CFLT Confluent Inc

• Subscription revenue of $240 million, up 27% year over year
• Confluent Cloud revenue of $130 million, up 42% year over year
• 1,346 customers with $100,000 or greater in ARR, up 14% year over year

Confluent, Inc. (NASDAQ: CFLT), the data streaming pioneer, today announced financial results for its third quarter of 2024, ended September 30, 2024.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20241029049730/en/

Q3 2024 Confluent Infographic (Graphic: Confluent)

“Confluent was founded with the mission of setting data in motion for organizations around the world,” said Jay Kreps, co-founder and CEO, Confluent. “Today, thousands of great customers trust Confluent to stream, connect, process, and govern their real-time data. In just 10 years since our founding, we have scaled to surpass $1 billion in total revenue run rate with over $250 million in Q3 total revenue. We also exceeded all guided metrics for Q3, including year-over-year subscription revenue growth of 27%. In the decade ahead, we remain well-positioned to drive durable long-term growth with our complete data streaming platform.”

“We drove robust top-line growth, record gross margins, and another positive quarter for both non-GAAP operating margin and free cash flow margin in the third quarter,” said Rohan Sivaram, CFO, Confluent. “Given our third quarter performance, we are raising our full-year 2024 subscription revenue guidance, and are now targeting positive non-GAAP operating margin and free cash flow margin for 2024.”

Third Quarter 2024 Financial Highlights

(In millions, except per share data and percentages)

 

Q3 2024

Q3 2023

Y/Y Change

Subscription Revenue

$239.9

$189.3

27%

Total Revenue

$250.2

$200.2

25%

GAAP Operating Loss

$(93.7)

$(108.6)

$14.9

Non-GAAP Operating Income (Loss)

$15.8

$(10.9)

$26.7

GAAP Operating Margin

(37.4%)

(54.3%)

16.9 pts

Non-GAAP Operating Margin

6.3%

(5.5%)

11.8 pts

GAAP Net Loss Per Share

$(0.23)

$(0.30)

$0.07

Non-GAAP Net Income Per Diluted Share

$0.10

$0.02

$0.08

Net Cash Provided by (Used in) Operating Activities

$15.6

$(9.1)

$24.7

Free Cash Flow

$9.3

$(13.1)

$22.4

Free Cash Flow Margin

3.7%

(6.5%)

10.2 pts

Financial Outlook

For the fourth quarter and fiscal year 2024, Confluent expects:

 

Q4 2024 Outlook

FY 2024 Outlook

Subscription Revenue

$245-$246 million

$916.5-$917.5 million

Non-GAAP Operating Margin

~2%

~2%

Non-GAAP Net Income Per Diluted Share

$0.05

$0.25

A reconciliation of forward-looking non-GAAP operating margin, free cash flow margin and non-GAAP net income per diluted share to the most directly comparable GAAP measures is not available without unreasonable effort, as certain items cannot be reasonably predicted because of their high variability, complexity and low visibility. In particular, the measures and effects of our stock-based compensation-related charges, which include stock-based compensation expenses, employer payroll taxes on employee stock transactions, and amortization of stock-based compensation capitalized in internal-use software, are directly impacted by the timing of employee stock transactions and unpredictable fluctuations in our stock price, which we expect to have a significant impact on our future GAAP financial results.

Conference Call Information

Confluent will host a video webcast to discuss the company’s third quarter 2024 results as well as its financial outlook today at 4:30 p.m. Eastern Time/1:30 p.m. Pacific Time. Open to the public, investors may access the webcast, earnings press release, supplemental financial information, and investor presentation on Confluent’s investor relations website at investors.confluent.io before the commencement of the webcast. A replay of the webcast will also be accessible from Confluent’s investor relations website a few hours after the conclusion of the live event.

