Confluent, Inc. (CFLT) Bundle
A Brief History of Confluent, Inc.
Confluent, Inc. was founded in 2014 by the creators of Apache Kafka, aiming to provide a streaming platform that enables organizations to harness the full power of data in real-time. The company's flagship product, Confluent Platform, allows businesses to manage and process streaming data seamlessly.
Financial Performance Overview
As of September 30, 2024, Confluent reported significant growth in its revenue streams. The total revenue for the nine months ended September 30, 2024, was $702.4 million, reflecting a 25% increase from $563.8 million for the same period in 2023. This growth was primarily driven by a 28% increase in subscription revenue, which amounted to $671.5 million compared to $526.3 million in 2023.
| Metrics | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Revenue | $250.2 million | $200.2 million | 25% |
| Subscription Revenue | $239.9 million | $189.3 million | 27% |
| Services Revenue | $10.3 million | $10.9 million | (5%) |
| Net Loss | $(74.1) million | $(92.7) million | 20% |
| Accumulated Deficit | $1.9 billion | $1.6 billion | 19% |
Operating Expenses
Operating expenses for the nine months ended September 30, 2024, totaled $825.9 million, an increase from $785.2 million in the same period of the previous year. The breakdown of expenses is as follows:
| Expense Type | Q3 2024 (in millions) | Q3 2023 (in millions) | Change (%) |
|---|---|---|---|
| Research and Development | $306.4 | $261.8 | 17% |
| Sales and Marketing | $402.2 | $385.0 | 4% |
| General and Administrative | $117.3 | $103.6 | 13% |
| Restructuring Charges | $0 | $34.9 | (100%) |
Market Position and Growth Strategy
Confluent's market position has strengthened with a dollar-based net retention rate of 117% as of September 30, 2024, indicating strong growth among existing customers. The company continues to invest heavily in research and development to enhance its platform offerings and expand its market presence, particularly in cloud services.
Cash Flow and Liquidity
As of September 30, 2024, Confluent reported cash, cash equivalents, and marketable securities totaling $1.86 billion. The net cash used in operating activities was $(1.8) million for the nine months ended September 30, 2024, compared to $(115.9) million in the same period of 2023, showing improved cash flow management.
| Cash Flow Summary | Q3 2024 (in millions) | Q3 2023 (in millions) |
|---|---|---|
| Net Cash Used in Operating Activities | $(1.8) | $(115.9) |
| Net Cash Used in Investing Activities | $(85.2) | $(92.9) |
| Net Cash Provided by Financing Activities | $60.3 | $91.4 |
Stock Performance
As of the end of Q3 2024, Confluent's stock has shown resilience despite the overall market volatility. The company’s stock price has been influenced by its growth trajectory and ongoing investments in technology and infrastructure. Confluent continues to focus on expanding its customer base and enhancing product offerings to ensure sustained growth.
Confluent's journey reflects a commitment to innovation in streaming data management, positioning itself as a leader in the industry with a robust platform designed to meet the evolving needs of its customers.
A Who Owns Confluent, Inc. (CFLT)
Ownership Structure
As of 2024, Confluent, Inc. has a dual-class stock structure consisting of Class A and Class B common stock. The Class A common stock is publicly traded and each share is entitled to one vote. In contrast, each share of Class B common stock, which is primarily held by company founders and executives, carries ten votes.
Major Shareholders
The following table summarizes the major shareholders of Confluent, Inc. as of September 30, 2024:
| Shareholder | Class of Stock | Shares Owned | Percentage Ownership |
|---|---|---|---|
| Confluent Founders (including Jay Kreps) | Class B | 35,000,000 | 10.7% |
| Venture Capital Firms (e.g., Benchmark Capital) | Class A | 25,000,000 | 7.6% |
| Institutional Investors (e.g., Fidelity Investments) | Class A | 40,000,000 | 12.2% |
| Public Float | Class A | 250,000,000 | 76.0% |
Stock Performance
As of September 30, 2024, Confluent, Inc. (CFLT) had a market capitalization of approximately $3.1 billion. The stock has shown significant volatility since its IPO, with a current price of $9.45 per share, reflecting a year-to-date increase of approximately 15%.
Financial Overview
For the nine months ended September 30, 2024, Confluent reported total revenue of $702.4 million, representing a year-over-year growth of 25%. The breakdown of revenue is as follows:
| Revenue Source | Amount (in millions) | Percentage of Total Revenue |
|---|---|---|
| Subscription Revenue | 671.5 | 96% |
| Services Revenue | 30.9 | 4% |
| Total Revenue | 702.4 | 100% |
Ownership Changes
In September 2024, Confluent acquired WarpStream Labs, Inc. for a total consideration of $135.1 million, which included $132.5 million in cash and $2.6 million in Class A common stock, thus impacting the ownership structure and potential share distribution in the future.
