- First quarter total revenue of $217 million, up 25% year over
year
- First quarter subscription revenue of $207 million, up 29% year
over year
- First quarter Confluent Cloud revenue of $107 million, up 45%
year over year
- 1,260 customers with $100,000 or greater in ARR, up 17% year
over year
Confluent, Inc. (NASDAQ: CFLT), the data streaming
pioneer, today announced financial results for its first quarter of
2024, ended March 31, 2024.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20240506875179/en/
Q1 2024 Confluent Infographic (Graphic:
Confluent)
“Confluent started fiscal year 2024 strong, highlighted by 45%
year-over-year revenue growth for Confluent Cloud, which now
accounts for the majority of our subscription revenue and remains
our fastest growing offering,” said Jay Kreps, co-founder and CEO,
Confluent. “These results show the critical role data streaming
plays in the modern technology landscape, with organizations
showing a clear preference for a complete platform to stream,
connect, process, and govern data everywhere. Our latest product
innovations reinforce our competitive advantage to help us fully
maximize the category opportunity ahead of us.”
“Our first quarter performance demonstrates that our consumption
transformation is showing early signs of success, evidenced by our
robust subscription revenue growth and the largest sequential
increase in total customers since Q1 2023,” said Rohan Sivaram,
CFO, Confluent. “While streaming remains the largest driver of our
cloud business with continued strong growth, our DSP products which
include connect, process, and govern have shown substantially
faster growth. This puts us in a stronger position to drive durable
and efficient growth in the years ahead.”
First Quarter 2024 Financial
Highlights
(In millions, except per share data and
percentages)
Q1 2024
Q1 2023
Y/Y Change
Total Revenue
$217.2
$174.3
25%
Subscription Revenue
$206.9
$160.6
29%
GAAP Operating Loss
$(111.4)
$(166.1)
$54.7
Non-GAAP Operating Loss
$(3.3)
$(40.3)
$37.0
GAAP Operating Margin
(51.3%)
(95.3%)
44.0 pts
Non-GAAP Operating Margin
(1.5%)
(23.1%)
21.6 pts
GAAP Net Loss Per Share
$(0.30)
$(0.52)
$0.22
Non-GAAP Net Income (Loss) Per Diluted
Share
$0.05
$(0.09)
$0.14
Net Cash Used in Operating Activities
$(26.0)
$(77.8)
$51.8
Free Cash Flow
$(31.7)
$(82.9)
$51.2
Financial Outlook
As previously announced, Confluent will be transitioning its
revenue outlook from total revenue to subscription revenue. The
second quarter of 2024 will be the final quarter for which
Confluent provides total revenue outlook for the quarter and fiscal
year 2024. Confluent will provide only total subscription revenue
outlook beginning with outlook for the third quarter of 2024.
For the second quarter of 2024, Confluent expects:
- Total revenue between $229 million and $230 million
- Subscription revenue between $217 million to $218 million
- Non-GAAP operating margin of approximately negative 1%
- Non-GAAP net income per diluted share between $0.04 to
$0.05
For fiscal year 2024, Confluent expects:
- Total revenue of approximately $957 million
- Subscription revenue of approximately $910 million
- Non-GAAP operating margin of approximately 0%
- Non-GAAP net income per diluted share between $0.19 to
$0.20
A reconciliation of forward-looking non-GAAP operating margin,
free cash flow margin and non-GAAP net income per share to the most
directly comparable GAAP measures is not available without
unreasonable effort, as certain items cannot be reasonably
predicted because of their high variability, complexity and low
visibility. In particular, the measures and effects of our
stock-based compensation-related charges, which include stock-based
compensation expenses, employer payroll taxes on employee stock
transactions, and amortization of stock-based compensation
capitalized in internal-use software, are directly impacted by the
timing of employee stock transactions and unpredictable
fluctuations in our stock price, which we expect to have a
significant impact on our future GAAP financial results.
Conference Call Information
Confluent will host a video webcast to discuss the company’s
first quarter 2024 results as well as its financial outlook today
at 4:30 p.m. Eastern Time/1:30 p.m. Pacific Time. Open to the
public, investors may access the webcast, earnings press release,
supplemental financial information, and investor presentation on
Confluent’s investor relations website at investors.confluent.io
before the commencement of the webcast. A replay of the webcast
will also be accessible from Confluent’s investor relations website
a few hours after the conclusion of the live event.