Confluent uses its investor relations website and may use its X (Twitter), LinkedIn, and Facebook accounts as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

Forward-Looking Statements

This press release and the earnings call referencing this press release contain forward-looking statements including, among other things, statements regarding (i) our financial outlook, including expected subscription revenue, Confluent Cloud revenue, non-GAAP operating margin, free cash flow margin, non-GAAP net income per share, revenue mix, including Confluent Cloud subscription revenue mix, revenue run rates, Confluent Cloud and data streaming platform growth, adoption and traction, operating margins and margin improvements, targeted or anticipated gross and operating margin levels, earnings per share levels and improvements, in-product optimizations of Confluent Cloud, continued business momentum, and expected revenue and consumption growth rate and efficient growth, (ii) our market and category leadership position, (iii) our expected investments in research and development and go-to-market functions and anticipated effectiveness and timing of product and pricing innovations, features and functionalities, (iv) our ability to drive efficient growth and rate and pace of investments, including expected capital allocation, (v) our expectations and trends relating to growth of our DSP products and Confluent Cloud, including following our transition to a consumption-oriented sales model for Confluent Cloud, (vi) rates of Confluent Cloud consumption and demand for and retention of data streaming platforms like Confluent in the face of scrutiny on IT spending, (vii) recent high interest rates and macroeconomic uncertainty as well as our expectations regarding the effects of macroeconomic pressure and volatility on overall consumption levels and growth rates of Confluent Cloud, IT spending, our go-to-market motion, durability of our offering with customers, and customer use case expansion, as well as potential benefits to our business and growth following any improvements to the macroeconomic environment, (viii) our pricing, our win rate and deal cycles and customer behaviors, such as budget scrutiny and preferences for consumption rather than large upfront commitments, (ix) customer growth, retention and engagement, (x) ability for Confluent Cloud to provide cost savings for users and customers, including lower total cost of ownership, and drive greater monetization of the open source Kafka user base as a result, (xi) increased adoption of our offering and fully managed solutions for data streaming in general, including from customers building generative AI applications, (xii) dependence of businesses on data in motion, (xiii) growth in and growth rate of revenue, customers, dollar-based net retention rate, and gross retention rate, (xiv) our ability to increase engagement of customers for Confluent and expand customer cohorts, (xv) our market opportunity and our ability to capture our market opportunity, (xvi) the timing, anticipated benefits, and overall effectiveness of our transition to a consumption-oriented sales model, (xvii) our go-to-market strategy, (xviii) our product differentiation and market acceptance of our products, including over open source alternatives, (xix) our strategy and expected results and market acceptance for our Flink offering and our DSP products, (xx) our expectations for market acceptance, direction and growth of stream processing, its potential to accelerate adoption of our platform and growth of our business, and our ability and positioning to capture this market, (xxi) our expectations of meeting near-term and mid-term financial targets, (xxii) our expectations regarding the generative AI landscape and our offering, including expectations of customers and partners using our offering for generative AI use cases, (xxiii) our expectations of relevance of certain key financial and operating metrics, (xxiv) our ability to drive long-term growth, (xxv) our expectations regarding the impact of the WarpSteam acquisition, and (xxvi) our overall future prospects. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “seek,” “plan,” “project,” “target,” “looking ahead,” “look to,” “move into,” and similar expressions are intended to identify forward-looking statements. Forward-looking statements represent our current beliefs, estimates and assumptions only as of the date of this press release and information contained in this press release should not be relied upon as representing our estimates as of any subsequent date. These forward-looking statements are subject to risks, uncertainties, and assumptions. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. Risks include, but are not limited to: (i) our limited operating history, including in uncertain macroeconomic environments, (ii) our ability to sustain and manage our rapid growth, (iii) our ability to increase consumption of our offering, including by existing customers and through the acquisition of new customers, including by addressing customer consumption preferences, successfully adding new features and functionality to our offering, and partnering with our customers to help them realize increased value in Confluent in an efficient and sustainable manner, (iv) our ability to successfully execute our go-to-market strategy and initiatives, including following our transition to a consumption-oriented sales model for Confluent Cloud, (v) our ability to attract new customers and successfully ramp their consumption of our offering, as well as retain and sell additional features and services to our existing customers, (vi) uncertain macroeconomic conditions, including high inflation, high interest rates, bank failures, supply chain challenges, geopolitical events, recessionary risks, and exchange rate fluctuations, which have resulted and may continue to result in reduced consumption of Confluent Cloud, volatility in consumption, including due to customer focus on cloud cost controls and increased efficiency, customer pullback in information technology spending, lengthening of sales cycles, reduced contract sizes, generally increased scrutiny on IT spending from existing and potential customers, or customer preference for open source alternatives, as well as the potential need for cost efficiency measures, (vii) our ability to achieve profitability and improve margins annually, by our expected timelines or at all, (viii) the estimated addressable market opportunity for our offering, including our Flink offering and stream processing, and our ability to capture our share of that market opportunity, (ix) our ability to compete effectively in an increasingly competitive market, (x) our ability to attract, ramp, and retain highly qualified personnel, including following our transition to a consumption-oriented sales model for Confluent Cloud, and the impacts of sales personnel attrition and levels of ramped capacity in our sales organization, (xi) breaches in our security measures, intentional or accidental cybersecurity incidents or unauthorized access to our platform, our data, or our customers’ or other users’ personal data, (xii) our reliance on third-party cloud-based infrastructure to host Confluent Cloud, (xiii) public sector budgetary cycles and funding reductions or delays, (xiv) our ability to accurately forecast our future performance, business and growth, and (xv) general market, political, economic, and business conditions. These risks are not exhaustive. Further information on these and other risks that could affect Confluent’s results is included in our filings with the Securities and Exchange Commission (“SEC”), including our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, and our future reports that we may file from time to time with the SEC. Additional information will be made available in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 that will be filed with the SEC, which should be read in conjunction with this press release and the financial results included herein. Confluent assumes no obligation to, and does not currently intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Non-GAAP Financial Measures