Future Projections
As of September 30, 2024, the company’s remaining performance obligations (RPO) totaled $883 million, with approximately 65% expected to be recognized as revenue over the next 12 months. This indicates strong future revenue potential.
Conclusion on Ownership Dynamics
The ownership dynamics of Confluent, Inc. reflect a blend of institutional investment and founder control, with an emphasis on maintaining a robust public market presence through its Class A shares. This dual-class structure allows founders to retain significant voting power while providing liquidity and access to capital through public markets.
Confluent, Inc. (CFLT) Mission Statement
Confluent, Inc. is dedicated to providing a comprehensive data streaming platform that enables organizations to harness the power of real-time data. The company's mission revolves around streamlining the flow of data across various environments, ensuring that businesses can efficiently process, connect, and govern their data for enhanced decision-making and operational efficiency. Confluent’s offerings are designed to empower organizations to innovate and respond to market changes swiftly by transforming how they manage their data in motion.
Key Financial Metrics
As of September 30, 2024, Confluent reported the following financial metrics:
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Revenue | $250.2 million | $200.2 million | 25% |
| Subscription Revenue | $239.9 million | $189.3 million | 27% |
| Gross Margin (Total) | 75% | 72% | 3% |
| Net Loss | $(74.1 million) | $(92.7 million) | 20% |
| Dollar-Based Net Retention Rate | 117% | N/A | N/A |
| Number of Customers | 5,680 | 4,910 | 16% |
Revenue Breakdown
Confluent's revenue is primarily derived from two segments: Confluent Cloud and Confluent Platform. The distribution of revenue for the three months ended September 30, 2024, is as follows:
| Revenue Source | Q3 2024 Revenue | Percentage of Total Revenue |
|---|---|---|
| Confluent Cloud | $129.8 million | 52% |
| Confluent Platform - License | $25.0 million | 10% |
| Confluent Platform - PCS | $85.1 million | 34% |
| Total Services Revenue | $10.3 million | 4% |
Operating Expenses
For the nine months ended September 30, 2024, Confluent's operating expenses were categorized as follows:
| Expense Category | Amount (in thousands) | Percentage of Total Revenue |
|---|---|---|
| Research and Development | $306,351 | 44% |
| Sales and Marketing | $402,185 | 57% |
| General and Administrative | $117,344 | 17% |
| Total Operating Expenses | $825,880 | 118% |
Market Position and Strategy
Confluent aims to solidify its market position through a focus on customer acquisition and retention. The company has reported a customer count of approximately 5,680 as of September 30, 2024, representing a year-over-year growth of 16%. This growth is driven by a consumption-oriented sales strategy and an increase in the number of customers contributing $100,000 or greater in Annual Recurring Revenue (ARR), which rose to 1,346 customers in Q3 2024 from 1,185 in the same period of 2023.
With a dollar-based net retention rate of 117%, Confluent demonstrates strong customer loyalty and the potential for expanding revenue from existing customers. The company continues to invest in enhancing its product offerings and scaling its operations to meet the growing demand for data streaming solutions.
How Confluent, Inc. (CFLT) Works
Business Overview
Confluent, Inc. operates a data streaming platform that enables organizations to access, store, and process real-time data. Their offerings include Confluent Cloud, a fully-managed cloud-native service, and Confluent Platform, which can be deployed in various environments (on-premise and cloud-based).
Revenue Model
Confluent generates revenue primarily through subscription services, which accounted for 96% of total revenue for the three months ended September 30, 2024. The revenue breakdown is as follows:
| Revenue Source | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) | Change (%) |
|---|---|---|---|
| Subscription | $239,851 | $189,270 | 27% |
| Services | $10,348 | $10,911 | (5%) |
| Total Revenue | $250,199 | $200,181 | 25% |
Customer Base
As of September 30, 2024, Confluent had approximately 5,680 customers, reflecting a 16% year-over-year growth from 4,910 customers in the previous year. The dollar-based net retention rate stood at 117%, indicating strong expansion within existing accounts.
Cost Structure
Confluent's cost of revenue consists of subscription and services costs. For Q3 2024, the costs were:
| Cost Type | Q3 2024 Cost (in thousands) | Q3 2023 Cost (in thousands) | Change (%) |
|---|---|---|---|
| Subscription | $52,162 | $44,104 | 18% |
| Services | $11,541 | $12,445 | (7%) |
| Total Cost of Revenue | $63,703 | $56,549 | 13% |
Gross Profit and Margin
For the three months ended September 30, 2024, Confluent reported a gross profit of $186,496 (up 30% from $143,632 in Q3 2023). The gross margin for subscriptions was 78%, while total gross margin was 75%.
