Investors show confidence in Confluent, as its stock gains on solid earnings beat and bullish guidance – SiliconANGLE

Shares of the data streaming software provider Confluent Inc. gained more than 4% in extended trading today after the company reported a strong first-quarter earnings and revenue beat.

The company delivered earnings before certain costs such as stock compensation of five cents per share, beating Wall Street’s consensus estimate of two cents per share, while its revenue jumped 25% from a year earlier to $217.2 million. That number also came in ahead of expectations, with analysts predicting sales of just $211.6 million in the quarter.

All told, Confluent delivered a net loss of $92.9 million, but that number represents considerable progress on its road to profitability, improving on the $152.5 million loss it reported a year earlier.

The company has emerged as one of the darlings of the fast-growing big data industry, which is seeing big benefits from the rise of generative artificial intelligence technologies. It’s best known as the primary developer of the open-source Apache Kafka platform that’s used by hundreds of enterprises to track data points such as sales, trades, orders and customer feedback in real-time. The data is delivered via real-time streams, and Confluent provides the tools necessary to analyze that information instantly.

It’s said that Apache Kafka is used by as much as 80% of the Fortune 500, and it is increasingly being seen as an essential ingredient of AI systems due to its ability to quickly analyze the data they generate. One of Confluent’s most famous customers is OpenAI, creator of the ChatGPT generative AI model that kicked off the surge of interest in AI.

Confluent co-founder and Chief Executive Jay Kreps (pictured) said in a statement that the company’s latest results underscore the critical importance of data streaming in the modern technology landscape. He said organizations are showing a “clear preference for a complete platform to stream, connect, process and govern data everywhere.”

The company is growing fast, and the most impressive segment of its business is Confluent Cloud, which is an enterprise-grade version of Apache Kafka that runs on Amazon Web Services, Google Cloud and Microsoft Azure. It offers the advantage of being much simpler to deploy and manage than the open-source Kafka software.

Confluent Cloud, which was launched two years ago, delivered revenue of $107 million in the quarter, up 45% from the same period last year. It now counts for just shy of half the company’s total revenue.

In addition, the segment now “accounts for the majority of our subscription revenue and remains our fastest-growing offering,” Kreps said.

Confluent’s subscription revenue rose 29% in the quarter, coming to $206.9 million, ahead of the $199.8 million analyst estimate. Meanwhile, services revenue came to $10.34 million, down 24% from a year earlier and just below the $11.78 million analyst forecast.

The company said it ended the quarter with 1,260 customers that delivered at least $100,000 in annual revenue, up 17% from a year earlier.

During the quarter, Confluent announced a major update to its platform with the launch of its managed service for Apache Flink, which is an open-source big data processing framework that’s sometimes used by enterprises instead of Apache Kafka. The company said it’s expecting big things from that offering, as it comes with a novel AI Model Inference feature that organizations can use to clean and process real-time streaming data for artificial intelligence and machine learning applications

With its rapid growth showing few signs of slowing down, Confluent felt able to issue a bullish forecast for the coming quarter. It said it’s expecting second-quarter earnings of between four and five cents per share, ahead of the Street’s estimate of four cents. In terms of revenue, Confluent is eying a range of between $229 million and $230 million versus Wall Street’s $228.7 million forecast.

Prior to today’s report, Confluent’s stock had gained 19% in the year to date, compared with a gain of just 9% in the wider S&P 500 Index. Over the last 12 months, its stock is up 23%, slightly trailing the S&P’s gain of 25%.

Photo: Confluent