day, we have a well-established and instrumented enterprise business. Capella is showing very strong growth and inflecting and there's much more to come both on the product portfolio and the go-to-market efforts, which will drive material leverage in the model. So I want to thank you all for coming again today. We appreciate it, and we'd now like to move to the Q&A session.

Great. Rob Oliver with Baird. Greg, this one is for you. Just -- so it sounds like that 1/3 Capella is kind of worst case for you guys out in the 4- to 6-year time frame. So with the potential that maybe half of your customers will still not be on Capella, how should we think about the balance of investments relative to product and innovation between those two? Obviously, Capella has been a really big focus for you guys. Maybe talk about the balance there.

Yes, let me start, and then Matt will probably pile on here. So just to be clear, like I said, we would be disappointed if it's not at least 1/3. We very much believe that we have the opportunity to be -- have the majority of our customers on Capella by that time frame. And so we're investing towards going for the majority of the customers on the platform, and we want to continue to focus our investments around the Capella platform.

Yes. Look, I think we were very intentional in how we've architected the underlying platform, and Capella supports full Couchbase server and mobile. And so Rob, as we think about our future big investment areas of innovation, take AI, extending database capabilities, continuing to improve the customer experience, some of those will be unique to Capella, but the majority are going to run, and we can back forward to the enterprise portion of the business. So we're going to drive a lot of efficiency and net new capabilities and resources. A big part of the heavy lift with Capella has been getting the initial platform to the level of capability that we have, building the control plane, taking away the management responsibility of the database. A lot of that is behind us. And now it's about net new capabilities fine-tuning the UI. There's efficiencies to be derived there, but we'll be able to get those features back into the enterprise version for the customers that prefer that deployment for whatever reason.

Got it. And if I can, just one quick follow-up for Huw. Obviously, conversions are going to be very important. Huw, so I'll be just curious to know how you're approaching that with your team. And have you found to date that the conversions are not competitive? In other words, there's -- it doesn't create an opportunity for the customer to say, "Hey, let's just at least check out another vendor while we're doing this."

Yes. I think that question came up last week on the earnings call. We don't see the door getting open from a competitive point of view. I would say, our customers enjoy what they get from enterprise today, and they're looking to get the TCO that gets delivered with Capella. So we spend a fair bit of time with them, working out what support we can give that customer in the migration and helping them articulate the TCO that they will derive from doing that. So we do not see it opening up a competitive threat.

Rob, we are benefiting from the other dynamic. You heard Harveer talk about the fact that he has other vendors in for dual vendor strategy. Quite frankly, until we've had Capella, we've been somewhat unable to penetrate some big accounts that have already standardized on other database solutions. And one of the things that has us pretty excited is the amount of opportunities in our pipeline where large customers are inviting us in to be the alternative to other competitive solutions because we have Capella and they're seeing it maturing. And so a lot of our initial lands, new application with Capella, what really has us excited is the opportunity behind if we're able to really put a dent in some of those competitive deployments. And I think we're seeing a lot more of that than anything working against this on Capella.

Sanjit Singh, Morgan Stanley. Thank you for all the data and the presentation, was super helpful. When we think about making the cloud journey, I think there's sort of two phases to that. One is sort of the technology side and delivering a world-class service offering, which there's been a lot of progress on that front. But the second piece of it is sort of go-to-market motion. And you're seeing, even companies that are way more further penetrating cloud, evolve their go-to-market, you're seeing a trend line of less committed contracts upfront, getting customers just to start, remove the sort of haggling around initial deal sizes. And so I guess my question is from a go-to-market perspective -- is there a further evolution that needs to happen between a sales organization that's been used to selling subscription contracts now pivoting to like a cloud-first strategy with Capella? Does that need to evolve in some ways, is there any potential sort of disruption associated with that?

