Confluent Announces Second Quarter 2024 Financial Results

Rhea-AI Summary

Confluent (NASDAQ: CFLT) reported solid financial results for Q2 2024, with subscription revenue reaching $224.7 million, up 27% year-over-year. Confluent Cloud revenue grew 40% to $117 million. The company added 1,306 customers with $100,000+ in ARR, a 14% increase. Despite a GAAP operating loss of $108.3 million, Confluent achieved a non-GAAP operating income of $1.3 million, marking a significant improvement from last year's loss.

Key highlights include:

• Total revenue: $235.0 million, up 24% YoY
• Non-GAAP operating margin: 0.6%, up 9.7 points YoY
• Free cash flow: $2.7 million, improving by $37.9 million YoY

For Q3 2024, Confluent expects subscription revenue between $233-$234 million and a non-GAAP operating margin of 0%.

Positive

• Subscription revenue grew 27% year-over-year to $224.7 million
• Confluent Cloud revenue increased 40% year-over-year to $117 million
• Customer base with $100,000+ ARR grew 14% year-over-year to 1,306
• Achieved non-GAAP operating income of $1.3 million, improving from a $17.3 million loss last year
• Free cash flow turned positive at $2.7 million, a $37.9 million improvement year-over-year
• Non-GAAP operating margin improved by 9.7 percentage points to 0.6%

Negative

• GAAP operating loss of $108.3 million, though improved from last year
• GAAP operating margin remains negative at -46.1%
• GAAP net loss per share of $0.28, despite improvement from last year

Insights

Financial Analyst

Confluent's Q2 2024 results demonstrate solid growth and improved financial performance, particularly in key areas. The 27% year-over-year increase in subscription revenue to $224.7 million and 40% growth in Confluent Cloud revenue to $117 million highlight the company's strong market position in data streaming solutions.

The 14% increase in customers with $100,000 or greater in ARR to 1,306 indicates successful enterprise adoption and upselling strategies. This growth in high-value customers is a positive indicator for future revenue stability and expansion potential.

Notably, Confluent achieved non-GAAP operating income of $1.3 million, a significant improvement from the $17.3 million loss in Q2 2023. This shift to profitability on a non-GAAP basis, coupled with a positive free cash flow of $2.7 million, suggests that the company is successfully balancing growth with operational efficiency.

The company's guidance for Q3 and full-year 2024 projects continued growth and maintained profitability. The expected non-GAAP operating margin of 0% for both Q3 and FY 2024 indicates management's commitment to sustainable growth while keeping costs in check.

While these results are encouraging, investors should monitor the pace of revenue growth, particularly in Confluent Cloud, as it's a key driver of the company's future success. The ability to maintain this growth rate while improving profitability will be important for Confluent's long-term value proposition.

Tech Expert

Confluent's Q2 2024 results underscore the growing importance of data streaming in today's digital landscape. The 40% year-over-year growth in Confluent Cloud revenue reflects the increasing adoption of cloud-based data streaming solutions, aligning with broader industry trends towards cloud migration and real-time data processing.

The company's success in attracting and retaining high-value customers, as evidenced by the 14% growth in customers with $100,000+ ARR, suggests that enterprises are recognizing the critical role of data streaming in their digital transformation initiatives. This trend is likely to continue as organizations seek to harness real-time data for improved decision-making and operational efficiency.

Confluent's focus on its "complete data streaming platform" positions it well in a market where integrated, end-to-end solutions are increasingly valued. The ability to offer a comprehensive platform that addresses various data streaming needs could be a key differentiator in a competitive landscape.

However, the tech sector is known for rapid innovation and intense competition. Confluent will need to maintain its technological edge and continue enhancing its platform to stay ahead. The company's ability to innovate and adapt to emerging technologies like edge computing and AI-driven data processing will be important for sustaining its growth trajectory.

Investors should keep an eye on Confluent's R&D investments and new product announcements as indicators of its ability to maintain technological leadership in the data streaming space.

• Subscription revenue of $225 million, up 27% year over year
• Confluent Cloud revenue of $117 million, up 40% year over year
• 1,306 customers with $100,000 or greater in ARR, up 14% year over year

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)-- Confluent, Inc. (NASDAQ: CFLT), the data streaming pioneer, today announced financial results for its second quarter of 2024, ended June 30, 2024.

