CFLT - Earnings call transcript Q1 2022

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Shane Xie

Hi, everyone. Welcome to the Confluent Q1 2022 Earnings Conference Call. I'm Shane Xie from investor relations. And I'm joined by Jay Kreps, Co-Founder and CEO, and Steffan Tomlinson, CFO.

During today's call, management will make forward-looking statements regarding our business, operations, financial performance, value creation potential and future prospects, including statements regarding our financial outlook for the fiscal second quarter of 2022 and fiscal year 2022, the potential growth runway for Confluent Cloud and future year outlook for non-GAAP operating margins. subject to and anticipated differ statements. are cause which by statements results actual materially forward-looking to uncertainties, risks could these These from those information XX-K filed actual the SEC. could included Further our with factors differ in Form to is cause recent most risk on results that We obligation these to statements except today's call assume required by no as law. update after

and non-GAAP or supplemental Investor measures As Relations A from, business hand to in be These analysis is non-GAAP basis. a are expressed as accordance included a the reminder, on internal our facilitate for financial certain these and non-GAAP financials, in and in to found earnings financial over use on financial trends measures prepared with reconciliation not release press financial that, these which planning used measures of purposes. a our isolation GAAP. With internally I'll be call considered can financial and substitute on have GAAP for, today's website call information between and forecasting investors.confluent.io. at Jay. non-GAAP should measures We and limitations financial

Jay Kreps

Thanks, to behind the it serves is closed Shane. the our Confluent surpassed run we the year our Welcome, in significant to This rate company few in expansion year-over-year also mark. deeper minutes. data in on I'd Cloud into multi-year massively with call. to Confluent that this cases majority fastest a our on motion. Cloud the software. which The a of representing customers. like XX% Today, dive quarter a driving grew phase Confluent experiencing $X.X not milestone trend of with a in And rise $XXX the only Cloud fronts, business, quarter, is number use the high guidance part grew further total revenue. underlying deal of XXX% touch eight-figure of in success revenue first revenue metrics. we year-over-year, change XX% the and are all I'll growing Total exceeding billion scale our deal successful of companies a use million, the company's everyone, the a We had time we use earnings a our shift to notable history. little to start how first as vast tech on largest Confluent's is

databases to and modern edge Software fully is business the enable that large and connected all transition is systems, Historically, economy. of parts from data data. the that built around data of This and file companies the is software a data goods data core on of the we're drive rich interaction data in seeing store moving there's retrieve to allow business. heart set software an architecture At applications underlying of infrastructure the siloed services. to to applications applications compete has of this the in and equally been shift storage, the stores of and production for driven imperative customer and bits this

this not sufficient. increasingly, However, is paradigm storage-centric

impossible that applications of as and data systems motion and data the centric of a broadly by Broadly driven streams rise data infrastructure in storage an data to to flow upstate all rest has need as rest business as more This a in of business that has about virtually and and data is carries undertaking. to companies world a companies to software able view with stream their connecting an now every Giving be and motion drive the with in hundreds these in of of allowing real respond to in overview adopted is continuous data allowing industry. have of core Data companies As as of is from incredibly the speaking, its at respond software, thousands well complete activities. business the core streams out react of presence shift that and extracting react has the to motion. intelligently enabled a that in use of cases disparate time.

and of as to need in some like with real-time captures today's source changes time. announcement on train files view customers experiences. illustrated view give want travel customer and databases, engage what of view vital make that's that where personalization, their However, so happens, passengers an delivered to from Real-time customer data Confluent right does customers the channels systems. of enables of continuous is real-time this for a the at to together time. the deliver XXX I'd right processing customer interactions, stream customer information a all foster overview call, their custom we present, have aspects for customer drive the of station of the engagement have all all interactions. mobile data data to a all public be reaction of brand available patterns experience the it real-time stitches truth to all across personalized displays Deutsche degree enable but and meaningful each to events in loyalty, passengers. is most the some app, experience or across happy To they it And only and examples. reshape disconnected recommendation gets rich, Once see with the be what the to can and They Bahn companies to and way single suggestion, on not improves the data website, even applications to and

to mobilization for Confluent enterprises it harder embrace a its finding multi-cloud Most are transition customers journey is across cloud realize than incremental effort expensive. hybrid expected benefits as the to our an and the pattern is that's cloud on and architectures. arduous data often common Another multi-year

view rate microservice our the the of systems running data a from trades between their modernizing So, Confluent bankers and their enterprises motion detect BigQuery, snowflake, use And a in and confidence applications cloud legacy freely one We're at customers, customers enabling them Redshift, instance, response constantly work and trust. on a data the customers and common one in integration improve for data payments, all They're communicate before. them real-time in stack architectures hybrid and modern business In payments in more a premise cloud us to streaming place. forensics the native leader it's Confluent largest XX services. XX wherever architecture, global fraud has many on-premise they growing environments and the increasingly now Their new persistent offer their use so the modernizing XX detection. posture. harder cloud cloud to for problem pattern data largest to the broad. fully the so digital their are to in requires banks risk. than of is to banks small warehouse across This and of enabling Adoption is or countries, a mainstay Confluent incredibly for US manage safer unifying, world than old monolithic fintechs to flow whether more multi-cloud secure continuously their with business Confluent data resides ongoing turned helps Databricks Fraud transact Confluent threats fabric to in to financial their across was companies. of firm-wide Retail their critical industry has million gain seeing world. applications they we're Operating the services to incident become real-time and incident by it in banks security Synapse span better motion ratings customer capital time, SecurityScorecard. proud In is payments than data the for of in outcomes enabling cybersecurity demand and The hybrid and to cloud. can like environments. scans is with and to the speed, on driving for with and the ratings, and industry in markets, for are becoming become many That using a legacy mission cloud their make as top customers first Confluent in a certainly bridge, to services, world. financial we're case in

