Summary
Confluent closed FY2024 Q3 with total revenue of $250.20 million, up 25.0% from $200.18 million in the prior-year quarter. Year-to-date revenue reached $702.42 million, up 24.6% from $563.77 million. Gross profit rose to $186.50 million from $143.63 million, up 29.8%, and gross margin expanded to 74.5% from 71.8%, up 2.8 percentage points. On a year-to-date basis, gross profit was $512.52 million, up 31.0%, and gross margin was 73.0%, up 3.6 percentage points. The company still posted a GAAP operating loss of $93.66 million, but that loss narrowed from $108.63 million a year earlier. Operating margin improved to -37.4% from -54.3%, up 16.8 percentage points. Net loss was $74.14 million, or -$0.23 per diluted share, compared with a net loss of $92.67 million, or -$0.30 per diluted share. For the first nine months, net loss was $257.01 million, or -$0.80 per diluted share, versus $348.65 million, or -$1.17 per diluted share.
Operational momentum leaned on cloud and large customers. Confluent Cloud represented 52% of total revenue in the quarter, up from 46% a year earlier. The company ended the quarter with 1,346 customers that generate at least $100,000 in annual recurring revenue, up 14% year over year. Total customers stood at approximately 5,680, up 16% from approximately 4,910. Dollar-based net retention rate was 117%. Within subscription revenue, Confluent Cloud and Confluent Platform contributed 54% and 46%, respectively, compared with 48% and 52% in the prior-year quarter. Management noted that the shift to a consumption-oriented sales model for Confluent Cloud may temper the dollar-based net retention rate near term.
Cash generation improved. Operating cash flow was $15.61 million in the quarter, up $24.67 million from negative $9.06 million in the prior-year quarter. Year-to-date operating cash flow was negative $1.75 million, up $114.14 million from negative $115.89 million. Capital expenditures were $0.61 million in the quarter, up 67.2% from $0.36 million, and $1.90 million year to date, up 10.5% from $1.72 million. Free cash flow was $9.3 million, compared with negative $13.1 million a year earlier, and free cash flow margin was 3.7%, compared with negative 6.5%. Deferred revenue ended the quarter at $374.40 million, up 15.6% year over year. Remaining performance obligations were $883.00 million, up 7.1% year over year. The company also reported non-GAAP operating income of $15.8 million, compared with a non-GAAP operating loss of $10.9 million a year earlier, and non-GAAP operating margin of 6.3%, compared with negative 5.5%.
Guidance points to continued subscription growth and a push toward profitability. For the fourth quarter of 2024, Confluent guided subscription revenue to $245 million to $246 million, non-GAAP operating margin of about 2%, and non-GAAP net income per diluted share of $0.05. For the full fiscal year 2024, the company guided subscription revenue to $916.5 million to $917.5 million, non-GAAP operating margin of about 2%, and non-GAAP net income per diluted share of $0.25. Management also said it targets positive non-GAAP operating margin and free cash flow margin for 2024. The outlook carries familiar risks. Macroeconomic uncertainty, high inflation, high interest rates, and geopolitical events could keep sales cycles long and IT budgets tight. Customers may continue to focus on near-term cloud cost controls, which can slow consumption expansion and reduce new use cases. The shift to a consumption-oriented sales model for Confluent Cloud may temper the dollar-based net retention rate near term. Competition, reliance on third-party cloud infrastructure, security breaches, and the ability to attract and retain personnel also remain risk factors.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2024 | Q2 FY2024 | QoQ | Q3 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $250.2M | $235.0M | +6.5% | $200.2M | +25.0% |
| Gross profit | $186.5M | $170.0M | +9.7% | $143.6M | +29.8% |
| Gross margin | 74.5% | 72.3% | +2.2 pp | 71.8% | +2.8 pp |
| Research & development | $102.7M | $106.1M | -3.1% | $91.2M | +12.6% |
| Sales & marketing | $138.0M | $132.9M | +3.8% | $128.6M | +7.3% |
| General & administrative | $39.5M | $39.4M | +0.1% | $31.9M | +23.8% |
| Total operating expenses | $280.2M | $278.4M | +0.6% | $252.3M | +11.1% |
| Operating income (loss) | -$93.7M | -$108.3M | +13.6% | -$108.6M | +13.8% |
| Operating margin | -37.4% | -46.1% | +8.7 pp | -54.3% | +16.8 pp |
| Net income (loss) | -$74.1M | -$89.9M | +17.5% | -$92.7M | +20.0% |
| Net margin | -29.6% | -38.3% | +8.6 pp | -46.3% | +16.7 pp |
| Diluted EPS | -$0.23 | -$0.28 | +$0.05 | -$0.30 | +$0.07 |
| Customers | 4,910 | 4,830 | +1.7% | 4,240 | +15.8% |
| Net retention rate | 117.0% | 118.0% | -1.0 pp | 130.0% | -13.0 pp |
Risks
Macroeconomic uncertainty and geopolitical conflicts continue to pressure customer IT spending. The filing says Confluent has experienced and expects to continue to experience longer sales cycles, reduced IT budgets, slowdowns in customer consumption expansion, and lower consumption from some larger enterprise customers, including impacts from conflicts in Ukraine and the Middle East and U.S. federal government shutdown uncertainty.
Confluent is shifting Confluent Cloud to a consumption-oriented sales model. The filing states this shift has caused and may continue to cause sales organization attrition, results in new customers with lower initial consumption, and may reduce commitments, delay sales cycles, and temper dollar-based net retention, which was 117% as of September 30, 2024.
Public cloud providers AWS, Azure, and GCP are both hosts and primary competitors, and open source Apache Kafka alternatives lower barriers. The filing warns these providers could bundle competing products, offer unfavorable pricing, or exclude Confluent, while customers may self-manage using open source and reduce demand.
As Confluent Cloud grows as a share of revenue, third-party cloud infrastructure costs increase and Confluent Cloud has a lower gross margin than Confluent Platform. MD&A notes Confluent Cloud and Confluent Platform were 53% and 47% of subscription revenue in the nine months ended September 30, 2024, respectively, versus 47% and 53% in the prior-year period, and risk factors say public cloud providers have pricing leverage that could hurt gross margins.
Confluent acquired WarpStream in September 2024 and added its bring-your-own-cloud data streaming solution. The filing says acquisitions may divert management attention, disrupt business, cause integration difficulties, dilute stockholders, and result in impairment charges if expected benefits do not materialize.
Sales to U.S. federal, state, local, and foreign government entities are subject to compliance, FedRAMP authorization for Confluent Cloud, reseller concentration, and government shutdown or budget risks. Failure to obtain FedRAMP authorization could prevent sales to certain public sector and private sector customers that require it.
Although revenue mix is shifting, Confluent Platform still contributed 47% of subscription revenue in the nine months ended September 30, 2024, and the company remains substantially dependent on it. Loss of market acceptance or reduced renewals for Confluent Platform could harm growth and financial results.
SaaS KPIs
All quarters →Free Cash Flow Margin
Non-GAAP Operating Margin
Total Customers
Customers with $100,000 or Greater in ARR
Free Cash Flow
Dollar-Based Net Retention Rate
Non-GAAP Gross Margin
Summary, forecast, risks and KPIs are extracted from Confluent, Inc.'s SEC filings for Q3 FY2024 (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.