Confluent : Supplemental financial information q125

Q1 2025 Supplemental Financial Information Table of Contents

Non-GAAP Financial Measures	1
Condensed Consolidated Statements of Operations - Fiscal Quarters	2
Condensed Consolidated Balance Sheets	3
Condensed Consolidated Statements of Cash Flows - Fiscal Quarters	4
Reconciliation of GAAP to Non-GAAP Measures - Fiscal Quarters	5

‌Non-GAAP Financial Measures

This supplemental financial information contains financial statements that have not been prepared in accordance with generally accepted accounting principles in the United States (GAAP). 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.

A reconciliation of our non-GAAP financial measures to the most directly comparable GAAP measures has been provided in the financial statement tables included in this supplemental financial information, and investors are encouraged to review these reconciliations.

‌Confluent, Inc. Condensed Consolidated Statements of Operations - Fiscal Quarters (in thousands, except percentages, share and per share data) (unaudited)

Three Months Ended
		Q2'23			Q3'23			Q4'23			Q1'24				Q2'24				Q3'24				Q4'24		Q1'25
Revenue:
Subscription	$	176,488		$	189,270		$	202,787		$	206,902			$	224,702			$	239,851			$	250,636		$	260,910
Services		12,797			10,911			10,397			10,335				10,284				10,348				10,584		10,210
Total revenue		189,285			200,181			213,184			217,237				234,986				250,199				261,220		271,120
Cost of revenue:
Subscription		44,188			44,104			44,807			48,355				52,863				52,162				55,220			56,847
Services		13,732			12,445			12,250			12,866				12,118				11,541				12,345		12,271
Total cost of revenue		57,920			56,549			57,057			61,221				64,981				63,703				67,565		69,118
Gross profit		131,365			143,632			156,127			156,016				170,005				186,496				193,655		202,002
Subscription		75.0%			76.7%			77.9%			76.6%				76.5%				78.3%				78.0%		78.2%
Services		(7.3%)			(14.1%)			(17.8%)			(24.5%)				(17.8%)				(11.5%)				(16.6%)			(20.2%)
Total gross margin		69.4%			71.8%			73.2%			71.8%				72.3%				74.5%				74.1%			74.5%
Operating expenses:
Research and development		85,677			91,237			86,948			97,571				106,060				102,720				114,886			116,801
Sales and marketing		127,770			128,624			119,911			131,352				132,865				137,968				145,194			146,259
General and administrative		36,343			31,874			33,948			38,444				39,429				39,471				39,359			40,120
Restructuring and other related charges		943			529			-			-				-				-				-		-
Total operating expenses		250,733			252,264			240,807			267,367				278,354				280,159				299,439		303,180
Operating loss		(119,368	)		(108,632	)		(84,680	)		(111,351	)			(108,349	)			(93,663	)			(105,784	)		(101,178	)
Other income, net		17,610			17,529			21,775			20,850				21,853				22,495				19,288		20,410
Loss before income taxes		(101,758	)		(91,103	)		(62,905	)		(90,501	)			(86,496	)			(71,168	)			(86,496	)		(80,768	)
Provision for (benefit from) income taxes		1,667			1,567			31,191			2,466				3,404				2,976				1,558			(13,194	)
Net loss	$	(103,425	)	$	(92,670	)	$	(94,096	)	$	(92,967	)		$	(89,900	)		$	(74,144	)		$	(88,054	)	$	(67,574	)
Net loss per share, basic and diluted	$	(0.35	)	$	(0.30	)	$	(0.30	)	$	(0.30	)		$	(0.28	)		$	(0.23	)		$	(0.27	)	$	(0.20	)
Weighted-average shares used to compute net loss per share, basic and diluted		297,827,200			303,896,632			309,101,119			314,203,181				319,415,586				324,317,971				329,406,849			335,755,902

‌Confluent, Inc. Condensed Consolidated Balance Sheets

(in thousands) (unaudited)