Yes, Sanjit, I think it's a well-made point, and I'll comment and then I'll turn it over to Huw. Quite frankly, at the outset of this fiscal year, if you would ask me or if I was talking to the Board on where are we on the transition, we needed to make that fundamental cloud-first mindset shift, and I'll give a lot of credit to Gopi for coming in AWS DNA, showing the organization a way, and giving us credit for the capabilities we have, knowing that when we layered in that from a technology perspective, how much faster we could go. And I think the rest of the company kind of follow that dramatic change management, credit to Huw for really spearheading that on the go-to-market side. At the turn of the fiscal year, the thing that I was talking to Huw a lot about is while we were Capella first in kind of value proposition, we were still doing it with somewhat of an enterprise sales mindset. And I remember, I think it was at our kickoff, somebody asked me, well, Matt, who is your favorite customer at Couchbase? And the reps want their name to be mentioned. And I said, it's actually the starter pack of the customer that we don't know that's going to close tomorrow. And what we needed to do is change the mindset of just get started. Now, we talk a lot about new logos, but the challenge for us is not just getting started with new logos. It's getting started with new apps. And I do believe when we say we feel the inflection, I think our field organization, everything from reps to SCs to our marketing teams, to our developer community understands that, and you're starting to see that behavior much more prevalent. Huw talked about a [ 6 to 8 ] new logo that closed. We were sitting back there. We had a win rate of another 8-day initial starter pack, 8-day sales cycle, and we're seeing a lot more of those with the, hey, this is going to be a bigger opportunity over time. So Huw, I don't know what you would add.

Yes. I'll just add a few points. We've spent a lot of time and effort and investment around enablement. So really making sure that we're training and evolving our existing employees. The second thing we've done, we've slightly changed the hiring profile of who we're looking to hire, people who come from a more cloud background per se. And I think the third thing that we spend a lot of time on internally is sharing win stories. And I think this is the point that Matt alludes to there is showing the sales teams that you can start small and you can grow quicker. We spend literally weekly. We're sharing these win stories of where we see that. And so they would be the three things that I would add to what Matt said.

I appreciate the detail there. One follow-up for Greg. On the long-term targets, around 20% plus ARR growth, I assume that's a CAGR in the sense that we're probably not committing to 20% plus next year. It seems like the macro is still a little uncertain. You guys are growing, sustaining growth quite well. But I just want to get a clarification that we should think about ARR growth on a CAGR basis over the next 4 to 6 years? And then on the operating margin side, the 20% target, any sort of time frame to reach the 20% margins?

Yes. Yes, on that top line growth, we just think over that period, we have the opportunity to be a 20-plus percent grower. We're obviously going to give you the fiscal '25 guidance at the Q4 earnings. And yes, there is some uncertainty in the macro and timing of certain things. But we just want to give the context of how we thought we could continue to grow. Like we've said before, we're certainly not running this company to slow down. We want to continue to accelerate and we think Capella gives us the chance to do this. And just to be clear, that was what we'll call the medium term, which we shared today, which is like a 4 to 6 year. The long term is we haven't sort of given a time frame on it. But you'll see we're -- based on the way the free cash flow and the op income is going, you'll see we're sort of clearly working our way to be that 20-plus percent operating margin business in the future.

Rudy Kessinger, D.A. Davidson. Matt, could you talk about what percent of applications or really database spend with your customers comes from mission-critical enterprise-grade applications that require the performance that you guys provide relative to smaller applications that maybe are okay with a bit worse performance on an easier to use, more developer-friendly or known alternative.

Yes, Rudy, it's a good question. And I think it varies so much based on the company. And if we go to the Playgon example. I mean, their business is running on Couchbase. I don't think there is any database spend that is not mission-critical. If we were to shift over to Harveer's business, he probably has a lot of applications that aren't mission-critical that can -- we're good enough, may be viable. We would be approximating at best if we tried to slice the TAM because I think there's so much variability. That said, what I think about is the percentage of applications that require the attributes that Couchbase has been architected for, and what that share mix looks like 5 years from now versus 5 years ago. And I think if you think about digital transformation, AI, the demands we have on applications in every aspect of our life, that share is only going to go up. And so whereas before, we might have been more challenged to find those mission-critical applications in enterprises where maybe good enough for stretching relational database might have been viable. More often than not, we're running into situations where customers realize that it's not good enough, and picking a platform that can satisfy those requirements, and at the same time, have the developer flexibility and agility that the customers on the panel talked about, that's a position that we enjoy and we're excited about because we are moving where the opportunity is going to expand. Huw, I don't know if there's anything you'd add.

