Financial Data and Key Metrics Changes - Q3 subscription revenue grew 19% to $286.3 million, with Confluent Cloud revenue increasing 24% to $161 million, representing 56% of subscription revenue compared to 54% in the previous year [20][21] - Non-GAAP operating margin expanded 3 percentage points to approximately 10%, with subscription gross margin at 81.8% [4][21] - Adjusted free cash flow margin increased 450 basis points to 8.2%, and net income per share was $0.13 [21][22] Business Line Data and Key Metrics Changes - Confluent Platform revenue grew 14% to $125.4 million, driven by strong demand in financial services [20] - Flink ARR for Confluent Cloud grew more than 70% sequentially, with over 1,000 customers using Flink [7][26] - The $100K+ ARR customer count increased to 1,487, marking the largest sequential increase in two years [22] Market Data and Key Metrics Changes - Revenue from the U.S. grew 13% to $172.1 million, while revenue from outside the U.S. grew 29% to $126.4 million [21] - The company reported a net retention rate (NRR) of 114% and a gross retention rate (GRR) close to 90% [22] Company Strategy and Development Direction - The company is focusing on tightening field alignment to drive more use cases into production and expanding its Data Streaming Platform (DSP) specialist team for multi-product selling [5][7] - Confluent aims to position its Data Streaming Platform as the context layer for enterprise AI, facilitating real-time data processing and decision-making [17][19] - The company is also enhancing its partner ecosystem, with partners sourcing over 25% of new business in the last 12 months [9][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong consumption growth and the traction of the Data Streaming Platform, particularly with Flink [18][29] - The outlook for Q4 2025 includes expected subscription revenue in the range of $295.5 to $296.5 million, representing growth of approximately 18% [23] - For fiscal year 2025, subscription revenue is expected to be in the range of $1.1135 to $1.1145 billion, representing growth of approximately 21% [24] Other Important Information - The company highlighted the successful integration and growth of WarpStream, which has seen 8x growth in consumption since its acquisition [12][29] - Confluent was named a MongoDB Partner of the Year and served as an AWS Launch Partner for the new AI Agents and Tools category [10] Q&A Session Summary Question: What are the learnings from the go-to-market changes and conversion trends? - Management noted high confidence in the late-stage pipeline, emphasizing that these are customer workloads reaching production, which will drive future consumption [32] Question: Why should RPO be considered a reliable leading indicator? - RPO is viewed as a key leading indicator for Confluent Platform, while for Confluent Cloud, the focus is on the momentum of new use cases moving into production [34][36] Question: When can growth be expected to bottom? - Management expressed optimism about the cloud business's strength and noted stability in overall growth rates, despite some customer-specific impacts [40] Question: Is there a cannibalization effect from new offerings? - Management indicated that new offerings have proven to be a substantial tailwind, leading to larger deal sizes and increased customer engagement [42] Question: What is the early response to the launch of streaming agents on Confluent Cloud? - Management believes streaming agents can become a significant part of the mix, facilitating real-time data access for AI applications [50][52] Question: How significant is the cloud service provider replacement opportunity? - Management highlighted that the total cost of ownership (TCO) improvements and enhanced Data Streaming Platform capabilities are driving customer interest in migrating from existing solutions [78] Question: How are optimization levels impacting guidance? - Management described current optimization levels as healthy and normalized compared to historical trends, indicating a balanced approach to managing customer growth [84]

Financial Data and Key Metrics Changes - Q3 subscription revenue grew 19% to $286.3 million, with Confluent Cloud revenue increasing 24% to $161 million, representing 56% of subscription revenue compared to 54% in the previous year [21][24] - Non-GAAP operating margin expanded 3 percentage points to approximately 10%, with subscription gross margin at 81.8% [4][22] - Adjusted free cash flow margin increased 450 basis points to 8.2%, and net income per share was $0.13 [22] Business Line Data and Key Metrics Changes - Confluent Platform revenue grew 14% to $125.4 million, driven by demand in financial services [21] - Flink ARR for Confluent Cloud grew more than 70% sequentially, with over 1,000 customers using Flink [27][28] - The count of $100K+ ARR customers increased to 1,487, marking the largest sequential increase in two years [23] Market Data and Key Metrics Changes - Revenue from the U.S. grew 13% to $172.1 million, while revenue from outside the U.S. grew 29% to $126.4 million [22] - The