This press release includes the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (research and development, sales and marketing, and general and administrative), non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per share, free cash flow, and free cash flow margin. We use these non-GAAP financial measures and other key metrics internally to facilitate analysis of our financial and business trends and for internal planning and forecasting purposes. We believe these non-GAAP financial measures, when taken collectively, may be helpful to investors because they provide consistency and comparability with past financial performance by excluding certain items that may not be indicative of our business, results of operations, or outlook. However, non-GAAP financial measures have limitations as an analytical tool and are presented for supplemental informational purposes only. They should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. In particular, other companies, including companies in our industry, may report non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (research and development, sales and marketing, general and administrative), non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per share, free cash flow, free cash flow margin, or similarly titled measures but calculate them differently, which reduces their usefulness as comparative measures. Further, free cash flow is not a substitute for cash used in operating activities. The utility of free cash flow is limited as such measure does not reflect our future contractual commitments and does not represent the total increase or decrease in our cash balance for any given period. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures, as presented below. We define non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (research and development, sales and marketing, and general and administrative), non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss), and non-GAAP net income (loss) per share as the respective GAAP measures, adjusted for, as applicable, stock-based compensation-related charges which include stock-based compensation expense, employer taxes on employee stock transactions and amortization of stock-based compensation capitalized in internal-use software; amortization of acquired intangibles; acquisition-related expenses; restructuring and other related charges; amortization of debt issuance costs; and income tax effects associated with these adjustments as well as the non-recurring income tax expense or benefit associated with acquisitions. Non-GAAP gross margin and non-GAAP operating margin are defined as non-GAAP gross profit and non-GAAP operating income (loss) as a percentage of revenue, respectively. We define free cash flow as net cash used in operating activities less capitalized internal-use software costs and capital expenditures and free cash flow margin as free cash flow as a percentage of revenue. We believe that free cash flow and free cash flow margin are useful indicators of liquidity that provide information to management and investors about the performance of core operations and future ability to generate cash that can be used for strategic opportunities or investing in our business.

Definition

Customers with $100,000 or greater in annual recurring revenue (“ARR”) represent the number of customers that contributed $100,000 or more in ARR as of period end. We define ARR as (1) with respect to Confluent Platform customers, the amount of revenue to which our customers are contractually committed over the following 12 months assuming no increases or reductions in their subscriptions, and (2) with respect to Confluent Cloud customers, the amount of revenue that we expect to recognize from such customers over the following 12 months, calculated by annualizing actual consumption of Confluent Cloud in the last three months of the applicable period, assuming no increases or reductions in usage rate. Services arrangements are excluded from the calculation of ARR. For purposes of determining our customer count, we treat all affiliated entities with the same parent organization as a single customer and include pay-as-you-go customers. Our customer count is subject to adjustments for acquisitions, consolidations, spin-offs, and other market activity.

About Confluent

Confluent is the data streaming platform that is pioneering a fundamentally new category of data infrastructure that sets data in motion. Confluent’s cloud-native offering is the foundational platform for data in motion – designed to be the intelligent connective tissue enabling real-time data, from multiple sources, to constantly stream across the organization. With Confluent, organizations can meet the new business imperative of delivering rich, digital front-end customer experiences and transitioning to sophisticated, real-time, software-driven backend operations.

