Summary
Confluent reported total revenue of $126.1 million for its fiscal 2022 first quarter, up 64% from a year earlier. The top line benefited from broad demand for data streaming as more organizations build real-time applications. Subscription revenue made up most of the total, while services revenue contributed a smaller share. Gross profit increased 51.1% to $80.4 million. Gross margin was 63.7%, down 5.3 percentage points. The decline reflects higher personnel-related costs, stock-based compensation, and a shift in revenue mix. Operating loss widened to $111.5 million. Net loss widened to $113.0 million. Diluted net loss per share was -$0.41. Operating margin was -88.4%, down 29.8 percentage points. The company remains unprofitable on a GAAP basis.
Remaining performance obligations stood at $551.1 million at quarter end. Deferred revenue was $265.7 million. Confluent ended the quarter with 791 customers that contribute $100,000 or more in annual recurring revenue, up 41% year over year. Total customer count was approximately 4,120, compared with 2,540 a year earlier, representing 62% growth. The dollar-based net retention rate was over 130% for the fourth consecutive quarter. Confluent Cloud revenue grew 180% year over year, and the dollar-based net retention rate for Confluent Cloud was greater than 150%. These metrics suggest that existing customers are expanding their usage and that the cloud offering is gaining traction. RPO and ARR are not necessarily indicative of future revenue growth because they do not account for actual consumption or future expansion.
Net cash used in operating activities was $55.0 million, down from a year earlier. Capital expenditures were $0.89 million. Free cash flow, a non-GAAP measure, was negative $58.4 million, and free cash flow margin was negative 46.3%. The company reported a non-GAAP operating loss of $51.7 million and a non-GAAP operating margin of negative 41.0%. The difference between GAAP and non-GAAP results is largely due to stock-based compensation and employer payroll taxes on employee stock transactions. Management expects to continue investing in sales and marketing, research and development, and cloud infrastructure. That spending will keep GAAP profitability under pressure. The company has generated significant operating losses and negative cash flows from operations. It expects those losses and negative cash flows to continue.
For the second quarter of 2022, Confluent guides to a non-GAAP operating margin of about negative 41% and a non-GAAP net loss per share of $0.21 to $0.19. For the full fiscal year 2022, the company guides to a non-GAAP operating margin of about negative 38% and a non-GAAP net loss per share of $0.79 to $0.73. Management raised its full-year 2022 guidance. It pointed to strong unit economics, continued momentum, and a commitment to annual improvement in non-GAAP operating and free cash flow margin. The second-quarter guidance covers the next quarter, while the fiscal 2022 guidance covers the full year.
Risks include the ongoing COVID-19 pandemic, which has delayed some professional services and lengthened sales cycles. The company also faces competition, reliance on third-party cloud infrastructure, security breaches, and the need for additional capital. It may need to raise equity or debt if existing resources are insufficient. Management said it will prioritize growth over near-term profitability. The company also expects travel, in-person events, and facilities expenses to increase as COVID-19 restrictions ease. Those factors could keep margins under pressure. The company maintains a full valuation allowance against U.S. and U.K. deferred tax assets.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2022 | Q4 FY2021 | QoQ | Q1 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $126.1M | $119.9M | +5.2% | — | — |
| Gross profit | $80.4M | $73.8M | +8.9% | — | — |
| Gross margin | 63.7% | 61.5% | +2.2 pp | — | — |
| Research & development | $57.7M | $56.7M | +1.7% | — | — |
| Sales & marketing | $106.7M | $100.6M | +6.0% | — | — |
| General & administrative | $27.5M | $30.2M | -8.9% | — | — |
| Total operating expenses | $191.8M | $187.5M | +2.3% | — | — |
| Operating income (loss) | -$111.5M | -$113.7M | +1.9% | — | — |
| Operating margin | -88.4% | -94.8% | +6.4 pp | — | — |
| Net income (loss) | -$113.0M | -$114.4M | +1.3% | — | — |
| Net margin | -89.6% | -95.4% | +5.9 pp | — | — |
| Customers | 4,120 | 734 | +461.3% | — | — |
| Net retention rate | 130.0% | 130.0% | ±0.0 pp | — | — |
Risks
The company has a history of operating losses and expects to continue incurring them. In FY2022 Q1, operating loss widened to $111.5 million from $45.1 million in FY2021 Q1, net loss widened to $113.0 million from $44.5 million, operating cash flow was negative $55.0 million versus negative $20.0 million, and accumulated deficit was $861.8 million as of March 31, 2022.
Growth in Confluent Cloud, which historically has a lower average price and higher third-party cloud infrastructure costs than Confluent Platform, is changing the revenue mix. Total gross margin declined to 63.7% in FY2022 Q1 from 69.1% in FY2021 Q1, down 5.3 percentage points, and subscription gross margin fell to 71% from 77%.
Public cloud providers AWS, Azure, and GCP are actual and potential competitors that could embed or bundle competing data-in-motion services, offer unfavorable pricing, or exclude Confluent from opportunities, and open source Apache Kafka alternatives lower barriers to entry. Intense competition could harm market acceptance and future revenue growth.
MD&A states that a 2020 hiring reduction in sales and marketing negatively impacted near- to medium-term growth, and risk factors cite failure to expand sales capabilities or improve sales productivity. Sales and marketing expense rose 82% to $106.7 million in FY2022 Q1 from $58.5 million in FY2021 Q1, outpacing total revenue growth of 63.8%.
The Codecov Breach disclosed in the filing involved attackers obtaining unauthorized read-only access to and copying private GitHub repositories containing Confluent source code and internal documents with customer references. The full impact may not be known and could lead to future attacks, legal claims, reduced market acceptance, and reputational harm.
The COVID-19 pandemic has lengthened the sales cycle for some prospective customers and could cause customers to decrease or delay spending, request pricing discounts, or renegotiate contracts. The filing also cites inflation, geopolitical conditions including Russian military operations in Ukraine, and reduced information technology spending as risks to growth.
Confluent Platform contributed 66% of subscription revenue in FY2022 Q1, down from 80% in FY2021 Q1, and the business remains substantially dependent on its market acceptance for future growth. Loss of renewals, reduced new customer adoption, or limited use case expansion for Confluent Platform could harm results.
Sales to government entities require certifications such as FedRAMP for Confluent Cloud, involve lengthy and expensive procurement cycles, and may include unfavorable contract terms or termination rights. Failure to obtain FedRAMP certification could prevent sales to certain Federal and public sector customers and harm competitive position.
Confluent Cloud relies on third-party public cloud infrastructure, and costs and gross margins are significantly influenced by prices negotiated with providers that are also competitors. Increased Confluent Cloud sales could raise public cloud contract costs and negatively impact gross margins.
SaaS KPIs
All quarters →Free Cash Flow Margin
Non-GAAP Operating Margin
Total Customers
Customers with $100,000 or Greater in ARR
Confluent Cloud Revenue
Dollar-Based Net Retention Rate (NRR)
Free Cash Flow
Remaining Performance Obligations (RPO)
Summary, forecast, risks and KPIs are extracted from Confluent, Inc.'s SEC filings for Q1 FY2022 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.