Summary
Confluent closed the second quarter of fiscal 2025 with total revenue of $282.3 million, up 20.1% from $235.0 million in the prior-year quarter. Gross profit was $208.1 million, up 22.4% from $170.0 million. Gross margin reached 73.7%, up 1.4 percentage points from 72.3%. The company still posted a GAAP operating loss of $96.4 million, but that loss narrowed from $108.3 million a year earlier. Operating margin was negative 34.2%, up 11.9 percentage points from negative 46.1%. Net loss was $81.95 million, narrowed from $89.9 million, and diluted EPS was negative $0.24, compared with negative $0.28. Non-GAAP operating income was $17.8 million, up from $1.3 million, and non-GAAP operating margin was 6.3%, up from 0.6%. Non-GAAP net income was $34.3 million, compared with $20.6 million, and non-GAAP net income per diluted share was $0.09, up from $0.06.
For the first six months of fiscal 2025, total revenue was $553.4 million, up 22.4% from $452.2 million in the prior-year period. Gross profit was $410.1 million, up 25.8% from $326.0 million. Gross margin improved to 74.1% from 72.1%, a gain of 2.0 percentage points. The year-to-date GAAP operating loss was $197.6 million, narrowed from $219.7 million, and operating margin was negative 35.7%, up 12.9 percentage points from negative 48.6%. Net loss was $149.5 million, narrowed from $182.9 million, and diluted EPS was negative $0.44, compared with negative $0.58. In the second quarter, operating cash flow was $18.1 million, up from $8.6 million, while capital expenditures were $0.9 million, down from $1.1 million. Operating cash flow for the six months was negative $8.6 million, compared with negative $17.4 million a year earlier. Capital expenditures for the six months were $2.35 million, up 81.9% from $1.29 million. Remaining performance obligations were $1.16 billion, up 30.9% from $887.8 million. Deferred revenue was $455.6 million, up 30.7% from $348.5 million. Adjusted free cash flow, a non-GAAP measure, was $11.0 million for the quarter, compared with $2.7 million in the prior-year quarter.
Operationally, Confluent ended the quarter with 1,439 customers that contributed $100,000 or greater in annual recurring revenue, up 10% from a year earlier. Dollar-based net retention rate was 114%. Management said Flink annual recurring revenue grew approximately three times over the past two quarters. For the third quarter of 2025, guidance calls for subscription revenue of $281 million to $282 million, a non-GAAP operating margin of 7%, and non-GAAP net income per diluted share of $0.09 to $0.10. For the full fiscal year 2025, guidance is subscription revenue of $1.105 billion to $1.11 billion, a non-GAAP operating margin of 6%, and non-GAAP net income per diluted share of $0.36.
Risks remain familiar. Management pointed to uncertain macroeconomic conditions, including inflation, high interest rates, tariffs, trade tensions, and geopolitical events. Those factors can lead to longer sales cycles, reduced IT budgets, and slower consumption expansion. The company also flagged volatility in consumption from larger enterprise customers, especially as customers focus on near-term cloud cost optimization and efficiency. Competition, reliance on third-party cloud infrastructure, security breaches, and the ability to attract and retain personnel are additional risks. Confluent continues to invest in its Data Streaming Platform, including Confluent Cloud, Confluent Platform, WarpStream, Flink, Tableflow, and Freight Clusters, while aiming for margin expansion and cash flow improvement.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2025 | Q1 FY2025 | QoQ | Q2 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $282.3M | $271.1M | +4.1% | $235.0M | +20.1% |
| Gross profit | $208.1M | $202.0M | +3.0% | $170.0M | +22.4% |
| Gross margin | 73.7% | 74.5% | -0.8 pp | 72.3% | +1.4 pp |
| Research & development | $121.2M | $116.8M | +3.8% | $106.1M | +14.3% |
| Sales & marketing | $143.6M | $146.3M | -1.8% | $132.9M | +8.1% |
| General & administrative | $39.7M | $40.1M | -1.0% | $39.4M | +0.7% |
| Total operating expenses | $304.6M | $303.2M | +0.5% | $278.4M | +9.4% |
| Operating income (loss) | -$96.4M | -$101.2M | +4.7% | -$108.3M | +11.0% |
| Operating margin | -34.2% | -37.3% | +3.2 pp | -46.1% | +12.0 pp |
| Net income (loss) | -$82.0M | -$67.6M | -21.3% | -$89.9M | +8.8% |
| Net margin | -29.0% | -24.9% | -4.1 pp | -38.3% | +9.2 pp |
| Diluted EPS | -$0.24 | -$0.20 | -$0.04 | -$0.28 | +$0.04 |
| Net retention rate | 114.0% | 117.0% | -3.0 pp | 118.0% | -4.0 pp |
Risks
Macroeconomic uncertainty, tariffs, trade tensions, and geopolitical conflicts have caused longer sales cycles, reduced IT budgets, slower consumption expansion, fewer new use cases, and lower consumption from some larger enterprise customers. MD&A says these dynamics continue to pressure IT spending scrutiny and may persist even if conditions improve.
Confluent Cloud revenue is usage-based, and MD&A says dollar-based NRR of 114% as of June 30, 2025 was tempered by consumption volatility and is expected to remain tempered near term. Larger enterprise customers have reduced consumption due to cloud cost optimization, creating revenue forecasting risk.
The shift to a consumption-oriented sales model for Confluent Cloud has resulted in new customers acquired in 2024 having lower initial consumption, slower usage ramp, and customer reluctance to make large long-term commitments. MD&A says this has negatively impacted and may continue to negatively impact revenue, growth rates, and consumption forecasts.
Public cloud providers AWS, Azure, and GCP are both hosts for Confluent Cloud and primary competitors, and the filing warns they could bundle competing products, provide unfavorable pricing, or exclude Confluent from opportunities. Open source alternatives including Apache Kafka also reduce differentiation and pricing power.
The risk factors state that attrition in the sales organization has adversely impacted and may continue to adversely impact Confluent's ability to meet sales, consumption, and revenue forecasts, delay the sales cycle, and increase costs. MD&A notes continued investment in sales and marketing while revenue growth rate is expected to decline.
Confluent Cloud runs on third-party public cloud infrastructure, and the filing says costs and gross margins are significantly influenced by prices negotiated with providers that are also competitors. As Confluent Cloud's revenue mix increases, greater public cloud contract costs have negatively impacted and are expected to negatively impact gross margins.
The filing says artificial intelligence may require significant resources for new products and features, and customer adoption of AI-related offerings may lag investments as customers scrutinize spend. Demand for generative AI applications is still emerging and may be unpredictable.
Confluent needs FedRAMP authorization for Confluent Cloud to sell to certain federal and public sector customers, and failure to obtain it could harm growth and competitive position. Public sector sales are also made through resellers, with a large majority of public sector revenue coming from a small number of distribution and resale partners.
The September 2024 WarpStream acquisition and any future deals pose integration, key personnel retention, and customer retention risks. The filing warns acquisitions may divert management attention, fail to deliver expected synergies, and result in impairment charges or dilution.
SaaS KPIs
All quarters →Free Cash Flow Margin
Non-GAAP Operating Margin
Customers with $100,000 or Greater in ARR
Confluent Cloud Revenue
Dollar-Based Net Retention Rate
Subscription Revenue
Adjusted Free Cash Flow Margin
Adjusted Free Cash Flow
Non-GAAP Operating Income
Non-GAAP Total Gross Margin
Summary, forecast, risks and KPIs are extracted from Confluent, Inc.'s SEC filings for Q2 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.