Small-cap Software company Couchbase is down -1.7% during this morning's trading session, while the S&P 500 moved -0.2%. With last year's reported gross margins at -45.5%, you might be wondering if today's drop is an opportunity to pick up shares of a profitable company at a discount.
Gross margins give insight into the basic economics of the company' product line and its pricing power in the target market, yet it's essential to balance this with a review of Couchbase's operating margins. Operating margins take into account the company's fixed overhead costs, in addition to the cost of revenue used to calculate gross margins
|Date Reported||Revenue ($)||Cost of Revenue ($)||Gross Margins (%)||YoY Growth (%)|
Couchbase's gross margins are currently in the green, but this might not be the case for long. Since its cost of revenue is growing at a rate of 89.4%, its gross margins have been shrinking -1.4% on average each year.
|Date Reported||Total Revenue ($)||Operating Expenses ($)||Operating Margins (%)||YoY Growth (%)|
The table above tells us that, on average, Couchbase has not been profitable over the last four years, which should be a warning sign to prospective investors. Indeed, the company's operating margins are sinking at rate of -14.6% despite their strong top line profitability.