Confluent uses its investor relations website and may use its X
(Twitter), LinkedIn, and Facebook accounts as a means of disclosing
material non-public information and for complying with its
disclosure obligations under Regulation FD.
Forward-Looking Statements
This press release and the earnings call referencing this press
release contain forward-looking statements including, among other
things, statements regarding (i) our financial outlook, including
expected total revenue, subscription revenue, Confluent Cloud
revenue, non-GAAP operating margin, free cash flow margin, non-GAAP
net income per share, revenue mix, Confluent Cloud growth,
operating margins and margin improvements, targeted or anticipated
gross and operating margin levels, earnings per share levels and
improvements, improvements in unit economics and in-product
optimizations of Confluent Cloud, continued business momentum, and
expected revenue growth rate and efficient growth, (ii) our market
and category leadership position, (iii) our expected investments in
research and development and go-to-market functions and anticipated
effectiveness and timing of product innovation, features and
functionalities, (iv) our ability to drive efficient growth and
rate and pace of investments, including expected capital
allocation, (v) our expectations and trends relating to growth of
our DSP products and Confluent Cloud, including following our
planned reorientation of our go-to-market strategy and model around
customer consumption, (vi) rates of Confluent Cloud consumption and
demand for and retention of data streaming platforms like Confluent
in the face of budget scrutiny, (vii) continued high interest rates
and macroeconomic uncertainty as well as our expectations regarding
the effects of macroeconomic pressure on our go-to-market motion,
durability of our offering with customers, customer use case
expansion and overall consumption levels of Confluent Cloud, as
well as potential benefits to our business and growth following any
improvements to the macroeconomic environment, (viii) our pricing,
our win rate and deal cycles and customer behaviors, such as budget
scrutiny and preferences for consumption rather than large upfront
commitments, (ix) customer growth, retention and engagement, (x)
ability for Confluent Cloud to provide cost savings for users and
customers, including lower total cost of ownership, and drive
greater monetization of the open source Kafka user base as a
result, (xi) increased adoption of our offering and fully managed
solutions for data streaming in general, including from customers
building generative AI applications, (xii) dependence of businesses
on data in motion, (xiii) growth in and growth rate of revenue,
customers, dollar-based net retention rate, and gross retention
rate, (xiv) our ability to increase engagement of customers for
Confluent and expand customer cohorts, (xv) our market opportunity,
(xvi) our ability to successfully reorient our go-to-market
strategy and model around customer consumption as well as the
timing, anticipated benefits, and overall effectiveness of such
transition for our business, future durable and efficient growth,
and ability to capture our market opportunity, (xvii) our
go-to-market strategy, (xviii) our product differentiation and
market acceptance of our products, including over open source
alternatives, (xix) our strategy and expected results and market
acceptance for our Flink offering and our DSP products, (xx) our
expectations for market acceptance, direction and growth of stream
processing, its potential to accelerate adoption of our platform
and growth of our business, and our ability and positioning to
capture this market, (xxi) our expectations of meeting near-term
and mid-term financial targets, (xxii) our expectations regarding
the generative AI landscape and our offering, including
expectations of customers and partners using our offering for
generative AI use cases, (xxiii) our expectations of relevance of
certain key financial and operating metrics, and (xxiv) our overall
future prospects. The words “believe,” “may,” “will,” “estimate,”
“continue,” “anticipate,” “intend,” “expect,” “seek,” “plan,”
“project,” “target,” “looking ahead,” “look to,” “move into,” and
similar expressions are intended to identify forward-looking
statements. Forward-looking statements represent our current
beliefs, estimates and assumptions only as of the date of this
press release and information contained in this press release
should not be relied upon as representing our estimates as of any
subsequent date. These forward-looking statements are subject to
risks, uncertainties, and assumptions. If the risks materialize or
assumptions prove incorrect, actual results could differ materially
from the results implied by these forward-looking statements. Risks
include, but are not limited to: (i) our limited operating history,
including in uncertain macroeconomic environments, (ii) our ability
to sustain and manage our rapid growth, (iii) our ability to
increase consumption of our offering, including by existing
customers and through the acquisition of new customers, including
by addressing customer consumption preferences, and successfully
add new features and functionality to our offering, (iv) our
ability to successfully execute our go-to-market strategy and
initiatives, including as we reorient our go-to-market strategy and
model around customer consumption, (v) our ability to attract new
customers and retain and sell additional features and services to
our existing customers, (vi) uncertain macroeconomic conditions,
including high inflation, high interest rates, bank failures,
supply chain challenges, geopolitical events, recessionary risks,
