Core Viewpoint - The Schall Law Firm is investigating Confluent, Inc. for potential violations of securities laws related to misleading statements and undisclosed information impacting investors [1][2]. Group 1: Investigation Details - The investigation centers on whether Confluent issued false or misleading statements and failed to disclose relevant information to investors [2]. - Confluent's Q2 2025 financial results, announced on July 30, 2025, indicated that consumption growth was affected by ongoing optimization, with month-over-month trends lagging behind previous years [2]. - A significant factor in the decline of Confluent's stock was the announcement that an AI-native customer was shifting towards self-management of internal data platforms, leading to reduced usage of Confluent Cloud services [2]. Group 2: Market Reaction - Following the earnings call and the related announcements, shares of Confluent experienced a sharp decline, falling by more than 32.8% the day after the news was released [2].

Core Viewpoint - Confluent's stock has experienced a significant decline due to slowing growth, but there are potential long-term recovery opportunities, particularly with the rise of AI applications [1][2]. Financial Performance - Confluent reported a 20% year-over-year revenue increase to over $282 million and a 50% increase in earnings per share to $0.09 [4]. - The company has slightly increased the lower end of its 2025 revenue guidance, indicating a positive outlook despite current challenges [6]. Growth Challenges - Growth has been hindered by customer optimization initiatives, leading to a forecast of slower sales growth in the second half of the year [5]. - The remaining performance obligations (RPO) increased by 31%, indicating a growing backlog of unfulfilled contracts, which could support future revenue growth [7]. AI Adoption Potential - Confluent anticipates a significant boost from AI service adoption, expecting production AI use cases to grow 10 times across several hundred customers by 2025 [9]. - The company is seeing increased usage of its platform for real-time AI workloads, which could attract more customers [8]. Valuation and Investment Opportunity - Confluent's stock is currently trading at an attractive valuation of 5 times sales, significantly lower than its five-year average and the U.S. technology sector average of 8.4 times [12]. - Analysts expect mid-teens revenue growth over the next couple of years, with potential for outperformance due to improving revenue backlog [13]. - If revenue reaches $1.57 billion by 2027 and trades at 7 times sales, the market cap could increase by 86% to $11 billion [15].

Core Viewpoint - Pomerantz LLP is investigating potential securities fraud or unlawful business practices involving Confluent, Inc. and its officers or directors, following a significant drop in the company's stock price after disappointing financial results [1][3]. Financial Performance - On July 30, 2025, Confluent announced its financial results for Q2 2025, indicating that consumption growth was negatively affected by ongoing optimization, with month-over-month trends lagging behind previous years [3]. - The company's stock price fell by $8.68, or 32.86%, closing at $17.73 per share on July 31, 2025, following the earnings call [3]. Legal Investigation - Pomerantz LLP is actively seeking claims from investors of Confluent, suggesting that there may be grounds for a class action lawsuit due to the alleged securities fraud [1].

Core Viewpoint - Confluent's stock has experienced a significant decline following its recent earnings report, yet analysts on Wall Street maintain a positive outlook on the company's long-term potential [3][13]. Company Performance - Confluent's stock dropped by 30% after the release of its second-quarter 2025 operating results, marking an 81% decrease from its peak in 2021 [3][16]. - The company reported subscription revenue of $270.8 million for the second quarter, exceeding expectations and reflecting a 21% year-over-year increase [10]. - The net revenue retention rate was 114%, indicating existing customers are spending 14% more compared to the previous year [11]. - The number of customers spending at least $100,000 annually grew by 10%, while those spending at least $1 million increased by 24% [11]. Market Outlook - Despite some large customers optimizing their spending and one AI-native customer moving away from the platform, the overall outlook remains positive, with management raising the low end of its 2025 revenue forecast by $5 million [12][13]. - Analysts covering Confluent stock are largely bullish, with 21 out of 36 recommending a buy, and an average price target of $25, suggesting a potential 45% upside [13][14]. Industry Context - Data streaming is becoming increasingly vital in various sectors, including retail and AI applications, enhancing real-time data processing capabilities [2][6]. - Confluent's platform is positioned to support businesses in creating data pipelines for AI applications, which is expected to drive significant growth as AI adoption increases [8][15]. - The company estimates its addressable market at $100 billion, indicating substantial growth potential based on current revenue levels [15]. Valuation Metrics - Confluent's price-to-sales (P/S) ratio has decreased to 5.2, the lowest since its IPO, following an 81% decline in stock price, making it more attractive for long-term investors [16].

