The website was very slick and well done. Then I read a long writeup on Confluent by muji from some time ago, and also read the thread on the board after results. I started out gungho about it, and finished up, after I also read the results and listened to the conference call, with a let’s wait and see feeling.
First, muji really likes Kafka but isn’t sure that people will pay Confluent for it as it’s open source.
Second, it’s an open source company like Elastic, and we have always drifted away from those because of all the complications involved, and the question of who is more important to the company, the open source developers or the stockholders. And because the companies with their origins in open source have almost seemed to feel that making money from it was secondary, was almost being disloyal to their origins, and finally because AWS and others almost always try to copy their open source software. A more complicated picture.
Third, importantly, as Stocknovice pointed out, acquiring new customers seems to be declining fairly rapidly the last two quarters.
Fourth, the CEO seemed to be a salesman to a ridiculous degree. Every time he was asked a question he responded “Oh yes, we can do that/ that’s good for our business, etc” Set my teeth on edge.
Fifth, their NRR is supposed to be over 30%. Their total revenue is growing at 67%, their platform business is growing at 40%, their cloud business is growing at 200% plus, even their service revenue is growing at 45%…. And they forecast 35% growth next year!!! Think about that! Forecasting 35% for next year when you are growing at 67% right now!!! Just their NRR would cover that with no new business at all. Yes, I’ve heard of sandbagging, but that is SOOOOOO… ridiculous that they must be feeling very insecure.
Sixth, and on top of that they forecast flat revenue between their fourth and first quarters this year. Zero sequential growth!!! They must be really anticipating a slowdown.
I decided not to buy. I have enough companies that I really like and that don’t have all these questions.