Yes, I've been here for 5.5 years. So Matt, the context of my answer comes from, well, what did we see then and how that's evolved? And just to back up Matt's point, I think the conversations that we get into now, it's much more about the attributes of the technology versus I've got this mission-critical situation I need to solve, [ you ] the answer. I think the other thing that's really opened up a number of different parts of the market is the relationship with the cloud service providers. Again, as you heard from our colleague at AWS, the close partnership that we've got with these cloud providers get us into conversations that we probably wouldn't have been in, in the past. And being on the marketplace opens us up and accessing multiple opportunities that we may not have seen in the past, so...

Yes, Rudy, I would just -- one thing I would add is, remember that even with these large customers that we showed you today, we're still -- we still only have a fraction of their total database spend as well. So there's plenty of opportunity within the existing customers and the new customers. That's why we say it's unconstrained because there is so much still out there for us.

And just a quick follow-up. With the cloud service providers, I guess, could you add a little bit more color, are all 3, I guess, do you have a joint go-to-market? Are the reps getting quota relief? And then what percentage of your Capella ARR is being transacted through the cloud marketplaces today?

And I have to lean on you on the numbers side if we share. We're embedded in programs with all three of the providers. We've got resources who are aligned to those partnerships. I think it is fair to say, we'd probably be a bit more advanced with AWS than probably Google and Azure, but we've got great partnerships with all of them, and a lot of it comes down to specific customer relationships with those cloud providers of who we leverage and how we operate to support the customer requirement.

Yes. Really, we haven't shared and we're not planning on sharing how much is coming from the marketplace, but just know that we're very engaged and driving business through there. In fact, we lean in with a number of our customers to say, hey, let's take this through -- to a private marketplace offer. I mean, that's how we want to go to market, and we're actually incentivizing our team to do that as well.

One up front here, [indiscernible].

Howard Ma with Guggenheim Securities. Thank you all for a really good presentation. I first have a question for Greg, which is -- can you -- if we think more near term on top line, can you comment on the shape of ARR and revenue? And when I think about it, like if we were to extrapolate the -- you showed 2 customer examples, right? If were to extrapolate the new logo -- the new Capella logo more broadly, and then also consider the fact that server migrations that -- at least on an ARR basis, might be kind of flattish in the near term and then -- but then you get this big bump, right, like Capella smaller initial lands, big expansions. Is it the right way to think about it, that it's not exactly linear in the near term, the progression it might be? So maybe ARR growth doesn't quite accelerate so much near term, but then we might get this big spike and then kind of thinking about it the way that Sanjit framed it? Maybe that's more of a CAGR? And then it really just seems like revenue. And then like the other examples you showed for revenue, it seems like revenue growth that could just be kind of pretty choppy over time. Is that the right way to think about it?

Yes. I'll go backwards. So the answer to the choppiness on revenue is yes. It's -- again, it's GAAP, so it's a good measure, but doesn't represent the best measure for our business because of some of that choppiness, and it's really sort of rear looking where we think the way we've constructed our ARR definition is much more forward-looking in terms of what's actually happening in the business today. In terms of the dynamics around ARR as we go. So yes, there will be the customers that are on the initial phase, obviously are sort of fixed for that first year. And the reason we do it is because in consumption, you can't start at your exact run rate, and it's going to take some time. So we want to represent the kind of deal we did and why we think you're going to see that ARR or potentially more in the future. But yes, there will be some -- in some cases, some delay. But look, we're at 10% plus. So we're getting enough or have enough of our customer base on the consumption and some of the customer base on the initial phase. So you're seeing sort of a blend. But over time, I think you're going to see that just continue to sort of flow through the model nicely, and we're just excited about what Capella can do here for our growth story over the next several years.

