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1. Company Snapshot

1.a. 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.

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1.b. Last Insights on CFLT

Confluent, Inc.'s recent performance is driven by strong Q3 earnings, beating estimates with $0.13 per share, and a significant $100 billion addressable market. The company boasts blue-chip customers, high-margin recurring revenue, and improving operating margins. A "Moderate Buy" consensus rating from 32 brokerages supports the stock. However, concerns arise from a proposed sale to IBM for $31.00 per share, prompting investigations into fairness and potential breaches of fiduciary duty. Institutional investors, including Campbell & CO Investment Adviser and Acadian Asset Management, have acquired stakes in the company.

1.c. Company Highlights

2. Confluent's Strong Q3 2025 Earnings: A Promising Outlook

Confluent's Q3 2025 earnings call highlighted a robust financial performance, with subscription revenue growing 19% to $286.3 million, and Confluent Cloud revenue growing 24% to $161 million. The non-GAAP operating margin expanded to 9.7%, exceeding guidance by 270 basis points. The company's actual EPS came out at -$0.1921, relative to estimates at $0.1. The significant growth in large customers is noteworthy, with $100,000-plus ARR customers increasing by 48 quarter-over-quarter, and $1 million-plus ARR customers growing 27%. As Rohan Sivaram noted, "RPO to cloud revenue coverage has continued to increase and improve, providing longer-term visibility."

Publication Date: Oct -28

📋 Highlights
  • Subscription Revenue Growth:: Increased 19% to $286.3 million, with Confluent Cloud up 24% to $161 million.
  • Non-GAAP Margin Expansion:: Reached 9.7%, exceeding guidance by 270 basis points, with FY2025 guidance at ~7%.
  • Large Customer Growth:: $100K+ ARR customers rose 48 (QoQ), and $1M+ ARR customers grew 27%.
  • Flink Momentum:: ARR surged 70% sequentially, with 1,000+ customers and 12 with >$100K ARR.
  • Acquisition Success:: WarpStream consumption grew 8x, and Immerock scaled Flink to low 8-figure ARR.

Revenue Growth and Margin Expansion

The company's revenue growth is driven by the momentum of new use cases moving into production, normalized levels of optimization, and continued strength in Flink and the cloud side of Flink. Confluent Cloud revenue is expected to grow around 20% year-over-year in Q4 2025. The guidance for subscription revenue is $295.5-296.5 million, with non-GAAP operating margin around 7%. For fiscal year 2025, subscription revenue is expected to be $1.1135-1.1145 billion, with non-GAAP operating margin around 7%.

New Products and Use Cases

Confluent's new products, such as Flink and Streaming Agents, are gaining traction, with Flink having over 1,000 paying customers and 12 customers spending over $100,000 in ARR. The company is seeing stability in the overall cloud growth rates and is optimistic about the future, with a strong pipeline and increasing consumption. Enterprises are moving from testing to production with AI use cases, with patterns around customer support, anomalies, and investigations.

Valuation and Outlook

Analysts estimate next year's revenue growth at 16.5%. Confluent's current valuation metrics are: P/E Ratio at -25.14, P/B Ratio at 6.83, P/S Ratio at 6.84, and EV/EBITDA at -22.97. Given the company's growth prospects and expanding margin, the market may be pricing in a relatively high growth rate. The Free Cash Flow Yield is 0.63%, indicating a relatively low return in terms of cash generation.

Conclusion on Financial Health

The company's disciplined ROI-driven capital allocation strategy, especially in M&A, is paying off, as seen in the WarpStream and Immerock acquisitions. Confluent's financial health is robust, with a strong balance sheet and improving cash flow generation. The net debt to EBITDA ratio is -2.2, indicating a net cash position. The ROIC is -16.89%, and ROE is -29.17%, reflecting the company's investment in growth initiatives.

3. NewsRoom

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Mueller Industries Inc: A Key Focus in Mario Gabelli's Latest 13F Filing

Feb -06

Source: gurufocus.com

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Penserra Capital Management LLC Has $3.99 Million Stake in Confluent, Inc. $CFLT

Feb -06

Source: defenseworld.net

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IBM Surges on Strong Q4 Earnings and Bullish FY26 Outlook

Jan -29

Source: gurufocus.com

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Confluent Medical Debuts Filmcast Select™ to Enable Tailored Performance in PTFE and Polyimide Tubing

Jan -28

Source: globenewswire.com

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Exane Asset Management Acquires 219,577 Shares of Confluent, Inc. $CFLT

Jan -28

Source: defenseworld.net

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Inspire Advisors LLC Buys Shares of 106,363 Confluent, Inc. $CFLT

Jan -19

Source: defenseworld.net

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Inspirato Investor Alert: Kahn Swick & Foti, LLC Investigates Adequacy of Price and Process in Proposed Sale of Inspirato Incorporated - ISPO

Jan -16

Source: prnewswire.com

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IBM's 2026 Outlook Could Turn Brighter

Jan -14

Source: gurufocus.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (24.87%)

6. Segments

Confluent Cloud

Expected Growth: 24.43%

Confluent Cloud's 24.43% growth is driven by increasing adoption of real-time data streaming, growing demand for cloud-based solutions, and expanding use cases in industries like IoT, retail, and finance. Additionally, Confluent's strong partnerships, innovative product offerings, and strategic investments in sales and marketing are contributing to its rapid growth.

