- Fourth quarter total revenue of $213 million, up 26% year over
year; fiscal year 2023 total revenue of $777 million, up 33% year
over year
- Fourth quarter subscription revenue of $203 million, up 31%
year over year; fiscal year 2023 subscription revenue of $729
million, up 36% year over year
- Fourth quarter Confluent Cloud revenue of $100 million, up 46%
year over year; fiscal year 2023 Confluent Cloud revenue of $349
million, up 65% year over year
- 1,229 customers with $100,000 or greater in ARR, up 21% year
over year
Confluent, Inc. (NASDAQ: CFLT), the data streaming
pioneer, today announced financial results for its fourth quarter
and fiscal year 2023, ended December 31, 2023.
“Confluent closed fiscal year 2023 on a high note, delivering
our first $100 million quarter in Confluent Cloud revenue,
representing growth of 46% year over year, and growing subscription
revenue by 31% year over year,” said Jay Kreps, co-founder and CEO,
Confluent. “Our momentum is driven by our leadership of the data
streaming platform category, which has become a requirement to
deliver business critical use cases like connected customer
experiences, cloud migrations and now real time generative AI.”
“We accomplished our stated goals of driving high revenue growth
for fiscal year 2023 while accelerating our path to achieving our
first positive non-GAAP operating margin in Q4,” said Rohan
Sivaram, CFO, Confluent. “Given our solid Q4 performance, we feel
confident in achieving our revenue guidance for 2024 and our first
breakeven year for both non-GAAP operating margin and free cash
flow margin.”
Fourth Quarter 2023 Financial
Highlights
(In millions, except per share data and
percentages)
Q4 2023
Q4 2022
Y/Y Change
Total Revenue
$213.2
$168.7
26%
Subscription Revenue
$202.8
$155.3
31%
GAAP Operating Loss
$(84.7)
$(115.0)
$30.3
Non-GAAP Operating Income (Loss)
$11.2
$(36.3)
$47.5
GAAP Operating Margin
(39.7%)
(68.2%)
28.5 pts
Non-GAAP Operating Margin
5.3%
(21.5%)
26.8 pts
GAAP Net Loss Per Share
$(0.30)
$(0.37)
$0.07
Non-GAAP Net Income (Loss) Per Diluted
Share
$0.09
$(0.09)
$0.18
Net Cash Provided by (Used in) Operating
Activities
$12.2
$(27.1)
$39.3
Free Cash Flow
$6.8
$(30.9)
$37.7
Fiscal Year 2023 Financial
Highlights
(In millions, except per share data and
percentages)
FY 2023
FY 2022
Y/Y Change
Total Revenue
$777.0
$585.9
33%
Subscription Revenue
$729.1
$535.0
36%
GAAP Operating Loss
$(478.8)
$(462.7)
$(16.1)
Non-GAAP Operating Loss
$(57.3)
$(176.9)
$119.6
GAAP Operating Margin
(61.6%)
(79.0%)
17.4 pts
Non-GAAP Operating Margin
(7.4%)
(30.2%)
22.8 pts
GAAP Net Loss Per Share
$(1.47)
$(1.62)
$0.15
Non-GAAP Net Income (Loss) Per Diluted
Share
$0.04
$(0.58)
$0.62
Net Cash Used in Operating Activities
$(103.7)
$(157.3)
$53.6
Free Cash Flow
$(124.3)
$(171.8)
$47.5
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
As previously announced, Confluent will be transitioning its
financial outlook from total revenue to subscription revenue. To
assist with the transition, this quarter and next quarter Confluent
will continue to provide total revenue outlook for the first and
second quarter of 2024, as well as fiscal year 2024, before
transitioning to providing only subscription revenue outlook
beginning with outlook for the third quarter of 2024.