and exchange rate fluctuations, which have resulted and may
continue to result in customer pullback in information technology
spending, lengthening of sales cycles, reduced contract sizes,
reduced consumption of Confluent Cloud or customer preference for
open source alternatives, as well as the potential need for cost
efficiency measures, (vii) our ability to achieve profitability and
improve margins annually, by our expected timelines or at all,
(viii) the estimated addressable market opportunity for our
offering, including our Flink offering and stream processing, and
our ability to capture our share of that market opportunity, (ix)
our ability to compete effectively in an increasingly competitive
market, (x) our ability to attract and retain highly qualified
personnel, including as we reorient our go-to-market strategy and
model around customer consumption, (xi) breaches in our security
measures, intentional or accidental cybersecurity incidents or
unauthorized access to our platform, our data, or our customers’ or
other users’ personal data, (xii) our reliance on third-party
cloud-based infrastructure to host Confluent Cloud, (xiii) public
sector budgetary cycles and funding reductions or delays, (xiv) our
ability to accurately forecast our future performance, business and
growth, and (xv) general market, political, economic, and business
conditions. These risks are not exhaustive. Further information on
these and other risks that could affect Confluent’s results is
included in our filings with the Securities and Exchange Commission
(“SEC”), including our Annual Report on Form 10-K for the year
ended December 31, 2023, and our future reports that we may file
from time to time with the SEC. Additional information will be made
available in our Quarterly Report on Form 10-Q for the quarter
ended March 31, 2024 that will be filed with the SEC, which should
be read in conjunction with this press release and the financial
results included herein. Confluent assumes no obligation to, and
does not currently intend to, update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by law.
Non-GAAP Financial Measures
This press release includes the following non-GAAP financial
measures: non-GAAP gross profit, non-GAAP gross margin, non-GAAP
operating expenses (research and development, sales and marketing,
and general and administrative), non-GAAP operating income (loss),
non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net
income (loss) per share, free cash flow, and free cash flow margin.
We use these non-GAAP financial measures and other key metrics
internally to facilitate analysis of our financial and business
trends and for internal planning and forecasting purposes. We
believe these non-GAAP financial measures, when taken collectively,
may be helpful to investors because they provide consistency and
comparability with past financial performance by excluding certain
items that may not be indicative of our business, results of
operations, or outlook. However, non-GAAP financial measures have
limitations as an analytical tool and are presented for
supplemental informational purposes only. They should not be
considered in isolation from, or as a substitute for, financial
information prepared in accordance with GAAP. In particular, other
companies, including companies in our industry, may report non-GAAP
gross profit, non-GAAP gross margin, non-GAAP operating expenses
(research and development, sales and marketing, general and
administrative), non-GAAP operating income (loss), non-GAAP
operating margin, non-GAAP net income (loss), non-GAAP net income
(loss) per share, free cash flow, free cash flow margin, or
similarly titled measures but calculate them differently, which
reduces their usefulness as comparative measures. Further, free
cash flow is not a substitute for cash used in operating
activities. The utility of free cash flow is limited as such
measure does not reflect our future contractual commitments and
does not represent the total increase or decrease in our cash
balance for any given period. Investors are encouraged to review
the reconciliation of these non-GAAP measures to their most
directly comparable GAAP financial measures, as presented below. We
define non-GAAP gross profit, non-GAAP gross margin, non-GAAP
operating expenses (research and development, sales and marketing,
and general and administrative), non-GAAP operating loss, non-GAAP
operating margin, non-GAAP net income (loss), and non-GAAP net
income (loss) per share as the respective GAAP measures, adjusted
for, as applicable, stock-based compensation-related charges which
include stock-based compensation expense, employer taxes on
employee stock transactions and amortization of stock-based
compensation capitalized in internal-use software; amortization of
acquired intangibles; acquisition-related expenses; restructuring
and other related charges; amortization of debt issuance costs; and
income tax effects associated with these adjustments as well as the
non-recurring income tax expense or benefit associated with
acquisitions. Non-GAAP gross margin and non-GAAP operating margin
are defined as non-GAAP gross profit and non-GAAP operating loss as
a percentage of revenue, respectively. We define free cash flow as
net cash used in operating activities less capitalized internal-use
software costs and capital expenditures and free cash flow margin
as free cash flow as a percentage of revenue. We believe that free
cash flow and free cash flow margin are useful indicators of
liquidity that provide information to management and investors
about the performance of core operations and future ability to
generate cash that can be used for strategic opportunities or
investing in our business.
