Confluent, Inc. ((CFLT)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Confluent, Inc. recently held an earnings call that was marked by a strong performance and an overall positive sentiment. The company reported significant growth in subscription revenue and achieved non-GAAP profitability for the first time. A major partnership with Databricks and robust customer growth further underscored the positive momentum. However, there were minor concerns related to deferred revenue timing and a one-time free cash flow impact.
Exceeding Guided Metrics
Confluent exceeded all guided metrics for the quarter. Subscription revenue surged by 24% to $251 million, while Confluent Cloud revenue saw an impressive increase of 38%, reaching $138 million. The company also achieved a non-GAAP operating margin of 5%, reflecting its strong financial health.
Major Partnership with Databricks
In a strategic move, Confluent announced a significant expansion of its partnership with Databricks. This collaboration aims to empower enterprises by providing real-time data for AI-driven decision-making, highlighting Confluent’s commitment to innovation and growth in the data streaming industry.
First Non-GAAP Profitable Year
Fiscal Year 2024 marked a milestone for Confluent as it achieved its first non-GAAP profitable year. The subscription revenue increased by 26%, totaling $922.1 million, showcasing the company’s solid financial trajectory and strategic execution.
Strong Customer Growth
Confluent ended fiscal year 2024 with approximately 5,800 customers, an increase of 840 customers year over year. This growth reflects the company’s expanding market presence and its ability to attract new clientele consistently.
Robust Expansion in Large Customers
The company experienced robust expansion in its large customer base, growing its 100K+ ARR customer count to 1,381, a 12% increase from the previous year. This segment represents approximately 90% of Confluent’s revenue, underscoring the importance of large customers to its business model.
Deferred Revenue Timing
Changes in deferred revenue were primarily driven by the timing of large Confluent Platform multiyear deals. Although this indicates some variability in revenue recognition, it is not seen as a major concern at this juncture.
One-Time Free Cash Flow Impact
A one-time negative impact of approximately 15 points to Q1, 2025’s free cash flow margin is expected due to a change in the timing of cash compensation payments. While this presents a temporary challenge, the company remains optimistic about its long-term cash flow outlook.
Forward-Looking Guidance
During the earnings call, Confluent’s management offered forward-looking guidance that was optimistic and ambitious. For FY 2025, the company anticipates subscription revenue between $1.117 billion to $1.121 billion, reflecting a growth of 21% to 22%. Additionally, the company expects a non-GAAP operating margin of approximately 6%, indicating continued focus on profitability.
In summary, Confluent’s earnings call painted a picture of a company on a positive trajectory, with significant growth in key areas such as subscription revenue and customer base. The strategic partnership with Databricks and the achievement of non-GAAP profitability were standout highlights. While there are some concerns regarding deferred revenue timing and a one-time cash flow impact, the overall sentiment remains optimistic, and the company appears poised for further success in the upcoming fiscal year.