 

Confluent, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

  September 30, December 31,

 

2024

 

 

2023

 

ASSETS Current assets: Cash and cash equivalents

$

322,606

 

$

349,761

 

Marketable securities

 

1,536,887

 

 

1,551,009

 

Accounts receivable, net

 

278,667

 

 

229,962

 

Deferred contract acquisition costs

 

44,812

 

 

43,937

 

Prepaid expenses and other current assets

 

83,221

 

 

76,986

 

Total current assets

 

2,266,193

 

 

2,251,655

 

Property and equipment, net

 

73,158

 

 

54,012

 

Operating lease right-of-use assets

 

9,989

 

 

10,061

 

Goodwill

 

164,366

 

 

51,998

 

Intangible assets, net

 

8,704

 

 

3,492

 

Deferred contract acquisition costs, non-current

 

72,167

 

 

75,815

 

Other assets, non-current

 

13,432

 

 

13,776

 

Total assets

$

2,608,009

 

$

2,460,809

 

LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable

$

15,516

 

$

6,714

 

Accrued expenses and other liabilities

 

158,914

 

 

141,847

 

Operating lease liabilities

 

10,738

 

 

7,890

 

Deferred revenue

 

349,787

 

 

330,570

 

Total current liabilities

 

534,955

 

 

487,021

 

Operating lease liabilities, non-current

 

11,413

 

 

17,391

 

Deferred revenue, non-current

 

24,588

 

 

22,436

 

Convertible senior notes, net

 

1,091,183

 

 

1,088,313

 

Other liabilities, non-current

 

11,552

 

 

35,233

 

Total liabilities

 

1,673,691

 

 

1,650,394

 

Stockholders’ equity: Preferred stock

 

-

 

 

-

 

Class A common stock

 

2

 

 

2

 

Class B common stock

 

1

 

 

1

 

Additional paid-in capital

 

2,826,053

 

 

2,453,293

 

Accumulated other comprehensive income

 

9,424

 

 

1,270

 

Accumulated deficit

 

(1,901,162

)

 

(1,644,151

)

Total stockholders’ equity

 

934,318

 

 

810,415

 

Total liabilities and stockholders’ equity

$

2,608,009

 

$

2,460,809

 

 

Confluent, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

(unaudited)

  Three Months Ended September 30, Nine Months Ended September 30,

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Revenue: Subscription

$

239,851

 

$

189,270

 

$

671,455

 

$

526,325

 

Services

 

10,348

 

 

10,911

 

 

30,967

 

 

37,443

 

Total revenue

 

250,199

 

 

200,181

 

 

702,422

 

 

563,768

 

Cost of revenue: Subscription(1)

 

52,162

 

 

44,104

 

 

153,380

 

 

131,197

 

Services(1)

 

11,541

 

 

12,445

 

 

36,525

 

 

41,416

 

Total cost of revenue

 

63,703

 

 

56,549

 

 

189,905

 

 

172,613

 

Gross profit

 

186,496

 

 

143,632

 

 

512,517

 

 

391,155

 

Operating expenses: Research and development(1)

 

102,720

 

 

91,237

 

 

306,351

 

 

261,804

 

Sales and marketing(1)

 

137,968

 

 

128,624

 

 

402,185

 

 

385,018

 

General and administrative(1)

 

39,471

 

 

31,874

 

 

117,344

 

 

103,572

 

Restructuring and other related charges

 

-

 

 

529

 

 

-

 

 

34,854

 

Total operating expenses

 

280,159

 

 

252,264

 

 

825,880

 

 

785,248

 

Operating loss

 

(93,663

)

 

(108,632

)

 

(313,363

)

 

(394,093

)

Other income, net

 

22,495

 

 

17,529

 

 

65,198

 

 

50,324

 

Loss before income taxes

 

(71,168

)

 

(91,103

)

 

(248,165

)

 

(343,769

)

Provision for income taxes

 

2,976

 

 

1,567

 

 

8,846

 

 

4,881

 

Net loss

$

(74,144

)

$

(92,670

)

$

(257,011

)

$

(348,650

)

