Financial Data and Key Metrics Changes - Q1 subscription revenue grew 26% to $261 million, exceeding guidance and representing 96% of total revenue [23] - Confluent Cloud revenue increased 34% to $143 million, accounting for 55% of subscription revenue [23] - Non-GAAP operating margin improved by 6 percentage points to 4% [4][26] - Subscription gross margin increased by 100 basis points to 81.7% [25] - Adjusted free cash flow margin was 1.8%, impacted by a compensation change [26] Business Line Data and Key Metrics Changes - Confluent Platform revenue reached a record $118.2 million, with growth accelerating to 18% [23] - The number of customers increased to approximately 6,140, with a net addition of 340 customers, the highest since Q1 2022 [27] - The count of $1 million plus ARR customers grew to 210, marking the best quarter for net additions in this cohort [28] Market Data and Key Metrics Changes - Revenue from the U.S. grew 23% to $156.4 million, while revenue from outside the U.S. grew 28% to $114.7 million [24] - The gross retention rate remained above 90%, demonstrating the mission-critical nature of the data streaming platform [6][28] Company Strategy and Development Direction - The company focuses on enabling customers to build next-generation applications efficiently, particularly in the age of AI [4] - Confluent aims to capture the $100 billion addressable market opportunity by leveraging Apache Kafka as a foundational technology [6] - The strategy includes a hybrid business model that allows flexibility in deployment across on-prem, cloud, and hybrid environments [12] Management's Comments on Operating Environment and Future Outlook - Management noted a slowdown in new use case additions among larger customers, while smaller customers showed stable consumption [29] - The company expects subscription revenue for Q2 2025 to be in the range of $267 million to $268 million, representing approximately 19% growth [28] - For fiscal year 2025, subscription revenue is expected to be between $1.1 billion and $1.11 billion, indicating growth of approximately 19% to 20% [29] Other Important Information - The company was named Google Partner of the Year for the sixth time, reflecting strong partnerships with leading cloud service providers [21] - Ryan McBann was promoted to Chief Revenue Officer, tasked with leading global field strategy [20] Q&A Session Summary Question: What is the status of existing use cases and consumption run rates? - Management observed lower consumption in larger customers but stable consumption in smaller ones, indicating a cycle of optimization and growth [35][36] Question: How does the company view the future of Confluent regarding diskless Kafka? - Management confirmed that both cloud and WarpStream are utilizing intelligent storage solutions, optimizing cost and performance [42][44] Question: Can you quantify the growth of DSP offerings like Flink and TableFlow? - DSP offerings are significantly outgrowing the core cloud business, with early traction noted in both cloud and Confluent Platform [48][50] Question: How does the company view customer additions versus net revenue retention (NRR)? - The company expects NRR to remain stable around 17%, supported by a strong gross retention rate [58] Question: What is the outlook for the Confluent Platform (CP) performance? - CP showed strong performance with an 18% growth, driven by multi-year deals and a balanced customer mix [99]

Financial Data and Key Metrics Changes - Q1 subscription revenue grew 26% to $261 million, exceeding guidance and representing 96% of total revenue [25] - Confluent Cloud revenue increased 34% to $143 million, accounting for 55% of subscription revenue [25] - Non-GAAP operating margin improved by 6 percentage points to 4% [6] - Subscription gross margin increased by 100 basis points to 81.7% [27] - Operating margin was 4.3%, exceeding guidance of approximately 3% [28] - Adjusted free cash flow margin was 1.8%, impacted by a non-recurring compensation change [28] Business Line Data and Key Metrics Changes - Confluent Platform revenue reached a record $118.2 million, with growth accelerating to 18% [25] - The company added 340 new customers in Q1, the highest net addition in three years [9] - The number of customers with $1 million plus ARR grew to 210, with a net addition of 16 customers, the best quarter for this cohort [30] Market Data and Key Metrics Changes - Revenue from the U.S. grew 23% to $156.4 million, while revenue from outside the U.S. grew 28% to $114.7 million [26] - The gross retention rate remained above 90%, demonstrating the mission-critical nature of the platform [8] Company Strategy and Development Direction - The company focuses on enabling customers to build next-generation applications efficiently, particularly in the age of AI [6] - Confluent aims to capture the $100 billion plus addressable market opportunity by leveraging Apache Kafka as a foundational technology [8] - The strategy includes a hybrid business model that allows flexibility in deployment across on-prem, cloud, and hybrid environments [14] Management's Comments on Operating Environment and Future Outlook - Management noted a slowdown in new use case additions among larger customers, while smaller customers showed stable consumption [31] - The company expects subscription revenue for Q2 2025 to be in the range of $267 million to $268 million, representing approximately 19% growth [30] - For fiscal year 2025, subscription revenue is expected to be between $1.1 billion and $1.11 billion, indicating growth of approximately 19% to 20% [31] Other Important Information - The company was named a Google Partner of the Year for the sixth time, reflecting strong partnerships with leading cloud service providers [22] - Ryan McBann was promoted to Chief Revenue Officer, leading global field strategy [21] Q&A Session Summary Question: What is the consumption run rate for existing use cases? - Management observed lower consumption in larger customers but stable consumption in smaller ones, indicating a cycle of optimization and growth [37][39] Question: How is the open-source community responding to diskless Kafka? - Management confirmed that they are exploring diskless solutions and optimizing storage use across their platforms [43][45] Question: Can you quantify the growth of DSP offerings? - DSP offerings are significantly outgrowing the core cloud business, with strong early adoption of Flink and TableFlow [51][52] Question: How do you view the relationship between customer adds and NRR? - The company expects NRR to remain stable around 17%, supported by a strong gross retention rate [60] Question: What is the outlook for AI-related demand? - Management sees strong demand for AI applications, particularly in real-time data processing, which is becoming increasingly important for enterprises [66][68] Question: How is the company positioned for potential optimization activities? - Management believes that customers have already optimized their cloud usage significantly, leading to a tighter range of outcomes compared to previous cycles [82][84]

