Confluent (CFLT) AI Stock Analysis

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Confluent

(NASDAQ:CFLT)

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Outperform 72 (OpenAI - 4o)

Rating:72Outperform

Price Target:

$33.00

▲(10.18% Upside)

Confluent's overall stock score is driven by strong earnings call performance and positive corporate events, particularly the merger with IBM. However, challenges in achieving profitability and a negative P/E ratio weigh on the score. The technical analysis indicates strong momentum, but potential overbought conditions could pose risks.

Positive Factors

Merger with IBM

The merger with IBM is expected to enhance Confluent's capabilities in data streaming and AI, aligning with IBM's strategy and potentially driving substantial synergies and efficiencies.

Revenue Growth

Consistent revenue growth, particularly in subscription and cloud services, demonstrates strong market demand and effective business model execution.

Cash Flow Improvement

Significant improvement in cash flow indicates better operational efficiency and financial health, providing more resources for strategic investments.

Negative Factors

Operational Profitability Challenges

Ongoing net losses and negative profit margins highlight challenges in achieving operational profitability, impacting long-term financial sustainability.

Federal Revenue Dependency

Low federal revenue contribution suggests limited exposure in this sector, posing a risk if federal spending decreases or if growth opportunities are missed.

Impact of AI Customer Transition

The transition of a major AI customer to on-prem solutions indicates potential vulnerabilities in retaining cloud clients, affecting future cloud revenue growth.

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

Market Cap

$10.59B

Dividend YieldN/A

Average Volume (3M)14.20M

Price to Earnings (P/E)―

Beta (1Y)1.84

Revenue Growth21.58%

EPS Growth18.88%

CountryUS

Employees3,060

SectorTechnology

Sector Strength88

IndustrySoftware - Infrastructure

Share Statistics

EPS (TTM)0.13

Shares Outstanding303,162,170

10 Day Avg. Volume32,515,698

30 Day Avg. Volume14,197,404

Financial Highlights & Ratios

PEG Ratio0.96

Price to Book (P/B)9.36

Price to Sales (P/S)9.34

P/FCF Ratio948.39

Enterprise Value/Market Cap0.56

Enterprise Value/Revenue5.36

Enterprise Value/Gross Profit7.22

Enterprise Value/Ebitda-17.52

Forecast

1Y Price Target

$29.10

Price Target Upside-2.84% Downside

Rating ConsensusHold

Number of Analyst Covering27

EPS Forecast (FY)0.4

Revenue Forecast (FY)$1.16B

Confluent Business Overview & Revenue Model

Company DescriptionConfluent, Inc. operates a data streaming platform in the United States and internationally. It offers Confluent Cloud, a managed cloud-native service for connecting and processing data; and Confluent Platform, an enterprise-grade self-managed software that connects and processes data in real-time with the foundational platform for data in motion. It also provides Kafka Connect that enables to build connectors to integrate Apache Kafka with other apps and data systems; ksqlDB, a database for stream processing applications; and stream governance, a solution that is designed for the intricacies of streaming data, which allows teams to expand usage of real-time data without bypassing requirements for risk management and regulatory compliance. In addition, it also offers training and professional services. The company was formerly known as Infinitem, Inc. and changed its name to Confluent, Inc. in September 2014. Confluent, Inc. was incorporated in 2014 and is headquartered in Mountain View, California.

How the Company Makes MoneyConfluent generates revenue primarily through a subscription-based model. Its main revenue streams include recurring revenue from its Confluent Cloud, a fully managed cloud-native service, and Confluent Platform, which can be deployed on-premises or in a hybrid environment. The company offers various pricing tiers based on usage and features, catering to different business needs. Additionally, Confluent earns revenue from professional services, including training and consulting, which help clients successfully implement and optimize their data streaming solutions. Strategic partnerships with major cloud providers, such as Amazon Web Services, Microsoft Azure, and Google Cloud, enhance its market reach and drive customer acquisition, contributing significantly to its earnings.

Confluent Key Performance Indicators (KPIs)

Any

Customers Over $100,000 Annual Recurring Revenue

Customers Over $100,000 Annual Recurring Revenue
Shows the number of customers contributing significant recurring revenue, reflecting the company's ability to deliver value to large clients and its potential for stable, predictable income streams.

