Summary
Confluent started fiscal 2025 with total revenue of $271.1 million for the quarter ended March 31, 2025, up 24.8% from the prior-year quarter. Gross profit rose 29.5% to $202.0 million, and gross margin was 74.5%, up 2.7 percentage points. The company continued to post GAAP losses but narrowed them. Operating loss was $101.2 million, and operating margin was negative 37.3%, an improvement of 13.9 percentage points. Net loss narrowed to $67.6 million, and diluted EPS improved to negative $0.20.
On a non-GAAP basis, operating income was $11.6 million, compared with a non-GAAP operating loss of $3.3 million in the prior-year quarter. Non-GAAP operating margin was 4.3%, and non-GAAP net income per diluted share was $0.08. Non-GAAP gross margin was 78.6%. Non-GAAP research and development expense was $63.3 million, non-GAAP sales and marketing expense was $112.4 million, and non-GAAP general and administrative expense was $25.7 million.
Customer metrics showed the platform still expanding within large accounts. Confluent ended the quarter with 1,412 customers that had at least $100,000 in annual recurring revenue, up 12% year over year. Total customer count was approximately 6,140, compared with 5,120 a year earlier, which the company said represented 20% growth. Dollar-based net retention rate was 117%. Confluent Cloud represented 53% of total revenue in the quarter, up from 49% in the prior-year quarter.
Cash generation remained a pressure point. GAAP operating cash flow was negative $26.8 million, down 3.1% from the prior-year quarter. Capital expenditures were $1.4 million, up 668.3%. Deferred revenue rose 16.6% to $405.4 million, and remaining performance obligations rose 20.9% to $1.02 billion. The company reported adjusted free cash flow of $4.9 million, a non-GAAP measure, compared with negative $31.7 million in the prior-year quarter. Free cash flow was negative $33.0 million.
Management pointed to durable demand for data streaming and product leadership. The company said the quarter demonstrated growth at scale amid heightened macroeconomic uncertainty. It cited the mission-critical nature of data streaming and its multi-cloud, multi-data destination, and multi-deployment approach as strengths. The CFO said the results underscored the strength of the data streaming platform and the flexibility of a well-diversified growth strategy.
For the second quarter of 2025, Confluent guided to subscription revenue of $267 million to $268 million, non-GAAP operating margin of about 5%, and non-GAAP net income per diluted share of $0.08 to $0.09. For full fiscal year 2025, the company guided to subscription revenue of $1.10 billion to $1.11 billion, non-GAAP operating margin of about 6%, and non-GAAP net income per diluted share of about $0.36. The guidance covers the next quarter and the full fiscal year, respectively.
The main risks remain familiar. Confluent cited uncertain macroeconomic conditions, inflation, interest rates, tariffs, trade tensions, and geopolitical events as factors that could lengthen sales cycles, reduce IT budgets, and slow consumption expansion. The company also flagged volatility in consumption from larger enterprise customers, particularly as customers focus on near-term cloud cost controls and efficiency. Other risks include competition, reliance on third-party cloud infrastructure, the ability to achieve profitability and improve margins, and the need to attract and retain personnel. Management said it would keep a disciplined approach to investing while optimizing for profitability, margins, and cash flow.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2025 | Q4 FY2024 | QoQ | Q1 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $271.1M | $261.2M | +3.8% | $217.2M | +24.8% |
| Gross profit | $202.0M | $193.7M | +4.3% | $156.0M | +29.5% |
| Gross margin | 74.5% | 74.1% | +0.4 pp | 71.8% | +2.7 pp |
| Research & development | $116.8M | $114.9M | +1.7% | $97.6M | +19.7% |
| Sales & marketing | $146.3M | $145.2M | +0.7% | $131.4M | +11.3% |
| General & administrative | $40.1M | $39.4M | +1.9% | $38.4M | +4.4% |
| Total operating expenses | $303.2M | $299.4M | +1.2% | $267.4M | +13.4% |
| Operating income (loss) | -$101.2M | -$105.8M | +4.4% | -$111.4M | +9.1% |
| Operating margin | -37.3% | -40.5% | +3.2 pp | -51.3% | +13.9 pp |
| Net income (loss) | -$67.6M | -$88.1M | +23.3% | -$93.0M | +27.3% |
| Net margin | -24.9% | -33.7% | +8.8 pp | -42.8% | +17.9 pp |
| Diluted EPS | -$0.20 | -$0.27 | +$0.07 | -$0.30 | +$0.10 |
| Customers | 5,120 | — | — | 4,690 | +9.2% |
| Net retention rate | 117.0% | 117.0% | ±0.0 pp | 120.0% | -3.0 pp |
Risks
Adverse and uncertain macroeconomic conditions, including inflation, interest rates, tariffs, trade tensions, and conflicts in Ukraine and the Middle East, have caused and may continue to cause longer sales cycles, reduced IT budgets, lower consumption from larger enterprise customers, and increased scrutiny on IT spending for Confluent.
