Confluent (CFLT) AI Stock Analysis

• Market Cap: $10.97B
• Dividend Yield: N/A
• Average Volume (3M): 14.88M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.75
• Revenue Growth: 21.58%
• EPS Growth: 18.88%
• Country: US
• Employees: 3,060
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 0.12
• Shares Outstanding: 308,661,560
• 10 Day Avg. Volume: 10,345,147
• 30 Day Avg. Volume: 14,881,897
• PEG Ratio: 1.79
• Price to Book (P/B): 8.89
• Price to Sales (P/S): 8.91
• P/FCF Ratio: 171.34
• Enterprise Value/Market Cap: 1.07
• Enterprise Value/Revenue: 10.06
• Enterprise Value/Gross Profit: 13.54
• Enterprise Value/Ebitda: -37.55
• 1Y Price Target: $30.50
• Price Target Upside: -0.65% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 23
• EPS Forecast (FY): 0.5
• Revenue Forecast (FY): $1.36B

• Rating: 61 Neutral
• Price Target: $32.00 ▲(4.23% Upside)
• Action: Reiterated Date: 02/14/26
• Date: Action: Reiterated 02/14/26

The score is driven primarily by improving financial quality (notably the move to positive operating and free cash flow and narrowing losses) and supportive technical momentum (trading above key moving averages). This is tempered by decelerating 2025 revenue growth and weak traditional valuation signals (negative P/E, no dividend). The latest earnings commentary is generally upbeat on Cloud/Flink momentum and margin progress, while the IBM deal adds upside visibility but carries some execution/legal process risk.

Positive Factors

Strong gross margins

Sustained ~74% gross margins indicate durable unit economics for a cloud/SaaS data-streaming platform. High gross profitability gives structural room to invest in R&D, sales, and customer success while pursuing operating leverage toward sustained long-term profitability if revenue growth stabilizes.

Positive cash flow inflection

The move to positive operating and free cash flow is a structural inflection: it reduces reliance on external financing, improves runway for strategic investments or debt paydown, and demonstrates improving cash conversion that supports durable financial flexibility as the business scales.

Strategic IBM acquisition

Approval and regulatory progress toward IBM's acquisition create a lasting structural change: integration into IBM's hybrid cloud and AI go-to-market expands distribution, cross-sell opportunities and product synergies, reducing standalone execution risk and accelerating enterprise adoption over time.

Negative Factors

Sharp revenue deceleration

Growth slowing to ~4.8% in 2025 represents a material structural headwind for a scale software business. Lower top-line expansion constrains operating leverage, extends the timeline to profitability on a GAAP basis, and increases pressure to either accelerate new product adoption or broaden customer penetration.

Ongoing net losses

Despite margin improvements and FCF gains, persistent net losses and negative returns on equity remain. Continued losses can limit reinvestment flexibility, necessitate external capital for growth or M&A, and complicate long-term planning absent sustained revenue acceleration or further cost discipline.

Meaningful leverage on balance sheet

Significant outstanding debt (~$1.11B) creates structural financial obligations that reduce flexibility. With ongoing net losses historically, leverage heightens refinancing and interest risks, and constrains capital allocation choices until free cash flow sustainably exceeds debt servicing and investment needs.

Confluent Business Overview & Revenue Model

Company Description

Confluent, 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 Money

Confluent 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 Financial Statement Overview

Summary

Mixed fundamentals: revenue has scaled strongly over multiple years, but 2025 growth slowed sharply (~4.8%). Profitability is still negative, though losses narrowed meaningfully and gross margin remains strong (~74%). The biggest positive is the clear inflection to positive operating cash flow (~$64M) and free cash flow (~$61M) in 2025; leverage is still meaningful (~$1.11B debt) but debt-to-equity improved.

Income Statement

Revenue has scaled meaningfully over the last several years (from ~$237M in 2020 to ~$1.17B in 2025), but growth has decelerated sharply (2025 revenue growth: ~4.8% vs. much higher earlier years). Profitability remains the key weakness: net losses persist each year, though the net loss margin has improved notably in 2025 (about -25% vs. about -36% in 2024), supported by strong gross margins (~74% in 2025). Overall, strong unit economics at the gross profit level, but the company is still not consistently translating that into operating profitability.

Balance Sheet

The balance sheet is better than earlier years with positive and growing equity (about $1.17B in 2025 vs. ~$0.96B in 2024), but leverage is still meaningful with total debt of ~$1.11B. Debt relative to equity has improved (about 0.95x in 2025 vs. ~1.15x in 2024 and higher in prior years), indicating improving balance sheet stability. The main concern remains ongoing losses, reflected in negative returns on equity, which can pressure capital needs over time if profitability doesn’t continue improving.

