Confluent (CFLT) AI Stock Analysis

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Confluent

(NASDAQ:CFLT)

55Neutral

Confluent's stock score reflects its robust revenue growth and improved cash flow, but profitability challenges and high liabilities are significant risks. Technical indicators point to a bearish trend, and valuation metrics are not favorable. The earnings call provides positive growth signals but highlights caution due to external uncertainties.

Positive Factors

Customer Growth

Customer growth strong with the addition of 340 customers, reaching a total of 6,140.

Revenue Performance

Solid Q1 subscription revenue of $260.9 million beat the estimate, growing 26.1% year-over-year.

Negative Factors

Cloud Consumption Trends

Weaker consumption trends and macro volatility weigh on cloud performance, full-year outlook.

Subscription Revenue Guidance

Full-year subscription revenue guidance was lowered slightly, pressuring shares after hours.

Confluent (CFLT) vs. S&P 500 (SPY)

Market Cap

$6.75B

Dividend YieldN/A

Average Volume (3M)6.10M

Price to Earnings (P/E)―

Beta (1Y)1.36

Revenue Growth24.11%

EPS Growth21.87%

CountryUS

Employees3,060

SectorTechnology

Sector Strength66

IndustrySoftware - Infrastructure

Share Statistics

EPS (TTM)-0.98

Shares Outstanding285,862,580

10 Day Avg. Volume8,219,067

30 Day Avg. Volume6,096,765

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap1.05

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit10.00

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$29.25

Price Target Upside47.58% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering30

Confluent Business Overview & Revenue Model

Company DescriptionConfluent, Inc. is a technology company that operates in the data infrastructure sector, specializing in real-time data streaming. The company provides a cloud-native platform designed to help businesses harness the power of Apache Kafka, an open-source stream-processing software platform. Confluent's core products and services include Confluent Cloud and Confluent Platform, which enable organizations to build and manage applications that require real-time data flows and analytics, enhancing their ability to respond to customer demands and market conditions swiftly.

How the Company Makes MoneyConfluent generates revenue primarily through a subscription-based model for its Confluent Cloud and Confluent Platform offerings. Confluent Cloud, a fully managed service, is available on major cloud providers like AWS, Google Cloud, and Microsoft Azure, with pricing based on consumption, allowing users to scale as needed. The Confluent Platform, offered as a software license, provides additional enterprise features and support for on-premises or hybrid cloud deployments. Additional revenue streams include professional services and training to help organizations implement and optimize their data streaming capabilities. Significant partnerships with cloud providers and a strong ecosystem of technology partners amplify Confluent's reach and enhance its service offerings, contributing to its revenue growth.

Confluent Key Performance Indicators (KPIs)

Any

Cloud Revenue

Cloud Revenue
Indicates the income generated from cloud services, highlighting the company's success in attracting and retaining customers in the cloud market, and its ability to scale and innovate in a competitive landscape.

Chart InsightsConfluent's cloud revenue has shown consistent growth, reaching $143 million in Q1 2025, a 34% increase. Despite this strong performance, the company anticipates a slowdown in growth due to reduced cloud consumption by larger customers and macroeconomic uncertainties. Management remains optimistic, driven by strategic partnerships, product diversification, and a robust data streaming platform. However, they have adopted a conservative outlook for future cloud revenue growth, highlighting the need for cautious optimism amid potential headwinds.

Data provided by:

Main Street Data

Confluent Financial Statement Overview

Summary

Confluent shows strong revenue growth and a solid gross profit margin but struggles with profitability due to negative net margins and operational losses. The balance sheet is stable with manageable debt, yet high liabilities pose risks. Cash flow improvements are promising, but sustainability needs focus.

Income Statement

―

Confluent has shown robust revenue growth, increasing from $236.6 million in 2020 to $1.02 billion in TTM 2025. The company demonstrates a strong gross profit margin, which stands at 73.9% for TTM 2025. However, the net profit margin remains negative, indicating ongoing challenges in achieving profitability, with a net income loss of $319.7 million in TTM 2025. EBIT and EBITDA margins are also negative, reflecting operational inefficiencies. Overall, the company is growing its top line but needs to manage costs better to achieve profitability.

Balance Sheet

Confluent maintains a solid equity base, with stockholders' equity increasing to $1.03 billion in TTM 2025. The debt-to-equity ratio is relatively moderate at 1.08, suggesting a balanced approach to leveraging debt for growth. The equity ratio improved to 38.0%, indicating a stable financial position with a strong asset base. While the company has increased its cash reserves, the overall liabilities remain high, which could pose risks if revenue growth slows.

Cash Flow

―

The company managed to turn its free cash flow positive in TTM 2025 with $12.9 million, a significant improvement from negative values in previous years. The operating cash flow to net income ratio remains low, indicating that cash generation from operations is still a challenge. Free cash flow growth is positive, but the company needs to focus on sustaining this trend to support its growth initiatives without relying heavily on external financing.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
963.64M	776.95M	585.94M	387.86M	236.58M
	Gross Profit
706.17M	547.28M	383.53M	250.57M	161.10M
	EBIT
-419.15M	-443.92M	-462.67M	-339.62M	-233.18M
	EBITDA
-419.15M	-430.01M	-455.05M	-335.99M	-231.61M
	Net Income Common Stockholders
-345.06M	-442.75M	-452.55M	-342.80M	-229.83M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.91B	1.90B	1.93B	2.02B	288.55M
	Total Assets
2.69B	2.46B	2.34B	2.34B	526.12M
	Total Debt
1.11B	1.11B	1.12B	1.12B	50.93M
	Net Debt
724.00M	763.83M	681.23M	-254.35M	14.14M
	Total Liabilities
1.73B	1.65B	1.58B	1.49B	832.37M
	Stockholders Equity
961.23M	810.41M	769.48M	850.28M	-306.25M
Cash Flow		Free Cash Flow
9.49M	-124.34M	-171.79M	-114.00M	-86.71M
	Operating Cash Flow
33.46M	-103.66M	-157.33M	-105.06M	-82.06M
	Investing Cash Flow
-74.98M	-84.85M	-865.80M	-400.58M	-176.86M
	Financing Cash Flow
79.81M	102.37M	82.24M	1.84B	276.76M