For the first quarter of 2024, Confluent expects:
- Total revenue between $211 million and $212 million
- Subscription revenue between $199 million to $200 million
- Non-GAAP operating margin of approximately negative 4%
- Non-GAAP net income per diluted share between $0.00 to
$0.02
For fiscal year 2024, Confluent expects:
- Total revenue of approximately $950 million
- Non-GAAP operating margin of approximately 0%
- Non-GAAP net income per diluted share of approximately
$0.17
A reconciliation of forward-looking non-GAAP operating margin
and non-GAAP net income per share to the most directly comparable
GAAP measures is not available without unreasonable effort, as
certain items cannot be reasonably predicted because of their high
variability, complexity and low visibility. In particular, the
measures and effects of our stock-based compensation expense
specific to our equity compensation awards and employer payroll
tax-related items on employee stock transactions are directly
impacted by the timing of employee stock transactions and
unpredictable fluctuations in our stock price, which we expect to
have a significant impact on our future GAAP financial results.
Conference Call Information
Confluent will host a video webcast to discuss the company’s
fourth quarter and fiscal year 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 total revenue, subscription revenue, non-GAAP operating
margin, non-GAAP net income per share, 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 ability to drive
efficient growth and rate and pace of investments, including
expected capital allocation (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,
including from customers building generative AI applications, (xii)
dependence of businesses on data in motion, (xiii) growth in and
growth rate of revenue, customers, 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, direction and growth of stream processing, its
potential to accelerate adoption of our platform and growth of our
business, and our ability and positioning to capture this market,
(xxi) our ability to meet near-term and mid-term financial targets,
(xxii) our expectations of relevance of certain key financial and
operating metrics, (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, (iii) 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, (iv) 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, (v) our ability to attract new customers and retain
and sell additional features and services to our existing
customers, (vi) 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, (vii) our ability to achieve profitability and
improve margins annually, by our expected timelines or at all,
(viii) 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, (ix)
our ability to compete effectively in an increasingly competitive
market, (ix) our ability to attract and retain highly qualified
personnel, including as we reorient our go-to-market strategy and
model around customer consumption, (x) our ability to successfully
transition executive leadership, (xi) 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, (xii) our reliance on third-party
cloud-based infrastructure to host Confluent Cloud, (xiii) public
sector budgetary cycles and funding reductions or delays, such as
an extended federal government shutdown, (xiv) our ability to
accurately forecast our future performance, business and growth,
and (xv) 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 September 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 Annual Report on Form 10-K for the
year ended December 31, 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 income (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 income (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 income (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; acquisition-related expenses; restructuring
and other related charges; amortization of debt issuance costs; and
income tax effects associated with these adjustments as well as the
non-recurring income tax expense or benefit associated with
acquisitions. 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.
Definition
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.
About Confluent
Confluent is the data streaming platform that is pioneering a
fundamentally new category of data infrastructure that sets data in
motion. Confluent’s cloud-native offering is the foundational
platform for data in motion – designed to be the intelligent
connective tissue enabling real-time data, from multiple sources,
to constantly stream across the organization. With Confluent,
organizations can meet the new business imperative of delivering
rich, digital front-end customer experiences and transitioning to
sophisticated, real-time, software-driven backend operations.
Confluent, Inc.
Condensed Consolidated Balance
Sheets
(in thousands)
(unaudited)
December 31,
December 31,
2023
2022
ASSETS Current assets: Cash and cash equivalents
$
349,761
$
435,781
Marketable securities
1,551,009
1,491,044
Accounts receivable, net
229,962
178,188
Deferred contract acquisition costs
43,937
35,883
Prepaid expenses and other current assets
76,986
57,229
Total current assets
2,251,655
2,198,125
Property and equipment, net
54,012
29,089
Operating lease right-of-use assets
10,061
29,478
Goodwill and intangible assets, net
55,490
-
Deferred contract acquisition costs, non-current
75,815
68,401
Other assets, non-current
13,776
19,756
Total assets
$
2,460,809
$
2,344,849
LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities:
Accounts payable
$
6,714
$
21,439
Accrued expenses and other liabilities
141,847
105,331
Operating lease liabilities
7,890
7,375
Deferred revenue
330,570
290,185
Total current liabilities
487,021
424,330
Operating lease liabilities, non-current
17,391
25,136
Deferred revenue, non-current
22,436
32,644
Convertible senior notes, net
1,088,313
1,084,500
Other liabilities, non-current
35,233
8,762
Total liabilities
1,650,394
1,575,372
Stockholders’ equity: Preferred stock
-
-
Class A common stock
2
2
Class B common stock
1
1
Additional paid-in capital
2,453,293
1,980,335
Accumulated other comprehensive income (loss)
1,270
(9,456
)
Accumulated deficit
(1,644,151
)
(1,201,405
)
Total stockholders’ equity
810,415
769,477
Total liabilities and stockholders’ equity
$
2,460,809
$
2,344,849
Confluent, Inc.