Confluent Platform - PCS

Expected Growth: 24.95%

Confluent Platform's 24.95% growth is driven by increasing adoption of real-time data streaming, growing demand for cloud-based data infrastructure, and rising need for scalable and secure data processing. Additionally, the shift towards event-driven architecture, IoT, and AI/ML workloads are fueling growth. Confluent's strong partnerships and expanding customer base also contribute to its rapid expansion.

Confluent Platform - License

Expected Growth: 25.6%

Confluent Platform's 25.6% growth is driven by increasing adoption of real-time data streaming, growing demand for cloud-based solutions, and rising need for scalable and secure data integration. Additionally, the company's strong partnerships, expanding sales channels, and continuous innovation in Kafka-based technologies contribute to its rapid growth.

Services

Expected Growth: 26.3%

Confluent's 26.3% growth is driven by increasing adoption of cloud-based data streaming, rising demand for real-time data processing, and growing need for scalable and secure data integration solutions. Additionally, the company's expanding partner ecosystem, innovative product offerings, and strategic acquisitions are contributing to its rapid growth.

7. Detailed Products

Confluent Platform

A fully managed, cloud-native service for building, deploying, and managing event-driven applications

Confluent Cloud

A fully managed, cloud-native Apache Kafka service for building event-driven applications

ksqlDB

A database for building event-driven applications, providing real-time data processing and analytics

Confluent Schema Registry

A centralized registry for managing and evolving schema definitions for event-driven data

Confluent Control Center

A web-based management and monitoring tool for Apache Kafka and Confluent Platform

Confluent Support

24/7 support and expertise for Confluent Platform and Apache Kafka

8. Confluent, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Confluent, Inc. has a low threat of substitutes due to its unique Kafka-based data streaming platform, which provides a differentiated value proposition to customers.

Bargaining Power Of Customers

Confluent, Inc. has a medium bargaining power of customers, as customers have some flexibility to switch to alternative solutions, but the company's strong brand and customer loyalty mitigate this risk.

Bargaining Power Of Suppliers

Confluent, Inc. has a low bargaining power of suppliers, as the company has a diverse supplier base and is not heavily dependent on any single supplier.

Threat Of New Entrants

Confluent, Inc. faces a high threat of new entrants, as the data streaming market is attractive and has low barriers to entry, making it vulnerable to new competitors.

Intensity Of Rivalry

Confluent, Inc. operates in a moderately competitive market, with several established players, but the company's strong brand and differentiated product offerings help to mitigate the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 57.49%
Debt Cost 3.95%
Equity Weight 42.51%
Equity Cost 8.61%
WACC 5.93%
Leverage 135.26%

11. Quality Control: Confluent, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Marqeta

A-Score: 4.6/10

Value: 5.1

Growth: 7.4

Quality: 3.4

Yield: 0.0

Momentum: 8.0

Volatility: 3.7

1-Year Total Return ->

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Stock-Card
Verint Systems

A-Score: 4.4/10

Value: 6.0

Growth: 4.6

Quality: 6.1

Yield: 0.0

Momentum: 4.0

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
Teradata

A-Score: 3.7/10

Value: 4.2

Growth: 4.1

Quality: 6.5

Yield: 0.0

Momentum: 3.5

Volatility: 3.7

1-Year Total Return ->

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Stock-Card
Remitly Global

A-Score: 3.2/10

Value: 3.2

Growth: 6.0

Quality: 6.2

Yield: 0.0

Momentum: 0.5

Volatility: 3.3

1-Year Total Return ->

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Stock-Card
Five9

A-Score: 3.2/10

Value: 3.5

Growth: 7.4

Quality: 3.8

Yield: 0.0

Momentum: 0.5

Volatility: 3.7

1-Year Total Return ->

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Stock-Card
Confluent

A-Score: 3.2/10

Value: 4.4

Growth: 6.6

Quality: 4.0

Yield: 0.0

Momentum: 2.0

Volatility: 2.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

30.57$

Current Price

30.57$

Potential

-0.00%

Expected Cash-Flows