Confluent Technical Analysis

Technical Analysis Sentiment

Negative

Last Price19.82

Price Trends

50DMA

25.03

Negative

100DMA

27.56

Negative

200DMA

25.43

Negative

Market Momentum

MACD

-0.83

Negative

RSI

37.39

Neutral

STOCH

34.53

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CFLT, the sentiment is Negative. The current price of 19.82 is below the 20-day moving average (MA) of 21.65, below the 50-day MA of 25.03, and below the 200-day MA of 25.43, indicating a bearish trend. The MACD of -0.83 indicates Negative momentum. The RSI at 37.39 is Neutral, neither overbought nor oversold. The STOCH value of 34.53 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CFLT.

Confluent Risk Analysis

Confluent disclosed 74 risk factors in its most recent earnings report. Confluent reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Confluent Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DBX	73 Outperform	$8.24B	20.41	-60.11%	―	1.86%	6.21%
PATH	67 Neutral	$6.60B	―	-3.82%	―	9.30%	20.59%
MDB	66 Neutral	$13.94B	―	-6.70%	―	19.22%	28.46%
S	64 Neutral	$6.22B	―	-17.68%	―	32.25%	20.56%
INFA	61 Neutral	$6.62B	630.36	0.44%	―	2.81%	―
Sector *	60 Neutral	$10.94B	10.48	-7.04%	2.99%	7.55%	-12.20%
CFLT	55 Neutral	$6.75B	―	-34.18%	―	24.11%	21.87%

* Technology Sector Average

Performance Comparison

CFLT

Confluent

19.82

-8.81

-30.77%

MDB

MongoDB

171.64

-194.03

-53.06%

DBX

Dropbox

28.61

5.07

21.54%

PATH

UiPath

11.97

-7.88

-39.70%

SentinelOne

18.88

-2.81

-12.96%

INFA

Informatica

19.10

-10.91

-36.35%

Confluent Earnings Call Summary

Earnings Call Date:Apr 30, 2025

(Q1-2025)

% Change Since: -16.76%|

Next Earnings Date:Jul 30, 2025

Earnings Call Sentiment Neutral

The earnings call reflected strong financial performance with significant growth in subscription and cloud revenues, improved operating margins, and record customer additions. However, caution was expressed due to a slowdown in cloud consumption by larger customers and uncertainties in the macro environment, leading to a conservative outlook for future growth.

Q1-2025 Updates

Positive Updates

Strong Growth in Subscription Revenue

Q1 subscription revenue grew 26% to $261 million, demonstrating strong demand for Confluent's offerings.

Confluent Cloud Revenue Surge

Confluent Cloud revenue increased by 34% to $143 million, indicating robust growth in cloud services.

Improvement in Operating Margin

Non-GAAP operating margin improved by six percentage points to 4%, reflecting better operational efficiency.

Record Customer Additions

Added 340 new customers in Q1, the highest net addition in three years, indicating strong market demand and product adoption.

Expansion of Million-Dollar ARR Customers

Added 16 new customers to the cohort of $1 million-plus ARR customers, the highest addition to that cohort ever.

Strong Performance of Confluent Platform

Confluent Platform revenue grew 18% year-over-year, marking its strongest Q1 growth in three years.

Strategic Partnerships and Recognitions

Named a Google Partner of the Year for the sixth time, highlighting strong strategic partnerships with leading CSPs.

Growth in Data Streaming Platform Components

Significant growth in DSP components, which outgrew the core cloud business, indicating strong product diversification.

Negative Updates

Slowdown in Cloud Consumption by Large Customers

Observed lower consumption in larger customers due to cost optimization and slower addition of new use cases.

Uncertain Macro Environment Impact

Guidance reflects a modest decline in growth rates from Q2 through Q4 due to uncertainties in the current macro environment.

Conservative Outlook for Cloud Revenue Growth

Guidance assumes no near-term rebound in cloud consumption, contrasting with previous cycles of expansion after optimization.

Company Guidance

During the Confluent Q1 2025 earnings call, the company provided financial guidance for the fiscal second quarter and the full fiscal year 2025. For Q2, they expect subscription revenue to be between $267 million and $268 million, representing about 19% growth, with a non-GAAP operating margin of approximately 5% and non-GAAP net income per diluted share in the range of $0.08 to $0.09. For the fiscal year 2025, Confluent projects subscription revenue of $1.1 billion to $1.11 billion, marking growth of 19% to 20%. They anticipate a non-GAAP operating margin of around 6% and non-GAAP net income per diluted share of approximately $0.36. Despite an uncertain macro environment, Confluent remains confident in its growth trajectory, driven by its mission-critical data streaming platform and diversified growth strategies, including its streaming conversion opportunity, DSP upsell potential, AI strategic role, and expanding partner ecosystem.

Confluent Corporate Events

Executive/Board Changes

Confluent CTO Chad Verbowski Announces Retirement Plan

Neutral

Nov 14, 2024

Chad Verbowski, the Chief Technology Officer of Confluent, Inc., will retire on November 26, 2024, to take a career break but will remain an advisor until February 21, 2025, ensuring a smooth transition. During this period, the engineering team will report to the CEO, as the company seeks a replacement. Confluent acknowledges Verbowski’s significant contributions to its engineering success.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.