Summary
Confluent closed fiscal 2025 with fourth quarter total revenue of $314.8 million, up 20.5% from the prior-year quarter. Gross profit for the quarter was $235.2 million, up 21.4%, and gross margin was 74.7%, up 0.6 percentage points. For the full year, total revenue reached $1.17 billion, up 21.1%, while gross profit was $866.8 million, up 22.8%, and gross margin was 74.3%, up 1.0 percentage point.
GAAP operating loss narrowed to $99.2 million in the fourth quarter from $105.8 million a year earlier, and operating margin improved to negative 31.5% from negative 40.5%. For fiscal 2025, operating loss narrowed to $380.1 million from $419.1 million, with operating margin of negative 32.6% compared with negative 43.5%. Net loss narrowed to $79.2 million in the quarter from $88.1 million. Fiscal 2025 net loss narrowed to $295.3 million from $345.1 million. Diluted net loss per share for fiscal 2025 narrowed to $0.86 from $1.07 a year earlier.
Operating cash flow was $42.1 million in the fourth quarter, up 19.6%, and $64.3 million for fiscal 2025, up 92.1%. Capital expenditures were $0.44 million in the quarter, down 33.9%, and $3.60 million for the year, up 40.1%. Deferred revenue at year end was $498.6 million, up 21.8%, and remaining performance obligations were $1.46 billion, up 44.7%. On a non-GAAP basis, operating income was $27.6 million in the quarter and $86.1 million for the year, while operating margin was 8.8% in the quarter and 7.4% for the year. Adjusted free cash flow, a non-GAAP measure, was $35.5 million in the quarter and $76.0 million for the year. Non-GAAP net income was $45.8 million in the quarter and $156.5 million for the year.
Confluent ended 2025 with 1,521 customers that contributed $100,000 or greater in annual recurring revenue, up 10% year over year. Total customers were approximately 6,690, up 15%. Dollar-based net retention rate was 114%. MD&A states Confluent Cloud represented 54% of total revenue for the year, up from 51% in 2024. Revenue growth for the year came primarily from sales to existing customers, with the remaining increase from new customers, according to MD&A. The proposed merger with IBM calls for IBM to acquire Confluent for $31.00 per share in cash, an enterprise value of $11 billion. The deal is expected to close by the middle of 2026, subject to Confluent shareholder approval, regulatory approvals, and other customary closing conditions. In light of the pending transaction, Confluent did not provide financial guidance for the next quarter or the full fiscal year.
Management lists several risks that could affect results. These include adverse and uncertain macroeconomic conditions, inflation, interest rates, fluctuations in capital markets and foreign currency exchange rates, tariffs, trade tensions, geopolitical events, longer sales cycles, reduced IT budgets, and increased scrutiny on IT spending. Consumption volatility from larger enterprise customers remains a concern, driven by cloud cost optimization and shifts in data streaming strategies. The company also cites competition, reliance on third-party cloud infrastructure to host Confluent Cloud, and the need to attract, ramp, and retain personnel. The IBM merger adds closing risks, including shareholder and regulatory approvals and the possibility of a termination fee. Confluent maintains a full valuation allowance against U.S. deferred tax assets and expects Pillar Two rules to apply beginning in 2026.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2025 | Q3 FY2025 | QoQ | Q4 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $314.8M | $298.5M | +5.5% | $261.2M | +20.5% |
| Gross profit | $235.2M | $221.6M | +6.1% | $193.7M | +21.4% |
| Gross margin | 74.7% | 74.2% | +0.5 pp | 74.1% | +0.6 pp |
| Research & development | $121.9M | $121.8M | +0.1% | $114.9M | +6.1% |
| Sales & marketing | $159.8M | $142.8M | +11.9% | $145.2M | +10.1% |
| General & administrative | $52.6M | $40.3M | +30.5% | $39.4M | +33.6% |
| Total operating expenses | $334.3M | $304.9M | +9.7% | $299.4M | +11.7% |
| Operating income (loss) | -$99.2M | -$83.3M | -19.0% | -$105.8M | +6.2% |
| Operating margin | -31.5% | -27.9% | -3.6 pp | -40.5% | +9.0 pp |
| Net income (loss) | -$79.2M | -$66.5M | -19.2% | -$88.1M | +10.0% |
| Net margin | -25.2% | -22.3% | -2.9 pp | -33.7% | +8.5 pp |
| Diluted EPS | -$0.23 | -$0.19 | -$0.04 | -$0.27 | +$0.04 |
| Net retention rate | 114.0% | 114.0% | ±0.0 pp | 117.0% | -3.0 pp |
Risks
Pending acquisition by IBM for $31.00 per share in cash is expected to close by mid-2026, but completion is subject to stockholder approval, regulatory clearances, no Material Adverse Effect, and other conditions. Failure to complete or delays could cause the market price of Class A common stock to decline, require payment of a termination fee to IBM, and harm customer, supplier, and investor relationships.
During the pendency of the Merger, Confluent is subject to contractual restrictions that limit issuing securities, incurring certain indebtedness, paying dividends, making certain capital expenditures, or pursuing alternative transactions without IBM's approval. Customers may also delay or stop purchases due to uncertainty, which could harm revenue and results of operations.
Two purported stockholder complaints have been filed in New York courts and 17 demand letters were received as of February 4, 2026 related to alleged disclosure deficiencies in the proxy statement for the special meeting. This litigation may be costly, delay or prevent completion of the Merger, and divert management attention.
Uncertainty about the Merger and future roles could cause key employees to depart or make it harder to recruit new employees. Loss of officers or employees could materially harm the business and results of operations, and the risk is exacerbated by delays in completing the Merger.
Macroeconomic uncertainty, inflation, tariffs, trade tensions, and geopolitical conflicts have caused longer sales cycles, reduced IT budgets, and slowdowns in customer consumption expansion. Confluent has also experienced lower consumption from some larger enterprise customers and does not know how long these conditions will persist.
Because Confluent Cloud and Confluent WarpStream revenue is usage-based, results fluctuate with customer consumption. The prior shift to a consumption-oriented sales model means new customers acquired beginning in 2024 tend to have lower initial consumption, and larger enterprise customers have shown volatility due to cloud cost optimization and shifts in data streaming strategies. Dollar-based net retention rate was 114% as of December 31, 2025 and is expected to be tempered near term.
Confluent competes with well-established public cloud providers including AWS, Microsoft Azure, and Google Cloud, which offer managed data streaming products and could bundle competing products, provide unfavorable pricing, or exclude Confluent from opportunities. Open source alternatives, especially Apache Kafka, reduce barriers to entry and may cause customers to use free or self-managed options instead of Confluent's offerings.
The company must effectively expand sales and marketing capabilities and improve productivity. 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 sales cycle delays, and increase costs.
Future growth depends partly on adoption of GenAI and event-driven autonomous agents, but markets for GenAI applications may not develop as anticipated or at all. Customer adoption of new AI-related products and features may lag Confluent's investments, reducing demand for its Data Streaming Platform capabilities.
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
Subscription Revenue
Adjusted Free Cash Flow Margin
Summary, forecast, risks and KPIs are extracted from Confluent, Inc.'s SEC filings for Q4 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.