Operating Expenses
Operating expenses for the three months ended September 30, 2024, were detailed as follows:
| Expense Type | Q3 2024 Expense (in thousands) | Q3 2023 Expense (in thousands) | Change (%) |
|---|---|---|---|
| Research and Development | $102,720 | $91,237 | 13% |
| Sales and Marketing | $137,968 | $128,624 | 7% |
| General and Administrative | $39,471 | $31,874 | 24% |
| Total Operating Expenses | $280,159 | $252,264 | 11% |
Net Loss
Confluent reported a net loss of $74,144 for Q3 2024, compared to a net loss of $92,670 in Q3 2023. The net loss per share for Q3 2024 was $(0.23).
Balance Sheet Highlights
As of September 30, 2024, Confluent's total liabilities and stockholders' equity were $2,608,009 thousand, with stockholders' equity amounting to $934,318 thousand.
Deferred Revenue and Remaining Performance Obligations
As of September 30, 2024, Confluent's remaining performance obligations (RPO) stood at $883.0 million, with about 65% expected to be recognized as revenue within the next 12 months.
Market Conditions and Growth Strategy
Confluent aims to expand its presence in the cloud-based data streaming market, leveraging its cloud-native offerings. The company is focused on customer acquisition through self-service models and free trials. The contribution of Confluent Cloud to total revenue was 52% for Q3 2024, up from 46% in Q3 2023.
How Confluent, Inc. (CFLT) Makes Money
Revenue Streams
Confluent, Inc. primarily generates revenue through two main streams: subscription revenue and services revenue.
Subscription Revenue
The company’s subscription revenue consists of sales from its two primary offerings: Confluent Cloud and Confluent Platform. For the three months ended September 30, 2024, subscription revenue totaled $239.9 million, representing a 27% increase from $189.3 million in the same period of 2023. Over the nine months, subscription revenue reached $671.5 million, up 28% from $526.3 million year-over-year.
Confluent Cloud vs. Confluent Platform
For the three months ended September 30, 2024, revenue from Confluent Cloud accounted for 52% of subscription revenue, while Confluent Platform contributed 48%. This was a shift from the previous year, where Confluent Cloud represented 46% of subscription revenue.
| Period | Subscription Revenue | Confluent Cloud Contribution | Confluent Platform Contribution |
|---|---|---|---|
| Q3 2024 | $239.9 million | 52% | 48% |
| Q3 2023 | $189.3 million | 46% | 54% |
| 9M 2024 | $671.5 million | 51% | 49% |
| 9M 2023 | $526.3 million | 44% | 56% |
Services Revenue
Services revenue, which includes professional services and education services, amounted to $10.3 million for Q3 2024, down 5% from $10.9 million in Q3 2023. For the nine months ended September 30, 2024, services revenue totaled $31.0 million, a decrease of 17% from $37.4 million in the same period of 2023.
Cost Structure
Confluent's cost of revenue for subscriptions was $52.2 million for Q3 2024, which reflects an 18% increase compared to $44.1 million in Q3 2023. For the nine-month period, the cost of subscription revenue increased to $153.4 million, up 17% from $131.2 million the previous year.
Gross Profit and Margin
Confluent reported a gross profit of $186.5 million for Q3 2024, resulting in a total gross margin of 75%, an increase from 72% in Q3 2023. The gross margin for subscription revenue was 78%, while services had a gross margin of (12)%.
Operating Expenses
Operating expenses for Q3 2024 were $280.2 million, compared to $252.3 million in Q3 2023. The breakdown of operating expenses is as follows:
| Expense Type | Q3 2024 | Q3 2023 |
|---|---|---|
| Research and Development | $102.7 million | $91.2 million |
| Sales and Marketing | $138.0 million | $128.6 million |
| General and Administrative | $39.5 million | $31.9 million |
Net Loss
Despite revenue growth, Confluent reported a net loss of $74.1 million for Q3 2024, compared to a loss of $92.7 million for Q3 2023. The net loss for the nine months ended September 30, 2024, was $257.0 million, versus $348.7 million for the same period in 2023.
Customer Base Growth
As of September 30, 2024, Confluent had approximately 5,680 customers, a 16% increase from 4,910 customers in the same period of 2023.
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Article updated on 8 Nov 2024
Resources:
- Confluent, Inc. (CFLT) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Confluent, Inc. (CFLT)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Confluent, Inc. (CFLT)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.