Okay. Great. And I have a follow-up for Gopi, maybe for Matt too. It's more of a philosophical question. And the question is, it seems like you guys are of the belief that combining real-time analytics -- operational analytics in the same platform, combining realtime analytics with the operational data store as part of one platform, that, that is the way for the future, for AI-powered adaptive applications, as you all call it. Is that like -- I have a follow-up, but is that -- can you confirm that that's a superior approach do you believe?

Yes. Look, fundamentally, as we think about the requirements of an application to deliver a hyper-personalized, real time, what we refer to as adaptive experience. I need to not only have access to everything in the data set, but I need to be able to query that in an intelligent way to derive insights to change the very performance of the application while it's running. Independent of our philosophy, applications will require that. So then we say, well, how will we best deliver that? And the fact that in a single platform, we can do the operational data store, and Scott articulated that we can ingest data from many, many sources, run those queries without slowing the performance, pump that in and do it in a single platform. Now imagine going to developer. All of our customers talked about the importance of developer flexibility. The fact that you can do that in a single engine and then layer in things like vector search and other capabilities. We think a lot about the density of the data platform supporting applications, and we want to be really smart about where we have an architectural advantage to own a very dense important part of that and where we want to integrate with other parts of the stack. So this real-time analytics is pretty fascinating. When you think about the application examples today, Harveer is talking about the emotional state of people transferring money, you're not driving that by simple data, that's analyzing data in real time where you transfer it, it's a perfect example. And the fact that we can do that in a single platform, is extremely powerful.

And I guess, perhaps a follow-up for Gopi is, it's on the Columnar Service specifically because I was under the impression that the way that Couchbase is built initially, the in-memory capabilities already has real-time analytics built in. So can you comment on what is -- basically, in terms of performance and scalability, what does the Columnar Service add that the existing in-memory analytics didn't already? And can you also talk about how -- just alternative approaches to bringing -- to bring analytic data stores into your operational database?

So the -- as you rightly pointed out, we already had -- we still have and customers still use our analytic capabilities as part of our OLTP system. If you look at what -- how Couchbase has been architected, we have a multidimensional scale. So you can add an analytical node or a query node or any of those kind of stuff. But basically, it's backing a data node, which is actually feeding the data into an analytical system. But that takes you only so far. But if you're trying to get into a full-fledged analytical system like for doing a 0 [ ETL]. So we pride ourselves in making sure that we have done so much for JSON. But if you look at a traditional analytical system, the data goes from an OLTP store like Couchbase. It goes all the way and like customers spend time, money and resources to transform these data' into some format so that it finds its way into a Columnstore at the [ very ] end like doing a Parquet or Avro, right, to get that data efficiencies back in. What we have invented here is the fact that we are able to do the whole thing using JSON. This is probably the first time it's been done. Like we are keeping the same format. The customers are not spending time, money or resources to transform the data. So we can store -- I mean, generally, these data go into S3 and we can analyze the data. And you're not spinning up any compute as long as you don't need it. We'll be able to spin up the compute and bring up the data that we need. Or in just as Scott mentioned, we have ingest mechanism built in that you will be able to ingest from other OLTP system, not just us to be able to do that. So it's much more powerful in terms of performance and scale that we are not -- we're still in private review, but we are order of magnitude better than anyone out there, including our own analytical systems out there. So it's more of a total system in terms of being able to go from one end of the spectrum to another end and coming back, which is also important.

Let me give you an example. So I was talking to a customer, really a prospect right now, where they have JSON data that they're converting into an AWS service, which is relationally oriented. So they're ETLing and converting that data. So they're actually flattening the JSON and losing some of the richness of the ray data within that. Then they do computation. So they convert that relational or analytics and serve that up via documents via KV store. So if you look at that pipeline, the data that's coming in is getting process and it's taking minutes to hours to move entirely through that platform. So the data, the application is getting served is latency embedded within that. So you have this very complex process of taking -- it's like, you've got oranges, you're squeezing to turn it to orange juice, and then somehow you're recombining it into an orange again to do it. And so what you get with that is just more complexity, fragility of the pipeline because you have to maintain the data mappings throughout that process. So if your data changes at all, you're going to break your pipeline. Keeping that natively within JSON and being able to stream that data in real-time into our platform is incredibly powerful. To add on to what Gopi was saying, when we look at our existing analytics service relative to our Columnar Service because of the Columnar format, there's actually two benefits. One is performance where we've seen significant performance improvements. The other is storage efficiency because the level of compression that we get. So there's a TCO benefit that customers receive. In addition to that, the performance improvements that we've seen is also reflective of using smaller compute nodes. So we're able to get not just similar performance with smaller compute nodes, but greater performance with smaller compute nodes, and that gives a better TCO story for our overall solution.

