Confluent Wants to Come In Out of the Cold

Note 1: I am a bumbling amateur investor whose investing mistakes basket has been full and overflowing for quite some time.

Note 2) Just because its summer and vacation time remember that there are children with serious illnesses getting free care provided by St Jude Children’s Research Hospital. They don’t look forward to vacations - they look forward to becoming cured of some really nasty bugs and getting to lead normal kid lives. If you have a buck or two just laying around with nothing to do - it might help them. And - it makes you a genuine life saving Super Hero: How bout that!

Confluent - CFLT

Here is what one investing site says about Confluent:

“Confluent, Inc. operates a data streaming platform in the United States and internationally. The company offers Confluent Cloud, a managed cloud-native service for connecting and processing real-time data; and Confluent Platform, an enterprise-grade self-managed software that connects and processes data.”

Here is what Confluent says about Confluent:

We Are the Only Company Focused on Data in Motion and Your Success!

Your business is in motion. Now, you have a data platform for it. Confluent makes it easy to connect your apps, data systems, and entire organization with real-time data flows and processing.

Current Price: $34.56
Sitting spitting distance to its High.
Market Cap: $10.3B
EV/Sales (fwd): 12.46
One Month Momentum: +62.7%

The company reported FQ1 on May 3 with:

  • First quarter revenue of $174 million, up 38% year over year

“… the geographic mix of revenue, revenue from the U.S. grew 32% to $103.9 million. Revenue from outside the U.S. grew 49% to $70.4 million.”

Revenue Growth the last 4 Qtrs: 38%; 40.6; 47.9; 57.8

  • First quarter Confluent Cloud revenue of $74 million, up 89% year over year

  • Remaining performance obligations of $743 million, up 35% year over year

“Current RPO estimated to be 64% of RPO was $477 million, up 44% and accelerated from last quarter.”

  • 1,075 customers with $100,000 or greater in ARR, up 34% year over year(1)

“Moving on to NRR starting this fiscal year, we moved to consumption-based NRR for Confluent Cloud, which provides better alignment and insight to the underlying consumption trends of our cloud business. Total NRR for Q1 was above 130%, and gross retention was above 90%. NRR for both cloud and hybrid customers remained higher than the company average, and NRR for cloud was the highest. We added 160 net new customers ending the quarter with approximately 4,690 total customers up 14%.”

  • Total gross margin was 72.2%, up 250 basis points and modestly above our target range of 70% to 72%.

  • Non-GAAP Operating Loss of (40.3) vs (51.7) in the year ago Qtr.

  • Non-GAAP Operating Margin improved by +17.9 points

“Turning to profitability and cash flow. Operating margin improved 18 percentage points to negative 23.1%, representing our third consecutive quarter of more than 10 points in improvement.”

  • Non-GAAP Net Loss per share of of (0.09) vs (0.19) in the year ago quarter.

  • Free Cash Flow went backwards from $(58.4) in the year ago qtr to $(82.9) in the current Qtr.

Free cash flow margin declined one percentage point to negative 47.5%. As expected and discussed on our last earnings call, free cash flow in Q1 was negatively impacted by charges related to our restructuring, the Immerok acquisition, ESPP and our corporate bonus payout. We ended the fourth quarter with $1.85 billion in cash, cash equivalents and marketable securities.

  • Guidance - For the second quarter of 2023 we expect revenue to be in the range of $181 million to $183 million, representing growth of 30% to 31%. Cloud sequential revenue add to be in the range of $7.5 million to $8 million. We continue to expect cloud sequential revenue add to increase every quarter for the rest of 2023.

Press Release Here:

Presentation Slides:

Conference Call Commentary:

Over the last year, Confluent has continued to show very strong gross retention, even through a substantial change in the economic environment, including abrupt changes in interest rates and economic slowdown, significant drop in funding for private tech companies, and the recent challenges in banking. Environments like this show, which products have true durability and which are simply fads are nice to have. I wanted to take the opportunity to explore what drives this durability for Confluent.

  • The first factor is that Confluent serves mission critical custom software applications.

  • The second factor is that unlike a database, Confluent isn’t just a platform for one app, but acts as an interchange between multiple teams and applications.

  • The third factor of our durability comes from the inherent TCO advantage of our cloud offering.

CC Transcript:

Scouting Reports:

  1. Bert
  1. IBD

Cloud Stock Improves Bottom Line, Finally Heads For Profitability

Ok so - after looking it over the question now is has the company earned a place on the portfolio roster. Well…yes and no. Yes - its seems to be going in the right direction with a small deterioration in Revenue Growth each Qtr - but the no comes not so much from Confluent’s performance; but rather, from potentially better companies out there to look at. In any other environment, I might add CFLT with a Scout Team position; unfortunately, just not what All-Too-Lovely has her sights set on a summer in Greece thingy and I am sort of trying to reduce exposure a bit. So there’s that. Anyway - CFLT is a company to watch as long as you understand the whole Kafka thing - I guess.

All the Best,
BDH Investing


After Nadia report clearly market participation changed looks they realized AI is real … first week money into hard ware and next week in Software AI
What happens this week… hope it consolidate here with some pullback so that we can add especially Cflt mdb and Pstg , amd nvdia because I had some exposure rest of them.

Do you add mdb back ?

best performance with 60% in 1 month period are Software AI stocks
PlTR (90%) CFLT (61%) NET(61%) MDB(71%) ZS (65%)UPST (143%)

Pstg(50%) AMD(41%) NVDIA(41%) SMCi( 71%)

We thought smci great run but when I saw yesterday looks software AI ran more than hardware … already good inflows…

NET got downgrade today good test now how it holds that gives answer. Clearly winner even with subpar results.

Small but worth to try:
NNOX —100% up … this one clearly change of character after approvals and pg buy stock … looks worth to buy as speculative I can see it’s early stage and recurring revenue with X-ray device …
ENVX - solid battery …