Confluent(US:CFLT)2025-10-27 20:38Revenue 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].