Shares of big data company Confluent Inc. made strong gains today after the company released second-quarter financial results and guidance for the next period that beat expectations.
The company reported a loss before certain costs such as stock-based compensation of 16 cents per share, with revenue reaching $139.4 million in the quarter, up 58% from a year earlier. This resulted in a net loss of $117.6 million for the quarter.
The results exceeded Wall Street targets. Analysts were looking for a wider loss of 19 cents per share on lower revenue of $131.2 million.
Investors apparently expected strong results from Confluent, as the company’s stock rose 8% in the regular trading session. Then, within minutes of the report‘s release, the stock gained another 8%.
Confluent is a growing player in the big data industry. It is the primary developer of the popular Apache Kafka open-source software used by businesses to track real-time data points such as sales, trades, orders, and customer responses. Data is made accessible through real-time streams, from which it can be analyzed quickly. Given this capability, it is said that up to 80% of the Fortune 500 use Confluent’s software in one way or another.
While Apache Kafka core software is free, Confluent provides a commercial version called Confluent Cloud that can be deployed on public cloud platforms such as Amazon Web Services, Google Cloud, and Microsoft Azure. It offers benefits such as easier deployment and less management hassle. The Confluent platform, which offers similar benefits, is designed for on-premises deployments.
In a statement, Confluent co-founder and chief executive Jay Kreps (pictured) said data streaming has become a requirement for companies that need to create real-time digital experiences, hence the success of his business. “Our strong second quarter, highlighted by Confluent Cloud revenue growth of 139% year-over-year and beating our guidance on all metrics, underscores our leadership in this market and the critical business value we offer to our customers”, added the CEO.
The bulk of Confluent’s revenue comes from the Confluent Platform, but that’s expected to change in the coming quarters given the rapid growth of Confluent Cloud. It generated sales of $47 million in the quarter, which is about a third of the company’s overall revenue.
Confluent also offered other promising growth metrics, saying it had performance obligations of $591 million remaining at the end of the quarter, up 81% from a year ago. In addition, he expanded his clientele. It ended the quarter with 857 customers generating at least $100,000 in annual revenue, up 39% from a year earlier.
“Clients view Confluent as a strategic platform for delivering data in motion, as evidenced by our net dollar retention rate exceeding 130% for the fifth consecutive quarter and our six- and seven-digit client growth,” Confluent added. Chief Financial Officer Steffan Tomlinson.
Confluent expects a similar strong performance in the next quarter. He said he was looking at a loss of between 17 and 19 cents per share, the midpoint of which is above Wall Street’s estimate of a loss of 19 cents per share. Similarly, Confluent’s revenue forecast of $143-145 million is also above the consensus estimate, with Wall Street targeting just $142 million in third-quarter sales.
For the full year, Confluent expects losses of between 69 and 73 cents per share with revenue of $567 million to $571 million.