net retention rate stabilized at 114%, with gross retention rate remaining close to 90% [23] Company Strategy and Development Direction - The company is focused on tightening field alignment to drive more use cases into production and expanding its Data Streaming Platform (DSP) specialist team for multi-product selling [5][6] - The partner ecosystem sourced over 25% of new business in the last 12 months, indicating strong growth potential [9][29] - The company aims to position its Data Streaming Platform as the context layer for enterprise AI, enhancing real-time data capabilities [19][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong cloud consumption growth and the traction of the Data Streaming Platform, particularly with Flink [19][30] - The outlook for Q4 2025 includes expected subscription revenue in the range of $295.5 million to $296.5 million, representing growth of approximately 18% [24] - For fiscal year 2025, subscription revenue is expected to be in the range of $1.1135 billion to $1.1145 billion, representing growth of approximately 21% [25] Other Important Information - The company reported a record operating margin of 9.7%, exceeding guidance by 270 basis points [22] - The WarpStream acquisition has seen 8x growth in consumption over the past year, indicating successful integration and market demand [12][30] Q&A Session Summary Question: Insights on go-to-market changes and pipeline conversion trends - Management highlighted the successful implementation of a specialization model for DSP and the importance of field execution in driving consumption pipeline [33] Question: RPO as a leading indicator for growth - RPO is considered a key leading indicator for Confluent Platform, while for Confluent Cloud, the focus is on the momentum of new use cases moving into production [37] Question: Growth stabilization and cannibalization effects - Management noted that new offerings have proven to be a substantial tailwind, leading to larger deal sizes and increased customer engagement [43] Question: Flink's growth and future potential - The company expressed excitement about Flink's growth trajectory and its potential to capture a significant market opportunity in real-time data processing [57] Question: Impact of U.S. Federal shutdown on guidance - Management indicated that the federal performance in Q3 was in line with expectations, and the impact of the shutdown is accounted for in Q4 guidance [80]

Financial Data and Key Metrics Changes - Q3 subscription revenue grew 19% to $286 million, representing 96% of total revenue [24][4] - Confluent Cloud revenue increased 24% to $161 million, accounting for 56% of subscription revenue compared to 54% in the previous year [24][4] - Non-GAAP operating margin expanded three percentage points to approximately 10% [4] - Subscription gross margin was 81.8%, above the long-term target of 80% [26] - Operating margin increased 340 basis points to a record 9.7%, exceeding guidance by 270 basis points [26] - Adjusted free cash flow margin increased 450 basis points to 8.2% [26] Business Line Data and Key Metrics Changes - Confluent Platform revenue grew 14% to $125.4 million, driven by demand in financial services [24] - Flink ARR for Confluent Cloud grew more than 70% sequentially, with over 1,000 customers using Flink [31][7] - The number of customers with $100k+ ARR increased to 2,533, up 36 sequentially [27] - The number of customers with $1 million+ ARR increased to 234, representing a growth acceleration of 27% [27] Market Data and Key Metrics Changes - Revenue from the U.S. grew 13% to $172.1 million, while revenue from outside the U.S. grew 29% to $126.4 million [24] - Net retention rate stabilized at 114%, with gross retention rate close to 90% [27] Company Strategy and Development Direction - The company is focused on tightening field alignment to drive more use cases into production and expanding its DSP specialist team for multiproduct selling [6][7] - The partner ecosystem sourced over 25% of new business in the last twelve months, indicating strong growth potential [10][11] - The company aims to position itself as a leader in providing real-time data context for AI applications, emphasizing the importance of data streaming in AI deployment [20][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong cloud consumption growth and the overall performance of the data streaming platform [22][36] - The company expects subscription revenue for 2025 to be in the range of $295.5 million to $296.5 million, representing approximately 18% growth [29] - For fiscal year 2025, subscription revenue is expected to be between $1.1135 billion and $1.1145 billion, indicating approximately 21% growth [29] Other Important Information - The company highlighted the successful integration and growth of WarpStream, which has seen eightfold growth in consumption since its acquisition [14][35] - The company has maintained a win rate above 90% in replacing CSP streaming offerings, with average deal sizes more than doubling over the past two quarters [11][12] Q&A Session Summary Question: