Citi has maintained a Neutral rating on Confluent (CFLT, Financial) while setting a price target of $25, and has initiated a "positive catalyst watch" in anticipation of upcoming conferences. The financial firm suggests that favorable seasonal trends and guidance might lead to a recovery in the second quarter. Confluent has underperformed compared to other software providers; however, increased General AI consumption could potentially drive its performance over time, especially following promising developments from companies like Microsoft Azure.
Despite the bright near-term outlook, with reduced risk in guidance after Liberation Day and potential growth from new product and partnership announcements involving Flink and GenAI, Citi retains a cautious stance regarding Confluent's long-term prospects. Challenges such as ongoing execution issues and the company's positioning in a less strategic sector contribute to this long-term caution.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 31 analysts, the average target price for Confluent Inc (CFLT, Financial) is $28.93 with a high estimate of $40.00 and a low estimate of $22.00. The average target implies an upside of 32.46% from the current price of $21.84. More detailed estimate data can be found on the Confluent Inc (CFLT) Forecast page.
Based on the consensus recommendation from 33 brokerage firms, Confluent Inc's (CFLT, Financial) average brokerage recommendation is currently 2.1, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Confluent Inc (CFLT, Financial) in one year is $40.68, suggesting a upside of 86.26% from the current price of $21.84. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Confluent Inc (CFLT) Summary page.
CFLT Key Business Developments
Release Date: April 30, 2025
- Q1 Subscription Revenue: Grew 26% to $260.9 million, representing 96% of total revenue.
- Confluent Cloud Revenue: Increased 34% to $142.7 million, making up 55% of subscription revenue.
- Confluent Platform Revenue: Reached a record $118.2 million, with growth accelerating to 18%.
- Subscription Gross Margin: Increased 100 basis points to 81.7%.
- Operating Margin: Achieved 4.3%, exceeding guidance of approximately 3%.
- Adjusted Free Cash Flow Margin: 1.8%, excluding a nonrecurring compensation change impact.
- Net Income Per Share: $0.08 with 367.8 million diluted weighted average shares outstanding.
- Cash and Marketable Securities: Ended the quarter with $1.92 billion.
- Total Customers: Approximately 6,140, with a sequential increase of 340 customers.
- $1 Million-Plus ARR Customers: Grew to 210, up 16 customers sequentially.
- Net Revenue Retention (NRR): Stable at 117%.
- Gross Retention Rate (GRR): Continued to be greater than 90%.
- Q2 2025 Subscription Revenue Guidance: Expected to be $267 million to $268 million, representing 19% growth.
- Fiscal Year 2025 Subscription Revenue Guidance: Expected to be $1.1 billion to $1.11 billion, representing 19% to 20% growth.
- Fiscal Year 2025 Adjusted Free Cash Flow Margin Guidance: Approximately 6%, excluding a onetime headwind.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Confluent Inc (CFLT, Financial) reported a 26% growth in Q1 subscription revenue, reaching $261 million, exceeding the high end of their guidance.
- Confluent Cloud revenue grew by 34% to $143 million, demonstrating strong demand for their cloud offerings.
- The company added 340 new customers in Q1, marking the highest net addition in three years.
- Confluent Inc (CFLT) achieved a non-GAAP operating margin improvement of 6 percentage points to 4%, indicating better operational efficiency.
- The company continues to see strong traction with new offerings like WarpStream and Freight Clusters, which are enabling high-throughput, low-latency workloads at attractive price points.
Negative Points
- Confluent Inc (CFLT) observed a slowdown in new use case additions among larger customers, impacting cloud consumption growth.
- The company has widened its revenue guidance range due to uncertainties in the current macroeconomic environment.
- There is a noted pattern of optimization and slower growth cycles among larger customers, leading to a more conservative outlook.
- Despite strong Q1 results, Confluent Inc (CFLT) is not assuming a near-term rebound in consumption patterns for larger cloud customers.
- The company faces challenges in maintaining growth momentum amid macroeconomic headwinds and customer cost optimization efforts.
