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 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]

Investor Presentation October 27, 2025 Disclaimer This presentation includes express and implied forward-looking statements. All statements contained in this presentation other than statements of historical facts, including expectations of Confluent, Inc. ("we,ˮ "us,ˮ "our,ˮ or "Confluentˮ) regarding our revenue, revenue mix, expenses and other results of operations; net dilution; future financial performance, business strategy and plans; potential market and growth opportunities; our growth drivers; compet ...

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]

Financial Performance - Confluent's Q2 2025 revenue reached $282.3 million, a 21% year-over-year increase[9,58] - Cloud revenue was $150.5 million, representing a 28% year-over-year growth[9,56] - The company achieved a Non-GAAP operating margin of 6.3%, a 6 percentage point increase year-over-year[9] - Adjusted Free Cash Flow Margin was 3.9%, a 3 percentage point increase year-over-year[9] - Subscription revenue for Q2 2025 was $270.8 million[54,79] Customer Growth and Retention - Net Retention Rate was 114%[9] - The number of customers contributing $100,000 or more in ARR grew by 24% year-over-year[60] - Customers with >= $1M in ARR increased by 10% YoY[60] Market and Strategy - Confluent estimates a total addressable market (TAM) of over $100 billion[46,70] - The company is focused on expanding its Data Streaming Platform (DSP) capabilities[8,21] - Confluent is transitioning to "Act 3," focusing on a complete Data Streaming Platform[8,48] Revenue Mix - In Q2 2025, US revenue accounted for 53% and International revenue accounted for 47% of the total revenue[58] - Confluent Cloud accounted for 50% of the revenue, Confluent Platform accounted for 46% and Services accounted for 4% of the total revenue in Q2 2025[58]

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 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]

Financial Data and Key Metrics Changes - Subscription revenue grew 26% to $922.1 million for fiscal year 2024, with Q4 subscription revenue increasing 24% to $250.6 million, exceeding guidance [28][29] - Non-GAAP operating margin improved by 10 percentage points to 2.9% for fiscal year 2024, with Q4 operating margin at 5.2%, surpassing guidance of approximately 2% [28][32] - Free cash flow margin reached 11.1% in Q4, marking a significant improvement [32] Business Line Data and Key Metrics Changes - Confluent Cloud revenue grew 38% to $137.9 million in Q4, accounting for 55% of subscription revenue, up from 49% a year ago [29] - Confluent Platform revenue increased by 10% to $112.7 million, representing 45% of subscription revenue [29] - DSP cloud consumption, which includes Connect, Process, and Govern, accounted for approximately 13% of cloud business, growing faster than overall cloud [29][36] Market Data and Key Metrics Changes - Revenue from the U.S. grew 20% to $153.7 million, while revenue from outside the U.S. accelerated to 26%, reaching $107.5 million [30] - The company announced a multi-year strategic partnership with Jio Platforms to enhance its presence in India [31] Company Strategy and Development Direction - The company is focusing on a complete data streaming platform to address customer needs for real-time data and AI-driven applications [5][10] - A major expansion of the strategic partnership with Databricks aims to integrate Confluent's data streaming platform with Databricks' data intelligence platform [6][8] - The company is transitioning to a consumption-based go-to-market model, which is expected to drive growth and profitability [39][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the market and demand across customer segments, expecting this trend to continue into 2025 [76] - The company anticipates that 2025 will be a pivotal year for its data streaming platform, with expectations for significant growth in DSP consumption [40][41] Other Important Information - The company ended Q4 with $1.91 billion in cash, cash equivalents, and marketable securities, indicating a strong balance sheet [33] - The win rate for new business increased significantly, remaining well above 90% against competitors [35] Q&A Session Summary Question: Insights on the relationship with Databricks and customer use cases - Management highlighted the importance of real-time data for AI applications and the integration of Confluent's offerings with Databricks' ecosystem [46][48] Question: Confidence in growth trends for DSP - Management noted qualitative and quantitative evidence of growth, including strong customer interest and increased consumption of DSP products [49][50] Question: GenAI use cases for streaming technology - Management discussed the evolution of AI applications and the need for real-time data processing to enhance operational efficiency [53][55] Question: Changes in go-to-market strategy for 2025 - Management indicated that adjustments would be minor, focusing on fine-tuning incentives and supporting use cases that drive DSP consumption [66][68] Question: Flink's role and future momentum - Management expressed satisfaction with Flink's progress and its relevance in the cloud data processing landscape [81][83] Question: Importance of real-time data processing for decision-making - Management acknowledged the growing significance of real-time data processing in business operations and its application in various workflows [90][92]