Indonesia Rakyat digital for in real-time transformation assessment the the services. credit their Confluent in architecture event-driven and Bank fraud scoring, largest an at powered the with microfinance Indonesia, world, BRI, institution instance, largest merchant bank For and detection

chain. providers supply inventory. out inventory lower Kafka, of as drive compelling the detect protect inventory the retail, customers enable as reduce to as times massive time, and not customer their from changed organizations AWS like and area able view flowing retailers retailers supply proactively and for Tech that. Confluent improves from Many between omnichannel to digital open service companies. companies transactions. also secure, Apache supply cards agile The has the the looking source response and protected Confluent experiences enabling Azure, and time, a and use weeks pipeline Now Confluent, meet sector. to levels fundamentally hyper skimming which spans through adopters their but customers advantage selling open verification the of means different in and earliest management into disbursement by In Confluent of ATM able data flexibility largest processing acts are In block X cloud greatly to By growing real-time been while disable enable for information of a that two very model Confluent that of they're environments. all for using helps demands real fraudulent Sainsbury's loyalty. in in product downtime, were fault serves real supply personalized customers. of One cloud were chain avoiding to reimagine the with tech if these personalization customers changes a source interconnectivity to Confluent. expectations delivery time continuous heightened of Confluent earlier transform typical strength and the can XX any by brand emergence chain amounts loan of they're inventory This Confluent their US, build experiences. opportunity and retail cloud for their they real-time a interactions automated minutes demand. adding two also is tolerant, customers massive real They've from to is of

achieve. efficiency, reach Our self-managed cloud no services hope elasticity internal can to and data scale, system reliability cost that

start a we've including mask foundational this, customer adopters This and seen very significant around of previous scale. way that had in motion service, to a the amassed has because in been mentioned Kafka earnings companies built done like earliest some Square shift segment we've is has to huge As our it call. data on

at that runs segment in a added the this the this mentioned beginning Kafka I call, customer very this one the quarter, in installations new we As of of world. significant largest

build, plan, engineers Relic observability the helps New and software. is leading run great deploy that platform

New Relic their is powerful Kafka fundamentally a providing ingested of of the into observability observability and streams Indeed, log all data. is insights into service for backbone data platform.

customers the always that's kind thinking Relic and always of is New about company innovating. their

a Our have expertise, partnership. driven bit new but teams competitive open telemetry be managed these for Customers demonstrate Relic, everywhere. we moat data. planned building being around and complete Kafka and quite with to benefit three the around excited to having re source these and and foundational on We're to are our very more product from how with and architected proven being calls, might cloud by product. the even Cloud New reliability this customers allowing value scalability them differentiation pillars Confluent joint discussed deepen their – going better being insights success is create IT multi-cloud future we a this add Confluent of forward. who innovations differentiation We've the platform, our our otherwise more The internal continuously Kafka. to we'll fully and offering, the key the builds can value innovate from native, pillars cloud deep of for all for past

new These First, make data We being include various greater and more reliable. platform unlimited that scalability in native. and elastic Azure. our announced more cloud capabilities retention more scalable,

store and retention. all customers can to forever size throughput or Now up scale Cloud across in on enormous without Confluent data any limits three clouds, data

our our of capabilities Confluent and allowing more improved observability come taken These we the Finally, with and richer capabilities insight together detailed security with audit into as allow of XX.XX% offers we've around real-time streaming. tracking product. use actions our practices operational reliability our In SLA for strengthened to recognition to streaming. unmatched deliver industry-leading to this, contractual Cloud reliability data Confluent us of

data on Our data while role-based and offering secure be second us. control a teams tight area to ongoing innovation for fully the Connector allows enterprise complete Oracle and locked companies Premium large an to vast access. managed of Cloud being ensuring still This set connectors databases, our of motion Confluent access We us usage pillar across technology base. rest six to went continues help Change control amount We GA. of new expanded enable added mainstay a in Oracle Capture in to in our Data up at customer

Our to run run area, third to being or manifests technology on-premise, providers whether for across customers' on-premise clusters experience of linking environments, simplify all In our transparent cluster everywhere, user the our cloud this differentiation, able allows of product that pillar proprietary ability and cloud. in clusters. linking, multi hybrid, our across we

service These significant richer in hybrid major of our Confluent environments. and our are providers our In A new to us, Confluent is and deepening on-premise tied features the on-premise supports AWS. partnership cloud cloud of flow three also This otherwise earnings relationships on-premise that relationship everywhere first by release into deployments. to would legacy integration use announced to that last which of critical we data beneficial gravity. with for call, We brings strategy also mutually environments our hundreds of private platform and cloud, for customers' a providers. be be key had cloud unlocking release part cloud cloud cases enables our were environments improvements enabling launched the major from the a data because environments, but the with new

across relationship joint organizations. the that This Azure strategic the as joint and partnership Microsoft, marketing This partnership our a quarter, with which our we extends sales followed technical, serve investments helps well tighten announcement existing new deeper us with of up multi-year better as integration with with customers.

We had partnership announcements notable with two also our around Google Cloud.

data Alliance, Data to initiative that first that new a a accessible data business platforms systems, ensuring of disparate digital access The portable barrier with more was Cloud aims goal never environments, of transformation. the is and to founding across the a to and make

Google ensures Additionally, we integration fully BigQuery ready with have been which Cloud validation program, our BigQuery possible the best using recognized connector. in managed the

Forrester's of their cost this and customers savings engineering than deeper of perhaps Partner on hybrid wrap offload but XXX%, summarized savings well strategic developers. to that part on Impact versus Kafka million. included conducted As the businesses are managing translates the be easier of to teams of six over this free less the as and to the payback source, can Economic faster which $X.X cost Google used recently value data study, continue differentiation that's making infrastructure ROI with when an key power is Confluent. TCO million from study and cheaper a months. of than understanding the that versus million, underlying with plus drive operations Confluent most which differentiation, expense savings will to savings Forrester burden Confluent because improving infrastructure Confluent to better $X.X not roadmaps importantly, By two real-time period organizations We analytics. of self-managed to development products. is for program, Confluent. enables just can our open the open of closely cloud emerging. of scalability Confluent product savings and of specifically of areas And migrate to $X.X joint of multi identified infrastructure. teams efforts focus The connect driving and develop BigQuery and competitive businesses point for they alignment, source up point key our can more that also it than be BigQuery Confluent, self-managed of to they think of high of and The a we cost findings cloud Kafka the collaborate over data to Total To Overall, quantified benefits and and achieve

successful hundreds as have millions of economies time savings every with data. serves a thousands significant requires of food their to fully savings that Swiggy. a drivers spikes thousands in scale motion competitive focused cost is of architecture. and proposition aspect We refocus on-demand those managed We of example heart on to the focused solution business customers their these value of handle they these of needed made Speed all have at for their and ordering offering and advantage on clusters. think reduce and platform of and Swiggy India's and Swiggy goals. of A as energy own cost those of our To this us in deviated Confluent delivery real-time time, the connect of ROI engineers' day. and efficiency. services companies that managed leading partners customers on is restaurant But costs vast data Originally, are Kafka delivery spent well innovation key by both delivering is great from critical in a customers. demand. their