Financial Performance Highlights - Q1 2025 subscription revenue reached $260.9 million, a 26% year-over-year increase[8] - Q1 2025 cloud revenue was $142.7 million, representing a 34% year-over-year growth[8] - The company achieved a non-GAAP operating margin of 4.3% in Q1 2025, a 6 percentage point increase year-over-year[8] - Adjusted free cash flow margin for Q1 2025 was 1.8%, up 16 percentage points year-over-year[8] - The net retention rate was 117%[8] Customer Growth - Confluent has been driving business success at every stage of the customer journey[29] - The number of customers with at least $100,000 in ARR increased[58] - The number of customers with at least $1 million in ARR reached 210[59] Market Opportunity and Strategy - Confluent estimates a total addressable market (TAM) exceeding $100 billion[44, 69] - The company is focused on managing net dilution, targeting a long-term goal of below 2%[67] - Confluent is positioned for growth with its complete data streaming platform[69]

Exhibit 99.1 Confluent Announces First Quarter 2025 Financial Results MOUNTAIN VIEW, Calif. -- April 30, 2025 -- Confluent, Inc. (NASDAQ: CFLT), the data streaming pioneer, today announced financial results for its first quarter of 2025, ended March 31, 2025. "Confluent started the year with solid momentum, achieving subscription revenue growth of 26% year over year," said Jay Kreps, co-founder and CEO, Confluent. "Our growth at scale amid heightened macroeconomic uncertainty demonstrates the mission-critic ...

Group 1 - Moretus Investments L.P. is a value-focused hedge fund that specializes in identifying deeply undervalued businesses trading significantly below intrinsic value [1] - The firm has a disciplined, fundamentals-driven approach that has produced exceptional returns, exemplified by an early recommendation of Carvana at $5, which generated a 50x return for investors within two years [1] - The Chief Investment Officer's early career experiences at Saxo Bank and Bloomberg have shaped the investment philosophy and approach at Moretus [1] Group 2 - The goal of the Chief Investment Officer on Seeking Alpha is to share practical, actionable insights drawn from experience as a hedge fund manager [1] - The content is aimed at long-term investors seeking compelling value opportunities amidst daily market fluctuations, providing rigorous analysis and clear perspectives [1]

Core Viewpoint - Confluent (CFLT) is positioned well to potentially beat earnings estimates in its upcoming quarterly report, supported by a strong history of exceeding expectations [1]. Earnings Performance - Confluent has a solid track record of surpassing earnings estimates, with an average surprise of 90% over the last two quarters [2]. - In the most recent quarter, Confluent reported earnings of $0.09 per share against an expectation of $0.05, resulting in an 80% surprise. The previous quarter also saw a significant surprise of 100% with actual earnings of $0.10 per share compared to an estimate of $0.05 [3]. Earnings Estimates and Predictions - Recent estimates for Confluent have been revised upward, indicating positive sentiment among analysts. The Zacks Earnings ESP for the company is currently positive, suggesting a strong likelihood of an earnings beat [6]. - Stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have a historical success rate of nearly 70% in beating consensus estimates [7]. - Confluent's current Earnings ESP stands at +3.70%, reflecting increased analyst optimism regarding its earnings prospects. This, combined with a Zacks Rank of 2 (Buy), indicates a strong possibility of another earnings beat [9]. Earnings Release Information - The next earnings report for Confluent is anticipated to be released on April 30, 2025 [9].

