Confluent (NASDAQ:CFLT) Surprises With Q1 Sales, Stock Soars

Radek Strnad /
2024/05/07 4:22 pm EDT

Data infrastructure software company, Confluent (NASDAQ:CFLT) reported Q1 CY2024 results beating Wall Street analysts' expectations, with revenue up 24.6% year on year to $217.2 million. The company expects next quarter's revenue to be around $229.5 million, in line with analysts' estimates. It made a non-GAAP profit of $0.05 per share, improving from its loss of $0.09 per share in the same quarter last year.

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Confluent (CFLT) Q1 CY2024 Highlights:

  • Revenue: $217.2 million vs analyst estimates of $211.8 million (2.5% beat)
  • EPS (non-GAAP): $0.05 vs analyst estimates of $0.02 ($0.03 beat)
  • Revenue Guidance for Q2 CY2024 is $229.5 million at the midpoint, roughly in line with what analysts were expecting
  • The company reconfirmed its revenue guidance for the full year of $957 million at the midpoint
  • Gross Margin (GAAP): 71.8%, up from 66.9% in the same quarter last year
  • Free Cash Flow was -$31.68 million, down from $6.82 million in the previous quarter
  • Customers: 1,260 customers paying more than $100,000 annually
  • Market Capitalization: $9.09 billion

“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.

Started in 2014 by the team of engineers at LinkedIn who originally built it as an internal tool, Confluent (NASDAQ:CFLT) provides infrastructure software for organizations that makes it easy and fast to collect and move large amounts of data between different systems.

Data Infrastructure

Generating insights from system level data is an increasing priority for most businesses, but to do so requires connecting and analyzing piles of data stored and siloed in separate databases. This is the demand driver for cloud based data infrastructure software providers, who can more readily integrate, distribute and process information vs. legacy on-premise software providers.

Sales Growth

As you can see below, Confluent's revenue growth has been impressive over the last three years, growing from $77.03 million in Q1 2021 to $217.2 million this quarter.

Confluent Total Revenue

This quarter, Confluent's quarterly revenue was once again up a very solid 24.6% year on year. However, its growth did slow down compared to last quarter as the company's revenue increased by just $4.05 million in Q1 compared to $13 million in Q4 CY2023. While we'd like to see revenue increase by a greater amount each quarter, a one-off fluctuation is usually not concerning.

Next quarter's guidance suggests that Confluent is expecting revenue to grow 21.2% year on year to $229.5 million, slowing down from the 35.8% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 22.6% over the next 12 months before the earnings results announcement.

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Large Customers Growth

This quarter, Confluent reported 1,260 enterprise customers paying more than $100,000 annually, an increase of 31 from the previous quarter. That's a bit fewer contract wins than last quarter and quite a bit below what we've typically observed over the past four quarters, suggesting that its sales momentum with large customers is slowing.

Confluent customers paying more than $100,000 annually

Key Takeaways from Confluent's Q1 Results

It was good to see Confluent beat analysts' revenue and EPS expectations this quarter. We were also glad its full-year revenue guidance came in higher than Wall Street's estimates. Overall, this was a solid quarter for Confluent. The stock is up 8.1% after reporting and currently trades at $30.1 per share.

So should you invest in Confluent right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.