Matt Martino of Goldman Sachs. This is for Matt or Greg. So you guys have laid out a target for 20% ARR growth over the midterm and shared a few slides on Couchbase enterprise migration opportunities. So to the extent possible, can you kind of share with us how we should be thinking about the underlying ARR contribution from net new logos on Capella versus enterprise migrations in the context of that midterm framework?

Yes. I mean, look, like I said, the thing that's going to get us from at least 1/3 to over 50% is going to be the migrations. We have large, very large customers, as I showed you examples of. If they want to go and go in a meaningful way, it's going to be material for us. So it's going to be more from the migrations and the new logos in the early days, but we also have showed you the example of a Capella new logo that went from a low 6-figure deal to now over a 7-figure deal in a matter of 2 years. So they will be meaningful, but we believe that the migrations with the uplift we can get. And again, as the technology team brings more services like Columnar and iQ, that's just more opportunity for customers to benefit from the platform, and thus use more of Capella. So I think that's how it's going to play out most likely.

I think the other thing that I would add is when we talk about a migration, Greg walked through some examples. Huw talked about this. The customers alluded to this. Sometimes it starts with one app. Sometimes it's the entire state. There's a lot in between. But when you look at the growth rates that we're seeing, that 2x and 4x, the dynamic at play there is, one, $1 of server is not as good as $1 of Capella because of what we support. But what we're getting there is new apps. And so I know there's a lot of focus on new logos, and we've committed to doing better there. But a big part of what we think about with the go-to-market teams is net new applications powered by Couchbase. And so I think the growth of new apps on that Capella percentage is going to be significant. How exactly the mix is between logos we have today and logos we're going to acquire, that's a dynamic that we're going to have to manage closely. I think we're going to be very smart about how we approach customers and not force them to the migration because look at the relation, I think a lot of what came out in the customer panel is relationships matter when these people have their jobs on the line. And I think other vendors have been a little bit more aggressive in trying to force some migration. And we're going to be smart about that, live according to our values and make sure that we don't do things that are out of alignment with how customers want to run their business.

Taz Koujalgi, Wedbush. Either for Greg or Matt. So you speak about migrations from existing database vendors versus new applications. And I think, good feedback from the customer panel on new apps being built on Couchbase. But when you think about the opportunity from existing -- moving from existing Oracle, or SQL-2 to Couchbase, how's that today? Do you get a big tailwind from that? Or is it mostly new apps? And you see that changing as you go forward as you add more new features with vector search and Columnar database? Do you think a bigger mix of new ARR comes from migration than you are seeing today?

Yes. So maybe I'll start, and then I'll ask Huw to comment. First of all, I think the opportunity for relational offload is significant, and I think it's going to happen over time. When we talk to customers, they express, well, what is the most important priority for them at any given moment. And there needs to be a compelling event to repurpose an application or to migrate it. Maybe it's part of a cloud migration, maybe it's because an e-commerce engine is no longer performing. That's our opportunity to come in and show that we're a better platform for the future. I don't think people are going to go out, particularly in an economic environment like this and just say, now is the time to move all relational databases without that compelling event. So I think it depends on where you find the enterprise on their particular project. We're talking to a lot of customers about the value that Couchbase brings and being able to simply repurpose the portion of the app that's working today by things that we're doing with the data modeling and data movement while also benefiting from net new capabilities. So I think this will be a very important driver of the transition of that $130-plus billion market, but I don't think it's the -- there needs to be that compelling event that goes along with it, and that's digital transformation and AI and what's aligned to their business strategy.

