- Third quarter revenue of $200 million, up 32% year over
year
- Third quarter Confluent Cloud revenue of $92 million, up 61%
year over year
- Remaining performance obligations of $824 million, up 24% year
over year
- 1,185 customers with $100,000 or greater in ARR, up 25% year
over year
Confluent, Inc. (NASDAQ: CFLT), the data streaming
pioneer, today announced financial results for its third quarter of
2023, ended September 30, 2023.
“Confluent delivered another strong quarter with 32%
year-over-year revenue growth in a volatile macroeconomic
environment,” said Jay Kreps, co-founder and CEO, Confluent. “Our
continued growth is driven by the critical role of data streaming
and customer demand for our industry leading platform that
connects, streams, governs, processes and shares streaming data
everywhere.”
“We achieved a key milestone in the third quarter, improving
GAAP EPS and delivering the company’s first positive non-GAAP EPS,
while growing subscription revenue 36% year over year,” said Rohan
Sivaram, CFO, Confluent. “Additionally, we improved operating
margins by more than twenty points year over year, a testament to
our ability to drive efficient growth, and we are raising our
non-GAAP operating margin guidance for the fourth quarter to
0-1%.”
Third Quarter 2023 Financial
Highlights (In millions, except per share data and
percentages)
Q3 2023
Q3 2022
Y/Y Change
Total Revenue
$200.2
$151.7
32%
Subscription Revenue
$189.3
$138.7
36%
Remaining Performance Obligations
$824.1
$663.5
24%
GAAP Operating Loss
$(108.6)
$(118.9)
$10.3
Non-GAAP Operating Loss
$(10.9)
$(42.1)
$31.2
GAAP Operating Margin
(54.3%)
(78.4%)
24.1 pts
Non-GAAP Operating Margin
(5.5%)
(27.8%)
22.3 pts
GAAP Net Loss Per Share
$(0.30)
$(0.41)
$0.11
Non-GAAP Net Income (Loss) Per Share
$0.02
$(0.13)
$0.15
Net Cash Used in Operating Activities
$(9.1)
$(41.8)
$32.7
Free Cash Flow
$(13.1)
$(45.6)
$32.5
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.”
Financial Outlook For the fourth
quarter and fiscal year 2023, Confluent expects:
Q4 2023 Outlook
FY 2023 Outlook
Total Revenue
$204-$205 million
$768-$769 million
Non-GAAP Operating Margin
0%-1%
(9%)
Non-GAAP Net Income (Loss) Per Share
$0.05
$(0.01)-$0.00
A reconciliation of forward-looking non-GAAP operating margin
and non-GAAP net income (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
third quarter 2023 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.
Confluent uses its investor relations website and may use its X
(Twitter), LinkedIn, and Facebook accounts as a means of disclosing
material non-public information and for complying with its
disclosure obligations under Regulation FD.
Forward-Looking Statements
This press release and the earnings call referencing this press
release contain forward-looking statements including, among other
things, statements regarding (i) our financial outlook, including
expected revenue mix, Confluent Cloud growth, operating margins and
margin improvements, targeted or anticipated gross and operating
margin levels, earnings per share levels and improvements,
improvements in unit economics and in-product optimizations of
Confluent Cloud, continued business momentum, and expected revenue
growth rate and efficient growth, (ii) our market and category
leadership position, (iii) our expected investments in research and
development and go-to-market functions and anticipated
effectiveness and timing of product innovation, features and
functionalities, (iv) our expected capital allocation to drive
efficient growth and rate and pace of investments, (v) our
expectations and trends relating to Confluent Cloud growth,
including following our planned reorientation of our go-to-market
strategy and model around customer consumption, (vi) rates of
Confluent Cloud consumption and demand for and retention of data
streaming platforms like Confluent in the face of budget scrutiny,
(vii) continued higher interest rates and macroeconomic uncertainty
as well as our expectations regarding the effects of macroeconomic
pressure on our go-to-market motion, durability of our offering
with customers, customer use case expansion and overall consumption
levels of Confluent Cloud, as well as potential benefits to our
business and growth following any improvements to the macroeconomic
environment, (viii) our pricing, our win rate and deal cycles and
customer behaviors, such as budget scrutiny and preferences for
consumption against smaller commitments rather than large upfront
commitments, (ix) customer growth, retention and engagement, (x)
ability for Confluent Cloud to provide cost savings for users and
customers, including lower total cost of ownership, and drive
greater monetization of the open source Kafka user base as a
result, (xi) increased adoption of our offering and fully managed
solutions for data streaming in general, (xii) dependence of