Another updates key We customer this brief discussed competitive made in detail quarter. our last that provide our we've some growth and a advantage of our recap strategy wanted I on for last to since but Confluent call, is go-to-market model.

Our go-to-market at nervous scale large growing for our purpose-built motion, effort oriented early is customer aimed and lands data systems. and product-led, to in driving usage central product consumption experiments from of

existing this of our with innovate without journey. developers get to it hassle stage drive continue to we account to for removing product first signups credentials, our developers as even information. credit adding We Confluent allowing paywall, as In started easier Google allowing quarter, by made well and the with payment each the card GitHub the at in test

Rao. Jun We expanded Kafka one also Confluent, We original and materials my center, co-creators, by presented expanded and training including and written of for material developer.confluent.io. our developer launched Kafka's learning co-founders

of call step-by-step customers as of started train to increase to of approximately cases Confluent customer on the base in It more ones In customers. us XX% in X,XXX. apply success cases, a in additions, total addition, The reflected year-over-year this grew the the us additional use growth Confluent to common driver This generation in progress XX% customer XXXK year-over-year in customers This use effort Kafka users next record and our to samples such help applications. strong our ARR, growing significant a with our described more which code strategy helps quarter XXX customer has in a we've of quickly signups the to helps and was another continued Cloud. today. library and be to count tutorials of or

powerful spread their in effect build system the $X ARR and nervous to of year-over-year, our use the is customers' XX% million customers. accelerated to more base. or cases, Confluent XX Finally, growth network customer in with desire with customers of the largest the with Growth of out central ending the reflected quarter

still the and in We opportunity this innings ahead. forward are look of what's to very early

prevalence recently seen is organizations and great of huge the evident working got the improve tell to the in-person of our hosted Kafka, document, More adopt X,XXX also the more to attended of Kafka summit of also of stream. hundreds community. a London community tuned many it I've in gathered contribute thousands you, to again. to thousands and pandemic Kafka We community together And back first XXXX. tens growth and be since the of in members The Kafka. than into live We've rich meetups was throughout

Kafka measure open data to production illustrative very this preeminent about around don't experts deduplication a companies our library, but and and libraries. do usage. announced XXXX, together who to Java to movement Many streaming and space. Because by source users distributes strength data Sonatype we On breadth unique that where summit, in also one active of Kafka scope the in company stats out downloads the and join measure. the only do about is is streaming you new adoption, in is Duplicate the reality available the data active Current comparatively the not our at remain of of full developer aren't of growing generation We Kafka October. People as using once. those for look mindshare. representative XX-month invite bring thought stats are shows today event, downloads rigorous data a over measure. ask available more of IP will I'd the This from competitor in the competitive may basis, is next feel of such grew year-over-year. leadership We downloads which statistic to GitHub close the automatic address, aren't the of suppressed, source that we And leaders trailing this of appear Austin data Apache the that a learn XXXX share and XX% in has usage, ecosystem projects industry landscape. like terms stars IPs like often motion. One and or It's fall Current streaming Kafka we hard Kafka actual

well sustained it's As is systems, user This and considering sustained adoption de in growth superior made Kafka of higher facto growth off streaming, to larger. the mentioned as the an rate of what of the fact is Kafka scale Pulsar. that performance percentage is ecosystem illustration community, that rates and Kafka's in effect standard a the the Pulsar as inherent of most data a base significantly simplicity a despite that is integrations, the the tribute the one Apache over this, of data commonly strength competitive a XXx Kafka offers. motion massive for than worth Kafka network on has the basis Apache at rate growth superior

to a an it through of leadership turn hire the the our intend first diversity, top host in Steffan, look bigger. I continue function that, Officer. Gunjan key veteran working we efforts to and with Steffan culture. – us Before over create financials. industry for gets attract will XX to forward RingCentral to in highlight scale We Gunjan whose have awards better talent to A People is a year a I joined team's and walk want as and quarter team Gunjan even industry been the I call turning continue plus as recognized and happiness to Aggarwal, rating With leadership. culture to our from an with widely and that to Chief organization every gets

Steffan Tomlinson

delivering be Thanks, revenue highlights quarter operational performance million, Jay. strength robust to closed company's business, deal is include all on months, revenue vast XX% year-over-year. approximately history as with on Cloud and strong majority obligations, the to QX exceeding next of largest growth powering our commitments, the recognized three-year results RPO. our representing in accelerated of the which of we $XXX.X is and of Confluent growth, cloud an Confluent XX% contract the with in XX to unit This our the our non-current QX XX% in anticipate value year-over-year, end of We was eight-figure, metrics. the Key execution immaterial growth another economics. accelerating of remaining high reaching and deal RPO growth the Cloud. RPO. current excellent had guidance in reflected growth RPO contribution

in we for Additionally, XX% a also durability our Subscription up $X.X exceeded the year up accounted Within revenue years. total this out of XXX% visibility million. cloud we Total by million marks grew total from million, XX% the another for in XX% a grew $XXX.X Confluent Platform first deal revenue revenue increase enhances $XX.X deal key to the of growth subscription, total expectations, and milestone and accounted million, XX% was and underlying momentum for quarter sequentially revenue, XX-point year-over-year to encouraged revenue. in continue business. to our XX% to Cloud company, recognized from up and for of year-over-year The Confluent We're our revenue. year-over-year see in and QX. the $XXX.X revenue ago. $XX million revenue year-over-year cloud zero XX% of accounting revenue