Condensed Consolidated
Statements of Operations
(in thousands, except share and
per share data)
(unaudited)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Revenue: Subscription
$
202,787
$
155,341
$
729,112
$
535,009
Services
10,397
13,325
47,840
50,935
Total revenue
213,184
168,666
776,952
585,944
Cost of revenue: Subscription(1)(2)
44,807
38,696
176,004
146,324
Services(1)(2)
12,250
15,253
53,666
56,091
Total cost of revenue
57,057
53,949
229,670
202,415
Gross profit
156,127
114,717
547,282
383,529
Operating expenses: Research and development(1)(2)
86,948
71,809
348,752
264,041
Sales and marketing(1)(2)
119,911
122,684
504,929
456,452
General and administrative(1)(2)
33,948
35,209
137,520
125,710
Restructuring and other related charges
-
-
34,854
-
Total operating expenses
240,807
229,702
1,026,055
846,203
Operating loss
(84,680
)
(114,985
)
(478,773
)
(462,674
)
Other income, net
21,775
11,327
72,099
16,416
Loss before income taxes
(62,905
)
(103,658
)
(406,674
)
(446,258
)
Provision for income taxes
31,191
2,226
36,072
6,293
Net loss
$
(94,096
)
$
(105,884
)
$
(442,746
)
$
(452,551
)
Net loss per share, basic and diluted
$
(0.30
)
$
(0.37
)
$
(1.47
)
$
(1.62
)
Weighted-average shares used to compute net loss per share, basic
and diluted
309,101,119
286,732,756
300,727,487
280,080,357
(1) Includes stock-based compensation
expense as follows:
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
Cost of revenue - subscription
$
6,207
$
5,492
$
25,620
$
23,136
Cost of revenue - services
2,575
2,379
11,096
9,253
Research and development
36,596
28,385
139,809
101,499
Sales and marketing
30,895
26,846
124,568
99,366
General and administrative
12,598
12,926
48,740
44,402
Total stock-based compensation expense
$
88,871
$
76,028
$
349,833
$
277,656
(2) Includes employer taxes on employee stock transactions as
follows:
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
Cost of revenue - subscription
$
102
$
84
$
867
$
569
Cost of revenue - services
48
385
392
604
Research and development
376
755
4,037
2,632
Sales and marketing
511
177
3,880
2,485
General and administrative
259
131
1,855
720
Total employer taxes on employee stock transactions
$
1,296
$
1,532
$
11,031
$
7,010
Confluent, Inc.
Condensed Consolidated
Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
CASH FLOWS FROM OPERATING ACTIVITIES Net loss
$
(94,096
)
$
(105,884
)
$
(442,746
)
$
(452,551
)
Adjustments to reconcile net loss to cash used in operating
activities: Depreciation and amortization
3,923
2,485
13,910
7,620
Net accretion of discounts on marketable securities
(11,484
)
(6,022
)
(42,505
)
(8,891
)
Amortization of debt issuance costs
963
959
3,813
3,799
Amortization of deferred contract acquisition costs
12,428
10,286
45,888
37,339
Non-cash operating lease costs
874
1,991
3,992
8,608
Lease abandonment charges
-
-
15,667
-
Stock-based compensation, net of amounts capitalized
88,871
76,028
349,833
277,656
Deferred income taxes
1,864
(283
)
1,889
(237
)
Other
(756
)
504
2,358
1,384
Changes in operating assets and liabilities, net of effects of
business combinations: Accounts receivable
(47,453
)
(35,665
)
(53,593
)
(42,080
)
Deferred contract acquisition costs
(21,781
)
(20,724
)
(61,354
)
(62,801
)
Prepaid expenses and other assets
3,438
3,248
(10,387
)
(17,850
)
Accounts payable
4,756
7,132
(14,452
)
13,580
Accrued expenses and other liabilities
43,368
8,226
61,333
9,948
Operating lease liabilities
(1,917
)
(2,270
)
(7,479
)
(9,209
)
Deferred revenue
29,237
32,911
30,176
76,352
Net cash provided by (used in) operating activities