Core Viewpoint - Pomerantz LLP is investigating potential securities fraud or unlawful business practices involving Confluent, Inc. and its officers or directors, following a significant drop in the company's stock price after disappointing financial results [1][2]. Financial Performance - On July 30, 2025, Confluent announced its second-quarter financial results, revealing that consumption growth was negatively affected by ongoing optimization, with month-over-month trends lagging behind previous years [2]. - The company's stock price plummeted by $8.68 per share, or 32.86%, closing at $17.73 per share on July 31, 2025, in response to the earnings call and the CFO's comments regarding reduced usage of Confluent Cloud by an AI-native customer [2]. Legal Investigation - Pomerantz LLP is actively seeking claims from investors of Confluent, indicating a potential class action lawsuit related to the alleged securities fraud [1]. - The firm has a long history of handling corporate, securities, and antitrust class litigation, emphasizing its commitment to fighting for victims of securities fraud and corporate misconduct [3].

Core Viewpoint - Confluent, Inc. is under investigation for possible securities fraud following a significant decline in its stock price after disappointing financial results for Q2 2025 [1][3][4]. Financial Performance - On July 30, 2025, Confluent announced its Q2 2025 financial results, indicating that consumption growth was impacted by ongoing optimization efforts, with month-over-month trends lagging behind previous years [3]. - The Chief Financial Officer mentioned a shift by an AI-native customer towards self-management of internal data platforms, leading to reduced usage of Confluent Cloud services [3]. Stock Market Reaction - Following the announcement of the financial results, Confluent's stock price fell by $8.68 per share, approximately 32.86%, closing at $17.73 per share on July 31, 2025 [4]. Legal Actions - The Portnoy Law Firm has initiated an investigation into Confluent and may file a class action on behalf of investors who incurred losses [1][2]. - Investors are encouraged to contact the law firm for a complimentary case evaluation regarding their legal rights and options for recovering losses [2].

Core Insights - Confluent reported revenue of $282.29 million for Q2 2025, marking a year-over-year increase of 20.1% and exceeding the Zacks Consensus Estimate by 1.63% [1] - The company's EPS for the same quarter was $0.09, up from $0.06 a year ago, representing a surprise of 12.5% over the consensus estimate of $0.08 [1] Financial Performance Metrics - Remaining performance obligations (RPO) stood at $1.16 billion, surpassing the average estimate of $1.04 billion [4] - Subscription revenue reached $270.83 million, exceeding the average estimate of $267.57 million, with a year-over-year growth of 20.5% [4] - Service revenue was reported at $11.45 million, above the average estimate of $10.18 million, reflecting an 11.4% year-over-year increase [4] - Confluent Cloud revenue was $150.52 million, slightly above the average estimate of $149.48 million, with a significant year-over-year growth of 28.7% [4] - Revenue from Confluent Platform- License was $30.63 million, exceeding the average estimate of $28.44 million [4] - Confluent Platform- PCS revenue was reported at $89.68 million, close to the average estimate of $89.89 million [4] Stock Performance - Confluent's shares have returned +8.1% over the past month, outperforming the Zacks S&P 500 composite's +3.4% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Confluent shares have lost about 3.5% since the beginning of the year versus the S&P 500's gain of 8.3%. What's Next for Confluent? While Confluent has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), bu ...