Insights on go-to-market changes and pipeline conversion trends - Management noted that the specialization model for DSP and field execution improvements have driven strong pipeline progression, with high confidence in the late-stage pipeline [40][41] Question: RPO and CRPO as leading indicators - Management confirmed that RPO is a key leading indicator for the Confluent platform, while for Confluent Cloud, the focus is on new use cases moving into production [45][46] Question: Growth outlook and cannibalization effects - Management indicated that new offerings have proven to be a substantial tailwind, leading to larger deal sizes and increased customer engagement [54] Question: Flink adoption and future business impact - Management expressed excitement about Flink's growth and its potential to drive significant business opportunities in the future [76][78] Question: AI use cases and customer readiness - Management highlighted various AI use cases across industries, emphasizing the importance of data flow and quality in achieving successful AI deployments [86][87]

Financial Data and Key Metrics Changes - Q3 subscription revenue grew 19% to $286.3 million, representing 96% of total revenue [19][20] - Confluent Cloud revenue increased 24% to $161 million, accounting for 56% of subscription revenue compared to 54% in the previous year [19][20] - Non-GAAP operating margin expanded 3 percentage points to approximately 10% [3] - Subscription gross margin was 81.8%, exceeding the long-term target of 80% [20] - Operating margin increased 340 basis points to a record of 9.7% [20] - Adjusted free cash flow margin rose 450 basis points to 8.2% [20] Business Line Data and Key Metrics Changes - Confluent Platform revenue grew 14% to $125.4 million, driven by demand in financial services [19] - Flink ARR for Confluent Cloud grew more than 70% sequentially, with over 1,000 customers using Flink [25][26] - The number of $100K+ ARR customers increased to 1,487, marking the largest sequential increase in two years [21] - The $1 million+ ARR customer count rose to 234, representing a 27% growth acceleration [21] Market Data and Key Metrics Changes - Revenue from the U.S. grew 13% to $172.1 million, while revenue from outside the U.S. grew 29% to $126.4 million [20] - RPO (Remaining Performance Obligations) grew 43%, indicating strong future revenue visibility [24] Company Strategy and Development Direction - The company is focusing on tightening field alignment to drive more use cases into production, with over 40% sequential growth in late-stage pipeline [4][24] - There is a strong emphasis on expanding the Data Streaming Platform (DSP) and multi-product selling, particularly with Flink [5][26] - The partner ecosystem is contributing significantly, with over 25% of new business sourced from partners [8][26] - The company aims to position its Data Streaming Platform as the context layer for enterprise AI, facilitating the transition from AI experimentation to production [16][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong cloud consumption growth and the traction of the Data Streaming Platform, particularly with Flink [17][27] - The outlook for Q4 2025 includes expected subscription revenue in the range of $295.5 to $296.5 million, representing approximately 18% growth [22] - For fiscal year 2025, subscription revenue is expected to be between $1.1135 to $1.1145 billion, indicating approximately 21% growth [23] Other Important Information - The company ended Q3 with $1.99 billion in cash, cash equivalents, and marketable securities, reflecting a strong balance sheet [20] - The WarpStream acquisition has seen 8x growth in consumption since its acquisition [11][26] Q&A Session Summary Question: Insights on go-to-market changes and pipeline conversion trends - Management highlighted the effectiveness of the specialization model for DSP and the high confidence in the late-stage pipeline, which is expected to drive future consumption [29][30] Question: RPO and CRPO as leading indicators - RPO is considered a key leading indicator for Confluent Platform, while for Confluent Cloud, the focus is on the momentum of new use cases moving into production [31][32] Question: Growth stabilization and cloud business outlook - Management noted that the cloud business has shown stability, with positive trends in new use cases and product adoption [34] Question: Impact of new offerings on core streaming business - New offerings have proven to be a substantial tailwind, leading to larger deal sizes and increased customer engagement [37] Question: Flink's growth and future potential - Flink has seen significant adoption, with over 1,000 paying customers, and management is optimistic about its future growth potential [56] Question: AI use cases and customer readiness - Management indicated that AI use cases are broad, with many enterprises actively pursuing projects across various sectors [61]