Consumption volatility from some larger enterprise customers has resulted in lower consumption from time to time, primarily due to customer focus on near-term cloud cost controls and efficiency, and this has reduced expansion in new use cases and may continue to pressure growth.
The shift to a consumption-oriented sales model for Confluent Cloud has led to new customers acquired in 2024 tending to have lower initial consumption, and customers may remain reluctant to make large long-term commitments, which has negatively impacted and may continue to negatively impact revenue, growth rates, consumption forecasts, and NRR.
Confluent intends to continue investing significantly in Confluent Cloud, its Data Streaming Platform capabilities, and BYOC, but adoption and consumption trends for these products remain volatile and early stage, and failure to achieve further market adoption or increased consumption could harm growth, business, results of operations, and financial condition.
Attrition in the sales organization has adversely impacted and may continue to adversely impact Confluent's ability to meet sales, consumption, and revenue forecasts, cause delays in the sales cycle, and increase costs; sales and marketing expenses increased 11% in the three months ended March 31, 2025 compared to the three months ended March 31, 2024.
Confluent competes with public cloud providers such as AWS, Microsoft, and Google, which also host Confluent Cloud and could embed competing capabilities, bundle products, provide unfavorable pricing, or exclude Confluent, and with open source alternatives including Apache Kafka that can reduce demand for its offerings.
Confluent Cloud operates on third-party public cloud infrastructure, and costs and gross margins are significantly influenced by prices negotiated with these providers, many of which are competitors; as Confluent Cloud revenue mix increases, increased public cloud costs may continue to negatively impact gross margins.
The increasing prominence of artificial intelligence and GenAI may require significant resources for new products and features, while customer adoption may lag these investments and worldwide markets for generative AI applications may not develop as anticipated, making demand unpredictable.
If Confluent does not obtain U.S. FedRAMP authorization for Confluent Cloud, it will not be able to sell Confluent Cloud, directly or indirectly, to certain Federal government, public sector, and private sector customers requiring such certification, which could harm growth and competitive position.
ARR for Confluent Cloud and WarpStream annualizes actual consumption in the last three months, which does not account for future consumption fluctuations; NRR was 117% as of March 31, 2025 and is expected to be tempered by the consumption-oriented model and consumption volatility.
Revenue mix varies based on recognition principles, with Confluent Platform term licenses recognized partly up front and Confluent Cloud and WarpStream recognized based on usage; increased Confluent Cloud contribution and consumption fluctuations may cause revenue and margins to fluctuate across periods.
Confluent typically sells a higher percentage of new and renewal subscriptions in the fourth quarter due to customer procurement and budgeting cycles, and this seasonality may become more pronounced as it targets larger enterprise customers.
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
Subscription Revenue
Adjusted Free Cash Flow Margin
Adjusted Free Cash Flow
Non-GAAP Gross Margin
Non-GAAP Operating Income
Total Revenue
Summary, forecast, risks and KPIs are extracted from Confluent, Inc.'s SEC filings for Q1 FY2025 (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.