12,235
(27,078
)
(103,657
)
(157,333
)
CASH FLOWS FROM INVESTING ACTIVITIES Capitalization of
internal-use software costs
(4,299
)
(2,781
)
(17,845
)
(10,334
)
Purchases of marketable securities
(351,105
)
(528,660
)
(1,586,693
)
(2,051,908
)
Maturities of marketable securities
374,612
482,899
1,578,323
1,200,558
Purchases of property and equipment
(1,116
)
(1,006
)
(2,834
)
(4,121
)
Cash paid for business combinations, net of cash acquired
(10,000
)
-
(55,802
)
-
Net cash provided by (used in) investing activities
8,092
(49,548
)
(84,851
)
(865,805
)
CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance
of common stock upon exercise of vested options
10,974
8,329
73,919
42,461
Proceeds from issuance of common stock upon early exercise of
unvested options
-
-
-
416
Repurchases of unvested common stock
-
(80
)
(255
)
(789
)
Payments of debt issuance costs for convertible senior notes
-
-
-
(786
)
Proceeds from issuance of common stock under employee stock
purchase plan
-
-
28,708
40,939
Net cash provided by financing activities
10,974
8,249
102,372
82,241
Effect of exchange rate changes on cash, cash equivalents, and
restricted cash
1,417
2
116
(4
)
Net increase (decrease) in cash, cash equivalents, and restricted
cash
32,718
(68,375
)
(86,020
)
(940,901
)
Cash, cash equivalents, and restricted cash at beginning of period
317,043
504,156
435,781
1,376,682
Cash, cash equivalents, and restricted cash at end of period
$
349,761
$
435,781
$
349,761
$
435,781
Reconciliation of cash, cash equivalents, and restricted cash
within the consolidated balance sheets to the amounts shown
above: Cash and cash equivalents
$
349,761
$
435,781
$
349,761
$
435,781
Restricted cash included in other assets, current
-
-
-
-
Total cash, cash equivalents, and restricted cash
$
349,761
$
435,781
$
349,761
$
435,781
Confluent, Inc.
Reconciliation of GAAP
Measures to Non-GAAP Measures
(in thousands, except
percentages, share and per share data)
(unaudited)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Reconciliation of GAAP total gross profit to non-GAAP total
gross profit: Total gross profit on a GAAP basis
$
156,127
$
114,717
$
547,282
$
383,529
Total gross margin on a GAAP basis
73.2
%
68.0
%
70.4
%
65.5
%
Add: Stock-based compensation expense
8,782
7,871
36,716
32,389
Add: Employer taxes on employee stock transactions
150
469
1,259
1,173
Add: Amortization of acquired intangibles
195
-
564
-
Non-GAAP total gross profit
$
165,254
$
123,057
$
585,821
$
417,091
Non-GAAP total gross margin
77.5
%
73.0
%
75.4
%
71.2
%
Reconciliation of GAAP operating expenses to non-GAAP
operating expenses: Research and development operating expense
on a GAAP basis
$
86,948
$
71,809
$
348,752
$
264,041
Less: Stock-based compensation expense
36,596
28,385
139,809
101,499
Less: Employer taxes on employee stock transactions
376
755
4,037
2,632
Less: Acquisition-related expenses
3,841
-
19,203
-
Non-GAAP research and development operating expense
$
46,135
$
42,669
$
185,703
$
159,910
Non-GAAP research and development operating expense as a percentage
of total revenue
21.6
%
25.3
%
23.9
%
27.3
%
Sales and marketing operating expense on a GAAP basis
$
119,911
$
122,684
$
504,929
$
456,452
Less: Stock-based compensation expense
30,895
26,846
124,568
99,366
Less: Employer taxes on employee stock transactions
511
177
3,880
2,485
Less: Acquisition-related expenses
1,076
-
4,304
-
Non-GAAP sales and marketing operating expense
$
87,429
$
95,661
$
372,177
$
354,601
Non-GAAP sales and marketing operating expense as a percentage of