“Confluent had a solid second quarter, demonstrated by 40% year-over-year revenue growth for Confluent Cloud and our largest sequential increase in total customer count in two years,” said Jay Kreps, co-founder and CEO, Confluent. “Confluent’s complete data streaming platform has never been more critical and relevant in helping organizations thrive in the modern world. We are more confident than ever in our ability to drive durable long-term growth.”

“We delivered solid subscription revenue growth and substantial operating margin and free cash flow expansions in the second quarter,” said Rohan Sivaram, CFO, Confluent. “As we continue to execute on our consumption transformation, we remain focused on driving efficient growth and delivering breakeven for non-GAAP operating margin and free cash flow margin for 2024."

Second Quarter 2024 Financial Highlights (In millions, except per share data and percentages)
	Q2 2024	Q2 2023	Y/Y Change
Subscription Revenue	$224.7	$176.5	27%
Total Revenue	$235.0	$189.3	24%
GAAP Operating Loss	$(108.3)	$(119.4)	$11.1
Non-GAAP Operating Income (Loss)	$1.3	$(17.3)	$18.6
GAAP Operating Margin	(46.1%)	(63.1%)	17.0 pts
Non-GAAP Operating Margin	0.6%	(9.2%)	9.7 pts
GAAP Net Loss Per Share	$(0.28)	$(0.35)	$0.07
Non-GAAP Net Income Per Diluted Share	$0.06	$0.00	$0.06
Net Cash Provided by (Used in) Operating Activities	$8.6	$(29.1)	$37.7
Free Cash Flow	$2.7	$(35.2)	$37.9
Free Cash Flow Margin	1.2%	(18.6%)	19.8 pts

Financial Outlook

For the third quarter and fiscal year 2024, Confluent expects:

	Q3 2024 Outlook	FY 2024 Outlook
Subscription Revenue	$233-$234 million	$910 million
Non-GAAP Operating Margin	0%	0%
Non-GAAP Net Income Per Share	$0.05	$0.20

A reconciliation of forward-looking non-GAAP operating margin, free cash flow margin and non-GAAP net income per share to the most directly comparable GAAP measures is not available without unreasonable effort, as certain items cannot be reasonably predicted because of their high variability, complexity and low visibility. In particular, the measures and effects of our stock-based compensation-related charges, which include stock-based compensation expenses, employer payroll taxes on employee stock transactions, and amortization of stock-based compensation capitalized in internal-use software, are directly impacted by the timing of employee stock transactions and unpredictable fluctuations in our stock price, which we expect to have a significant impact on our future GAAP financial results.

Conference Call Information

Confluent will host a video webcast to discuss the company’s second quarter 2024 results as well as its financial outlook today at 4:30 p.m. Eastern Time/1:30 p.m. Pacific Time. Open to the public, investors may access the webcast, earnings press release, supplemental financial information, and investor presentation on Confluent’s investor relations website at investors.confluent.io before the commencement of the webcast. A replay of the webcast will also be accessible from Confluent’s investor relations website a few hours after the conclusion of the live event.

Confluent uses its investor relations website and may use its X (Twitter), LinkedIn, and Facebook accounts as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