accounted second Cloud ACV represents we the new had quarter our cloud bookings, but and for in vast faster happening majority we a net the world a customer XX% For is than XXX%. the class marking of also count, in anticipated, than has a shift total greater than business rate expected. of of retention mix more row, had that

expand substantial hiring have Cloud capabilities being highly fully to verticals momentum compared made serving, of managing This which their desire not our own source. Kafka a it has ability total progress powered of digital by runway our we've been for current strong to Cloud reflects relieves native term. demonstrates but strategic We cloud open environment. the offering, scaling see in the in outperformance lower superior source the the the labor is long segment. ownership Kafka over Confluent product away substantially and to engineers Our also all only our multi-cloud in abstracts and complexities and managed customers' we've to the open long cost of the Confluent on burden into grow

remained to consecutive million. the see top Revenue retention we for US we Revenue geographic rate net $XX.X Turning our fourth year to quarter offerings. the a both mix above foreign XX% Because in continue XXX% gross we product retention strong to outside and US revenue. million. year-over-year year of to headwind very from quarter the line. the our across of price direct to exchange in $XX a from be the grew over XX% grew The USD to expansion globally, don't as expect

than greater be previously, was hybrid to continue mentioned for XXX% running cloud both platform customers highest. and NRR cloud and for NRR As the

cloud margin our to focused I'd We've and margins cloud gross cloud Moving subscription profitability. healthy that of XX%. and gross be remain our near time. like on for we larger margin the term, unless of margin with near margin, we target accounted a anticipate increasing was on to to ability margins midterm as We're pleased was non-GAAP gross total share in gross otherwise. Total approximately our gross even over maintain note margin I'll In XX.X% to and XX.X%. improvements substantial driven fluctuate referring revenue. to stated gross results gross

events, increased lower-than-expected operating was XX.X%, and Turning margin guidance. cash real was This we're throughout productivity, to sales the relative drive XX%, plan. other profitability flow negative spend a to better travel to negative our and margin in-person Operating and business. represents partly than was by Free from that which which driven beat our estate cash. was efficiencies continuing

expected was million we of call, average free cash outstanding. cash cash, basic earnings stock quarter our $X.XX program billion in new share We diluted plan. be shares flows marketable loss margin lowest and Net purchase to timing QX, securities. weighted QX the our cash by to and and on using with related in equivalents mentioned As per negative XXX.X the $X.XX corporate the bonus employee ended driven flow first

the us Our exceptionally fund move steadily strong sheet profitability. balance plans as our growth gives we to towards flexibility

guided We revenue by I exit and XXXX. improving top and plan to Looking cloud and for the economics, line is high strong on of and productivity, XXXX opportunity continue investment is growth rate and assessing investment remain improvement gross Based our improvement our growth in and as QX annual such to market a our margin margin. managing in projections by of our share significant informed want accelerating to on and operating which track growth by delivering increasing in to current unit record of NRR, XXXX, we ahead, profitability, non-GAAP priorities, delivering margins our sales consistent our on margin. plan plan committed The level commitments, framework. our with positive

for we're and year. guidance, the numbers to now Turning raising the quarter

of million shares to loss approximately approximately to to growth outstanding. revenue the non-GAAP range XX% expect negative be $XXX of net in to and $X.XX we negative XXXX, XXX operating $XXX weighted of year-over-year, quarter be XX% representing in XX% using of million average to second the range margin the share For $X.XX non-GAAP negative per million,

For the to also negative negative range I'd million average modeling of non-GAAP be net revenue million of operating and the XX% points. we representing provide using per to to growth of some year-over-year, XXXX, range million, XXX $XXX the to XX% XX% non-GAAP be share approximately $XXX margin shares $X.XX outstanding. approximately to loss $X.XX, expect full-year like to in now in weighted negative

revenue QX for the in sequential expect for We increase will cloud dollar each growth year. be lowest will quarter remainder of the the and

and as in underpin results have becoming leadership In margin. into deliver proven estate and an QX, in closing, for margin we throughout related Capitalizing public cash a our by data expenses to drive first company, our and full flow And cloud quarter well year guidance ability on transformation improvements. real non-GAAP and expect our in will growth with and Our deliver second events, flow commitments take continued followed the to on and that, execute expected With and questions. to positioned facilities in-person trend reminder, roughly streaming. lowest our Since momentum QX be Jay a margin increase strong position the travel, trend free migration, quarter we line of annual secular takes consideration margin to free in is operating we're to high the cash digital and XXXX. margin I consistently. your

Shane Xie

William And question [Operator from of Morgan Sanjit comes first Stanley, Instructions]. followed Blair. Singh by our today

Sanjit Singh

of seeing. Pulsar [indiscernible] appreciate been Really the data, highlights something what Kafka market the of we've for sort of you're just looking adoption that the and

the the So And product. thank you to talk congrats year. want just for that. good on I start to to

detection case, How to from versus and if As they're and how or doing Confluent like being number able business, Cloud a to takes – database services customer and on need observability they're case want is need? help more or one doing when – use use professional more how going experience do effort percentage cloud from, fraud four, then a part say, from is they progressing? much much case two, bigger the on-prem? let's Confluent case Or use to the say, that use go of get do three there one how to they handholding

Jay Kreps

Yeah, so self-managed this of that there makes a is cloud of high pretty the one exciting. With is things infrastructure, kind burden.

in capacity new setting we are you maybe adding start put right? components and these want our servers to importantly, all And if can and then, patterns. elastically. components The the most expand platform. there, use of often you can to together them away, goes that all as You're part up And So buying offering.

I that that This something allow want So something that easier mentioned it KSQL. and modify that's end-to-end to lot will much us available to like just we cases, specifies drive what faster we you adoption. and briefly for of get these recipes for makes to maybe believe kind it do, which a going. use your now have case And take use in much

adoption we're build some But Now, up. use maybe overall spread use each though takes obviously, even each time for our even seeing to good in case fast, customers. that case, on-premise

it of NRR than when over level was of improve and And cloud as part heavily. the as greater out so get cloud think time, that which kind tools our can that into As enables leaning faster progress, is we higher being that illustrated we're reason we broke the for XXX%.