Net loss per share, basic and diluted

$

(0.23

)

$

(0.30

)

$

(0.80

)

$

(1.17

)

Weighted-average shares used to compute net loss per share, basic and diluted

 

324,317,971

 

 

303,896,632

 

 

319,330,398

 

 

297,906,112

 

(1)

Includes stock-based compensation-related charges* as follows:

Three Months Ended September 30, Nine Months Ended September 30,

 

2024

 

2023

 

2024

 

2023

Cost of revenue - subscription

$

8,999

$

6,350

$

26,196

$

20,178

Cost of revenue - services

 

2,341

 

2,745

 

7,397

 

8,865

Research and development

 

42,259

 

38,464

 

125,549

 

106,874

Sales and marketing

 

33,639

 

33,095

 

104,751

 

97,042

General and administrative

 

14,599

 

11,333

 

45,629

 

37,738

Total stock-based compensation-related charges

$

101,837

$

91,987

$

309,522

$

270,697

*

Represents stock-based compensation expense, employer taxes on employee stock transactions, and amortization of stock-based compensation capitalized in internal-use software. We began excluding amortization of stock-based compensation capitalized in internal-use software from our non-GAAP measures starting with the quarter ended March 31, 2024. The amounts of amortization of stock-based compensation capitalized in internal-use software were immaterial in both current and prior periods.

Confluent, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

  Three Months Ended September 30, Nine Months Ended September 30,

 

2024

 

 

2023

 

 

2024

 

 

2023

 

CASH FLOWS FROM OPERATING ACTIVITIES Net loss

$

(74,144

)

$

(92,670

)

$

(257,011

)

$

(348,650

)

Adjustments to reconcile net loss to cash provided by (used in) operating activities: Depreciation and amortization

 

5,702

 

 

3,609

 

 

15,855

 

 

9,987

 

Net accretion of discounts on marketable securities

 

(9,294

)

 

(11,300

)

 

(29,561

)

 

(31,021

)

Amortization of debt issuance costs

 

964

 

 

961

 

 

2,870

 

 

2,850

 

Amortization of deferred contract acquisition costs

 

13,949

 

 

11,923

 

 

40,045

 

 

33,460

 

Non-cash operating lease costs

 

940

 

 

934

 

 

2,794

 

 

3,118

 

Lease abandonment charges

 

-

 

 

-

 

 

-

 

 

15,667

 

Stock-based compensation, net of amounts capitalized

 

98,307

 

 

89,514

 

 

292,736

 

 

260,962

 

Deferred income taxes

 

(111

)

 

15

 

 

231

 

 

25

 

Other

 

485

 

 

2,263

 

 

1,695

 

 

3,114

 

Changes in operating assets and liabilities, net of effects of business combinations: Accounts receivable

 

(21,577

)

 

5,153

 

 

(50,235

)

 

(6,140

)

Deferred contract acquisition costs

 

(12,244

)

 

(15,607

)

 

(37,272

)

 

(39,573

)

Prepaid expenses and other assets

 

(2,135

)

 

(7,768

)

 

(361

)

 

(13,825

)

Accounts payable

 

1,231

 

 

(488

)

 

8,286

 

 

(19,208

)

Accrued expenses and other liabilities

 

(10,363

)

 

10,413

 

 

(7,222

)

 

17,965

 

Operating lease liabilities

 

(2,020

)

 

(1,808

)

 

(5,949

)

 

(5,562

)

Deferred revenue

 

25,923

 

 

(4,204

)

 

21,348

 

 

939

 

Net cash provided by (used in) operating activities

 

15,613

 

 

(9,060

)

 

(1,751

)

 

(115,892

)

CASH FLOWS FROM INVESTING ACTIVITIES Capitalization of internal-use software costs

 

(5,669

)

 

(3,660

)

 

(15,984

)

 

(13,546

)

Purchases of marketable securities

 

(273,169

)

 

(235,824

)

 

(1,172,359

)

 

(1,235,588

)

Sales of marketable securities

 

-

 

 

-

 

 

12,744

 

 

-

 

Maturities of marketable securities

 

374,281

 

 

228,328

 

 

1,210,037

 

 

1,203,711

 

Purchases of investments in privately-held companies

 

(1,250

)

 

-

 

 

(2,250

)

 

-

 

Purchases of property and equipment

 

