Confluent (CFLT) Q2 2024 earnings summary

Executive summary

• Q2 2024 subscription revenue grew 27% year-over-year to $225M, with Confluent Cloud revenue up 40% to $117M, now representing 50% of total revenue.

• Customer count with $100,000+ in ARR grew 14% year-over-year to 1,306, with total customer base expanding to 5,440, the largest sequential increase in two years.

• Dollar-based net retention rate was 118% as of June 30, 2024, reflecting strong expansion within existing accounts.

• Management highlighted improved operating and free cash flow margins, with non-GAAP operating margin at 0.6% and free cash flow margin at 1.2%.

• Strategic focus remains on expanding the data streaming platform, leveraging partnerships, and driving innovation in GenAI and real-time analytics.

Financial highlights

• Q2 2024 total revenue was $235.0M, up 24% year-over-year; subscription revenue was $224.7M, representing 96% of total revenue.

• Confluent Cloud revenue grew 40% to $117.4M, now 50% of total and 52% of subscription revenue; Confluent Platform revenue was $107.3M, up 16%.

• Gross margin improved to 72% (GAAP) and 77.5% (non-GAAP); subscription gross margin was 80.8%.

• Net loss narrowed to $89.9M, with non-GAAP net income per share at $0.06; free cash flow margin turned positive at 1.2%.

• Ended Q2 with $1.93B in cash, cash equivalents, and marketable securities.

Outlook and guidance

• Q3 2024 subscription revenue expected at $233M–$234M, up 23%–24% year-over-year; FY2024 subscription revenue outlook at ~$910M, up 25%.

• Q3 non-GAAP operating margin to break even; non-GAAP net income per share to be $0.05.

• FY2024 non-GAAP operating and free cash flow margins expected to break even; cloud mix for full year expected at ~53% of subscription revenue.

• Management remains focused on achieving breakeven for non-GAAP operating and free cash flow margins in 2024.

• Macroeconomic uncertainty and volatility in digital native consumption and large deal timing continue to impact guidance.