Definition
Customers with $100,000 or greater in annual recurring revenue
(“ARR”) represent the number of customers that contributed $100,000
or more in ARR as of period end. We define ARR as (1) with respect
to Confluent Platform customers, the amount of revenue to which our
customers are contractually committed over the following 12 months
assuming no increases or reductions in their subscriptions, and (2)
with respect to Confluent Cloud customers, the amount of revenue
that we expect to recognize from such customers over the following
12 months, calculated by annualizing actual consumption of
Confluent Cloud in the last three months of the applicable period,
assuming no increases or reductions in usage rate. Services
arrangements are excluded from the calculation of ARR. For purposes
of determining our customer count, we treat all affiliated entities
with the same parent organization as a single customer and include
pay-as-you-go customers. Our customer count is subject to
adjustments for acquisitions, consolidations, spin-offs, and other
market activity.
About Confluent
Confluent is the data streaming platform that is pioneering a
fundamentally new category of data infrastructure that sets data in
motion. Confluent’s cloud-native offering is the foundational
platform for data in motion – designed to be the intelligent
connective tissue enabling real-time data, from multiple sources,
to constantly stream across the organization. With Confluent,
organizations can meet the new business imperative of delivering
rich, digital front-end customer experiences and transitioning to
sophisticated, real-time, software-driven backend operations.
Confluent, Inc.
Condensed Consolidated Balance
Sheets
(in thousands)
(unaudited)
March 31, December 31,
2024
2023
ASSETS Current assets: Cash and cash equivalents
$
336,373
$
349,761
Marketable securities
1,570,586
1,551,009
Accounts receivable, net
199,842
229,962
Deferred contract acquisition costs
43,214
43,937
Prepaid expenses and other current assets
76,102
76,986
Total current assets
2,226,117
2,251,655
Property and equipment, net
61,627
54,012
Operating lease right-of-use assets
9,176
10,061
Goodwill and intangible assets, net
54,988
55,490
Deferred contract acquisition costs, non-current
73,508
75,815
Other assets, non-current
14,213
13,776
Total assets
$
2,439,629
$
2,460,809
LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities:
Accounts payable
$
1,882
$
6,714
Accrued expenses and other liabilities
96,739
141,847
Operating lease liabilities
10,061
7,890
Deferred revenue
330,516
330,570
Total current liabilities
439,198
487,021
Operating lease liabilities, non-current
13,284
17,391
Deferred revenue, non-current
17,145
22,436
Convertible senior notes, net
1,089,266
1,088,313
Other liabilities, non-current
35,519
35,233
Total liabilities
1,594,412
1,650,394
Stockholders’ equity: Preferred stock
-
-
Class A common stock
2
2
Class B common stock
1
1
Additional paid-in capital
2,584,665
2,453,293
Accumulated other comprehensive (loss) income
(2,333
)
1,270
Accumulated deficit
(1,737,118
)
(1,644,151
)
Total stockholders’ equity
845,217
810,415
Total liabilities and stockholders’ equity
$
2,439,629
$
2,460,809
Confluent, Inc.