businesses on data in motion, (xiii) growth in and growth rate of
revenue, customers, remaining performance obligations, dollar-based
net retention rate, and gross retention rate, (xiv) our ability to
increase engagement of customers for Confluent and expand customer
cohorts, (xv) our market opportunity, (xvi) our ability to
successfully reorient our go-to-market strategy and model around
customer consumption as well as the timing, anticipated benefits,
and overall effectiveness of such transition for our business,
future durable and efficient growth, and ability to capture our
market opportunity, (xvii) our go-to-market strategy, (xviii) our
product differentiation and market acceptance of our products,
including over open source alternatives, (xix) our strategy and
expected results and market acceptance for our Flink offering, (xx)
our expectations for market acceptance and growth of stream
processing, (xxi) our ability to meet near-term and mid-term
financial targets, (xxii) our expectations of relevance of certain
key financial and operating metrics, including RPO and cRPO,
(xxiii) 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) our limited operating history, including in uncertain
macroeconomic environments, (ii) our ability to sustain and manage
our rapid growth, including following our restructuring, (iii) our
ability to attract new customers and retain and sell additional
features and services to our existing customers, (iv) uncertain
macroeconomic conditions, including higher inflation, higher
interest rates, bank failures, supply chain challenges,
geopolitical events, recessionary risks, and exchange rate
fluctuations, which have resulted and may continue to result in
customer pullback in information technology spending, lengthening
of sales cycles, reduced contract sizes, reduced consumption of
Confluent Cloud or customer preference for open source
alternatives, as well as the potential need for cost efficiency
measures, (v) our ability to increase consumption of our offering,
including by existing customers and through the acquisition of new
customers, including by addressing customer consumption
preferences, and successfully add new features and functionality to
our offering, (vi) our ability to achieve profitability and improve
margins annually, by our expected timelines or at all, (vii) the
estimated addressable market opportunity for our offering,
including our Flink offering and stream processing, and our ability
to capture our share of that market opportunity, (viii) our ability
to compete effectively in an increasingly competitive market, (ix)
our ability to successfully execute our go-to-market strategy and
initiatives, including as we reorient our go-to-market strategy and
model around customer consumption, (x) our ability to attract and
retain highly qualified personnel, including as we reorient our
go-to-market strategy and model around customer consumption, (xi)
our ability to successfully transition executive leadership, (xii)
breaches in our security measures, intentional or accidental
cybersecurity incidents or unauthorized access to our platform, our
data, or our customers’ or other users’ personal data, (xiii) our
reliance on third-party cloud-based infrastructure to host
Confluent Cloud, (xiv) public sector budgetary cycles and funding
reductions or delays, such as an extended federal government
shutdown, (xv) our ability to accurately forecast our future
performance, business and growth, and (xvi) general market,
political, economic, and business conditions, including continuing
impacts from the COVID-19 pandemic. 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 June 30, 2023, and our future
reports that we may file from time to time with the SEC. Additional
information will be made available in our Quarterly Report on Form
10-Q for the quarter ended September 30, 2023 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 income (loss), non-GAAP net income
(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 income (loss), non-GAAP net income (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
income (loss), and non-GAAP net income (loss) per share as the
respective GAAP balances, adjusted for, as applicable, stock-based
compensation expense; employer taxes on employee stock
transactions; amortization of acquired intangibles; common stock
charitable donation expense; acquisition-related expenses;
restructuring and other related charges; 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 actual 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 (1) with respect to Confluent Platform customers, the amount of
revenue to which our customers are contractually committed over the
following 12 months assuming no increases or reductions in their
subscriptions, and (2) with respect to Confluent Cloud customers,
the amount of revenue that we expect to recognize from such