Financial Data and Key Metrics Changes - Subscription revenue grew 21% to $270.8 million, representing 96% of total revenue [26] - Confluent Cloud revenue increased 28% to $150.5 million, accounting for 56% of subscription revenue compared to 52% in the previous year [26] - Non-GAAP operating margin improved to 6%, up approximately six percentage points [5][28] - Adjusted free cash flow margin increased to 3.9% [28] - Net income per share was $0.09 with a diluted share count of approximately 380 million [28] Business Line Data and Key Metrics Changes - Confluent Platform revenue grew 12% to $120.3 million, driven by strong performance in financial services and OEM partners [26] - Flink ARR grew approximately 3x over the past two quarters, approaching $10 million [5][16] - RPO growth accelerated to 31%, indicating deepening customer relationships [8] Market Data and Key Metrics Changes - Revenue from the US grew 15% to $164.3 million, while revenue from outside the US grew 29% to $117.9 million [27] - Total customer growth was in line with the average growth rate of the previous four quarters [29] - 20k+ ARR customer count grew approximately 8% to 2,497, representing over 95% of ARR [29] Company Strategy and Development Direction - The company is focusing on three key areas: replacing CSP streaming offerings, enhancing the partner ecosystem, and expanding Flink [10][12][34] - The partner ecosystem has sourced over 20% of the business in the past year, with significant partnerships established [14][35] - The company aims to capture a meaningful share of the $100 billion data streaming market [24] Management's Comments on Operating Environment and Future Outlook - Management noted that larger customers are optimizing their usage, which is expected to impact consumption growth in the near term [6][30] - Despite consumption headwinds, management remains confident in the strength of the business and the potential for growth in AI workloads [23][34] - The outlook for Confluent Cloud assumes month-over-month growth rates will remain notably below historical averages for the remainder of the year [31] Other Important Information - The company is seeing early success in operational enhancements aimed at improving customer engagement and driving use case expansions [9][33] - The Flink offering is central to the company's strategy for real-time data processing, with significant growth observed [17][34] Q&A Session Summary Question: Can you elaborate on the consumption optimization trends? - Management indicated that the optimization is a broader trend seen across various companies, with some customers reducing their Confluent Cloud usage due to internal changes [37][40] Question: How do you see production AI workloads impacting subscription growth? - Management believes that the relevance of streaming and processing in AI applications will positively impact subscription growth moving forward [43][45] Question: What is the outlook for NRR and GRR metrics? - Management expects near-term pressure on NRR and GRR due to current consumption patterns but sees potential tailwinds from operational improvements and customer commitments [98][99] Question: How is the company addressing the challenges in the 20k+ customer segment? - Management acknowledged the need to focus on this segment and is implementing strategies to drive growth, particularly through CSP takeouts [78][80]

Financial Data and Key Metrics Changes - Confluent reported a 21% growth in subscription revenue, reaching $270.8 million, which represented 96% of total revenue [25] - Non-GAAP operating margin increased to 6%, up approximately six percentage points year-over-year [4][28] - Adjusted free cash flow margin rose to 3.9%, reflecting operational efficiencies [28] Business Line Data and Key Metrics Changes - Confluent Cloud revenue grew 28% to $150.5 million, accounting for 56% of subscription revenue, up from 52% in the previous year [25] - Confluent Platform revenue increased by 12% to $120.3 million, driven by strong performance in financial services and OEM partnerships [25] - Flink ARR grew approximately 3x over the past two quarters, approaching $10 million [15][31] Market Data and Key Metrics Changes - Revenue from the US grew 15% to $164.3 million, while revenue from outside the US increased by 29% to $117.9 million [26] - Total customer growth remained consistent with previous quarters, with 20k+ ARR customer count growing 8% to 2,497 [29] Company Strategy and Development Direction - The company is focusing on enhancing operational efficiencies and improving coverage ratios between account executives and post-sales roles to drive customer engagement [6][7] - Confluent is doubling down on three strategic areas: replacing CSP streaming offerings, expanding the partner ecosystem, and growing the Flink business [8][12][15] - The partner ecosystem has sourced over 20% of business in the past year, indicating a strong collaborative approach to market penetration [13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged near-term consumption headwinds but expressed confidence in the long-term growth trajectory, particularly in AI workloads and DSP monetization [22][35] - The company expects production AI use cases to grow 10x across a few hundred customers, indicating a significant market opportunity [19][33] - Management raised full-year growth expectations for Confluent Platform, reflecting strong pipeline visibility [31] Other Important Information - The company ended the quarter with $1.94 billion in cash, cash equivalents, and marketable securities, providing a strong financial position [29] - Non-GAAP net income per diluted share was reported at $0.09, with expectations for continued growth in the upcoming quarters [28][31] Q&A Session Summary Question: Can you elaborate on the consumption optimization trends? - Management noted that optimization efforts are similar to trends seen across the industry, with some customers focusing on maximizing value from existing purchases [40][41] Question: How do you see production AI workloads impacting subscription growth? - Management believes that the relevance of streaming in AI applications will positively influence subscription growth moving forward [43][45] Question: What is the outlook for net revenue retention (NRR)? - NRR is expected to face near-term pressure due to current consumption patterns, but management is optimistic about future tailwinds from operational improvements and customer commitments [93][94] Question: How is the go-to-market strategy evolving? - Management indicated that changes in sales compensation to focus on incremental consumption have been beneficial, and they are optimistic about driving new use cases [62][63] Question: What are the expectations for structural changes from field realignment efforts? - Management is already seeing positive momentum from recent changes and expects these adjustments to yield meaningful results in the near future [107][108]