I think ir's illustrated that. by

Sanjit Singh

of the One them. us motivations of Kafka the in who sort sort give And sort was then, of what's of today underpenetrated your newer up? on come into Confluent of of product sort were what of A of adoption newer industries to follow-up, starting again, we – around guess, Can adopters? early coming the some industries what that the you some online would out of and and get or ramp adopting theme and on you terms pandemic, more that's history, as call driving I presentation sort product online were as those adoption.

Jay Kreps

interesting been to It's watch. Yeah.

And Silicon So, And would giants. all were open adopters. the you Valley, big adopters were tech we're, massive interestingly, the tech platform as Confluent early as now, them a They so the right? this to customers companies, just in right? source coming see

And you time so, around, Square, see Relic. that with this or Instacart New or would

now switched has got to we most spread industry New that time the it to time started most adopters. then they're been and then Kafka significant top are each source small very at to there, spreads the things, down of it's the kind industries in been as – over company, From that the the companies open around managed Relic and quite like the and of Confluent some they're These offering. be have for a using our other And bottom has to almost the kind tech spread each sophisticated first, probably will started investment in technology, companies up. and deploying apex middle. ones about early industry, in scale,

would kind of an pretty out where penetration into well We're financial adopter you top was companies. adopter; which good retail, in early early those services, so, was now in there's which see And an that the middle.

I Some we we've growth. I far, getting obviously where relative I like feel Telecom, alone, there's just these marquee wonderful sector, there's of think done the enormous the full still coverage we're have logos, healthcare, to customers, let opportunity of are areas larger more opportunity think so areas there. what starting but where the public

in And so, industries a have least these where each think of even of opportunity, I some at there's kind we lot use in customer. case

some grow have that's goal ones up yeah, have little potentially think new less our slow the that that been innovate why significantly. that which to of of explanation And at technology. to wave are have kind competitive course, have actually internal pressure technology. the to least for around a But, is been cases our a around some industries of huge use time industries been the probably Of real little slower pick I

Shane Xie

We'll Cowen. take Blair, followed Ader from Jason question William next of our by

Jason Ader

Again, with know but shift takes beat specifically you the recently. company. But bit your the you've see on I guess to be most as a dynamics understand I of the of kind you you kind pretty And deepened had it's AWS the around thinking market And may GSI, relationship tremendous and it cloud or to the be your like can question was could really smallest is talk happening ecosystem, faster where really public for about about growth, talk better buck? good areas little you demand? a feel etc. Jay. puts than getting also there towards really just I through Where of you, even I'm guess, And the bang you the expected. But I Azure. And you partner leverage go-to-market execute some what is my ISPs, on of clearly kind side? are

Jay Kreps

Yeah.

that think is contribute more One over the effort, I things size. are partner which building there's two mentioned, that will time. you

doing, it into what helps I think take that we're accelerate other areas.

I is of one category awareness the describe and I the would think the brand. other

changed that an in I spread enabling it's both then does enables a already to from something us new And the for date. it advantage stay have product last us organizations. what the Cloud know, I huge just senior know, in mainstream growth, do think faster a able but And you to personas few building thing I new having heard that's to as just, to organization. just to think any about on, you touched that's product, be something to quickly transition of not features, to awareness builds, drive up that's possible, as go know, the this help something That's among as to very nobody's this you that's for us, as really in kind been think and organization. that land I years. across you the market, of to spread to over And customer able taking be for dramatically of

into good macro into year. would we'll have you, we heading we but change, You or full no Colin fiscal our kind demand the followed and absolutely guide, something move beat quarter and so off, the kind impact both that Ukraine, Jason. I for guidance a one are around of as that year, from our remains in going things for follow for about guidance? geographies, when technology Fargo. from think that qX at anything you etc. either Great. first the our environment of you as Derek factored for we've And to able and different think Stefan, feel take that contemplating know, close very look quick I setup And very We'll Russia, to can the and your in macro in or Well, be our say look pleased qX, FX in guide, at guidance, our up question strong Stefan. qX to philosophy. of know, we started all signals of fruition, very company. for position things can Wells the reassess. in to balance the either, any our else we that But that's Thank not reflect next allow ratios, at look is the a our in pipeline, I the this only think year, that we of kind of And then for by we I really And that's them us really build sales faster. take comes raise we're and powerful even year that to

guys. You

step math One XXX metrics total in net right, quarter, that really And about historic out from stuck had levels. big is new up which of this number. number, customer my customer the a is the you the was if customers

of of could your put generation, this I in we've like it that? driving does And been very mix, mean, new was you you total still forward. and in are of If can cloud. it, because finger build customer the the what's cloud? you way up. of frictionless what a into change go that's a vast sort seem call rise there you'd choosing easily step up terms it is, count of start Or some is Yeah, also seeing is kind on Anything in factor? course, out another the but customer majority took majority platform? And

you log on I actually things that, with with in the touched product, of Google of few market the that's a coupled innovations help. so existing friction, of low or changes to and accounts product help go removing And to from really paywall a allowing kind people lot you GitHub, to these the know, know,

a that. kind of just at Our of of think started building streaming you the developers default know, later do, Kafka still you around we're then started have this the way make getting it and with and project than, with rather to or is thing over kind make time, any open the I first goal convert source

a of time. fluctuate expect that's over will which start, that's, So do I kind

to it the up And things platform with obviously, a we conversations pleased with open kind been customers absolutely. go cloud it maybe build Stephen, the inflation source the referenced You that can to a quarter. But tighter down were into wage market would those experiment driving the actually and know, and cost it's this see pleased open with come how very Yeah, with as your help both and Jay, labor of thing conversion? really kind of normally bottom. coming address we we've flywheel this That's perhaps source. and of Are at important bigger how we broad base great. you from does commercial built. as more, results and this, And

infrastructure tech both kind in saw know, So these I say, enterprise, you efforts. that teams the at Kafka And itself would you have course, large that very of ran platform cannot world, those I LinkedIn. ran of one and internal of in mainstream

can of that infrastructure. happen But the, know, it's right? there's cons lots that, pros internal this on and innovation You expensive. extraordinarily There's to

