U.S. markets open in 2 hours 38 minutes
  • S&P Futures

    3,682.00
    +27.75 (+0.76%)
     
  • Dow Futures

    29,464.00
    +179.00 (+0.61%)
     
  • Nasdaq Futures

    11,306.00
    +77.75 (+0.69%)
     
  • Russell 2000 Futures

    1,698.70
    +16.60 (+0.99%)
     
  • Crude Oil

    81.30
    +0.07 (+0.09%)
     
  • Gold

    1,673.70
    +5.10 (+0.31%)
     
  • Silver

    19.01
    +0.30 (+1.62%)
     
  • EUR/USD

    0.9763
    -0.0057 (-0.58%)
     
  • 10-Yr Bond

    3.7470
    0.0000 (0.00%)
     
  • Vix

    30.89
    +0.71 (+2.35%)
     
  • GBP/USD

    1.1082
    -0.0042 (-0.37%)
     
  • USD/JPY

    144.4870
    +0.0440 (+0.03%)
     
  • BTC-USD

    19,494.56
    +59.57 (+0.31%)
     
  • CMC Crypto 200

    445.95
    -0.03 (-0.01%)
     
  • FTSE 100

    6,926.01
    +44.42 (+0.65%)
     
  • Nikkei 225

    25,937.21
    -484.84 (-1.83%)
     

Confluent Announces Fourth Quarter and Fiscal Year 2021 Financial Results

·16 min read
  • Fourth quarter revenue of $120 million, up 71% year over year; fiscal year 2021 revenue of $388 million, up 64% year over year

  • Fourth quarter Confluent Cloud revenue of $34 million, up 211% year over year; fiscal year 2021 Confluent Cloud revenue of $94 million, up 200% year over year

  • Remaining performance obligations of $501 million, up 91% year over year

  • 734 customers with $100,000 or greater in ARR, up 43% year over year

MOUNTAIN VIEW, Calif., February 10, 2022--(BUSINESS WIRE)--Confluent, Inc. (NASDAQ: CFLT), the data streaming platform to set data in motion, today announced financial results for its fourth quarter and fiscal year 2021, ended December 31, 2021.

"To compete in the modern world, organizations must harness the power of data that constantly flows throughout their business," said Jay Kreps, co-founder and CEO, Confluent. "Our accelerating growth throughout the year, highlighted by a 200% increase in full year 2021 Confluent Cloud revenue at large scale, shows that Confluent has emerged as the leader of this large and growing market as organizations build toward a central nervous system for their data."

"The execution by our go-to-market organization coupled with our powerful innovation engine drove record fourth quarter results, capping off a year of robust growth in our business," said Steffan Tomlinson, CFO, Confluent. "Growth in remaining performance obligations and total revenue continued to accelerate in the fourth quarter, while dollar-based net retention rate exceeded 130% for the third consecutive quarter. Looking ahead, we remain focused on executing against our plan to drive durable growth and profitability over the long term."

Fourth Quarter 2021 Financial Highlights
(In millions, except per share data and percentages)

Q4 2021

Q4 2020

Y/Y Change

Total Revenue

$119.9

$70.3

71%

Remaining Performance Obligations

$500.6

$261.7

91%

GAAP Operating Loss

$(113.7)

$(32.3)

$(81.4)

Non-GAAP Operating Loss

$(49.7)

$(22.3)

$(27.4)

GAAP Operating Margin

(94.8%)

(45.9%)

(48.9) pts

Non-GAAP Operating Margin

(41.4%)

(31.7%)

(9.7) pts

GAAP Net Loss Per Share

$(0.43)

$(0.30)

$(0.13)

Non-GAAP Net Loss Per Share

$(0.19)

$(0.21)

$0.02

Net Cash Used in Operating Activities

$(23.9)

$(20.4)

$(3.5)

Free Cash Flow

$(26.7)

$(21.4)

$(5.3)

Fiscal Year 2021 Financial Highlights
(In millions, except per share data and percentages)

FY 2021

FY 2020

Y/Y Change

Total Revenue

$387.9

$236.6

64%

GAAP Operating Loss

$(339.6)

$(233.2)(1)

$(106.4)

Non-GAAP Operating Loss

$(160.6)

$(89.3)

$(71.3)

GAAP Operating Margin

(87.6%)

(98.6%)(1)

11.0 pts

Non-GAAP Operating Margin

(41.4%)

(37.8%)

(3.6) pts

GAAP Net Loss Per Share

$(1.82)

$(2.21)(1)

$0.39

Non-GAAP Net Loss Per Share

$(0.86)

$(0.84)

$(0.02)

Net Cash Used in Operating Activities

$(105.1)

$(82.1)

$(23.0)

Free Cash Flow

$(114.0)

$(86.7)

$(27.3)

A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure is provided in the financial statement tables included in this press release. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section titled "Non-GAAP Financial Measures."