(607

)

 

(363

)

 

(1,898

)

 

(1,718

)

Cash paid for business combinations, net of cash acquired

 

(115,516

)

 

-

 

 

(115,516

)

 

(45,802

)

Net cash used in investing activities

 

(21,930

)

 

(11,519

)

 

(85,226

)

 

(92,943

)

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of common stock upon exercise of vested options

 

8,835

 

 

14,673

 

 

36,332

 

 

62,945

 

Repurchases of unvested common stock

 

-

 

 

(32

)

 

-

 

 

(255

)

Proceeds from issuance of common stock under employee stock purchase plan

 

8,367

 

 

11,536

 

 

23,970

 

 

28,708

 

Net cash provided by financing activities

 

17,202

 

 

26,177

 

 

60,302

 

 

91,398

 

Effect of exchange rate changes on cash and cash equivalents

 

393

 

 

(1,198

)

 

(480

)

 

(1,301

)

Net increase (decrease) in cash and cash equivalents

 

11,278

 

 

4,400

 

 

(27,155

)

 

(118,738

)

Cash and cash equivalents at beginning of period

 

311,328

 

 

312,643

 

 

349,761

 

 

435,781

 

Cash and cash equivalents at end of period

$

322,606

 

$

317,043

 

$

322,606

 

$

317,043

 

 

Confluent, Inc.

Reconciliation of GAAP Measures to Non-GAAP Measures

(in thousands, except percentages, share and per share data)

(unaudited)

  Three Months Ended September 30, Nine Months Ended September 30,

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Reconciliation of GAAP total gross profit to non-GAAP total gross profit: Total gross profit on a GAAP basis

$

186,496

 

$

143,632

 

$

512,517

 

$

391,155

 

Total gross margin on a GAAP basis

 

74.5

%

 

71.8

%

 

73.0

%

 

69.4

%

Add: Stock-based compensation-related charges

 

11,340

 

 

9,095

 

 

33,593

 

 

29,043

 

Add: Amortization of acquired intangibles

 

585

 

 

129

 

 

1,588

 

 

369

 

Non-GAAP total gross profit

$

198,421

 

$

152,856

 

$

547,698

 

$

420,567

 

Non-GAAP total gross margin

 

79.3

%

 

76.4

%

 

78.0

%

 

74.6

%

  Reconciliation of GAAP operating expenses to non-GAAP operating expenses: Research and development operating expense on a GAAP basis

$

102,720

 

$

91,237

 

$

306,351

 

$

261,804

 

Research and development operating expense as a percentage of total revenue on a GAAP basis

 

41.1

%

 

45.6

%

 

43.6

%

 

46.4

%

Less: Stock-based compensation-related charges

 

42,259

 

 

38,464

 

 

125,549

 

 

106,874

 

Less: Acquisition-related expenses

 

5,870

 

 

3,841

 

 

14,704

 

 

15,362

 

Non-GAAP research and development operating expense

$

54,591

 

$

48,932

 

$

166,098

 

$

139,568

 

Non-GAAP research and development operating expense as a percentage of total revenue

 

21.8

%

 

24.4

%

 

23.6

%

 

24.8

%

  Sales and marketing operating expense on a GAAP basis

$

137,968

 

$

128,624

 

$

402,185

 

$

385,018

 

Sales and marketing operating expense as a percentage of total revenue on a GAAP basis

 

55.1

%

 

64.3

%

 

57.3

%

 

68.3

%

Less: Stock-based compensation-related charges

 

33,639

 

 

33,095

 

 

104,751

 

 

97,042

 

Less: Acquisition-related expenses

 

-

 

 

1,076

 

 

-

 

 

3,228

 

Non-GAAP sales and marketing operating expense

$

104,329

 

$

94,453

 

$

297,434

 

$

284,748

 

Non-GAAP sales and marketing operating expense as a percentage of total revenue

 

41.7

%

 

47.2

%

 

42.3

%

 

50.5

%

  General and administrative operating expense on a GAAP basis

$

39,471

 

$

31,874

 

$

117,344

 

$

103,572

 

General and administrative operating expense as a percentage of total revenue on a GAAP basis

 

15.8

%

 

15.9

%

 

16.7

%

 

18.4

%

Less: Stock-based compensation-related charges

 

14,599

 

 