Revenue Growth - Confluent reported revenue of $298.5 million for the three months ended September 30, 2025, representing a year-over-year growth of 19% compared to $250.2 million in the same period of 2024[118]. - For the nine months ended September 30, 2025, revenue was $851.9 million, a 21% increase from $702.4 million in the same period of 2024[118]. - Subscription revenue for the three months ended September 30, 2025, was $286.3 million, a 19% increase from $239.9 million in the same period of 2024[147]. - Subscription revenue increased by $146.6 million (22%) to $818.1 million for the nine months ended September 30, 2025, compared to $671.5 million in the same period of 2024[158]. - Total revenue for the nine months ended September 30, 2025, was $851.9 million, reflecting a $149.5 million (21%) increase from $702.4 million in 2024[158]. Customer Metrics - The number of customers contributing $100,000 or greater in Annual Recurring Revenue (ARR) increased to 1,487 as of September 30, 2025, from 1,346 in the same period of 2024[128]. - The dollar-based net retention rate (NRR) was 114% as of September 30, 2025, indicating strong expansion within existing customers[129]. - The dollar-based net retention rate was 114% as of September 30, 2025, indicating strong revenue expansion from existing customers[158]. Product and Market Strategy - Confluent Cloud revenue accounted for 54% of total revenue for the three months ended September 30, 2025, up from 52% in the same period of 2024[122]. - The company aims to grow its customer base through self-service cloud adoption and free trials, facilitating a shift to a consumption-oriented sales model[123]. - Confluent's Data Streaming Platform is designed to connect, process, and govern data in motion, establishing itself as a strategic component of modern technology stacks[114]. - The company expects continued growth in customer adoption and usage of its Data Streaming Platform products, despite current volatility in consumption trends[121]. Financial Performance - Gross profit for the three months ended September 30, 2025, was $221.6 million, resulting in a gross margin of 74%[145]. - Operating loss for the three months ended September 30, 2025, was $83.3 million, compared to a loss of $93.7 million in the same period of 2024[145]. - Gross profit for the nine months ended September 30, 2025, was $631.7 million, a $119.2 million (23%) increase from $512.5 million in 2024[160]. - The company's loss before income taxes for the nine months ended September 30, 2025, was $221.0 million, a decrease of 11% from a loss of $248.2 million in the same period of 2024[167]. Expenses and Costs - Research and development expenses for the three months ended September 30, 2025, were $121.8 million, an increase from $102.7 million in 2024[145]. - Research and development expenses increased by $53.4 million (17%) to $306.4 million for the nine months ended September 30, 2025, compared to $359.8 million in 2024[163]. - Sales and marketing expenses increased by $30.5 million (8%) to $402.2 million for the nine months ended September 30, 2025, compared to $432.7 million in 2024[164]. - Total cost of revenue increased by $30.3 million (16%) to $220.2 million for the nine months ended September 30, 2025, compared to $189.9 million in 2024[160]. Cash Flow and Liquidity - As of September 30, 2025, the company's liquidity sources included cash, cash equivalents, and marketable securities totaling $1,989.8 million[170]. - The company generated $22.2 million in cash from operating activities for the nine months ended September 30, 2025, compared to a cash outflow of $1.8 million in the same period of 2024[172][175]. - Cash used in investing activities for the nine months ended September 30, 2025, was $167.2 million, primarily due to purchases of marketable securities totaling $1,286.2 million[176]. - Cash provided by financing activities for the nine months ended September 30, 2025, was $56.6 million, driven by $32.7 million from stock option exercises and $23.9 million from the employee stock purchase plan[178]. Tax and Regulatory - The provision for income taxes included a benefit of $5.0 million for the nine months ended September 30, 2025, compared to a provision of $8.8 million in 2024[144]. - The effective tax rate for the three months ended September 30, 2025, was (2.4)%, compared to (4.2)% in 2024[157]. - The income tax benefit for the nine months ended September 30, 2025, was $5.0 million, primarily due to a $16.4 million release of the valuation allowance of U.K. deferred tax assets[167]. Strategic Outlook - The company expects fluctuations in total revenue based on new subscriptions, customer renewals, and consumption trends[134]. - The company expects to experience seasonality in cash flows, with the fourth quarter historically being the strongest for sales due to large enterprise buying patterns[173]. - The company may require additional capital resources to execute strategic initiatives for growth, depending on factors such as growth rate and market acceptance of its services[171]. - The company has established a hedging program to mitigate foreign currency risk, although the majority of its sales contracts are denominated in U.S. dollars[186][187].

