Confluent(US:CFLT)2025-02-11 22:30Financial 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]