Confluent reports strong revenue growth on rising demand for streaming data
by Mike Wheatley
Shares of the big data company Confluent Inc. made sharp gains today after the company reported second quarter financial results and guidance for the next period that came in ahead of expectations.
The company reported a loss before certain costs such as stock compensation of 16 cents per share, with revenue coming to $139.4 million in the quarter, growing 58% from a year earlier. That resulted in a net loss of $117.6 million for the quarter. The results surpassed Wall Street’s targets. Analysts had been looking for a wider loss of 19 cents per share on lower revenue of $131.2 million.
Investors had apparently been expecting good results from Confluent, with the company’s stock rising 8% in the regular trading session. Then, in the minutes after the report was published, the stock made a further 8% gain.
Confluent is a rising player in the big data industry. It’s the primary developer of the popular Apache Kafka open-source software that’s used by enterprises to track data points such as sales, trades, orders and customer responses, in real-time. The data is made accessible through real-time streams, from where it can be analyzed rapidly. Given this capability, it’s said that as much as 80% of the Fortune 500 uses Confuent’s software in some way.
While the basic Apache Kafka software is free to use, Confluent provides a commercial version called Confluent Cloud that can be deployed on public cloud platforms such as Amazon Web Services, Google Cloud and Microsoft Azure. It offers benefits such as easier deployment and less management hassles. Confluent Platform, which provides similar advantages, is designed for on-premises deployments.
In a statement, Confluent co-founder and Chief Executive Jay Kreps (pictured) said data streaming has become a requirement for enterprises that need to create real-time digital experiences, hence the success of his company. “Our strong Q2, highlighted by 139% year-over-year Confluent Cloud revenue growth and exceeding our guidance on all metrics, underscores our leadership of this market and the critical business value we deliver to our customers,” the CEO added.
The bulk of Confluent’s revenue comes from Confluent Platform, but that is likely to change in the coming quarters given the rapid growth of Confluent Cloud. It generated sales of $47 million during the quarter, accounting for about a third of the company’s overall revenue.
Confluent offered some other promising growth metrics too, saying it had remaining performance obligations of $591 million at the end of the quarter, up 81% from a year ago. Moreover, it grew its customer base too. It ended the quarter with 857 clients that deliver at least $100,000 in annual revenue, up 39% from one year earlier.
“Customers view Confluent as a strategic platform for delivering data in motion, as evidenced by our dollar-based net retention rate of greater than 130% for the fifth consecutive quarter and the growth in our six- and seven-figure customers,” added Confluent Chief Financial Officer Steffan Tomlinson.
Confluent is expecting a similar strong performance in the coming quarter. It said it’s looking at a loss of between 19 cents and 17 cents per share, the midpoint of which is above Wall Street’s estimate of a 19 cent per share loss. Similarly, Confluent’s revenue forecast of $143 million to $145 million is also above the consensus estimate, with Wall Street targeting just $142 million in third quarter sales.
For the full year, Confluent said it expects losses to range from 73 cents to 69 cents per share with revenue between $567 million to $571 million.
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