Forward-Looking Statements

This press release and the earnings call referencing this press release contain forward-looking statements including, among other things, statements regarding (i) our financial outlook, including expected total revenue, subscription revenue, Confluent Cloud revenue, non-GAAP operating margin, free cash flow margin, non-GAAP net income per share, net dilution, revenue mix, Confluent Cloud and data streaming platform growth, operating margins and margin improvements, targeted or anticipated gross and operating margin levels, earnings per share levels and improvements, in-product optimizations of Confluent Cloud, continued business momentum, and expected revenue and consumption growth rate and efficient growth, (ii) our market and category leadership position, (iii) our expected investments in research and development and go-to-market functions and anticipated effectiveness and timing of product innovation, features and functionalities, (iv) our ability to drive efficient growth and rate and pace of investments, including expected capital allocation, (v) our expectations and trends relating to growth of our DSP products and Confluent Cloud, including following our reorientation of our go-to-market strategy and model around customer consumption, (vi) rates of Confluent Cloud consumption and demand for and retention of data streaming platforms like Confluent in the face of scrutiny on IT spending, (vii) continued high interest rates and macroeconomic uncertainty as well as our expectations regarding the effects of macroeconomic pressure and volatility on overall consumption levels and growth rates of Confluent Cloud, IT spending, our go-to-market motion, durability of our offering with customers, and customer use case expansion, as well as potential benefits to our business and growth following any improvements to the macroeconomic environment, (viii) our pricing, our win rate and deal cycles and customer behaviors, such as budget scrutiny and preferences for consumption rather than large upfront commitments, (ix) customer growth, retention and engagement, (x) ability for Confluent Cloud to provide cost savings for users and customers, including lower total cost of ownership, and drive greater monetization of the open source Kafka user base as a result, (xi) increased adoption of our offering and fully managed solutions for data streaming in general, including from customers building generative AI applications, (xii) dependence of businesses on data in motion, (xiii) growth in and growth rate of revenue, customers, dollar-based net retention rate, and gross retention rate, (xiv) our ability to increase engagement of customers for Confluent and expand customer cohorts, (xv) our market opportunity, (xvi) our ability to successfully reorient our go-to-market strategy and model around customer consumption as well as the timing, anticipated benefits, and overall effectiveness of such transition for our business, future durable and efficient growth, and ability to capture our market opportunity, (xvii) our go-to-market strategy, (xviii) our product differentiation and market acceptance of our products, including over open source alternatives, (xix) our strategy and expected results and market acceptance for our Flink offering and our DSP products, (xx) our expectations for market acceptance, direction and growth of stream processing, its potential to accelerate adoption of our platform and growth of our business, and our ability and positioning to capture this market, (xxi) our expectations of meeting near-term and mid-term financial targets, (xxii) our expectations regarding the generative AI landscape and our offering, including expectations of customers and partners using our offering for generative AI use cases, (xxiii) our expectations of relevance of certain key financial and operating metrics, and (xxiv) our overall future prospects. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “seek,” “plan,” “project,” “target,” “looking ahead,” “look to,” “move into,” and similar expressions are intended to identify forward-looking statements. Forward-looking statements represent our current beliefs, estimates and assumptions only as of the date of this press release and information contained in this press release should not be relied upon as representing our estimates as of any subsequent date. These forward-looking statements are subject to risks, uncertainties, and assumptions. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. Risks include, but are not limited to: (i) our limited operating history, including in uncertain macroeconomic environments, (ii) our ability to sustain and manage our rapid growth, (iii) our ability to increase consumption of our offering, including by existing customers and through the acquisition of new customers, including by addressing customer consumption preferences, successfully add new features and functionality to our offering, and partner with our customers to help them realize increased value in Confluent in an efficient and sustainable manner, (iv) our ability to successfully execute our go-to-market strategy and initiatives, including as we reorient our go-to-market strategy and model around customer consumption, (v) our ability to attract new customers and successfully ramp their consumption of our offering, as well as retain and sell additional features and services to our existing customers, (vi) uncertain macroeconomic conditions, including high inflation, high interest rates, bank failures, supply chain challenges, geopolitical events, recessionary risks, and exchange rate fluctuations, which have resulted and may continue to result in reduced consumption of Confluent Cloud, volatility in consumption, including due to customer focus on cloud cost controls and increased efficiency, customer pullback in information technology spending, lengthening of sales cycles, reduced contract sizes, generally increased scrutiny on IT spending from existing and potential customers, or customer preference for open source alternatives, as well as the potential need for cost efficiency measures, (vii) our ability to achieve profitability and improve margins annually, by our expected timelines or at all, (viii) the estimated addressable market opportunity for our offering, including our Flink offering and stream processing, and our ability to capture our share of that market opportunity, (ix) our ability to compete effectively in an increasingly competitive market, (x) our ability to attract, ramp, and retain highly qualified personnel, including as we reorient our go-to-market strategy and model around customer consumption, and the impacts of sales personnel attrition and levels of ramped capacity in our sales organization, (xi) breaches in our security measures, intentional or accidental cybersecurity incidents or unauthorized access to our platform, our data, or our customers’ or other users’ personal data, (xii) our reliance on third-party cloud-based infrastructure to host Confluent Cloud, (xiii) public sector budgetary cycles and funding reductions or delays, (xiv) our ability to accurately forecast our future performance, business and growth, and (xv) general market, political, economic, and business conditions. These risks are not exhaustive. Further information on these and other risks that could affect Confluent’s results is included in our filings with the Securities and Exchange Commission (“SEC”), including our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, and our future reports that we may file from time to time with the SEC. Additional information will be made available in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 that will be filed with the SEC, which should be read in conjunction with this press release and the financial results included herein. Confluent assumes no obligation to, and does not currently intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Non-GAAP Financial Measures