customers over the following 12 months, calculated by annualizing
actual consumption of Confluent Cloud in the last three months of
the applicable period, assuming no increases or reductions in usage
rate. Services arrangements are excluded from the calculation of
ARR. Prior to the first quarter of 2023, ARR with respect to
Confluent Cloud customers excluded pay-as-you-go arrangements and
was based on contractual commitments over the following 12 months,
regardless of actual consumption. We adjusted our methodology for
calculating ARR commencing with the first quarter of 2023 to
incorporate actual consumption of Confluent Cloud and applied this
change retroactively. 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 then calculate the ARR from these same customers as of
the current period end (“Current Period Value”), and 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 Confluent Platform
subscriptions that expand, renew, contract, or attrit. The
dollar-based NRR also includes the effect of annualizing actual
consumption of Confluent Cloud in the last three months of the
applicable period, 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)
September 30,
December 31,
2023
2022
ASSETS Current assets: Cash and cash equivalents
$
317,043
$
435,781
Marketable securities
1,555,749
1,491,044
Accounts receivable, net
183,206
178,188
Deferred contract acquisition costs
41,174
35,883
Prepaid expenses and other current assets
70,886
57,229
Total current assets
2,168,058
2,198,125
Property and equipment, net
47,950
29,089
Operating lease right-of-use assets
10,935
29,478
Goodwill and intangible assets, net
45,685
-
Deferred contract acquisition costs, non-current
69,224
68,401
Other assets, non-current
19,815
19,756
Total assets
$
2,361,667
$
2,344,849
LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities:
Accounts payable
$
1,993
$
21,439
Accrued expenses and other liabilities
125,109
105,331
Operating lease liabilities
7,741
7,375
Deferred revenue
300,617
290,185
Total current liabilities
435,460
424,330
Operating lease liabilities, non-current
19,457
25,136
Deferred revenue, non-current
23,152
32,644
Convertible senior notes, net
1,087,350
1,084,500
Other liabilities, non-current
7,192
8,762
Total liabilities
1,572,611
1,575,372
Stockholders’ equity: Preferred stock
-
-
Class A common stock
2
2
Class B common stock
1
1
Additional paid-in capital
2,348,874
1,980,335
Accumulated other comprehensive loss
(9,766
)
(9,456
)
Accumulated deficit
(1,550,055
)
(1,201,405
)
Total stockholders’ equity
789,056
769,477
Total liabilities and stockholders’ equity
$
2,361,667
$
2,344,849
Confluent, Inc.
Condensed Consolidated
Statements of Operations
(in thousands, except share and
per share data)
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Revenue: Subscription
$
189,270
$
138,730
$
526,325
$
379,668
Services
10,911
13,002
37,443
37,610
Total revenue
200,181
151,732
563,768
417,278
Cost of revenue: Subscription(1)(2)
44,104
38,417
131,197
107,628
Services(1)(2)
12,445
14,763
41,416
40,838
Total cost of revenue
56,549
53,180
172,613
148,466
Gross profit
143,632
98,552
391,155
268,812
Operating expenses: Research and development(1)(2)
91,237
70,099
261,804
192,232
Sales and marketing(1)(2)
128,624
114,312
385,018
333,768
General and administrative(1)(2)
31,874
33,041
103,572
90,501
Restructuring and other related charges
529
-
34,854
-
Total operating expenses
252,264
217,452
785,248
616,501
Operating loss
(108,632
)
(118,900
)
(394,093
)
(347,689
)
Other income, net
17,529
4,719
50,324
5,089
Loss before income taxes
(91,103
)
(114,181
)
(343,769
)
(342,600
)
Provision for income taxes
1,567
1,868
4,881
4,067
Net loss
$
(92,670
)
$
(116,049
)
$
(348,650
)
$
(346,667
)
Net loss per share, basic and diluted
$
(0.30
)
$
(0.41
)
$
(1.17
)
$
(1.25
)
Weighted-average shares used to compute net loss per share, basic
and diluted
303,896,632
282,267,230
297,906,112
277,840,258
(1) Includes stock-based compensation expense
as follows:
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Cost of revenue - subscription
$
6,171
$
6,313
$
19,413
$
17,644
Cost of revenue - services
2,619
2,684
8,521
6,874
Research and development
37,778
27,692
103,213
73,114
Sales and marketing
32,297
26,712
93,673
72,520
General and administrative
10,649
11,992
36,142
31,476
Total stock-based compensation expense
$
89,514
$
75,393
$
260,962
$
201,628
(2) Includes employer taxes on employee stock
transactions as follows:
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Cost of revenue - subscription
$
179
$
82
$
765
$
485
Cost of revenue - services
126
62
344
219
Research and development
686
496
3,661
1,877
Sales and marketing
798
580
3,369
2,308
General and administrative
684
149
1,596
589
Total employer taxes on employee stock transactions
$
2,473
$
1,369
$
9,735
$
5,478
Confluent, Inc.
