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Confluent (CFLT)
NASDAQ:CFLT
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Confluent
(NASDAQ:CFLT)
64Neutral
Positive Factors
Market Opportunity
The company addresses a large total addressable market estimated to be $100 billion.
Product Expansion
Confluent is moving from selling just its Kafka streaming engine to selling a full data streaming platform, which includes additional elements such as connectors, governance, and stream processing software.
Strategic Partnerships
Confluent's partnership with Databricks unlocks more sales opportunities in an AI-driven space where real-time data is necessary.
Negative Factors
Leadership Changes
There is disappointment regarding the departure of Erica Schultz, President of Field Operations, due to her effective leadership in scaling the organization.
Stock Performance
The stock has fallen 9% YTD versus a decrease of 6% YTD for the Russell 3000.
Confluent (CFLT) vs. S&P 500 (SPY)
Market Cap
$8.67B
Dividend YieldN/A
Average Volume (3M)7.04M
Price to Earnings (P/E)―
Beta (1Y)1.37
Revenue Growth24.03%
EPS Growth27.45%
CountryUS
Employees3,060
SectorTechnology
Sector Strength46
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)-1.07
Shares Outstanding272,936,800
10 Day Avg. Volume4,840,737
30 Day Avg. Volume7,043,307
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)9.67
Price to Cash Flow (P/CF)141.70
P/FCF Ratio237.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$37.58Price Target Upside46.97% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering29
Confluent Business Overview & Revenue Model
Company DescriptionConfluent, Inc. operates a data streaming platform in the United States and internationally. It offers Confluent Cloud, a managed cloud-native service for connecting and processing data; and Confluent Platform, an enterprise-grade self-managed software that connects and processes data in real-time with the foundational platform for data in motion. It also provides Kafka Connect that enables to build connectors to integrate Apache Kafka with other apps and data systems; ksqlDB, a database for stream processing applications; and stream governance, a solution that is designed for the intricacies of streaming data, which allows teams to expand usage of real-time data without bypassing requirements for risk management and regulatory compliance. In addition, it also offers training and professional services. The company was formerly known as Infinitem, Inc. and changed its name to Confluent, Inc. in September 2014. Confluent, Inc. was incorporated in 2014 and is headquartered in Mountain View, California.
How the Company Makes MoneyConfluent generates revenue primarily through a subscription-based model for its Confluent Cloud and Confluent Platform offerings. Confluent Cloud, a fully managed service, is available on major cloud providers like AWS, Google Cloud, and Microsoft Azure, with pricing based on consumption, allowing users to scale as needed. The Confluent Platform, offered as a software license, provides additional enterprise features and support for on-premises or hybrid cloud deployments. Additional revenue streams include professional services and training to help organizations implement and optimize their data streaming capabilities. Significant partnerships with cloud providers and a strong ecosystem of technology partners amplify Confluent's reach and enhance its service offerings, contributing to its revenue growth.
Confluent Financial Statement Overview
Summary
Confluent shows robust revenue growth and improving cash flow, but remains unprofitable with a negative net profit margin. The balance sheet indicates manageable leverage, but profitability needs enhancement for a stronger financial position.Income Statement
Confluent has demonstrated strong revenue growth, with a TTM revenue increase of 24% compared to the previous year. The gross profit margin stands at 73.3%, indicating effective cost management. However, the company remains unprofitable with a net profit margin of -35.8% and negative EBIT and EBITDA margins, reflecting ongoing operational challenges.72
Positive
Balance Sheet
The balance sheet shows a moderate debt-to-equity ratio of 1.15, indicating manageable leverage. The return on equity (ROE) is negative due to the company's net losses. The equity ratio is 35.7%, suggesting a balanced asset structure, but the company needs to improve profitability for a stronger financial position.65
Positive
Cash Flow
The company has improved its cash flow position, achieving a positive operating cash flow of $33.5 million in the TTM, compared to negative figures in previous years. Free cash flow growth is significant, moving from negative to positive, which is a positive sign. However, the free cash flow to net income ratio is still constrained by net losses.68
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 963.64M | 776.95M | 585.94M | 387.86M | 236.58M | Gross Profit |
| 706.17M | 547.28M | 383.53M | 250.57M | 161.10M | EBIT |
| -419.15M | -443.92M | -462.67M | -339.62M | -233.18M | EBITDA |
| -419.15M | -430.01M | -455.05M | -335.99M | -231.61M | Net Income Common Stockholders |
| -345.06M | -442.75M | -452.55M | -342.80M | -229.83M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 1.91B | 1.90B | 1.93B | 2.02B | 288.55M | Total Assets |
| 2.69B | 2.46B | 2.34B | 2.34B | 526.12M | Total Debt |
| 1.11B | 1.11B | 1.12B | 1.12B | 50.93M | Net Debt |
| 724.00M | 763.83M | 681.23M | -254.35M | 14.14M | Total Liabilities |
| 1.73B | 1.65B | 1.58B | 1.49B | 832.37M | Stockholders Equity |
| 961.23M | 810.41M | 769.48M | 850.28M | -306.25M |
| Cash Flow | Free Cash Flow | |||
| 9.49M | -124.34M | -171.79M | -114.00M | -86.71M | Operating Cash Flow |
| 33.46M | -103.66M | -157.33M | -105.06M | -82.06M | Investing Cash Flow |
| -74.98M | -84.85M | -865.80M | -400.58M | -176.86M | Financing Cash Flow |
| 79.81M | 102.37M | 82.24M | 1.84B | 276.76M |
Confluent Technical Analysis
Negative
25.57
Price Trends
29.26
Negative
29.33
Negative
26.12
Negative
Market Momentum
-1.06
Positive
40.23
Neutral
35.23
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CFLT, the sentiment is Negative. The current price of 25.57 is below the 20-day moving average (MA) of 27.33, below the 50-day MA of 29.26, and below the 200-day MA of 26.12, indicating a bearish trend. The MACD of -1.06 indicates Positive momentum. The RSI at 40.23 is Neutral, neither overbought nor oversold. The STOCH value of 35.23 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CFLT.