This press release includes the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (research and development, sales and marketing, and general and administrative), non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per share, free cash flow, and free cash flow margin. We use these non-GAAP financial measures and other key metrics internally to facilitate analysis of our financial and business trends and for internal planning and forecasting purposes. We believe these non-GAAP financial measures, when taken collectively, may be helpful to investors because they provide consistency and comparability with past financial performance by excluding certain items that may not be indicative of our business, results of operations, or outlook. However, non-GAAP financial measures have limitations as an analytical tool and are presented for supplemental informational purposes only. They should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. In particular, other companies, including companies in our industry, may report non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (research and development, sales and marketing, general and administrative), non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per share, free cash flow, free cash flow margin, or similarly titled measures but calculate them differently, which reduces their usefulness as comparative measures. Further, free cash flow is not a substitute for cash used in operating activities. The utility of free cash flow is limited as such measure does not reflect our future contractual commitments and does not represent the total increase or decrease in our cash balance for any given period. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures, as presented below. We define non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (research and development, sales and marketing, and general and administrative), non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss), and non-GAAP net income (loss) per share as the respective GAAP measures, adjusted for, as applicable, stock-based compensation-related charges which include stock-based compensation expense, employer taxes on employee stock transactions and amortization of stock-based compensation capitalized in internal-use software; amortization of acquired intangibles; acquisition-related expenses; restructuring and other related charges; amortization of debt issuance costs; and income tax effects associated with these adjustments as well as the non-recurring income tax expense or benefit associated with acquisitions. Non-GAAP gross margin and non-GAAP operating margin are defined as non-GAAP gross profit and non-GAAP operating income (loss) as a percentage of revenue, respectively. We define free cash flow as net cash used in operating activities less capitalized internal-use software costs and capital expenditures and free cash flow margin as free cash flow as a percentage of revenue. We believe that free cash flow and free cash flow margin are useful indicators of liquidity that provide information to management and investors about the performance of core operations and future ability to generate cash that can be used for strategic opportunities or investing in our business.

Definition

Customers with $100,000 or greater in annual recurring revenue (“ARR”) represent the number of customers that contributed $100,000 or more in ARR as of period end. We define ARR as (1) with respect to Confluent Platform customers, the amount of revenue to which our customers are contractually committed over the following 12 months assuming no increases or reductions in their subscriptions, and (2) with respect to Confluent Cloud customers, the amount of revenue that we expect to recognize from such customers over the following 12 months, calculated by annualizing actual consumption of Confluent Cloud in the last three months of the applicable period, assuming no increases or reductions in usage rate. Services arrangements are excluded from the calculation of ARR. For purposes of determining our customer count, we treat all affiliated entities with the same parent organization as a single customer and include pay-as-you-go customers. Our customer count is subject to adjustments for acquisitions, consolidations, spin-offs, and other market activity.

About Confluent

Confluent is the data streaming platform that is pioneering a fundamentally new category of data infrastructure that sets data in motion. Confluent’s cloud-native offering is the foundational platform for data in motion – designed to be the intelligent connective tissue enabling real-time data, from multiple sources, to constantly stream across the organization. With Confluent, organizations can meet the new business imperative of delivering rich, digital front-end customer experiences and transitioning to sophisticated, real-time, software-driven backend operations.