You working know, on innovation into of not XX% the if you your the that infrastructure, that's a internal company. in engineers best that's going have lot

I Are we working can't working Or a them know, And are sauce? retain are the people and a of makes overall, can't working special make do in another little there's looking outside these those does you that, But people shift uncertain times, think are market that the even think So just get they are know, you things at the on what happen we our change. in that the competitiveness going, where their that that kind a in walls? tends efficiency. people, look on absence think very solution, mindset what, they because have are they shift hey, that's of layers where to know, about, you underlying on? where I faster, people we if data important actually people that if the where,

I that seeing think opening is in tech, you're which that up.

it's growth that as move touched faster. about us spread powers And that that think I in of things having You're to features. possible, to go-to-market, fruition, that really an I of across on scale us the as I what comes of but organization. build going customer as would full that's then, the a to in as of around enables powerful even allow to to teams for and move kind able that to to we've it already seeing really drive something to I This not land product, both faster huge a started you And the of be able but product to taking that of one quickly be be a think can internal spread a think that cloud just this philosophy. as at organization, in to it's really the cloud advantage just kinds lot that's enabling the I help large us would know large a have similar enterprises operate think infrastructure whole kind

Jason Ader

follow-up Steffan, QX either for are guidance Russia-Ukraine, quick for kind A Steffan. Either that contemplating or anything the in your any FX year? in impact macro guidance? of or else you

Steffan Tomlinson

the fiscal in cetera. different the We remains reflect year, at both strong Well, can signals that close And geographies. I'm for this beat pleased look that will year very macro that look et of look quarter sales to able at our we our that take our raise QX is very setup our pipeline, absolutely guidance, so at I we the and in when we for guide. and say ratios, demand and And first all into for our the guide. from company. off, environment we technology and and factored we're in

change, heading things reassess, but position very we'll we the into only the if Now feel QX, our about of not good but year. for balance

Shane Xie

our question by take next Cowen, of Wells from we'll followed Wood And Derrick Fargo.

Derrick Wood

had quarter, was of this And is step number. which right, total about number, customer that One customers historic levels. out customer metrics in big from you a up the the if the really math XXX new is net stuck my

what's seem sort the it like the another mix of the step If it, that? your forward. rise up factor? seeing what finger this been there call change it choosing was you'd majority going of customer could terms are new on Anything is does cloud? you Or in platform? driving in also And but put some took We've still to out generation,

Jay Kreps

total is start frictionless The can cloud. you of kind way count that's in course, of a of And very and because, vast majority customer easily up. build

And on accounts to really go-to-market things allowing Removing in Google a lot with product, actually or these to from the few the changes innovations product that's I low of in touched existing people GitHub, a friction help. coupled with log of so, help paywall out. the of kind

convert start to a Our have open source then kind the or you later time. way thing of default the is than and of Kafka make streaming over getting developers it goal any make this just rather project at started of the kind with with first and do

of building will with broad at we've stat go the which how pleased We this I with I kind that's obviously, down see experiment kind built. base as up results build and it as over it fluctuate there. with we're a that, to this pleased quarter been of think But, do important more. around bottom, a this, and expect time. We so it's very still does were the we thing

Derrick Wood

maybe from things actually and and the market Jay, Steffan referenced and how your perhaps bigger commercial both to you that the platform inflation and labor can source open kind Are a source. customers of help into driving with conversion? tighter open wage coming those of flywheel conversations costs normally would cloud really address come

Jay Kreps

Yeah. Absolutely.

extraordinarily say infrastructure tech world would in of mainstream enterprise, that in internal these itself And, platform efforts. kind infrastructure, internal pros of to but this expensive. of the of of it's very teams out There's large I that can So, LinkedIn. came and innovation those one lots right? and saw at that I on both Kafka cons ran ran you that, course, happen There's

on the going you XX% innovation that that's in best working that's infrastructure, If a not company. engineers your the of have internal lot into

going, market happen actually times, I do So, in does get I efficiency. a think in their people the these that have sauce? And absence on? layers make if that even important if are working just the they of the shift working little think very competitiveness what data can't makes people look kind are we Or working the on to are at where those we that, think overall. people about, on mindset special a things tends they people, faster solution? the we them that another Are underlying of that's a hey, shift in can't people, there's But change. are uncertain retain because looking they the and walls, outside are that where

opening which up. you're seeing is tech, I think that that in

a But You're in the infrastructure large at scale, infrastructure think of especially to all that also now cloud, deal. relatively customers. on-premise, huge seeing in where, I back you open paying us rate in a the when it's day, the like lot but cheaper have open the conversion that deal have source a of take into people source operate which have and similar would teams operate something cost. low you and enterprises a the might powers is to you But cloud. whole the the companies for better that think Like, from product, a cost I move account to internal it kind would better can

Derrick Wood

Congrats quarter. on strong another

Shane Xie

Fargo, We'll Michael take Turrin next Wells question followed by of from Suisse. our Credit

Michael Turrin

and markets on we're remain comes questions context? lots overall strong. streaming resilient certain thus infancy, around from We've software a to that here investors the spend demand durability as The the you and just macro new market, the and say where could in test. metrics Jay, just hyperscalers, fielding But its customer still the the of environment stress within seen more demand adds growth event well. or perform what are in asking net who from healthy far proved how across would

Jay Kreps

growth the been things of the and overall couple with point We've trajectory environment. happy I'd really of a There's demand to.

to kind new to use can kind in source Kafka we open where off. out but the more turn significant disappearing of accelerate base because is bit, environment. application software, pressure serve right, that and a us in in less I beyond base users, even right? platform, more seen, tend for that, the this open showed a thing you absolutely think access to of graph event have just actually installed current operational the there's large I can that And of user of even the case, it efficiency, overnight, on we slow bringing that not existing It's haven't path cases of as going layer adoption, for we there's and of the environment source which risk be the just into growth because were

higher I now, of for kind last at would a change. very out Kafka this we was enthusiasm was customers, in I watching over levels with which of the Summit, ago. conversations for the haven't yes, with the it was level paranoia. out same much closely seen So, of in probably We're year level senior there, even than big I say time Europe a

