Confluent(CFLT) - 2025 Q2 - Quarterly Results

Confluent Q2 2025 Financial Results Overview Management Commentary Management reported strong Q2 performance with 28% Confluent Cloud revenue growth and tripled Flink ARR, alongside continued margin expansion - Confluent Cloud revenue grew 28% year-over-year, leading the company's performance[2] - Flink Annual Recurring Revenue (ARR) has grown approximately 3x over the last two quarters, indicating strong adoption of the complete data streaming platform strategy[2] - The CFO noted solid top-line growth and continued margin expansion for the quarter[2] Second Quarter 2025 Financial Highlights Confluent achieved $282.3 million in total revenue, a 20% year-over-year increase, with significant non-GAAP operating income and EPS improvement Q2 2025 Financial Performance vs. Q2 2024 (In millions, except per share data) | Metric | Q2 2025 | Q2 2024 | Y/Y Change | | :--- | :--- | :--- | :--- | | Total Revenue | $282.3 | $235.0 | 20% | | Subscription Revenue | $270.8 | $224.7 | 21% | | GAAP Operating Loss | $(96.4) | $(108.3) | $11.9 | | Non-GAAP Operating Income | $17.8 | $1.3 | $16.5 | | Non-GAAP Operating Margin | 6.3% | 0.6% | 5.7 pts | | Non-GAAP Net Income Per Diluted Share | $0.09 | $0.06 | $0.03 | | Adjusted Free Cash Flow | $11.0 | $2.7 | $8.3 | - Confluent Cloud revenue, a key growth driver, increased 28% year-over-year to $151 million[5] - Customers with $100,000 or greater in ARR grew 10% year-over-year to 1,439[5] Financial Outlook Confluent projects Q3 2025 subscription revenue of $281-$282 million with a 7% non-GAAP operating margin, and full-year subscription revenue of $1.105-$1.11 billion with a 6% margin Q3 and FY 2025 Financial Outlook | Metric | Q3 2025 Outlook | FY 2025 Outlook | | :--- | :--- | :--- | | Subscription Revenue | $281-$282 million | $1.105-$1.11 billion | | Non-GAAP Operating Margin | ~7% | ~6% | | Non-GAAP Net Income Per Diluted Share | $0.09-$0.10 | ~$0.36 | Consolidated Financial Statements (Unaudited) Condensed Consolidated Balance Sheets As of June 30, 2025, total assets reached $2.82 billion, driven by marketable securities, with total stockholders' equity increasing to $1.06 billion Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $295,591 | $385,980 | | Marketable securities | $1,645,032 | $1,524,583 | | Total Assets | $2,817,408 | $2,694,911 | | Deferred revenue (Current) | $424,293 | $378,771 | | Total Liabilities | $1,753,741 | $1,733,685 | | Total Stockholders' Equity | $1,063,667 | $961,226 | Condensed Consolidated Statements of Operations Q2 2025 total revenue grew to $282.3 million, with GAAP operating loss narrowing to $96.4 million and net loss per share improving to $(0.24) Statement of Operations Summary - Three Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenue | $282,285 | $234,986 | | Gross Profit | $208,115 | $170,005 | | Total Operating Expenses | $304,553 | $278,354 | | Operating Loss | $(96,438) | $(108,349) | | Net Loss | $(81,950) | $(89,900) | | Net Loss Per Share | $(0.24) | $(0.28) | Condensed Consolidated Statements of Cash Flows Q2 2025 operating cash flow significantly increased to $18.1 million, resulting in $11.0 million in adjusted free cash flow Cash Flow Summary - Three Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $18,115 | $8,590 | | Net Cash Used in Investing Activities | $(8,489) | $(46,531) | | Net Cash Provided by Financing Activities | $6,062 | $13,096 | | Net Increase (Decrease) in Cash | $17,030 | $(25,045) | Reconciliation of GAAP to Non-GAAP Financial Measures Reconciliation of Operating and Net Income Q2 2025 GAAP operating loss of $96.4 million was adjusted to a non-GAAP operating income of $17.8 million, primarily due to $106.9 million in stock-based compensation GAAP to Non-GAAP Reconciliation - Q2 2025 (in thousands) | Metric | GAAP | Adjustments* | Non-GAAP | | :--- | :--- | :--- | :--- | | Operating Loss/Income | $(96,438) | $114,276 | $17,838 | | Net Loss/Income | $(81,950) | $116,214 | $34,264 | - The largest adjustment to GAAP operating loss was $106.9 million in stock-based compensation-related charges[28] Reconciliation of Free Cash Flow Q2 2025 net cash from operating activities of $18.1 million resulted in $11.0 million of free cash flow, representing a 3.9% margin Free Cash Flow Reconciliation - Q2 2025 (in thousands) | Metric | Amount | | :--- | :--- | | Net cash provided by operating activities | $18,115 | | Less: Capitalized internal-use software costs | $(6,191) | | Less: Capital expenditures | $(919) | | Free cash flow | $11,005 | Supplementary Information and Disclosures Key Metrics Definitions This section defines key performance indicators, including Annual Recurring Revenue (ARR) for Confluent Platform and Cloud, and Flink ARR, a subset for Apache Flink offerings - Annual Recurring Revenue (ARR) for Confluent Cloud and WarpStream customers is annualized based on their actual consumption over the last three months[15] - Flink ARR is specific to revenue from Confluent Platform and Confluent Cloud for Apache Flink, calculated similarly to total ARR[16][17] Disclosures This section provides standard legal and informational disclosures, including forward-looking statements warnings and explanations for non-GAAP financial measure usage - The company provides a standard forward-looking statements warning, listing numerous risks that could cause actual results to differ[9][10] - Confluent explains its use of non-GAAP financial measures for internal analysis and investor comparability, while also noting their limitations[11]