Confluent Risk Analysis
Confluent disclosed 74 risk factors in its most recent earnings report. Confluent reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Confluent Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $33.38B | ― | -1.21% | ― | 27.77% | 89.39% | |
66 Neutral | $37.90B | 210.26 | 7.75% | ― | 26.12% | 274.50% | |
64 Neutral | $8.67B | ― | -38.95% | ― | 24.03% | 27.45% | |
63 Neutral | $15.54B | ― | -1.24% | ― | 7.32% | 88.51% | |
60 Neutral | $15.32B | ― | -6.70% | ― | 19.22% | 28.46% | |
58 Neutral | $21.67B | 10.60 | -18.43% | 2.42% | 4.66% | -24.45% | |
57 Neutral | $53.37B | ― | -31.43% | ― | 29.21% | -51.47% |
* Technology Sector Average
Performance Comparison
CFLT
Confluent
25.57
-4.27
-14.31%
TWLO
Twilio
101.82
39.37
63.04%
MDB
MongoDB
188.64
-167.45
-47.02%
ZS
Zscaler
209.45
17.32
9.01%
DDOG
Datadog
104.85
-18.30
-14.86%
SNOW
Snowflake
156.98
-3.54
-2.21%
Confluent Earnings Call Summary
Earnings Call Date: Feb 11, 2025 | % Change Since: -15.05% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong performance by Confluent, with significant growth in subscription revenue and the achievement of non-GAAP profitability for the first time. The major partnership with Databricks and robust customer growth underscore the positive momentum. However, there are minor concerns related to deferred revenue timing and a one-time free cash flow impact.Highlights
Exceeding Guided Metrics
Confluent exceeded all guided metrics for the quarter. Subscription revenue grew by 24% to $251 million, Confluent Cloud revenue increased by 38% to $138 million, and the non-GAAP operating margin was 5%.
Major Partnership with Databricks
Confluent announced a major expansion of its strategic partnership with Databricks. The integration aims to empower enterprises with real-time data for AI-driven decision-making.
First Non-GAAP Profitable Year
Fiscal Year 2024 marked Confluent's first non-GAAP profitable year, with a subscription revenue increase of 26% to $922.1 million.
Strong Customer Growth
Confluent ended fiscal year 2024 with approximately 5,800 customers, representing an increase of 840 customers year over year.
Robust Expansion in Large Customers
The company grew its 100K+ ARR customer count to 1,381, an increase of 12% from a year ago, representing approximately 90% of revenue.
Lowlights
Deferred Revenue Timing
Changes in deferred revenue are primarily driven by timing of large Confluent Platform multiyear deals, indicating some variability in revenue recognition.
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 timing of cash compensation payments.
Company Guidance
During the Confluent Q4 and Fiscal Year 2024 earnings call, management reported surpassing all guided metrics. Subscription revenue increased by 24% to $251 million, and Confluent Cloud revenue grew by 38% to $138 million. The company's non-GAAP operating margin stood at 5%, marking the third consecutive positive quarter. Fiscal Year 2024 subscription revenue rose by 26% to $922.1 million, with a non-GAAP operating margin improvement of 10 percentage points to 2.9%. For FY 2025, the company anticipates subscription revenue between $1.117 billion to $1.121 billion, reflecting a growth of 21% to 22%, and a non-GAAP operating margin of approximately 6%.Confluent Corporate Events
Executive/Board Changes
Confluent CTO Chad Verbowski Announces Retirement Plan
Neutral
Nov 14, 2024
Chad Verbowski, the Chief Technology Officer of Confluent, Inc., will retire on November 26, 2024, to take a career break but will remain an advisor until February 21, 2025, ensuring a smooth transition. During this period, the engineering team will report to the CEO, as the company seeks a replacement. Confluent acknowledges Verbowski’s significant contributions to its engineering success.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.