Condensed Consolidated
Statements of Operations
(in thousands, except share and
per share data)
(unaudited)
Three Months Ended March 31,
2024
2023
Revenue: Subscription
$
206,902
$
160,567
Services
10,335
13,735
Total revenue
217,237
174,302
Cost of revenue: Subscription(1)
48,355
42,905
Services(1)
12,866
15,239
Total cost of revenue
61,221
58,144
Gross profit
156,016
116,158
Operating expenses: Research and development(1)
97,571
84,890
Sales and marketing(1)
131,352
128,624
General and administrative(1)
38,444
35,355
Restructuring and other related charges
-
33,382
Total operating expenses
267,367
282,251
Operating loss
(111,351
)
(166,093
)
Other income, net
20,850
15,185
Loss before income taxes
(90,501
)
(150,908
)
Provision for income taxes
2,466
1,647
Net loss
$
(92,967
)
$
(152,555
)
Net loss per share, basic and diluted
$
(0.30
)
$
(0.52
)
Weighted-average shares used to compute net loss per share, basic
and diluted
314,203,181
291,864,975
(1) Includes stock-based
compensation-related charges* as follows:
Three Months Ended March 31,
2024
2023
Cost of revenue - subscription
$
7,905
$
6,649
Cost of revenue - services
2,718
2,867
Research and development
41,424
31,684
Sales and marketing
35,780
29,570
General and administrative
15,158
12,182
Total stock-based compensation-related charges
$
102,985
$
82,952
* Represents stock-based compensation
expense, employer taxes on employee stock transactions, and
amortization of stock-based compensation capitalized in
internal-use software. We began excluding amortization of
stock-based compensation capitalized in internal-use software from
our non-GAAP measures starting with the quarter ended March 31,
2024. The amounts of amortization of stock-based compensation
capitalized in internal-use software were immaterial in both
current and prior periods.
Confluent, Inc.
Condensed Consolidated
Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended March 31,
2024
2023
CASH FLOWS FROM OPERATING ACTIVITIES Net loss
$
(92,967
)
$
(152,555
)
Adjustments to reconcile net loss to cash used in operating
activities: Depreciation and amortization
4,311
3,122
Net accretion of discounts on marketable securities
(10,396
)
(9,133
)
Amortization of debt issuance costs
953
939
Amortization of deferred contract acquisition costs
12,762
10,484
Non-cash operating lease costs
885
1,207
Lease abandonment charges
-
15,667
Stock-based compensation, net of amounts capitalized
95,322
79,289
Deferred income taxes
615
5
Other
849
279
Changes in operating assets and liabilities, net of effects of
business combinations: Accounts receivable
29,360
8,068
Deferred contract acquisition costs
(9,732
)
(10,160
)
Prepaid expenses and other assets
(1,929
)
3,141
Accounts payable
(4,932
)
(11,325
)
Accrued expenses and other liabilities
(43,752
)
(16,557
)
Operating lease liabilities
(1,935
)
(1,998
)
Deferred revenue
(5,368
)
1,755
Net cash used in operating activities
(25,954
)
(77,772
)
CASH FLOWS FROM INVESTING ACTIVITIES Capitalization of
internal-use software costs
(5,539
)
(4,556
)
Purchases of marketable securities
(443,307
)
(453,356
)
Maturities of marketable securities
432,267
451,777
Purchases of property and equipment
(186
)
(546
)
Cash paid for business combinations, net of cash acquired
-
(45,802
)
Net cash used in investing activities
(16,765
)
(52,483
)
CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance
of common stock upon exercise of vested options
14,401
20,780
Repurchases of unvested options
-
(223
)
Proceeds from issuance of common stock under employee stock
purchase plan
15,603
17,172
Net cash provided by financing activities
30,004
37,729
Effect of exchange rate changes on cash and cash equivalents
(673
)
205
Net decrease in cash and cash equivalents
(13,388
)
(92,321
)
Cash and cash equivalents at beginning of period
349,761
435,781
Cash and cash equivalents at end of period
$
336,373
$
343,460
Confluent, Inc.