Cash Flow

Cash flow quality has improved materially: operating cash flow turned solidly positive in 2024 and strengthened further in 2025 (~$64M), with free cash flow also positive and sharply higher in 2025 (~$61M, up strongly vs. 2024). This is a clear positive inflection after negative operating and free cash flow in 2021–2023. A remaining watch item is that operating cash generation is still modest relative to the size of the business and the company is still reporting net losses, though free cash flow is close to the net loss magnitude in 2025, suggesting improving cash efficiency.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	1.17B	963.64M	776.95M	585.94M	387.86M
Gross Profit	866.84M	706.17M	547.28M	383.53M	250.57M
EBITDA	-310.37M	-397.06M	-430.01M	-455.05M	-335.99M
Net Income	-295.27M	-345.06M	-442.75M	-452.55M	-342.80M
Balance Sheet
Total Assets	2.99B	2.69B	2.46B	2.34B	2.34B
Cash, Cash Equivalents and Short-Term Investments	2.05B	1.91B	1.90B	1.93B	2.02B
Total Debt	1.11B	1.11B	1.11B	1.12B	1.12B
Total Liabilities	1.82B	1.73B	1.65B	1.58B	1.49B
Stockholders Equity	1.17B	961.23M	810.41M	769.48M	850.28M
Cash Flow
Free Cash Flow	60.68M	9.49M	-124.34M	-171.79M	-114.00M
Operating Cash Flow	64.27M	33.46M	-103.66M	-157.33M	-105.06M
Investing Cash Flow	-185.00M	-74.98M	-84.85M	-865.80M	-400.58M
Financing Cash Flow	81.19M	79.81M	102.37M	82.24M	1.84B

Confluent Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 30.70
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: 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 30.7 is above the 20-day moving average (MA) of 30.55, above the 50-day MA of 30.34, and above the 200-day MA of 24.11, indicating a bullish trend. The MACD of 0.23 indicates Positive momentum. The RSI at 68.15 is Neutral, neither overbought nor oversold. The STOCH value of 89.38 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CFLT.

Confluent Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MDB	75 Outperform	$29.55B	-403.50	-3.23%	―	20.93%	68.47%
EVCM	65 Neutral	$1.76B	-2,528.21	0.04%	―	-11.61%	99.07%
CRWD	62 Neutral	$104.81B	―	-8.88%	―	22.05%	-341.24%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
CFLT	61 Neutral	$10.97B	-35.78	-27.72%	―	21.58%	18.88%
OKTA	60 Neutral	$14.70B	75.10	2.96%	―	12.12%	―
NET	57 Neutral	$66.97B	―	-8.16%	―	28.06%	-7.44%

Confluent Corporate Events

Confluent Shareholders Approve IBM Acquisition Merger Agreement

On December 7, 2025, Confluent, Inc. entered into a merger agreement under which a subsidiary of International Business Machines Corporation will merge with and into Confluent, leaving Confluent as a wholly owned IBM subsidiary. At a special online shareholder meeting held on February 12, 2026, a quorum was achieved with holders of 247,889,521 shares present or represented by proxy out of 356,430,665 shares entitled to vote.

Shareholders approved the adoption of the merger agreement with 687,954,937 votes in favor, 339,860 against, and 91,336 abstaining, and also backed on an advisory basis the compensation arrangements for Confluent’s named executive officers related to the transaction. With the key shareholder approvals secured and the adjournment proposal rendered moot, the parties indicated that the merger is expected to close by mid-2026, subject to remaining conditions, marking a significant step toward Confluent’s integration into IBM’s enterprise software portfolio.

The most recent analyst rating on (CFLT) stock is a Hold with a $31.00 price target. To see the full list of analyst forecasts on Confluent stock, see the CFLT Stock Forecast page.

Confluent Issues Supplemental Disclosures Amid Shareholder Lawsuits

On December 7, 2025, Confluent entered into a merger agreement under which an IBM subsidiary will merge with and into Confluent, leaving Confluent as the surviving corporation and a wholly owned IBM unit, with shareholders scheduled to vote on the deal at a February 12, 2026 special meeting. Ahead of that vote, the company disclosed that it has received 17 demand letters and faces two New York state court lawsuits, filed on January 21 and 22, 2026, alleging that its January 9, 2026 definitive proxy statement contains misleading or omitted material information regarding the transaction; while Confluent denies all allegations and maintains that its disclosures fully comply with applicable law, it is voluntarily issuing supplemental financial and valuation-related disclosures, including additional detail on Morgan Stanley’s analyses and precedent transaction multiples, in an effort to moot the claims and reduce litigation risk and cost without admitting any wrongdoing.

The most recent analyst rating on (CFLT) stock is a Hold with a $31.00 price target. To see the full list of analyst forecasts on Confluent stock, see the CFLT Stock Forecast page.

Confluent Clears Key U.S. Antitrust Hurdle in IBM Deal

Confluent, Inc. disclosed that it entered into a merger agreement on December 7, 2025 with International Business Machines Corporation (IBM) under which a wholly owned IBM subsidiary, Corvo Merger Sub, Inc., will be merged into Confluent, leaving Confluent as a wholly owned subsidiary of IBM. The transaction moved a step closer to completion when the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired on January 12, 2026, removing a key U.S. antitrust hurdle, though the deal still depends on additional regulatory clearances in other jurisdictions and approval by Confluent shareholders at a special meeting scheduled for February 12, 2026, signaling continued but not yet finalized progress toward IBM’s acquisition of the data-streaming company.

The most recent analyst rating on (CFLT) stock is a Hold with a $31.00 price target. To see the full list of analyst forecasts on Confluent stock, see the CFLT Stock Forecast page.

Confluent Announces Merger Agreement with IBM

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.

The most recent analyst rating on (CFLT) stock is a Sell with a $24.00 price target. To see the full list of analyst forecasts on Confluent stock, see the CFLT Stock Forecast page.