Confluent, Inc. Condensed Consolidated Balance Sheets (in thousands) (unaudited)
	June 30,				December 31,
		2024				2023
ASSETS
Current assets:
Cash and cash equivalents	$	311,328			$	349,761
Marketable securities		1,619,853				1,551,009
Accounts receivable, net		257,485				229,962
Deferred contract acquisition costs		44,433				43,937
Prepaid expenses and other current assets		74,135				76,986
Total current assets		2,307,234				2,251,655
Property and equipment, net		66,791				54,012
Operating lease right-of-use assets		9,997				10,061
Goodwill and intangible assets, net		54,487				55,490
Deferred contract acquisition costs, non-current		74,251				75,815
Other assets, non-current		15,706				13,776
Total assets	$	2,528,466			$	2,460,809
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	13,990			$	6,714
Accrued expenses and other liabilities		166,777				141,847
Operating lease liabilities		10,574				7,890
Deferred revenue		328,845				330,570
Total current liabilities		520,186				487,021
Operating lease liabilities, non-current		12,566				17,391
Deferred revenue, non-current		19,608				22,436
Convertible senior notes, net		1,090,219				1,088,313
Other liabilities, non-current		12,023				35,233
Total liabilities		1,654,602				1,650,394
Stockholders’ equity:
Preferred stock		-				-
Class A common stock		2				2
Class B common stock		1				1
Additional paid-in capital		2,702,980				2,453,293
Accumulated other comprehensive (loss) income		(2,101	)			1,270
Accumulated deficit		(1,827,018	)			(1,644,151	)
Total stockholders’ equity		873,864				810,415
Total liabilities and stockholders’ equity	$	2,528,466			$	2,460,809

Confluent, Inc. Condensed Consolidated Statements of Operations (in thousands, except share and per share data) (unaudited)
	Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Revenue:
Subscription	$	224,702			$	176,488			$	431,604			$	337,055
Services		10,284				12,797				20,619				26,532
Total revenue		234,986				189,285				452,223				363,587
Cost of revenue:
Subscription(1)		52,863				44,188				101,218				87,093
Services(1)		12,118				13,732				24,984				28,971
Total cost of revenue		64,981				57,920				126,202				116,064
Gross profit		170,005				131,365				326,021				247,523
Operating expenses:
Research and development(1)		106,060				85,677				203,631				170,567
Sales and marketing(1)		132,865				127,770				264,217				256,394
General and administrative(1)		39,429				36,343				77,873				71,698
Restructuring and other related charges		-				943				-				34,325
Total operating expenses		278,354				250,733				545,721				532,984
Operating loss		(108,349	)			(119,368	)			(219,700	)			(285,461	)
Other income, net		21,853				17,610				42,703				32,795
Loss before income taxes		(86,496	)			(101,758	)			(176,997	)			(252,666	)
Provision for income taxes		3,404				1,667				5,870				3,314
Net loss	$	(89,900	)		$	(103,425	)		$	(182,867	)		$	(255,980	)
Net loss per share, basic and diluted	$	(0.28	)		$	(0.35	)		$	(0.58	)		$	(0.87	)
Weighted-average shares used to compute net loss per share, basic and diluted		319,415,586				297,827,200				316,809,384				294,862,197

(1)	Includes stock-based compensation-related charges* as follows:

	Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Cost of revenue - subscription	$	9,292			$	7,179			$	17,197			$	13,828
Cost of revenue - services		2,338				3,253				5,056				6,120
Research and development		41,866				36,726				83,290				68,410
Sales and marketing		35,332				34,377				71,112				63,947
General and administrative		15,872				14,223				31,030				26,405
Total stock-based compensation-related charges	$	104,700			$	95,758			$	207,685			$	178,710

*

Represents stock-based compensation expense, employer taxes on employee stock transactions, and amortization of stock-based compensation capitalized in internal-use software. We began excluding amortization of stock-based compensation capitalized in internal-use software from our non-GAAP measures starting with the quarter ended March 31, 2024. The amounts of amortization of stock-based compensation capitalized in internal-use software were immaterial in both current and prior periods.