Reconciliation of GAAP
Measures to Non-GAAP Measures
(in thousands, except
percentages, share and per share data)
(unaudited)
Three Months Ended March 31,
2024
2023
Reconciliation of GAAP total gross profit to non-GAAP total
gross profit: Total gross profit on a GAAP basis
$
156,016
$
116,158
Total gross margin on a GAAP basis
71.8
%
66.6
%
Add: Stock-based compensation-related charges
10,623
9,516
Add: Amortization of acquired intangibles
502
113
Non-GAAP total gross profit
$
167,141
$
125,787
Non-GAAP total gross margin
76.9
%
72.2
%
Reconciliation of GAAP operating expenses to non-GAAP
operating expenses: Research and development operating expense
on a GAAP basis
$
97,571
$
84,890
Research and development operating expense as a percentage of total
revenue on a GAAP basis
44.9
%
48.7
%
Less: Stock-based compensation-related charges
41,424
31,684
Less: Acquisition-related expenses
4,362
7,680
Non-GAAP research and development operating expense
$
51,785
$
45,526
Non-GAAP research and development operating expense as a percentage
of total revenue
23.8
%
26.1
%
Sales and marketing operating expense on a GAAP basis
$
131,352
$
128,624
Sales and marketing operating expense as a percentage of total
revenue on a GAAP basis
60.5
%
73.8
%
Less: Stock-based compensation-related charges
35,780
29,570
Less: Acquisition-related expenses
-
1,076
Non-GAAP sales and marketing operating expense
$
95,572
$
97,978
Non-GAAP sales and marketing operating expense as a percentage of
total revenue
44.0
%
56.2
%
General and administrative operating expense on a GAAP basis
$
38,444
$
35,355
General and administrative operating expense as a percentage of
total revenue on a GAAP basis
17.7
%
20.3
%
Less: Stock-based compensation-related charges
15,158
12,182
Less: Acquisition-related expenses
225
561
Non-GAAP general and administrative operating expense
$
23,061
$
22,612
Non-GAAP general and administrative operating expense as a
percentage of total revenue
10.6
%
13.0
%
Three Months Ended March 31,
2024
2023
Reconciliation of GAAP operating loss to non-GAAP operating
loss: Operating loss on a GAAP basis
$
(111,351
)
$
(166,093
)
GAAP operating margin
(51.3
%)
(95.3
%)
Add: Stock-based compensation-related charges
102,985
82,952
Add: Amortization of acquired intangibles
502
113
Add: Acquisition-related expenses
4,587
9,317
Add: Restructuring and other related charges
-
33,382
Non-GAAP operating loss
$
(3,277
)
$
(40,329
)
Non-GAAP operating margin
(1.5
%)
(23.1
%)
Reconciliation of GAAP net loss to non-GAAP net income
(loss): Net loss on a GAAP basis
$
(92,967
)
$
(152,555
)
Add: Stock-based compensation-related charges
102,985
82,952
Add: Amortization of acquired intangibles
502
113
Add: Acquisition-related expenses
4,587
9,317
Add: Restructuring and other related charges
-
33,382
Add: Amortization of debt issuance costs
953
939
Add: Income tax effects and adjustments
(260
)
362
Non-GAAP net income (loss)
$
15,800
$
(25,490
)
Non-GAAP net income (loss) per share, basic
$
0.05
$
(0.09
)
Non-GAAP net income (loss) per share, diluted
$
0.05
$
(0.09
)
Weighted-average shares used to compute non-GAAP net income (loss)
per share, basic
314,203,181
291,864,975
Weighted-average shares used to compute non-GAAP net income (loss)
per share, diluted
350,195,868
291,864,975
The following table presents a reconciliation of free cash flow
to net cash used in operating activities, the most directly
comparable GAAP measure, for each of the periods indicated
(unaudited, in thousands, except percentages):
Three Months Ended March 31,
2024
2023
Net cash used in operating activities
$
(25,954
)
$
(77,772
)
Capitalized internal-use software costs
(5,539
)
(4,556
)
Capital expenditures
(186
)
(546
)
Free cash flow
$
(31,679
)
$
(82,874
)
Free cash flow margin
(14.6
%)
(47.5
%)
Net cash used in investing activities
$
(16,765
)
$
(52,483
)
Net cash provided by financing activities
$
30,004
$
37,729
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240506875179/en/
Investor Contact Shane Xie investors@confluent.io
Media Contact Justin Dorff pr@confluent.io
Grafico Azioni Confluent (NASDAQ:CFLT)
Storico
Da Mag 2024 a Giu 2024
Grafico Azioni Confluent (NASDAQ:CFLT)
Storico
Da Giu 2023 a Giu 2024