Confluent(US:CFLT)2022-11-03 02:04Financial Data and Key Metrics Changes - Total revenue grew 48% year-over-year to $152 million [7] - Non-GAAP operating margin improved by 14 percentage points year-over-year [7][35] - RPO grew 72% to $663.5 million, with current RPO estimated at approximately $408.2 million, up 59% [41] - Subscription revenue grew 50% to $138.7 million, accounting for 91% of total revenue [41] Business Line Data and Key Metrics Changes - Confluent Cloud revenue increased 112% year-over-year to $57 million, representing 38% of total revenue compared to 26% a year ago [7][42] - Confluent platform revenue was $81.8 million, up 25% and accounted for 54% of total revenue [41] Market Data and Key Metrics Changes - Revenue from the US grew 44% to $95.1 million, while revenue from outside the US grew 56% to $56.6 million [45] - The company added 120 net new customers, ending the quarter with approximately 4,240 total customers, up 40% [46] Company Strategy and Development Direction - The company aims to drive durable and efficient growth, with a market opportunity of approximately $60 billion [28] - The focus is on converting open-source users and landing new customers through self-service on Confluent Cloud [28] - The introduction of Stream Designer and Stream Governance Advanced aims to enhance customer engagement and expand the addressable market [27][38] Management's Comments on Operating Environment and Future Outlook - Management noted that the demand for data streaming remains strong despite macroeconomic pressures [58] - The company raised its revenue and bottom line guidance for Q4 and FY 2022, reflecting confidence in its business model [53][55] - For FY 2023, the company expects revenue in the range of $760 million to $770 million, incorporating a negative impact from increased scrutiny on deal approvals [56] Other Important Information - The company ended Q3 with $1.94 billion in cash, cash equivalents, and marketable securities [52] - The company announced the appointment of Rey Perez as Chief Customer Officer [36] Q&A Session Summary Question: How is the shift from open-source DIY to Confluent Cloud being perceived by large Apache Kafka users? - Management noted that the total cost of ownership (TCO) of the cloud offering has become a significant part of the sales process, with many large tech customers recognizing the benefits of moving to Confluent Cloud [61][62] Question: Can you discuss the seasonality of Confluent Cloud revenue? - Management indicated that Q4 typically sees less aggressive deployment of new workloads as companies prepare for year-end, but they expect a sequential increase in revenue [65] Question: How has the consumption impact related to macroeconomic conditions affected the company? - Management stated that the mission-critical nature of their use cases has helped maintain strong net retention rates, despite economic pressures [69] Question: What percentage of the business is supporting operational use cases versus analytical use cases? - Management indicated that the vast majority of use cases are operational in nature, which contributes to the resilience of demand [73][76] Question: How does the shift to cloud impact the competitive landscape? - Management noted that the shift is making on-premise solutions less relevant, while emphasizing the importance of cloud partnerships [92][96]