Financial Performance - Q3'25 subscription revenue reached $286337000, a 19% year-over-year increase[8] - Q3'25 cloud revenue was $161000000, representing a 24% year-over-year growth[8] - The company achieved a non-GAAP operating margin of 97% in Q3'25, a 34 percentage point increase year-over-year[8] - Adjusted free cash flow margin was 82% in Q3'25, up 45 percentage points year-over-year[8] - The dollar-based net retention rate was 114%[8] Customer Growth - The number of customers with at least $20000 in ARR increased by 7% year-over-year[63] - Customers contributing $100000 or more in ARR increased by 10% year-over-year[63] - The number of customers with at least $1000000 in ARR increased by 27% year-over-year[63] Market and Strategy - The company estimates a total addressable market (TAM) exceeding $100 billion[48, 74] - The company is focused on managing net dilution to below 2% long-term[69, 72] - The company is creating a data streaming platform[74]

Exhibit 99.1 Confluent Announces Third Quarter 2025 Financial Results MOUNTAIN VIEW, Calif. -- October 27, 2025 -- Confluent, Inc. (NASDAQ: CFLT), the data streaming pioneer, today announced financial results for its third quarter of 2025, ended September 30, 2025. "Confluent delivered a strong quarter, with 24% year-over-year growth in Confluent Cloud revenue and 43% year-over-year growth acceleration in remaining performance obligations, reflecting strong consumption growth and the deepening commitment of ...

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Core Insights - Confluent, Inc. is a significant player in the data streaming industry, offering solutions for real-time data processing [1][4] - The consensus price target for Confluent's stock has fluctuated, with a recent increase to $24 from $22, indicating a shift in analyst sentiment [1][5] - Confluent has a substantial addressable market of $100 billion and serves blue-chip customers, enhancing its business model [4] Price Target and Analyst Sentiment - The average price target for Confluent's stock was $24 last month, up from $22 in the previous quarter, but down from $27.63 a year ago [1][5] - Analyst Rudy Kessinger from D.A. Davidson has set a price target of $44 for Confluent, reflecting a positive outlook despite recent fluctuations [2] Stock Performance and Market Conditions - Confluent's stock saw a 7.6% increase in its price during the last trading session, driven by higher-than-average trading volume [3][5] - Current trends in earnings estimate revisions may not support a continued upward trajectory in the near term, suggesting caution for investors [3] Financial Position and Valuation - Confluent holds nearly $2 billion in cash reserves, indicating a strong financial position [4][5] - The company trades at low enterprise value to revenue multiples of 5.2x for fiscal year 2025 and 4.4x for fiscal year 2026, making it an attractive investment opportunity [4]

Core Insights - Confluent Inc. is a key player in the data streaming industry, competing with Apache Kafka and Amazon Kinesis [1] - The company is set to report quarterly earnings on October 27, 2025, with an expected EPS of $0.10 and revenue of approximately $292.9 million [1][2] Financial Performance - The anticipated EPS of $0.10 is consistent with the same period last year, which is important for maintaining investor sentiment [2] - Projected revenue of $292.9 million represents a 16.7% increase year-over-year, indicating positive growth momentum for Confluent [2][6] Valuation Metrics - Confluent's price-to-sales ratio is 7.40, suggesting that investors are willing to pay a premium for each dollar of sales, reflecting confidence in future growth prospects [3][6] - The enterprise value to sales ratio stands at 8.17, further emphasizing the company's valuation relative to its revenue [3] - The enterprise value to operating cash flow ratio is notably high at 206.16, indicating a premium valuation compared to cash flow [4] Debt and Financial Stability - The debt-to-equity ratio of 1.04 indicates a manageable level of debt relative to equity [5] - Confluent's current ratio of 3.98 demonstrates a strong ability to meet short-term liabilities with short-term assets, ensuring financial stability [5]