Core Viewpoint - Confluent (CFLT) has been upgraded to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][2]. Earnings Estimates and Stock Price Movement - The correlation between changes in a company's future earnings potential and its stock price movements is strong, largely due to institutional investors who adjust their valuations based on earnings estimates [3]. - An increase in earnings estimates typically leads to higher fair value for a stock, prompting institutional investors to buy or sell, which in turn affects stock prices [3]. Implications of the Upgrade - The rising earnings estimates and the Zacks rating upgrade for Confluent suggest an improvement in the company's underlying business, which could lead to an increase in stock price as investors respond positively [4]. - The Zacks Rank system effectively utilizes earnings estimate revisions to guide investment decisions, indicating that tracking these revisions can be beneficial [5]. Zacks Rank System Overview - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a proven track record of Zacks Rank 1 stocks generating an average annual return of +25% since 1988 [6]. - The system maintains a balanced distribution of 'buy' and 'sell' ratings across over 4000 stocks, ensuring that only the top 20% receive a 'Strong Buy' or 'Buy' rating [8][9]. Earnings Estimate Revisions for Confluent - For the fiscal year ending December 2025, Confluent is expected to earn $0.35 per share, reflecting a 20.7% increase from the previous year [7]. - Over the past three months, the Zacks Consensus Estimate for Confluent has risen by 2.6%, indicating positive sentiment among analysts [7].

Core Insights - Confluent Medical Technologies has launched Ultra Polyimide, the strongest polyimide tubing in the industry, offering nearly double the strength of traditional polyimide [1][2] - The new material allows for thinner walls in medical devices without compromising strength, addressing the evolving needs of device engineers [2] - Ultra Polyimide is manufactured without harmful solvents, ensuring regulatory compliance and enhancing safety for both workers and patients [3] Company Overview - Confluent specializes in the design, development, and large-scale manufacturing of interventional catheter-based devices and implants, with expertise in materials like Nitinol and high-precision polymer tubing [4] - The company operates multiple facilities across the United States and internationally, establishing a strong reputation in the medical device community [4]

Core Viewpoint - Confluent's stock has experienced a significant decline, dropping nearly 13% due to a price target cut by an analyst, despite maintaining a buy recommendation [1][2]. Group 1: Analyst Actions - Truist Securities analyst W. Miller Jump has reduced Confluent's price target from $40 to $35 per share, reflecting a double-digit decrease [2]. - The analyst's downgrade is part of a broader analysis of the infrastructure and security software tech segments [2]. Group 2: Market Sentiment - Investor sentiment in the infrastructure and security software sectors is reportedly worsening due to uncertainties surrounding policy decisions from the current presidential administration [3]. - The trend of downsizing federal departments poses a risk to companies with significant government business, including Confluent [3][5]. Group 3: Company Performance - Confluent's stock reached a year-to-date peak in mid-February following the release of its fourth-quarter and full-year 2024 results, showcasing a 23% year-over-year revenue increase to $262 million [4]. - The company announced two business collaborations, which were positively received by investors [4].

Group 1: Reddit Overview - Reddit is a unique social media platform that organizes content into subreddits, providing users with valuable information [2] - The platform has seen significant growth, with daily active unique users increasing by 39% year over year to 101.7 million and revenue rising by 71% to $427.7 million in Q4 2024 [3] - Reddit generates revenue primarily through advertising and partnerships with AI companies, with plans to introduce paywalls for certain content [4] Group 2: Financial Performance of Reddit - Reddit is currently profitable, achieving a GAAP operating margin of approximately 12% and a gross margin of 93% in Q4 2024 [5] - The company reported $215.8 million in free cash flow last year, benefiting from an asset-light business model that relies on third-party cloud services [5] - Despite being valued at nearly $21 billion, Reddit's stock has declined over 40% from its all-time high, presenting a potential opportunity for long-term investors [6] Group 3: Confluent Overview - Confluent addresses the complexities of connecting applications in large enterprises, leveraging Apache Kafka as a solution [7][8] - The company has built proprietary features on top of Kafka, serving around 5,800 customers, including nearly 1,400 that spend over $100,000 annually [9] Group 4: Financial Performance of Confluent - Confluent's total revenue grew by 23% to $261.2 million, with cloud revenue increasing by 38% year over year in Q4 [10] - Although Confluent is not yet GAAP profitable, it is generating positive free cash flow, indicating progress towards profitability [11] - The stock has decreased by approximately 70% since its peak in late 2021, but strong revenue growth positions it as a long-term buy for growth investors [11]