Confluent — Q2 2023 Earnings Presentation
43 slides from Confluent's earnings presentation, Aug 2, 2023
Slide 1: Q2 2023 Earnings Call
Q2 2023 Earnings Call August 2, 2023
Slide 2: Forward Looking Statements and Non-GAAP Financial Measures
Forward Looking Statements and Non-GAAP Financial Measures This presentation and the accompanying oral presentation (together, the “presentation”) contain forward-looking statements including, among other things, statements regarding (i) our financial outlook, including expected revenue mix, operatin
Slide 3: Jay Kreps
Jay Kreps Co-Founder and CEO 3
Slide 4: Organizational Update
Organizational Update Steffan Tomlinson Rohan Sivaram Confluent's CFO Confluent's Incoming CFO 4
Slide 5: Rohan Sivaram
Rohan joined Confluent in October 2020 and has built and led corporate finance, IR, treasury, and business operations. As CFO, Rohan will lead all of Confluent’s finance and business technology & data teams. Rohan Sivaram Previously: Confluent's Incoming CFO 5
Slide 6: Thanks Steffan!
Thanks Steffan! 6
Slide 7: Thanks Steffan! Rohan Sivaram
Thanks Steffan! Rohan Sivaram Wish you the very best Confluent's Incoming CFO 7
Slide 8: Strong Second Quarter Results
Strong Second Quarter Results Total Confluent Cloud Non-GAAP Revenue Revenue Operating Margin $189M $84M +24 pts +36% YoY +78% YoY YoY Note: Financials are for the period ended June 30, 2023. Refer to the slides in the section titled “GAAP to Non-GAAP Reconciliations” in the Appendix, for a reconcili
Slide 9: Current Conference Highlights: 95 Speakers
1,500+ In-person Attendees 2,300+ Virtual Attendees 50+ Countries Represented 95 Speakers 9
Slide 10: Kora Engine
KORA ENGINE The Apache Kafka® Engine Built for the Cloud 10
Slide 11: Data Streaming Platform
Data Streaming Platform ML & AI Data Pipelines Real-time Analytics Data Analytics Cyber-Security IoT & Telematics ML & AIand more… Geofencing Streaming ETL Dynamic Pricing Shipment Tracking / Alerting Customer 360 and more… DATA STREAMING APPLICATIONS CONNECT GOVERN PROCESS SHARE DSP STREAM KORA: TH
Slide 12: Stream
Stream ML & AI Data Pipelines Real-time Analytics Data Analytics Cyber-Security IoT & Telematics ML & AIand more… Geofencing Streaming ETL Dynamic Pricing Shipment Tracking / Alerting Customer 360 and more… DATA STREAMING APPLICATIONS CONNECT GOVERN PROCESS SHARE DSP STREAM KORA: THE APACHE KAFKA EN
Slide 13: Connect
Connect ML & AI Data Pipelines Real-time Analytics Data Analytics Cyber-Security IoT & Telematics ML & AIand more… Geofencing Streaming ETL Dynamic Pricing Shipment Tracking / Alerting Customer 360 and more… DATA STREAMING APPLICATIONS CONNECT GOVERN PROCESS SHARE DSP STREAM KORA: THE APACHE KAFKA E
Slide 14: Connectors
Connectors 120+ Pre-Built Connectors 70+ Fully Managed Connectors 14
Slide 15: Govern
Govern ML & AI Data Pipelines Real-time Analytics Data Analytics Cyber-Security IoT & Telematics ML & AIand more… Geofencing Streaming ETL Dynamic Pricing Shipment Tracking / Alerting Customer 360 and more… DATA STREAMING APPLICATIONS CONNECT GOVERN PROCESS SHARE DSP STREAM KORA: THE APACHE KAFKA EN
Slide 16: Stream Governance
VALIDATE Stream Governance PROTECT CLASSIFY Where did data come from? Where is it going? Where, when, and how was it transformed? Who can access the data? What is the current state of the stream? Is it compliant with regulatory standards? DISCOVER CONNECT 16
Slide 17: Process
Process ML & AI Data Pipelines Real-time Analytics Data Analytics Cyber-Security IoT & Telematics ML & AIand more… Geofencing Streaming ETL Dynamic Pricing Shipment Tracking / Alerting Customer 360 and more… DATA STREAMING APPLICATIONS CONNECT GOVERN PROCESS SHARE DSP STREAM KORA: THE APACHE KAFKA E
Slide 18: Flink
Flink The Emerging De Facto Standard for Stream Processing 18
Slide 19: Share
Share ML & AI Data Pipelines Real-time Analytics Data Analytics Cyber-Security IoT & Telematics ML & AIand more… Geofencing Streaming ETL Dynamic Pricing Shipment Tracking / Alerting Customer 360 and more… DATA STREAMING APPLICATIONS CONNECT GOVERN PROCESS SHARE DSP STREAM KORA: THE APACHE KAFKA ENG
Slide 20: Stream Sharing
Example: Travel Airports Airlines Stream Sharing We Bring Real-time to Secure Data Sharing Between Organizations and Extend the Network Effect Bookings Baggage 20
Slide 21: Virtuous Cycle of Data Streaming Platforms
Virtuous Cycle of Data Streaming Platforms Connect Govern Stream Share Process 21
Slide 22: Complete Data Streaming Platform
Complete Data Streaming Platform ML & AI Data Pipelines Real-time Analytics Data Analytics Cyber-Security IoT & Telematics ML & AIand more… Geofencing Streaming ETL Dynamic Pricing Shipment Tracking / Alerting Customer 360 and more… DATA STREAMING APPLICATIONS CONNECT GOVERN PROCESS SHARE DSP STREAM
Slide 23: Customer Highlight: Meesho
Customer Highlight Meesho 23
Slide 24: Customer Highlight: Policygenius
Policygenius Customer Highlight PolicyGenius 24
Slide 25: Customer Highlight: Recursion Pharmaceuticals
Customer Highlight Recursion Pharmaceuticals 25
Slide 26: Steffan Tomlinson
Steffan Tomlinson Chief Financial Officer 26
Slide 27: Remaining Performance Obligations (RPO)
Remaining Performance Obligations (RPO) RPO Current RPO ~65% of RPO $791.4M ~$514.8M +34% YoY +41% YoY Note: Metrics are as of period ended June 30, 2023. 27 See Appendix for the definition of “Current RPO”.