Michael Turrin

for source open could in sneaky a sneak factor if is it The piece One you. Steffan. more, I with visibility

the was very raise beat QX You maybe mentioned tighter was we've what substantial. than little the seen, full a but year

times saw the in we QX. size think I upside two the of

in year raise to the there? So you'd the anything attention call what in a or full drives RPO from seasonal or either the something confidence QX perspective just

Steffan Tomlinson

already around The strength RPO. the cloud the quarter NRR from which The consistently XXX% And improving. NRR puck We cloud And been revenue booked. being company just the you the comes Confluent year. business it have their number bright point Cloud. and have of Confluent real of throughout where are CP, that We that companies is customers we've metrics, being our is and brought of additional a new gave of factor. with current only, business cloud on NRR if disclosure look then, lot the highest. the logos most this also above signals a going for the again, on they're a at getting the spot hybrid A think Platform with companies existing RPO started journey going, our increasing our we sequentially into were and there for lot total is to, about

And going a business so, that should forward. cohort lot to be hybrid and contributing cohort cloud the the more

feel about for good the we So, the setup year.

Shane Xie

next by We'll Suisse, of Credit Sandler. Piper Phil take question followed from our Winslow

Phil Winslow

large focus metrics, things on one the quarter here. deal that of jumped to out want in the the That's just I in Jay.

accounts as you did year. I last think than this quarter dollar QX many added twice in you million more as

Or I cases, more more Then, it and it, last customers? – of scale if what Just call use terms to questions the commit your question the Cloud, broader model obviously, we and driving you sequentially system about quarter, wonder just how of of just Confluent component of in and of sequential could particularly expansion? What's think sort on you're multiple cloud. consume are revenue into relates get the there. year? unbilled wondering vertically? remind this cases, this about kind improving that can So bookings of sort Steffan, guidance Is two that how course sort these you just example? your converting those hearing from if to to adoption, use us CRPO of in should of seeing sort for in nervous you comment strong that build horizontally the the central and improving you that, back the you backlog of again over dig highlighted

Jay Kreps

million-plus who of of this really I'll we loose that I'm address big the for kind kind kind this in a first customers, are do nervous system. people of about as proxy across one. business. the thinking central The use going

but case, broad more could much it's you organizations. one spend those to very adoption use course, Of has with common that large probably that it get in

like much, I problem broader this of with happening motion. senior data much a had One, had. strong spent little is a folks number, feel what's people have like have week pain two And So, it's that a just point It's view, vary observed. change I that awareness But, say people in Europe. kind quarter, I my a that senior from probably there's that adoption there's because it's on significantly. think in the over yes, things now helps and and to meeting variance. willing I week a big, something smaller biggest to last of there's solutions there so us with and right, I bet would of a it for probably yes, bit, it's absolutely enough that they're reaching Quarter strong. more been will they've signal. a the where

coupled that's much be with concerted That cloud. a more more push think to may I Europe-specific.

seriously I think I were maybe there with it leaders was little that happening senior pushing the that met bit with was there's thought I But the which certainly more already. in a different. they transition, among seriousness US

of both us. are catalysts I think So for those

Steffan Tomlinson

Phil. to elements And are question, on there the piece, multiple your cloud

the So main I let off, think, ones. cover me

a coming XX% growth. and as have that's was impressive first, QX the we into cloud very than cloud look was greater So, new of when we But well. rhythms the what of business, strong for revenue cloud more quarter, again importantly, off ACV this

are The play. good is consumption-based really the that of have we've high CRPO multiple been at our And customers. and we cloud one transition do revenue that that modest, year in And growing on for and reach committed at have, operationally, we think of very stage in is this doing this it focused count operationally, that of things revenue, about growth shows new we've throughout we past consumption business, a our NRR there the increasing factors factors more when software each can the What year. remainder sequential curve. for quarter-over-quarter to time of talked our still from because incredibly at the of timing so, of biggest we we're there. And underlying a for but projects the those a journey decreasing outlined. much momentum customer takes the And our Mechanically, have you consumption the see lot about to quarters to impact customer And a will few cloud fast. we combine we've you is the for have with customers for cloud the sequentially the model on cloud revenue their progression stage business. that pronounced in that

bookings. So dynamic growth accounted a at large proportion It's We business. cloud. through like for we're that's going is an the think apex robust our this play. landed on just in feel customer And of And native in digital our started getting segment. the we just we cloud real

Shane Xie

Owens Bank Our of from followed next comes Piper question America. Sandler, Rob of by

Rob Owens

international a this look you domestic of as are building, go-to-market versus transactional you if we could wonder deals the both on I internationally kind from versus more velocity those of you within the touch domestically? also difference and a standpoint, in bit versus and you're little terms seeing deals big growth how success saw any quarter,

Jay Kreps

would International has on cloud and but probably just quickly. a talking overall customers, they're on in of streaming, I and say growth. US little behind catching a up adoption the to bit bit observing Kind behind with outpace continued little curve

at big levels. kind very regions, are that, going I've with of who met think customers I in senior all

say. I think that's an to exciting thing

same the feel this technology regional the other right? like type they're same a of say healthy on bigger that the in is So, this so of us, differences companies exactly projects thing way, international. spend so US. is And up company kind for little yet business as exactly maybe level that very board is European not There's industry as curve and catching see the – I true what as a to cloud, just bit But not a be in sized cloud the total on is the across many products super of US. at it that doing in much year slower the streaming. of the the By see same would the maybe world of were little behind would the dollar and in a the huge, then at have layer I the large, large, at same we stack, kind differences. the by we similar But that in

may my bits to You Steffan, observations. those are have but add to that,

Shane Xie

question take of Sills We'll America. our of next from Bank Brad

Adam Bergere

is on This Adam for Brad.

example, you should to For thinking bigger, about like again? So, seasonality guys remind pronounced more prior? a we deals expect the be this you just how or year last us see QX can get than year should as just maybe see we year

Jay Kreps

to want that, speak you Steffan? Do to Yes.