(1) Includes the one-time impact of $111.9 million of stock-based compensation expense in connection with a tender offer and secondary sales of our common stock and convertible founder stock in fiscal year 2020.

Financial Outlook
For the first quarter and fiscal year 2022, Confluent expects:

Q1 2022 Outlook

FY 2022 Outlook

Total Revenue

$117-$119 million

$538-$546 million

Non-GAAP Operating Margin

~(50%)

(39%)-(40%)

Non-GAAP Net Loss Per Share

$(0.23)-$(0.21)

$(0.82)-$(0.74)

A reconciliation of forward-looking non-GAAP operating margin and non-GAAP net loss per share to the most directly comparable GAAP measures is not available without unreasonable effort, as certain items cannot be reasonably predicted because of their high variability, complexity and low visibility. In particular, the measures and effects of our stock-based compensation expense specific to our equity compensation awards and employer payroll tax-related items on employee stock transactions are directly impacted by the timing of employee stock transactions and unpredictable fluctuations in our stock price, which we expect to have a significant impact on our future GAAP financial results.

Conference Call Information

Confluent will host a video webcast to discuss the company’s fourth quarter 2021 and fiscal year 2021 results as well as its financial outlook today at 4:30 p.m. Eastern Time/1:30 p.m. Pacific Time. Open to the public, investors may access the webcast, earnings press release, supplemental financial information, and investor presentation on Confluent’s investor relations website at investors.confluent.io before the commencement of the webcast. A replay of the webcast will also be accessible from Confluent’s investor relations website a few hours after the conclusion of the live event.

Forward-Looking Statements

This press release and the earnings call referencing this press release contain forward-looking statements including, among other things, statements regarding our financial outlook; increased adoption of our platform; our ability and position to capitalize on the shift to cloud; the degree of market acceptance of our products; our ability to sustain relationships and integration with cloud providers; growth in revenue, customers, remaining performance obligations and dollar-based net retention rate; our market opportunity; our go-to-market strategy; our product differentiation; our ability to improve margins; our ability to meet near-term and mid-term financial targets; our investment priority and philosophy; and our overall future prospects. The words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," "seek," "plan," "project," "target," "looking ahead," "look to," "move into," and similar expressions are intended to identify forward-looking statements. Forward-looking statements represent our current beliefs, estimates and assumptions only as of the date of this press release and information contained in this press release should not be relied upon as representing our estimates as of any subsequent date. These forward-looking statements are subject to risks, uncertainties, and assumptions. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. Risks include, but are not limited to: (i) the impact of the ongoing COVID-19 pandemic on our business, as well as our customers, prospects, partners, and service providers, (ii) our ability to sustain and manage our rapid growth, (iii) our limited operating history, (iv) our ability to attract new customers and retain and sell additional features and services to our existing customers, (v) our ability to increase consumption of our offering, including by existing customers and through the acquisition of new customers, and successfully add new features and functionality to our offering, (vi) our ability to achieve or sustain profitability, (vii) the estimated addressable market opportunity for our offering, (viii) our ability to compete effectively in an increasingly competitive market, including achieving market acceptance over competitors and open source alternatives, (ix) our ability to attract and retain highly qualified personnel, (x) breaches in our security measures or unauthorized access to our platform, our data, or our customers’ or other users’ personal data, (xi) our reliance on third-party cloud-based infrastructure to host Confluent Cloud, and (xii) general market, political, economic, and business conditions. These risks are not exhaustive. Further information on these and other risks that could affect Confluent’s results is included in our filings with the Securities and Exchange Commission ("SEC"), including our Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, and our future reports that we may file from time to time with the SEC. Additional information will be made available in our Annual Report on Form 10-K for the year ended December 31, 2021 that will be filed with the SEC, which should be read in conjunction with this press release and the financial results included herein. Confluent assumes no obligation to, and does not currently intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Non-GAAP Financial Measures