Confluent, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited)
	Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(89,900	)		$	(103,425	)		$	(182,867	)		$	(255,980	)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Depreciation and amortization		5,842				3,256				10,153				6,378
Net accretion of discounts on marketable securities		(9,871	)			(10,588	)			(20,267	)			(19,721	)
Amortization of debt issuance costs		953				950				1,906				1,889
Amortization of deferred contract acquisition costs		13,334				11,053				26,096				21,537
Non-cash operating lease costs		969				977				1,854				2,184
Lease abandonment charges		-				-				-				15,667
Stock-based compensation, net of amounts capitalized		99,107				92,159				194,429				171,448
Deferred income taxes		(273	)			5				342				10
Other		361				572				1,210				851
Changes in operating assets and liabilities, net of effects of business combinations:
Accounts receivable		(58,018	)			(19,361	)			(28,658	)			(11,293	)
Deferred contract acquisition costs		(15,296	)			(13,806	)			(25,028	)			(23,966	)
Prepaid expenses and other assets		3,703				(9,198	)			1,774				(6,057	)
Accounts payable		11,987				(7,395	)			7,055				(18,720	)
Accrued expenses and other liabilities		46,893				24,109				3,141				7,552
Operating lease liabilities		(1,994	)			(1,756	)			(3,929	)			(3,754	)
Deferred revenue		793				3,388				(4,575	)			5,143
Net cash provided by (used in) operating activities		8,590				(29,060	)			(17,364	)			(106,832	)
CASH FLOWS FROM INVESTING ACTIVITIES
Capitalization of internal-use software costs		(4,776	)			(5,330	)			(10,315	)			(9,886	)
Purchases of marketable securities		(455,883	)			(546,408	)			(899,190	)			(999,764	)
Sales of marketable securities		12,744				-				12,744				-
Maturities of marketable securities		403,489				523,606				835,756				975,383
Purchases of investments in privately-held companies		(1,000	)			-				(1,000	)			-
Purchases of property and equipment		(1,105	)			(809	)			(1,291	)			(1,355	)
Cash paid for business combinations, net of cash acquired		-				-				-				(45,802	)
Net cash used in investing activities		(46,531	)			(28,941	)			(63,296	)			(81,424	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock upon exercise of vested options		13,096				27,492				27,497				48,272
Repurchases of unvested common stock		-				-				-				(223	)
Proceeds from issuance of common stock under employee stock purchase plan		-				-				15,603				17,172
Net cash provided by financing activities		13,096				27,492				43,100				65,221
Effect of exchange rate changes on cash and cash equivalents		(200	)			(308	)			(873	)			(103	)
Net decrease in cash and cash equivalents		(25,045	)			(30,817	)			(38,433	)			(123,138	)
Cash and cash equivalents at beginning of period		336,373				343,460				349,761				435,781
Cash and cash equivalents at end of period	$	311,328			$	312,643			$	311,328			$	312,643

Confluent, Inc. Reconciliation of GAAP Measures to Non-GAAP Measures (in thousands, except percentages, share and per share data) (unaudited)
	Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Reconciliation of GAAP total gross profit to non-GAAP total gross profit:
Total gross profit on a GAAP basis	$	170,005			$	131,365			$	326,021			$	247,523
Total gross margin on a GAAP basis		72.3	%			69.4	%			72.1	%			68.1	%
Add: Stock-based compensation-related charges		11,630				10,432				22,253				19,948
Add: Amortization of acquired intangibles		501				127				1,003				240
Non-GAAP total gross profit	$	182,136			$	141,924			$	349,277			$	267,711
Non-GAAP total gross margin		77.5	%			75.0	%			77.2	%			73.6	%
Reconciliation of GAAP operating expenses to non-GAAP operating expenses:
Research and development operating expense on a GAAP basis	$	106,060			$	85,677			$	203,631			$	170,567
Research and development operating expense as a percentage of total revenue on a GAAP basis		45.1	%			45.3	%			45.0	%			46.9	%
Less: Stock-based compensation-related charges		41,866				36,726				83,290				68,410
Less: Acquisition-related expenses		4,472				3,841				8,834				11,521
Non-GAAP research and development operating expense	$	59,722			$	45,110			$	111,507			$	90,636
Non-GAAP research and development operating expense as a percentage of total revenue		25.4	%			23.8	%			24.7	%			24.9	%
Sales and marketing operating expense on a GAAP basis	$	132,865			$	127,770			$	264,217			$	256,394
Sales and marketing operating expense as a percentage of total revenue on a GAAP basis		56.5	%			67.5	%			58.4	%			70.5	%
Less: Stock-based compensation-related charges		35,332				34,377				71,112				63,947
Less: Acquisition-related expenses		-				1,076				-				2,152
Non-GAAP sales and marketing operating expense	$	97,533			$	92,317			$	193,105			$	190,295
Non-GAAP sales and marketing operating expense as a percentage of total revenue		41.5	%			48.8	%			42.7	%			52.3	%
General and administrative operating expense on a GAAP basis	$	39,429			$	36,343			$	77,873			$	71,698
General and administrative operating expense as a percentage of total revenue on a GAAP basis		16.8	%			19.2	%			17.2	%			19.7	%
Less: Stock-based compensation-related charges		15,872				14,223				31,030				26,405
Less: Acquisition-related expenses		6				281				231				842
Non-GAAP general and administrative operating expense	$	23,551			$	21,839			$	46,612			$	44,451
Non-GAAP general and administrative operating expense as a percentage of total revenue		10.0	%			11.5	%			10.3	%			12.2	%
	Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Reconciliation of GAAP operating loss to non-GAAP operating income (loss):
Operating loss on a GAAP basis	$	(108,349	)		$	(119,368	)		$	(219,700	)		$	(285,461	)
GAAP operating margin		(46.1	%)			(63.1	%)			(48.6	%)			(78.5	%)
Add: Stock-based compensation-related charges		104,700				95,758				207,685				178,710
Add: Amortization of acquired intangibles		501				127				1,003				240
Add: Acquisition-related expenses		4,478				5,198				9,065				14,515
Add: Restructuring and other related charges		-				943				-				34,325
Non-GAAP operating income (loss)	$	1,330			$	(17,342	)		$	(1,947	)		$	(57,671	)
Non-GAAP operating margin		0.6	%			(9.2	%)			(0.4	%)			(15.9	%)
Reconciliation of GAAP net loss to non-GAAP net income (loss):
Net loss on a GAAP basis	$	(89,900	)		$	(103,425	)		$	(182,867	)		$	(255,980	)
Add: Stock-based compensation-related charges		104,700				95,758				207,685				178,710
Add: Amortization of acquired intangibles		501				127				1,003				240
Add: Acquisition-related expenses		4,478				5,198				9,065				14,515
Add: Restructuring and other related charges		-				943				-				34,325
Add: Amortization of debt issuance costs		953				950				1,906				1,889
Add: Income tax effects and adjustments		(175	)			507				(435	)			869
Non-GAAP net income (loss)	$	20,557			$	58			$	36,357			$	(25,432	)
Non-GAAP net income (loss) per share, basic	$	0.06			$	0.00			$	0.11			$	(0.09	)
Non-GAAP net income (loss) per share, diluted	$	0.06			$	0.00			$	0.10			$	(0.09	)
Weighted-average shares used to compute non-GAAP net income (loss) per share, basic		319,415,586				297,827,200				316,809,384				294,862,197
Weighted-average shares used to compute non-GAAP net income (loss) per share, diluted		354,236,764				339,296,142				352,216,317				294,862,197