Yes, I'd only add two points. One would be if you think about what we're representing as a field sales team, the great thing that we've got in our kit bag is able to say, we can help you with that new application. We can help you migrate off a maybe competitive solution in NoSQL or we can help you with the legacy technology you've got as well. And the approach we take is we'll start wherever is right for that prospect. But the credibility we've got by us being able to say, we can help you with all those different cases really helps us from a land point of view and have the credibility to expand. The other thing I'd call out, we work, again, as I mentioned earlier on, very closely with both our marketing teams and our partner teams to help us identify what people are looking to do. So as you can imagine, we've got a lot of telemetry ourselves. We also use other technologies to help us understand the propensity to buy from a given prospect. And we're able to pick up with the materials that a prospect engages with of where they are on that journey and what they're looking to do with us. So we just sort of pivot, all depending on a given prospect of where we would start with them.

And one follow-up on Capella. So Greg, you mentioned the NRR for Capella is 167% in the quarter. If you look at the overall NRR for the business, it's been in that 115% range. As your Capella mix goes from 10% to 30% to 50%, do you expect that -- it should -- basic math, should drive that NRR going forward. Is that a fair assumption?

Yes. I mean, again, we're not giving any forward projections on net retention rate. We've tried to -- in the last couple of earnings calls, dropped some hints about where our net retention -- in quarter net retention rate is. And then it's been the highest and Q2 was the highest in 3 years, and Q3 was right around there. It's driven by strong foundation being over 115%. And now you see the Capella piece bringing it up. So if that continues, yes, we could see that continue to move up. And we'll continue to try to update you and give you some insights. But we're not, at the time, going to change the position that we're going to be 115-plus-percent net retention rate.

Just one final question. On the net new ARR, you've added about 8 million to 9 million net new ARR for the last 2, 3 quarters. Any color on how much of that was Capella versus enterprise? I know, you give us the overall ARR mix. But within the net new ARR that you've added, how does Capella versus what's Capella versus enterprise? Any...

Yes, I think what we're going to do as it is at Q4 earnings, we're going to actually break out and give you specifically the Capella ARR, so you'll be able to track sort of what's net new coming from Capella versus enterprise going forward. I think, Edward, maybe one more before we break here if we have it.

Going once.

This is Rob from Stifel. On Capella iQ, I know it's very early, but I was wondering what specific feedback you've heard from customers as to the pace that they've been able to reduce new workload time to market and increase efficiency?

I'll take that. What was the first part? I'm sorry.

The pace that customers on Capella iQ have been able to reduce new workload time to market?

Yes. We were in private preview that's going to be GA next year. I think what we found in the feedback, and we added tens of developers using that, and we had a mix of developer types. So we had some people who were, call early in career. And just that time to get data created within the system and sample data and then the right indexes and then the SQL code. What I would say is it just accelerated, I guess, their journey to expertise. And it'd be difficult to quantify, but I would say, they were very impressed with that. And I think, one of the proxies I always look at new features is how many new feature requests they have associated with that. So there's this level of excitement around the IQ where we love it, but can I have this, can I have this, can I have this? And I think that's a great proxy in terms of the reaction and the power of that tool. So it's an area that Gopi and I are very committed to, to ensure that we're prioritizing our engineering resources to enhance that capability and broaden that. And demonstration of that in our private preview with Columnar day one it came with iQ support. So you'll see that continue as we bring in new capabilities in the platform, and we'll extend the capabilities of iQ generally.

Great. Well, listen, on behalf of Team Couchbase, not just the members of the team that are here, but our employees around the world, we genuinely want to thank all of you in the room and online for joining us for what we hope was a fantastic day. As I said at the outset, I hope you pick up on our collective enthusiasm for what we're doing as a company. I think you heard that relayed from some of our customers. We do truly believe that our technology is helping change the world, and we spent a lot of time being meticulous and maniacal about building a foundation, being very strategic about layering in Capella and preparing for a future that we genuinely believe will provide the best days of Couchbase. So once again, thank you for being here. We hope you enjoyed the day and look forward to spending some time with some of you over lunch as we conclude. Thank you.

Thank you.