Condensed Consolidated
Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
CASH FLOWS FROM OPERATING ACTIVITIES Net loss
$
(92,670
)
$
(116,049
)
$
(348,650
)
$
(346,667
)
Adjustments to reconcile net loss to cash used in operating
activities: Depreciation and amortization
3,609
2,075
9,987
5,135
Net accretion of discounts on marketable securities
(11,300
)
(3,105
)
(31,021
)
(2,869
)
Amortization of debt issuance costs
961
958
2,850
2,841
Amortization of deferred contract acquisition costs
11,923
9,658
33,460
27,053
Non-cash operating lease costs
934
2,142
3,118
6,617
Lease abandonment charges
-
-
15,667
-
Stock-based compensation, net of amounts capitalized
89,514
75,393
260,962
201,628
Deferred income taxes
15
20
25
46
Other
2,263
321
3,114
880
Changes in operating assets and liabilities, net of effects of a
business combination: Accounts receivable
5,153
6,047
(6,140
)
(6,415
)
Deferred contract acquisition costs
(15,607
)
(19,354
)
(39,573
)
(42,077
)
Prepaid expenses and other assets
(7,768
)
(977
)
(13,825
)
(21,098
)
Accounts payable
(488
)
(1,004
)
(19,208
)
6,448
Accrued expenses and other liabilities
10,413
(35
)
17,965
1,721
Operating lease liabilities
(1,808
)
(2,029
)
(5,562
)
(6,939
)
Deferred revenue
(4,204
)
4,187
939
43,441
Net cash used in operating activities
(9,060
)
(41,752
)
(115,892
)
(130,255
)
CASH FLOWS FROM INVESTING ACTIVITIES Capitalization of
internal-use software costs
(3,660
)
(2,788
)
(13,546
)
(7,553
)
Purchases of marketable securities
(235,824
)
(355,886
)
(1,235,588
)
(1,523,248
)
Maturities of marketable securities
228,328
347,000
1,203,711
717,659
Purchases of property and equipment
(363
)
(1,044
)
(1,718
)
(3,115
)
Cash paid for a business combination, net of cash acquired
-
-
(45,802
)
-
Net cash used in investing activities
(11,519
)
(12,718
)
(92,943
)
(816,257
)
CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance
of common stock upon exercise of vested options
14,673
9,749
62,945
34,132
Proceeds from issuance of common stock upon early exercise of
unvested options
-
-
-
416
Repurchases of unvested common stock
(32
)
(14
)
(255
)
(709
)
Payments of debt issuance costs for convertible senior notes
-
-
-
(786
)
Proceeds from issuance of common stock under employee stock
purchase plan
11,536
18,454
28,708
40,939
Net cash provided by financing activities
26,177
28,189
91,398
73,992
Effect of exchange rate changes on cash, cash equivalents, and
restricted cash
(1,198
)
20
(1,301
)
(6
)
Net increase (decrease) in cash, cash equivalents, and restricted
cash
4,400
(26,261
)
(118,738
)
(872,526
)
Cash, cash equivalents, and restricted cash at beginning of period
312,643
530,417
435,781
1,376,682
Cash, cash equivalents, and restricted cash at end of period
$
317,043
$
504,156
$
317,043
$
504,156
Reconciliation of cash, cash equivalents, and restricted cash
within the consolidated balance sheets to the amounts shown
above: Cash and cash equivalents
$
317,043
$
503,406
$
317,043
$
503,406
Restricted cash included in other assets, current
-
750
-
750
Total cash, cash equivalents, and restricted cash
$
317,043
$
504,156
$
317,043
$
504,156
Confluent, Inc.