The following table presents a reconciliation of free cash flow to net cash provided by (used in) operating activities, the most directly comparable GAAP measure, for each of the periods indicated (unaudited, in thousands, except percentages):

	Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Net cash provided by (used in) operating activities	$	8,590			$	(29,060	)		$	(17,364	)		$	(106,832	)
Capitalized internal-use software costs		(4,776	)			(5,330	)			(10,315	)			(9,886	)
Capital expenditures		(1,105	)			(809	)			(1,291	)			(1,355	)
Free cash flow	$	2,709			$	(35,199	)		$	(28,970	)		$	(118,073	)
Free cash flow margin		1.2	%			(18.6	%)			(6.4	%)			(32.5	%)
Net cash used in investing activities	$	(46,531	)		$	(28,941	)		$	(63,296	)		$	(81,424	)
Net cash provided by financing activities	$	13,096			$	27,492			$	43,100			$	65,221

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240730385374/en/

Investor Contact

Shane Xie

investors@confluent.io

Media Contact

Justin Dorff

pr@confluent.io

Source: Confluent, Inc.

FAQ

What was Confluent's (CFLT) subscription revenue for Q2 2024?

Confluent's subscription revenue for Q2 2024 was $224.7 million, representing a 27% increase year-over-year.

How much did Confluent Cloud revenue grow in Q2 2024?

Confluent Cloud revenue grew by 40% year-over-year, reaching $117 million in Q2 2024.

What is Confluent's (CFLT) financial outlook for Q3 2024?

For Q3 2024, Confluent expects subscription revenue between $233-$234 million and a non-GAAP operating margin of 0%.

How many customers does Confluent (CFLT) have with $100,000+ ARR as of Q2 2024?

As of Q2 2024, Confluent has 1,306 customers with $100,000 or greater in Annual Recurring Revenue (ARR), up 14% year-over-year.

What was Confluent's (CFLT) free cash flow in Q2 2024?

Confluent's free cash flow in Q2 2024 was $2.7 million, improving by $37.9 million compared to the same period last year.