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]