total revenue
41.0
%
56.7
%
47.9
%
60.5
%
General and administrative operating expense on a GAAP basis
$
33,948
$
35,209
$
137,520
$
125,710
Less: Stock-based compensation expense
12,598
12,926
48,740
44,402
Less: Employer taxes on employee stock transactions
259
131
1,855
720
Less: Acquisition-related expenses
650
1,104
1,640
1,104
Non-GAAP general and administrative operating expense
$
20,441
$
21,048
$
85,285
$
79,484
Non-GAAP general and administrative operating expense as a
percentage of total revenue
9.6
%
12.5
%
11.0
%
13.6
%
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Reconciliation of GAAP operating loss to non-GAAP operating
income (loss): Operating loss on a GAAP basis
$
(84,680
)
$
(114,985
)
$
(478,773
)
$
(462,674
)
Add: Stock-based compensation expense
88,871
76,028
349,833
277,656
Add: Employer taxes on employee stock transactions
1,296
1,532
11,031
7,010
Add: Amortization of acquired intangibles
195
-
564
-
Add: Acquisition-related expenses
5,567
1,104
25,147
1,104
Add: Restructuring and other related charges
-
-
34,854
-
Non-GAAP operating income (loss)
$
11,249
$
(36,321
)
$
(57,344
)
$
(176,904
)
Non-GAAP operating margin
5.3
%
(21.5
%)
(7.4
%)
(30.2
%)
Reconciliation of GAAP net loss to non-GAAP net income
(loss): Net loss on a GAAP basis
$
(94,096
)
$
(105,884
)
$
(442,746
)
$
(452,551
)
Add: Stock-based compensation expense
88,871
76,028
349,833
277,656
Add: Employer taxes on employee stock transactions
1,296
1,532
11,031
7,010
Add: Amortization of acquired intangibles
195
-
564
-
Add: Acquisition-related expenses
5,567
1,104
25,147
1,104
Add: Restructuring and other related charges
-
-
34,854
-
Add: Amortization of debt issuance costs
963
959
3,813
3,799
Add: Income tax effects and adjustments(1)
29,373
656
30,570
1,631
Non-GAAP net income (loss)
$
32,169
$
(25,605
)
$
13,066
$
(161,351
)
Non-GAAP net income (loss) per share, basic
$
0.10
$
(0.09
)
$
0.04
$
(0.58
)
Non-GAAP net income (loss) per share, diluted
$
0.09
$
(0.09
)
$
0.04
$
(0.58
)
Weighted-average shares used to compute non-GAAP net income (loss)
per share, basic
309,101,119
286,732,756
300,727,487
280,080,357
Weighted-average shares used to compute non-GAAP net income (loss)
per share, diluted
342,370,878
286,732,756
339,567,823
280,080,357
(1) Income tax effects and adjustments for
the three months ended and year ended December 31, 2023 primarily
consist of income tax expense related to an intra-group transfer of
acquired intellectual property.
The following table presents a reconciliation of free cash flow
to net cash provided by (used in) operating activities, the most
directly comparable GAAP measure, for each of the periods indicated
(unaudited, in thousands, except percentages):
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Net cash provided by (used in) operating activities
$
12,235
$
(27,078
)
$
(103,657
)
$
(157,333
)
Capitalized internal-use software costs
(4,299
)
(2,781
)
(17,845
)
(10,334
)
Capital expenditures
(1,116
)
(1,006
)
(2,834
)
(4,121
)
Free cash flow
$
6,820
$
(30,865
)
$
(124,336
)
$
(171,788
)
Free cash flow margin
3.2
%
(18.3
%)
(16.0
%)
(29.3
%)
Net cash provided by (used in) investing activities
$
8,092
$
(49,548
)
$
(84,851
)
$
(865,805
)
Net cash provided by financing activities
$
10,974
$
8,249
$
102,372
$
82,241
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240206860627/en/
Investor Contact Shane Xie investors@confluent.io
Media Contact Taylor Jones pr@confluent.io
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