11,333

 

 

45,629

 

 

37,738

 

Less: Acquisition-related expenses

 

1,169

 

 

148

 

 

1,400

 

 

990

 

Non-GAAP general and administrative operating expense

$

23,703

 

$

20,393

 

$

70,315

 

$

64,844

 

Non-GAAP general and administrative operating expense as a percentage of total revenue

 

9.5

%

 

10.2

%

 

10.0

%

 

11.5

%

  Three Months Ended September 30, Nine Months Ended September 30,

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Reconciliation of GAAP operating loss to non-GAAP operating income (loss): Operating loss on a GAAP basis

$

(93,663

)

$

(108,632

)

$

(313,363

)

$

(394,093

)

GAAP operating margin

 

(37.4

%)

 

(54.3

%)

 

(44.6

%)

 

(69.9

%)

Add: Stock-based compensation-related charges

 

101,837

 

 

91,987

 

 

309,522

 

 

270,697

 

Add: Amortization of acquired intangibles

 

585

 

 

129

 

 

1,588

 

 

369

 

Add: Acquisition-related expenses

 

7,039

 

 

5,065

 

 

16,104

 

 

19,580

 

Add: Restructuring and other related charges

 

-

 

 

529

 

 

-

 

 

34,854

 

Non-GAAP operating income (loss)

$

15,798

 

$

(10,922

)

$

13,851

 

$

(68,593

)

Non-GAAP operating margin

 

6.3

%

 

(5.5

%)

 

2.0

%

 

(12.2

%)

  Reconciliation of GAAP net loss to non-GAAP net income (loss): Net loss on a GAAP basis

$

(74,144

)

$

(92,670

)

$

(257,011

)

$

(348,650

)

Add: Stock-based compensation-related charges

 

101,837

 

 

91,987

 

 

309,522

 

 

270,697

 

Add: Amortization of acquired intangibles

 

585

 

 

129

 

 

1,588

 

 

369

 

Add: Acquisition-related expenses

 

7,039

 

 

5,065

 

 

16,104

 

 

19,580

 

Add: Restructuring and other related charges

 

-

 

 

529

 

 

-

 

 

34,854

 

Add: Amortization of debt issuance costs

 

964

 

 

961

 

 

2,870

 

 

2,850

 

Add: Income tax effects and adjustments

 

(1,529

)

 

328

 

 

(1,964

)

 

1,197

 

Non-GAAP net income (loss)

$

34,752

 

$

6,329

 

$

71,109

 

$

(19,103

)

Non-GAAP net income (loss) per share, basic

$

0.11

 

$

0.02

 

$

0.22

 

$

(0.06

)

Non-GAAP net income (loss) per share, diluted

$

0.10

 

$

0.02

 

$

0.20

 

$

(0.06

)

Weighted-average shares used to compute non-GAAP net income (loss) per share, basic

 

324,317,971

 

 

303,896,632

 

 

319,330,398

 

 

297,906,112

 

Weighted-average shares used to compute non-GAAP net income (loss) per share, diluted

 

353,577,179

 

 

346,974,638

 

 

352,685,531

 

 

297,906,112

 

The following table presents a reconciliation of free cash flow to net cash provided by (used in) operating activities, the most directly comparable GAAP measure, for each of the periods indicated (unaudited, in thousands, except percentages):

Three Months Ended September 30, Nine Months Ended September 30,

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net cash provided by (used in) operating activities

$

15,613

 

$

(9,060

)

$

(1,751

)

$

(115,892

)

Capitalized internal-use software costs

 

(5,669

)

 

(3,660

)

 

(15,984

)

 

(13,546

)

Capital expenditures

 

(607

)

 

(363

)

 

(1,898

)

 

(1,718

)

Free cash flow

$

9,337

 

$

(13,083

)

$

(19,633

)

$

(131,156

)

Free cash flow margin

 

3.7

%

 

(6.5

%)

 

(2.8

%)

 

(23.3

%)

Net cash used in investing activities

$

(21,930

)

$

(11,519

)

$

(85,226

)

$

(92,943

)

Net cash provided by financing activities

$

17,202

 

$

26,177

 

$

60,302

 

$

91,398

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241029049730/en/

Investor Contact Shane Xie investors@confluent.io

Media Contact Kerry Tuttle pr@confluent.io