Slide 28: Customers
Customers Total Customers with Customers with Customers ≥ $100K in ARR ≥ $1M in ARR ~4,830 1,144 147 +17% YoY +33% YoY +48% YoY +140 QoQ +69 QoQ +12 QoQ Note: Metrics are as of period ended June 30, 2023. 28 See Appendix for the definitions for “Total Customers”, “Customers with $100,000 or greater i
Slide 29: Dollar-Based Net Retention Rate (NRR)
Dollar-Based Net Retention Rate (NRR) Total Gross Cloud NRR Retention NRR >130% >90% >140% Note: Metrics are as of period ended June 30, 2023. 29 See Appendix for the definitions for “Dollar-Based Net Retention Rate,” “Gross Retention Rate,” and “Cloud NRR.”
Slide 30: Revenue
Revenue Total Subscription Revenue Revenue $189.3M $176.5M +36% YoY +39% YoY 93% of Total Revenue Note: Financials are for the quarter ended June 30, 2023. 30
Slide 31: Revenue by Product
Revenue by Product Confluent Platform Confluent Cloud Confluent Cloud % Revenue Revenue New ACV Bookings $92.9M $83.6M >50% +16% YoY +78% YoY 49% of Total Revenue 44% of Total Revenue Greater Than 50% for the 7th +$9.9M Q/Q Consecutive Quarter Note: Financials are for the quarter ended June 30, 2023. 3
Slide 32: Revenue by Geography
Revenue by Geography Revenue Revenue From the U.S. From Outside the U.S. $113.9M $75.4M +30% YoY +45% YoY 60% of Total Revenue 40% of Total Revenue Note: Financials are for the quarter ended June 30, 2023. 32
Slide 33: Non-GAAP Gross Margins
Non-GAAP Gross Margins Total Subscription Gross Margin Gross Margin 75.0% 79.1% +440 bps YoY +230 bps YoY Note: Financials are for the quarter ended June 30, 2023. Refer to the slides in the section titled “GAAP to Non-GAAP Reconciliations” in the Appendix, for a reconciliation of our non-GAAP financ
Slide 34: Other Financial Summary
Other Financial Summary Q2’23 Non-GAAP Operating Margin (9.2%), +24 pts YoY Non-GAAP Net Income Per Share $0.00, +$0.16 YoY Free Cash Flow Margin (18.6%), +8 pts YoY Cash, Cash Equivalents, and Marketable Securities $1.85B Weighted-Average Shares Outstanding 297.8M Basic, 339.3M Diluted Fully Dilute
Slide 35: 1H Learnings & 2H Outlook
1H Learnings & 2H Outlook Beginning of the Year 1H’23 Learnings Subscription Revenue Tough selling environment: Customers are more inclined to: Confluent Platform (CP): ● Additional budget scrutiny ● Sign shorter duration contracts ● Remains resilient and changes in customer ● Start with smaller init
Slide 36: Guidance
Guidance Q3’23 FY’23 $193.5M-$195.5M $767M-$772M Total Revenue 28%-29% YoY 31%-32% YoY ~$92.2M Cloud Revenue N/A 62% YoY Non-GAAP Operating Margin ~ (10%) ~ (10%) Non-GAAP Net Income (Loss) Per Share $(0.01)-$0.00 $(0.05)-$(0.02) 304M Basic Weighted-Average Shares Outstanding 300M Basic 350M Diluted
Slide 37: Thank You
/ ae Thank You @) CONFLUENT
Slide 38: Appendix
Appendix 38
Slide 39: Definitions
Definitions Current Remaining Performance Obligations (Current RPO): Represents the estimated amount of contracted future revenue expected to be recognized as revenue over the next 12 months. Annual Recurring Revenue (ARR): We define ARR as (1) with respect to Confluent Platform customers, the amount o
Slide 40: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations (in thousands, except percentages) Q2’22 Q2’23 Total revenue $139,407 $189,285 Total gross profit on a GAAP basis $89,898 $131,365 Add: Stock-based compensation expense 8,346 10,039 Add: Employer taxes on employee stock transactions 150 393 Add: Amortization of acquir
Slide 41: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations (in thousands, except percentages) Q2’22 Q2’23 Total revenue $139,407 $189,285 Operating loss on a GAAP basis $(117,307) $(119,368) Add: Stock-based compensation expense 68,866 92,159 Add: Employer taxes on employee stock transactions 1,670 3,599 Add: Amortization of
Slide 42: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations (in thousands, except percentages, share and per share data) Q2’22 Q2’23 Net loss on a GAAP basis $(117,631) $(103,425) Add: Stock-based compensation expense 68,866 92,159 Add: Employer taxes on employee stock transactions 1,670 3,599 Add: Amortization of acquired in
Slide 43: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations (in thousands, except percentages) Q2’22 Q2’23 Total revenue $139,407 $189,285 Net cash used in operating activities $(33,472) $(29,060) Add: Capitalized internal-use software costs (2,256) (5,330) Add: Capital expenditures (1,184) (809) Free cash flow $(36,912) $(35,