Confluent (CFLT) AI Stock Analysis

• Market Cap: $6.81B
• Dividend Yield: N/A
• Average Volume (3M): 7.69M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.49
• Revenue Growth: 23.02%
• EPS Growth: 21.01%
• Country: US
• Employees: 3,060
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 0.09
• Shares Outstanding: 291,931,180
• 10 Day Avg. Volume: 6,129,931
• 30 Day Avg. Volume: 7,687,065
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.13
• Enterprise Value/Revenue: 7.21
• Enterprise Value/Gross Profit: 9.71
• Enterprise Value/Ebitda: -20.67
• 1Y Price Target: $24.40
• Price Target Upside: 23.29% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 25

• Rating: 59 Neutral
• Price Target: $20.50 ▲(3.59% Upside)

Confluent's overall stock score reflects strong revenue growth and a solid gross margin, but negative profitability and valuation challenges weigh heavily. Technical indicators suggest a cautious outlook, with the stock trading below key moving averages. The absence of profitability and a negative P/E ratio further impact the valuation score. Despite positive earnings call highlights, these factors collectively result in a moderate overall score.

Positive Factors

Revenue Growth

Strong subscription and cloud revenue growth indicates robust demand for Confluent's services, supporting long-term business expansion and market penetration.

Partner Ecosystem Expansion

Expanding partnerships enhance market reach and customer acquisition, strengthening Confluent's competitive position and supporting sustainable growth.

Flink ARR Growth

Rapid growth in Flink ARR demonstrates successful product adoption and diversification, bolstering Confluent's revenue streams and market relevance.

Negative Factors

Profitability Challenges

Ongoing net losses and negative margins indicate operational inefficiencies, posing a risk to long-term financial health and requiring strategic cost management.

Consumption Growth Challenges

Slower consumption growth among larger customers may impact future revenue potential, necessitating strategies to enhance customer engagement and retention.

Gross Revenue Retention

Lower revenue retention suggests potential customer churn or reduced spending, which could hinder consistent revenue growth and necessitate improved retention strategies.

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 business model. Its key revenue streams include subscriptions to Confluent Cloud and the Confluent Platform. Confluent Cloud offers a pay-as-you-go pricing model based on the volume of data processed, while the Confluent Platform typically involves annual subscription fees based on the number of nodes or usage levels. Additionally, the company earns revenue from professional services, including training and consulting, which help organizations implement and optimize their data streaming solutions. Significant partnerships with major cloud providers, such as Amazon Web Services (AWS), Google Cloud Platform (GCP), and Microsoft Azure, further enhance its market presence and contribute to its earnings by integrating Confluent's services within these platforms, thus expanding its customer base.

Confluent Financial Statement Overview

Summary

Confluent demonstrates strong revenue growth and a solid gross margin, indicating healthy market demand and efficient cost management. However, negative profitability margins and continued net losses highlight a need for operational efficiency improvements. The balance sheet is sound, with controlled leverage and a strong asset base. Cash flow improvements are notable, although full profitability remains a challenge.

Income Statement

Confluent shows a robust revenue growth trajectory, with TTM revenue increasing by approximately 10.5% compared to the previous year. Gross profit margin remains solid at around 74.2%. However, the net profit margin is negative due to substantial net losses, indicating ongoing challenges in achieving profitability. EBIT and EBITDA margins are also negative, reflecting high operational costs.

Balance Sheet

The company maintains a healthy balance sheet with a debt-to-equity ratio of approximately 1.04, indicating moderate leverage. The equity ratio is around 37.8%, pointing to a stable financial structure. Return on equity remains negative due to net losses, but overall, the financial position is stable with ample assets to cover liabilities.

Cash Flow

Operating cash flow has turned positive in the TTM period, reflecting improvements in cash generation. Free cash flow has also improved significantly, growing from the previous period. However, the free cash flow to net income ratio is low due to continued net losses, suggesting that profitability is still a concern despite cash flow improvements.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.06B	963.64M	776.95M	585.94M	387.86M	236.58M
Gross Profit	790.27M	706.17M	547.28M	383.53M	250.57M	161.10M
EBITDA	-371.18M	-397.06M	-430.01M	-455.05M	-335.99M	-231.61M
Net Income	-311.72M	-345.06M	-442.75M	-452.55M	-342.80M	-229.83M
Balance Sheet
Total Assets	2.82B	2.69B	2.46B	2.34B	2.34B	526.12M
Cash, Cash Equivalents and Short-Term Investments	1.94B	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	1.75B	1.73B	1.65B	1.58B	1.49B	832.37M
Stockholders Equity	1.06B	961.23M	810.41M	769.48M	850.28M	-306.25M
Cash Flow
Free Cash Flow	27.47M	9.49M	-124.34M	-171.79M	-114.00M	-86.71M
Operating Cash Flow	42.19M	33.46M	-103.66M	-157.33M	-105.06M	-82.06M
Investing Cash Flow	-132.17M	-74.98M	-84.85M	-865.80M	-400.58M	-176.86M
Financing Cash Flow	73.57M	79.81M	102.37M	82.24M	1.84B	276.76M

Confluent Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 19.79
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: 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 19.79 is above the 20-day moving average (MA) of 19.65, below the 50-day MA of 19.95, and below the 200-day MA of 24.58, indicating a neutral trend. The MACD of 0.07 indicates Negative momentum. The RSI at 51.55 is Neutral, neither overbought nor oversold. The STOCH value of 32.36 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CFLT.

Confluent Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MDB	73 Outperform	25.90B	-321.82	-2.67%	―	21.90%	67.81%
NET	70 Neutral	75.39B	-639.11	-9.44%	―	27.32%	-11.94%
EVCM	69 Neutral	2.07B	-100.00	-2.82%	―	-7.25%	51.12%
CRWD	66 Neutral	120.81B	-402.32	-7.91%	―	23.46%	-270.07%
OKTA	64 Neutral	16.07B	107.49	2.49%	―	12.68%	―
CFLT	59 Neutral	$6.81B	―	-32.18%	―	23.02%	21.01%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%