Stock Story -
Data infrastructure software company, Confluent (NASDAQ:CFLT) announced better-than-expected results in Q2 CY2024, with revenue up 24.1% year on year to $235 million. It made a non-GAAP profit of $0.06 per share, improving from its loss of $0 per share in the same quarter last year.
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Confluent (CFLT) Q2 CY2024 Highlights:
- Revenue: $235 million vs analyst estimates of $230.2 million (2.1% beat)
- Adjusted Operating Income: $1.33 million vs analyst estimates of -$1.95 million (168% beat)
- EPS (non-GAAP): $0.06 vs analyst estimates of $0.05 (31% beat)
- Gross Margin (GAAP): 72.3%, up from 69.6% in the same quarter last year
- Free Cash Flow of $2.71 million is up from -$31.68 million in the previous quarter
- Customers: 1,306 customers paying more than $100,000 annually
- Market Capitalization: $7.72 billion
Started in 2014 by the team of engineers at LinkedIn who originally built it as an internal tool, Confluent (NASDAQ:CFLT) provides infrastructure software for organizations that makes it easy and fast to collect and move large amounts of data between different systems.
Data InfrastructureGenerating insights from system level data is an increasing priority for most businesses, but to do so requires connecting and analyzing piles of data stored and siloed in separate databases. This is the demand driver for cloud based data infrastructure software providers, who can more readily integrate, distribute and process information vs. legacy on-premise software providers.
Sales GrowthAs you can see below, Confluent's revenue growth has been incredible over the last three years, growing from $88.34 million in Q2 2021 to $235 million this quarter.
This quarter, Confluent's quarterly revenue was once again up a very solid 24.1% year on year. On top of that, its revenue increased $17.75 million quarter on quarter, a very strong improvement from the $4.05 million increase in Q1 CY2024. This is a sign of acceleration of growth and great to see.
Looking ahead, analysts covering the company were expecting sales to grow 23.5% over the next 12 months before the earnings results announcement.
Large Customers Growth This quarter, Confluent reported 1,306 enterprise customers paying more than $100,000 annually, an increase of 46 from the previous quarter. That's quite a bit more contract wins than last quarter but also quite a bit below what we've typically observed over the last year, suggesting that the company may be reinvigorating growth.
Key Takeaways from Confluent's Q2 Results We were impressed by Confluent's significant improvement in new large contract wins this quarter. We were also glad its revenue outperformed Wall Street's estimates. However, the company stopped providing guidance, which sometimes drives skepticism in the market. Overall, we think this was a strong quarter that should satisfy shareholders. Investors were likely expecting more, however, and the stock traded down 2.2% to $24.50 immediately after reporting.