Chart InsightsConfluent's customer base with over $100,000 in annual recurring revenue has shown consistent growth, reaching 1,439 by mid-2025. This expansion aligns with strong subscription and cloud revenue growth, driven by new Flink offerings and strategic partnerships. However, challenges like customer optimization and a shift by a major AI client could temper future growth. Despite these headwinds, the company’s focus on strategic growth and efficiency improvements suggests a cautiously optimistic outlook for sustaining customer expansion.

Data provided by:

The Fly

Confluent Earnings Call Summary

Earnings Call Date:Oct 27, 2025

(Q3-2025)

% Change Since: |

Next Earnings Date:Feb 05, 2026

Earnings Call Sentiment Positive

The earnings call reflects a positive sentiment driven by strong quarterly performance, significant growth in key segments like Confluent Cloud and Flink, and strategic advancements in AI and partnerships. While there is a notable impact from a large AI customer's transition, the company's overall growth trajectory remains robust.

Q3-2025 Updates

Positive Updates

Strong Q3 Performance

Q3 subscription revenue grew 19% to $286 million. Confluent Cloud revenue grew 24% to $161 million, and non-GAAP operating margin expanded 3 percentage points to approximately 10%.

Late-Stage Pipeline Growth

More than 40% sequential growth in progressing late-stage pipeline and accelerating pace of new use cases, positioning for durable consumption growth.

Expansion of Large Customer Base

Largest sequential net add in $100,000-plus ARR customer count in the past 2 years, with continued acceleration in million-dollar-plus ARR customer growth.

Flink Momentum

Q3 Flink ARR for Confluent Cloud grew more than 70% sequentially. More than 1,000 customers used Flink, including a dozen with $100,000-plus ARR and 4 with over $1 million ARR.

Partner Ecosystem Success

Partners sourced well over 25% of new business over the last 12 months, aiding in broader footprint and customer expansion.

RPO Growth

RPO growth of 43%, providing greater visibility into near-term consumption revenue and longer-term growth.

AI Integration

Confluent's platform is becoming the context layer for enterprise AI, with over 100 AI native customers, including 21 with $100,000-plus in ARR.

Negative Updates

Impact of a Large AI Customer Transition

A large AI native customer shifted from Confluent Cloud to on-prem, resulting in a low single-digit impact on Q4 cloud revenue.

Federal Revenue Dependency

Federal revenue remains in the low single digits, indicating a potential area for growth but also a risk if federal spending decreases.

Company Guidance

During the Confluent Third Quarter 2025 Earnings Conference Call, the company reported exceeding the high end of all guided metrics, with subscription revenue growing 19% to $286 million and Confluent Cloud revenue increasing 24% to $161 million. The non-GAAP operating margin expanded by 3 percentage points to approximately 10%. The company highlighted strong momentum in late-stage pipeline progression, with more than 40% sequential growth. They also noted the largest sequential net add in $100,000-plus ARR customer count in two years and continued acceleration in million-dollar-plus ARR customer growth. The Flink ARR for Confluent Cloud grew more than 70% sequentially, with over 1,000 customers using Flink during the quarter. The company's partner ecosystem sourced over 25% of new business in the last 12 months. For the fiscal fourth quarter of 2025, Confluent expects subscription revenue between $295.5 million to $296.5 million and a non-GAAP operating margin of approximately 7%. For the fiscal year 2025, they project subscription revenue of $1.1135 billion to $1.1145 billion and a non-GAAP operating margin of approximately 7%.

Confluent Financial Statement Overview

Summary

Confluent demonstrates strong revenue growth and improving cash flow metrics, with a significant free cash flow growth rate of 75.19% TTM. However, the company faces challenges with net losses and negative returns on equity, and operational profitability remains a key focus.

Income Statement

Positive

Confluent has shown consistent revenue growth, with a TTM growth rate of 4.54%. Gross profit margins are strong at 74.22% TTM, indicating efficient cost management. However, the company is still operating at a net loss, with a net profit margin of -29.27% TTM. The negative EBIT and EBITDA margins suggest ongoing challenges in achieving operational profitability.