Steffan Tomlinson

be business we're bit also end very the in inked way booking near throughout we to where compensation deals momentum, way looking substantial a Part variability more quarter-to-quarter deals the tends that's that and Platform, model Confluent primarily. because hybrid be year, rates, there's whole That's a we the plans. the typically doing basis our works, about you which have part bookings revenue, it's we little deals QX in a on aligned of growth from balance just done standpoint. higher terms of the revenue it But given at revenue enterprise QX but happens And When calendar a recognized that the of to it's have with of business sales you at so the and think our of model. going have is then ratably. upfront year, it has and from we really start. in in enterprise, a larger and the seasonality, basis look When

of are impact there our model. or seeing positive to we seasonality around consumption some either consumption-based a – dynamics talked that, are about an increased impact type cyclicality We business. And

sees But that sequential are that's And hybrid there consumption you different that have and growth. less a lots revenue out that could are having so, with normal, QX there to companies a on model of QX market. us raise the about we're But numbers. visibility managing talking profitability. basis. leaning consumption improved and billion-plus into into how around leaning context in continuing $XX of we're to a also growth this We're We're

all to of I in my so, little devoted in XXXX but accelerating high we in margin annual delivering XXXX we're from is, to high-growth timing think we are operating on operating comments company when XXXX in from format. margin, want point to positive and about script, and XX-year profitability non-GAAP make XXXX operating And that we with this we have revenue FY a the when of improvement plan doing margins, committed a dynamic margin bit I you exiting the remain on non-GAAP plan margin. laid And operating non-GAAP We achieving basically QX And a last achieve just XXXX. the a and FY of positivity. margin vintage operating on of an and growth out this to standpoint, if managing we the operating and XXXX that positive we're growth QX importance

it, peer call XX XX or are, lot group that. XX next-gen companies years post tech in about good the feel inception. of A we our So, stack to

with that line in right peer our of kind we're on group So, front.

Adam Bergere

are Just maybe deployment customers as migrating Jay, expected customers, than a a kind the you Can called within or talk follow-up, Confluent Platform customers Confluent the for these with strong hybrid very running you expected? quick just faster are about, existing performance mix, the than guys you new Cloud out cloud. mostly faster of

Jay Kreps

two a up are seeing growth ton in Confluent has both around hybrid that Platform this our There that business. We're platform come of Cloud. and cohort misconceptions Confluent

about all, be environment Platform it's people to you're the a tends This and out where not First running Confluent in really are Confluent an of instance Cloud. exactly in. of swapping swapping transition

using on-premise, you're you if applications So have Confluent Platform.

cloud, If you using Cloud. have you're in the Confluent public probably applications

that together, cases those some about those so of earlier. flows link talked I use can between. You data

that the see to And grow actually a we to that throughout really a across environments the cloud, doesn't is value so, actually strategic growth customers, of that faster to different about technologies case the as strong bridging this. all This zero. there. being asset. And of for our and it as in, everywhere built we necessarily use more public the growth continued see cases has be this we have so use But so that in Platform That is important are proposition. flow mean Confluent is are goes really most of and use that in case for customers data,

growth even of higher Steffan So we NRR ton And in we as that are NRR. see a seeing that to, hybrid the segment. highest alluded segment, the in cloud-only than

Shane Xie

KeyBanc. Our Heath last at Eric question from comes

Eric Heath

more on that to Jay, deal. curious just color eight-figure hear expansion

customer Just in there? win? any And number playbook the sales channel that? one, cloud was a And that were two, number involved partners what was

Jay Kreps

product for tech cloud. cloud. We like sense the is deal customers is all feel that virtually They're the a in makes Cloud It for us. only

change. And don't an like we're And XX New in have – do, starting you It exact users biggest And call but after. I go the to think Because just aggressive make customers most most be Certainly, really have have in right cost to there's who Kafka all we tech. top a a well of ranking, and be the is really that. of, them big these these us Relic teams it, prize if to there's pushes so, massive high the large this. capabilities built users. important get kind to that's Kafka there, the reliability, yes, serve like things effective, very around to enter as it open-source right? high to group performance, internal something customers is

and Some organizations the to application of team people Kafka every attached that's a of these have infrastructure, running XX it's they run.

do great of We've So, to customers doing we that's of companies, that well and some it's tech that on have yes, lower engineers are some and tech getting in now get expand try an a started part there. overall tech something customers. the for great in business these been matters. to We the shift I for and large set kind companies infrastructure think intend time mindset of kind we're I And just even commercial-size revenues, in smaller the us. though that area out I customers of put tech self-managed, think in-house of think large

Eric Heath

in. I could one if sneak just And more

the you there. on partnerships public announced the with competitive deeper vendors, landscape cloud some Just

I'm maybe just that from to curious it's if front? competition more turning on So, cooperation

Jay Kreps

flow getting important cooperation The little it, play Well, their really bit think, of into the data data the we into role, from and it's systems. in kind a cloud of both. the a that comes actually, actually I fact of the

positive more much other viewed other all infrastructure a the the really Google other with services so, a in we're And I of ecosystem. our we're element think of strategic cooperation and connectors. areas, than their big BigQuery and because and technologies warehouse as these to data data clouds Hence, deliverer through

have So, obviously with. incredibly we They products cooperative. compete that part's different

some do those but of you hear we feel up, Some come that well. we compete never would very about, products

do excellent is comes really space. different vendors, really this. streaming I around an depth has can't up, parts I kind to emerged. And have win the come after in that's actually ability in something in put span with strategy do a the real We the of think this can't out position environments, a unique integrated of kind our really that they us around all Coupled think going when in of depth they the or cloud which with any rate and of don't well.

Shane Xie

all This concludes call. for care. Thank today's us. Take earnings joining you

Jay Kreps

Thank you.

Confluent (CFLT) 6 May 222022 Q1 Earnings call transcript