Reconciliation of GAAP
Measures to Non-GAAP Measures
(in thousands, except
percentages, share and per share data)
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Reconciliation of GAAP total gross profit to non-GAAP total
gross profit: Total gross profit on a GAAP basis
$
143,632
$
98,552
$
391,155
$
268,812
Total gross margin on a GAAP basis
71.8
%
65.0
%
69.4
%
64.4
%
Add: Stock-based compensation expense
8,790
8,997
27,934
24,518
Add: Employer taxes on employee stock transactions
305
144
1,109
704
Add: Amortization of acquired intangibles
129
-
369
-
Non-GAAP total gross profit
$
152,856
$
107,693
$
420,567
$
294,034
Non-GAAP total gross margin
76.4
%
71.0
%
74.6
%
70.5
%
Reconciliation of GAAP operating expenses to non-GAAP
operating expenses: Research and development operating expense
on a GAAP basis
$
91,237
$
70,099
$
261,804
$
192,232
Less: Stock-based compensation expense
37,778
27,692
103,213
73,114
Less: Employer taxes on employee stock transactions
686
496
3,661
1,877
Less: Acquisition-related expenses
3,841
-
15,362
-
Non-GAAP research and development operating expense
$
48,932
$
41,911
$
139,568
$
117,241
Non-GAAP research and development operating expense as a percentage
of total revenue
24.4
%
27.6
%
24.8
%
28.1
%
Sales and marketing operating expense on a GAAP basis
$
128,624
$
114,312
$
385,018
$
333,768
Less: Stock-based compensation expense
32,297
26,712
93,673
72,520
Less: Employer taxes on employee stock transactions
798
580
3,369
2,308
Less: Acquisition-related expenses
1,076
-
3,228
-
Non-GAAP sales and marketing operating expense
$
94,453
$
87,020
$
284,748
$
258,940
Non-GAAP sales and marketing operating expense as a percentage of
total revenue
47.2
%
57.4
%
50.5
%
62.1
%
General and administrative operating expense on a GAAP basis
$
31,874
$
33,041
$
103,572
$
90,501
Less: Stock-based compensation expense
10,649
11,992
36,142
31,476
Less: Employer taxes on employee stock transactions
684
149
1,596
589
Less: Acquisition-related expenses
148
-
990
-
Non-GAAP general and administrative operating expense
$
20,393
$
20,900
$
64,844
$
58,436
Non-GAAP general and administrative operating expense as a
percentage of total revenue
10.2
%
13.8
%
11.5
%
14.0
%
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Reconciliation of GAAP operating loss to non-GAAP operating
loss: Operating loss on a GAAP basis
$
(108,632
)
$
(118,900
)
$
(394,093
)
$
(347,689
)
Add: Stock-based compensation expense
89,514
75,393
260,962
201,628
Add: Employer taxes on employee stock transactions
2,473
1,369
9,735
5,478
Add: Amortization of acquired intangibles
129
-
369
-
Add: Acquisition-related expenses
5,065
-
19,580
-
Add: Restructuring and other related charges
529
-
34,854
-
Non-GAAP operating loss
$
(10,922
)
$
(42,138
)
$
(68,593
)
$
(140,583
)
Non-GAAP operating margin
(5.5
%)
(27.8
%)
(12.2
%)
(33.7
%)
Reconciliation of GAAP net loss to non-GAAP net income
(loss): Net loss on a GAAP basis
$
(92,670
)
$
(116,049
)
$
(348,650
)
$
(346,667
)
Add: Stock-based compensation expense
89,514
75,393
260,962
201,628
Add: Employer taxes on employee stock transactions
2,473
1,369
9,735
5,478
Add: Amortization of acquired intangibles
129
-
369
-
Add: Acquisition-related expenses
5,065
-
19,580
-
Add: Restructuring and other related charges
529
-
34,854
-
Add: Amortization of debt issuance costs
961
958
2,850
2,841
Add: Income tax effects and adjustments
328
293
1,197
975
Non-GAAP net income (loss)
$
6,329
$
(38,036
)
$
(19,103
)
$
(135,745
)
Non-GAAP net income (loss) per share, basic
$
0.02
$
(0.13
)
$
(0.06
)
$
(0.49
)
Non-GAAP net income (loss) per share, diluted
$
0.02
$
(0.13
)
$
(0.06
)
$
(0.49
)
Weighted-average shares used to compute non-GAAP net income (loss)
per share, basic
303,896,632
282,267,230
297,906,112
277,840,258
Weighted-average shares used to compute non-GAAP net income (loss)
per share, diluted
346,974,638
282,267,230
297,906,112
277,840,258
The following table presents a reconciliation of free cash flow
to net cash used in operating activities, the most directly
comparable GAAP measure, for each of the periods indicated
(unaudited, in thousands, except percentages):
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net cash used in operating activities
$
(9,060
)
$
(41,752
)
$
(115,892
)
$
(130,255
)
Capitalized internal-use software costs
(3,660
)
(2,788
)
(13,546
)
(7,553
)
Capital expenditures
(363
)
(1,044
)
(1,718
)
(3,115
)
Free cash flow
$
(13,083
)
$
(45,584
)
$
(131,156
)
$
(140,923
)
Free cash flow margin
(6.5
%)
(30.0
%)
(23.3
%)
(33.8
%)
Net cash used in investing activities
$
(11,519
)
$
(12,718
)
$
(92,943
)
$
(816,257
)
Net cash provided by financing activities
$
26,177
$
28,189
$
91,398
$
73,992
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231031684321/en/
Investor Contact Shane Xie investors@confluent.io
Media Contact Taylor Jones pr@confluent.io
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