This press release includes the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (research and development, sales and marketing, general and administrative), non-GAAP operating loss, non-GAAP operating margin, non-GAAP net loss, non-GAAP net loss per share, free cash flow, and free cash flow margin. We use these non-GAAP financial measures and other key metrics internally to facilitate analysis of our financial and business trends and for internal planning and forecasting purposes. We believe these non-GAAP financial measures, when taken collectively, may be helpful to investors because they provide consistency and comparability with past financial performance by excluding certain items that may not be indicative of our business, results of operations, or outlook. However, non-GAAP financial measures have limitations as an analytical tool and are presented for supplemental informational purposes only. They should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. In particular, other companies, including companies in our industry, may report non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (research and development, sales and marketing, general and administrative), non-GAAP operating loss, non-GAAP operating margin, non-GAAP net loss, non-GAAP net loss per share, free cash flow, free cash flow margin, or similarly titled measures but calculate them differently, which reduces their usefulness as comparative measures. Further, free cash flow is not a substitute for cash used in operating activities. The utility of free cash flow is limited as such measure does not reflect our future contractual commitments and does not represent the total increase or decrease in our cash balance for any given period. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures, as presented below. We define non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (research and development, sales and marketing, general and administrative), non-GAAP operating loss, non-GAAP operating margin, non-GAAP net loss, and non-GAAP net loss per share as the respective GAAP balances, adjusted for, as applicable, stock-based compensation expense; employer taxes on employee stock transactions; common stock charitable donation expense; amortization of debt issuance costs; and income tax effects associated with these adjustments. We define free cash flow as net cash used in operating activities less capitalized internal-use software costs and capital expenditures and free cash flow margin as free cash flow as a percentage of revenue. We believe that free cash flow and free cash flow margin are useful indicators of liquidity that provide information to management and investors about the performance of core operations and future ability to generate cash that can be used for strategic opportunities or investing in our business.

Other Business Metrics

Remaining performance obligations ("RPO") represent the amount of contracted future revenue that has not yet been recognized as of the end of each period, including both deferred revenue that has been invoiced and non-cancelable committed amounts that will be invoiced and recognized as revenue in future periods. RPO excludes pay-as-you-go arrangements. RPO may also fluctuate due to a number of factors, including the timing of renewals, average contract terms, seasonality, and dollar amount of customer contracts. RPO as a metric is not necessarily indicative of future revenue growth because it does not account for the timing of customers’ consumption or future expansion.

Customers with $100,000 or greater in annual recurring revenue ("ARR") represent the number of customers that contributed $100,000 or more in ARR as of period end. We define ARR as the revenue customers contractually committed to over the following 12 months assuming no increases or reductions in their subscriptions. ARR excludes services and pay-as-you-go arrangements. Similar to RPO, ARR as a metric is not necessarily indicative of future revenue growth because it does not account for the timing of customers’ consumption or future expansion. For purposes of determining our customer count, we treat all affiliated entities with the same parent organization as a single customer and include pay-as-you-go customers. Our customer count is subject to adjustments for acquisitions, consolidations, spin-offs, and other market activity.

Dollar-based net retention rate ("NRR") as of a period end is calculated by starting with the ARR from the cohort of all customers as of 12 months prior to such period end ("Prior Period Value"). We calculate the ARR from these same customers as of the current period end ("Current Period Value"), which includes any growth in the value of subscriptions and is net of contraction or attrition over the prior 12 months. Services and pay-as-you-go arrangements are excluded from the calculation of ARR. We then divide the Current Period Value by the Prior Period Value to arrive at our dollar-based NRR. The dollar-based NRR includes the effect, on a dollar-weighted value basis, of our subscriptions that expand, renew, contract, or attrit, but excludes ARR from new customers in the current period. Our dollar-based NRR is subject to adjustments for acquisitions, consolidations, spin-offs, and other market activity.

About Confluent

Confluent is the data streaming platform that is pioneering a fundamentally new category of data infrastructure that sets data in motion. Confluent’s cloud-native offering is the foundational platform for data in motion – designed to be the intelligent connective tissue enabling real-time data, from multiple sources, to constantly stream across the organization. With Confluent, organizations can meet the new business imperative of delivering rich, digital front-end customer experiences and transitioning to sophisticated, real-time, software-driven backend operations.

Confluent, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

December 31,

December 31,

2021

2020

ASSETS

Current assets:

Cash and cash equivalents

$

1,375,932

$

36,789

Marketable securities

640,085

251,756

Accounts receivable, net of allowance

137,491

105,971

Deferred contract acquisition costs

27,646

14,403

Prepaid expenses and other current assets

44,919

18,775

Total current assets

2,226,073

427,694

Property and equipment, net

14,428

6,718

Operating lease right-of-use assets

37,281

48,273

Deferred contract acquisition costs, non-current

51,178

33,196

Other assets, non-current

13,769

10,238

Total assets

$

2,342,729

$

526,119

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities:

Accounts payable

$

7,591

$

1,646

Accrued expenses and other liabilities

98,974

33,711

Operating lease liabilities

9,236

10,492

Deferred revenue

220,920

142,901

Liability for early exercise of unvested stock options

11,467

5,049

Total current liabilities

348,188

193,799

Operating lease liabilities, non-current

31,645

40,440

Deferred revenue, non-current

25,557

16,292

Convertible senior notes, net

1,080,701

-

Other liabilities, non-current

6,357

7,203

Total liabilities

1,492,448

257,734

Redeemable convertible preferred stock

-

574,634

Stockholders’ equity (deficit):