Balance Sheet

Neutral

The company's debt-to-equity ratio has improved slightly to 1.04 TTM, indicating a better balance between debt and equity compared to previous years. However, the return on equity remains negative at -31.29% TTM, reflecting ongoing losses. The equity ratio is not explicitly calculated, but the improvement in stockholders' equity suggests a positive trend.

Cash Flow

Positive

Confluent's cash flow position has improved significantly, with a free cash flow growth rate of 75.19% TTM. The operating cash flow to net income ratio is positive at 0.07, indicating better cash generation relative to net income losses. The free cash flow to net income ratio of 0.65 TTM suggests improved cash efficiency.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.11B	963.64M	776.95M	585.94M	387.86M	236.58M
Gross Profit	825.34M	706.17M	547.28M	383.53M	250.57M	161.10M
EBITDA	-340.35M	-397.06M	-430.01M	-455.05M	-335.99M	-231.61M
Net Income	-304.08M	-345.06M	-442.75M	-452.55M	-342.80M	-229.83M
Balance Sheet
Total Assets	2.88B	2.69B	2.46B	2.34B	2.34B	526.12M
Cash, Cash Equivalents and Short-Term Investments	1.99B	1.91B	1.90B	1.93B	2.02B	288.55M
Total Debt	1.11B	1.11B	1.11B	1.12B	1.12B	50.93M
Total Liabilities	1.76B	1.73B	1.65B	1.58B	1.49B	832.37M
Stockholders Equity	1.12B	961.23M	810.41M	769.48M	850.28M	-306.25M
Cash Flow
Free Cash Flow	37.91M	9.49M	-124.34M	-171.79M	-114.00M	-86.71M
Operating Cash Flow	57.37M	33.46M	-103.66M	-157.33M	-105.06M	-82.06M
Investing Cash Flow	-157.00M	-74.98M	-84.85M	-865.80M	-400.58M	-176.86M
Financing Cash Flow	76.14M	79.81M	102.37M	82.24M	1.84B	276.76M

Confluent Technical Analysis

Technical Analysis Sentiment

Positive

Last Price29.95

Price Trends

50DMA

24.11

Positive

100DMA

21.57

Positive

200DMA

22.69

Positive

Market Momentum

MACD

2.09

Negative

RSI

77.05

Negative

STOCH

80.31

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CFLT, the sentiment is Positive. The current price of 29.95 is above the 20-day moving average (MA) of 25.71, above the 50-day MA of 24.11, and above the 200-day MA of 22.69, indicating a bullish trend. The MACD of 2.09 indicates Negative momentum. The RSI at 77.05 is Negative, neither overbought nor oversold. The STOCH value of 80.31 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MDB	75 Outperform	$33.56B	-482.09	-3.23%	―	20.93%	68.47%
CFLT	72 Outperform	$10.59B	―	-29.62%	―	21.58%	18.88%
OKTA	70 Neutral	$15.67B	82.84	2.96%	―	12.12%	―
CRWD	67 Neutral	$118.49B	-377.76	-8.88%	―	22.05%	-341.24%
EVCM	65 Neutral	$2.18B	-3,258.97	0.04%	―	-11.61%	99.07%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
NET	61 Neutral	$67.05B	-651.75	-8.88%	―	28.06%	-7.44%

* Technology Sector Average

Performance Comparison

CFLT

Confluent

29.95

1.46

5.12%

OKTA

Okta

90.23

8.54

10.45%

MDB

MongoDB

425.20

180.20

73.55%

CRWD

CrowdStrike Holdings

477.26

126.23

35.96%

NET

Cloudflare

193.83

85.25

78.51%

EVCM

EverCommerce

12.71

1.53

13.69%

Confluent Corporate Events

M&A TransactionsBusiness Operations and Strategy

Confluent Announces Merger Agreement with IBM

Positive

Dec 8, 2025

On December 7, 2025, Confluent, Inc. announced a merger agreement with IBM, under which IBM will acquire Confluent for $31 per share, valuing the company at $11 billion. The merger, expected to close by mid-2026, will make Confluent a wholly owned subsidiary of IBM, enhancing IBM’s capabilities in data streaming and AI. The acquisition aligns with IBM’s strategy to expand its hybrid cloud and AI offerings, and is expected to drive substantial product synergies and operational efficiencies. Confluent’s shareholders, representing 62% of the voting power, have agreed to vote in favor of the merger.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Dec 09, 2025