Cloud Stocks: Confluent Expands Ecosystem with Microsoft and AWS

According to Gartner, the global application infrastructure middleware market is projected to grow at 10% CAGR to $ 83.1 billion by 2027 from $ 47.5 billion in 2021. Silicon Valley-based Confluent is a leading player in the sector that operates a data streaming platform. Its managed cloud-native service for connecting and processing data and an enterprise-grade self-managed software, which connects and processes data in real-time with the foundational platform for data in motion, are seeing strong market adoption as was evident in its recent results.

Confluent’s Financials

Revenues for the first-quarter grew 64% to $126 million. Non GAAP loss was $0.41 per share. The market was looking for revenues of $118.49 million and a loss of $0.42 per share

By segment, subscription revenues grew 67.55% to $113.92 million, and service revenues grew 35.23% to $12.3 million.

Among key metrics, customers with ARR of more than $100,000 grew to 791. Confluent Cloud revenue grew 180% to $39 million.

For the second quarter, Confluent expects revenues of $130-$132 million and a loss per share of $0.21-$0.19. For the fiscal year, it expects revenues of $554-$560 million, and a loss per share of $0.79-$0.73.

Confluent’s Partnership Expansion

Recently, Confluent announced the expansion of its partnership with Microsoft. The partnership increases investments across technology integrations, solution development, and go-to-market activities. Both Confluent and Microsoft are able to reduce the operational burden of managing data streams in Azure while also speeding up real-time application development in the cloud. The deepened partnership will allow Confluent Cloud to be quickly accessed with single sign-on through Azure Marketplace’s Active Directory and integrate billing with Azure billing accounts for simple cost management.

Confluent also announced a strategic collaboration agreement with Amazon Web Services. Under the five-year agreement, Confluent and AWS will work on joint go-to-market initiatives to help organizations accelerate their cloud adoption journey with real-time data. Confluent Cloud is already available in AWS Marketplace and runs on AWS to integrate management, security, and billing. It allows companies to migrate and connect data in real-time to services including Amazon Simple Storage Service (S3), Amazon Redshift, Amazon DynamoDB, Amazon Lambda, with over 120 pre-built connectors. These connectors help enterprises migrate and modernize data platforms more easily.

Confluent Cloud has been built on Apache Kafka’s open source foundation, and is a fully managed service that completes the open source project and makes it easier to adopt data streaming. Confluent on AWS is able to provide a stable Kafka operating environment, and is a cost-effective solution allowing organizations to connect to other AWS services.

Confluent’s stock is currently trading at $24.86 with a market capitalization of $6.91 billion. It reported a year high of $94.97 in November last year and a low of $16.48 in May. The company had listed last June when it raised $828 million at a stock price of $36 and a valuation of $9.1 billion.

Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article.

Photo Credit: Picabel from Pixabay

This segment is a part in the series : Cloud Stocks