Preferred stock

-

-

Common stock

-

1

Convertible founder stock

-

-

Class A common stock

1

-

Class B common stock

2

-

Additional paid-in capital

1,599,962

99,575

Accumulated other comprehensive (loss) income

(830

)

228

Accumulated deficit

(748,854

)

(406,053

)

Total stockholders’ equity (deficit)

850,281

(306,249

)

Total liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit)

$

2,342,729

$

526,119

Confluent, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

(unaudited)

Three Months Ended December 31,

Year Ended December 31,

2021

2020

2021

2020

Revenue:

Subscription

$

108,191

$

63,219

$

347,099

$

208,633

Services

11,737

7,105

40,765

27,944

Total revenue

119,928

70,324

387,864

236,577

Cost of revenue:

Subscription(1)(2)

33,322

14,162

94,860

49,283

Services(1)(2)

12,824

6,755

42,432

26,193

Total cost of revenue

46,146

20,917

137,292

75,476

Gross profit

73,782

49,407

250,572

161,101

Operating expenses:

Research and development(1)(2)

56,686

21,861

161,925

105,399

Sales and marketing(1)(2)

100,625

47,838

319,331

166,361

General and administrative(1)(2)

30,151

12,009

108,936

122,516

Total operating expenses

187,462

81,708

590,192

394,276

Operating loss

(113,680

)

(32,301

)

(339,620

)

(233,175

)

Interest income

189

1,108

2,020

4,113

Other expense, net

(518

)

(302

)

(2,027

)

(973

)

Loss before income taxes

(114,009

)

(31,495

)

(339,627

)

(230,035

)

Provision for (benefit from) income taxes

430

261

3,174

(207

)

Net loss

$

(114,439

)

$

(31,756

)

$

(342,801

)

$

(229,828

)

Net loss per share, basic and diluted

$

(0.43

)

$

(0.30

)

$

(1.82

)

$

(2.21

)

Weighted-average shares used to compute net loss per share, basic and diluted

265,480,761

105,294,029

188,627,720

104,218,082

(1) Includes stock-based compensation expense as follows:

Three Months Ended December 31,

Year Ended December 31,

2021

2020

2021

2020

Cost of revenue - subscription

$

5,479

$

703

$

12,571

$

2,572

Cost of revenue - services

2,029

412

5,418

1,745

Research and development

20,298

2,937

49,051

33,755

Sales and marketing

20,859

3,247

55,506

14,734

General and administrative

9,407

2,445

33,078

90,535

Total stock-based compensation expense

$

58,072

$

9,744

$

155,624

$

143,341

*

* In connection with a tender offer and secondary sales of our common stock and convertible founder stock, stock-based compensation for the year ended December 31, 2020 included $111.9 million of expense related to the amount paid in excess of the estimated fair value of common stock as of the date of the transactions.

(2) Includes employer taxes on employee stock transactions as follows:

Three Months Ended December 31,

Year Ended December 31,

2021

2020

2021

2020

Cost of revenue - subscription

$

481

$

-

$

636

$

9

Cost of revenue - services

40

-

377

16

Research and development

1,279

27

2,278

81

Sales and marketing

2,317

214

4,266

271

General and administrative

1,835

2

2,532

143

Total employer taxes on employee stock transactions

$

5,952

$

243

$

10,089

$

520

Confluent, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Three Months Ended December 31,

Year Ended December 31,

2021

2020

2021

2020

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss

$

(114,439

)

$

(31,756

)

$

(342,801

)

$

(229,828

)

Adjustments to reconcile net loss to cash used in operating activities:

Depreciation and amortization

1,192

380

3,632

1,567

Net amortization of premiums or discounts on marketable securities

770

516

2,270

1,294

Amortization of debt issuance costs

187

-

187

-

Amortization of deferred contract acquisition costs

8,375

5,776

26,697

16,029

Non-cash operating lease costs

2,424

2,866

10,990

11,911

Common stock charitable donation expense

-

-

13,290

-

Stock-based compensation, net of amounts capitalized

58,072

9,744

155,624

143,341

Deferred income taxes

(394

)

(297

)

1,335

(1,335

)

Other

157

331

1,828

710

Changes in operating assets and liabilities:

Accounts receivable

(21,642

)

(18,013

)

(32,516

)

(41,612

)

Deferred contract acquisition costs

(20,332

)

(14,654

)

(57,924

)

(38,129

)

Prepaid expenses and other assets

(14,027

)

(10,391

)

(31,366

)

(14,368

)

Accounts payable

4,406

(222

)

...

(327

)

Accrued expenses and other liabilities

29,642

7,638

61,132

15,837

Operating lease liabilities