	March 31,		December 31,
	2025		2024
ASSETS
Current assets:
Cash and cash equivalents	$	278,561	$	385,980
Marketable securities		1,638,016		1,524,583
Accounts receivable, net		297,862		314,306
Deferred contract acquisition costs		46,149		47,271
Prepaid expenses and other current assets		82,250	79,179
Total current assets		2,342,838	2,351,319
Property and equipment, net		81,697		78,680
Operating lease right-of-use assets		7,923		8,818
Goodwill		164,406		164,406
Intangible assets, net		7,463		7,924
Deferred contract acquisition costs, non-current		69,069		71,468
Other assets, non-current		25,278	12,296
Total assets	$	2,698,674	$	2,694,911
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	5,983	$	7,531
Accrued expenses and other liabilities		141,922		194,250
Operating lease liabilities		9,093		8,694
Deferred revenue		372,870	378,771
Total current liabilities		529,868	589,246
Operating lease liabilities, non-current		6,735		9,138
Deferred revenue, non-current		32,511		30,430
Convertible senior notes, net		1,093,094		1,092,149
Other liabilities, non-current		11,133	12,722
Total liabilities		1,673,341	1,733,685
Stockholders' equity:
Preferred stock		-		-
Class A common stock		2		2
Class B common stock		1		1
Additional paid-in capital		3,079,260		2,953,080
Accumulated other comprehensive income (loss)		2,860		(2,641	)
Accumulated deficit	(2,056,790		)	(1,989,216	)
Total stockholders' equity		1,025,333		961,226
Total liabilities and stockholders' equity	$	2,698,674	$	2,694,911

‌Confluent, Inc. Condensed Consolidated Statements of Cash Flows - Fiscal Quarters

(in thousands) (unaudited)

Three Months Ended

Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (103,425 )		$ (92,670 )	$ (94,096 )	$ (92,967 )	$ (89,900 )	$ (74,144 )	$ (88,054 )	$ (67,574 )
Adjustments to reconcile net loss to cash (used in) provided by operating activities:
Depreciation and amortization	3,256	3,609	3,923	4,311	5,842	5,702	6,234	6,605
Net accretion of discounts on marketable securities	(10,588 )	(11,300 )	(11,484 )	(10,396 )	(9,871 )	(9,294 )	(8,205 )	(6,847 )
Amortization of debt issuance costs	950	961	963	953	953	964	966	945
Amortization of deferred contract acquisition costs	11,053	11,923	12,428	12,762	13,334	13,949	14,213	13,931
Non-cash operating lease costs	977	934	874	885	969	940	1,172	1,075
Stock-based compensation, net of amounts capitalized	92,159	89,514	88,871	95,322	99,107	98,307	102,924	92,575
Deferred income taxes	5	15	1,864	615	(273 )	(111 )	46	(17,338 )
Other	572	2,263	(756 )	849	361	485	1,675	454
Changes in operating assets and liabilities, net of effects of business combinations:
Accounts receivable	(19,361 )	5,153	(47,453 )	29,360	(58,018 )	(21,577 )	(36,327 )	15,414
Deferred contract acquisition costs	(13,806 )	(15,607 )	(21,781 )	(9,732 )	(15,296 )	(12,244 )	(15,974 )	(10,410 )
Prepaid expenses and other assets	(9,198 )	(7,768 )	3,438	(1,929 )	3,703	(2,135 )	1,205	1,515
Accounts payable	(7,395 )	(488 )	4,756	(4,932 )	11,987	1,231	(8,159 )	(1,274 )
Accrued expenses and other liabilities	24,109	10,413	43,368	(43,752 )	46,893	(10,363 )	32,861	(49,828 )
Operating lease liabilities	(1,756 )	(1,808 )	(1,917 )	(1,935 )	(1,994 )	(2,020 )	(4,191 )	(2,177 )
Deferred revenue	3,388	(4,204 )	29,237	(5,368 )	793	25,923	34,825	(3,820 )
Net cash (used in) provided by operating activities	(29,060 )	(9,060 )	12,235	(25,954 )	8,590	15,613	35,211	(26,754 )
CASH FLOWS FROM INVESTING ACTIVITIES
Capitalization of internal-use software costs	(5,330 )	(3,660 )	(4,299 )	(5,539 )	(4,776 )	(5,669 )	(5,420 )	(4,806 )
Purchases of marketable securities	(546,408 )	(235,824 )	(351,105 )	(443,307 )	(455,883 )	(273,169 )	(367,357 )	(405,235 )
Sales of marketable securities	-	-	-	-	12,744	-	2,567	-
Maturities of marketable securities	523,606	228,328	374,612	432,267	403,489	374,281	381,127	299,467
Purchases of investments in privately-held companies	-	-	-	-	(1,000 )	(1,250 )	-	-
Purchases of property and equipment	(809 )	(363 )	(1,116 )	(186 )	(1,105 )	(607 )	(669 )	(1,429 )
Cash paid for business combinations, net of cash acquired	-	-	(10,000 )	-	-	(115,516 )	-	-
Net cash (used in) provided by investing activities	(28,941 )	(11,519 )	8,092	(16,765 )	(46,531 )	(21,930 )	10,248	(112,003 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock upon exercise of vested options	27,492	14,673	10,974	14,401	13,096	8,835	19,504 16,606
Repurchases of unvested common stock	-	(32 )	-	-	-	-	- -
Proceeds from issuance of common stock under employee stock purchase plan	-	11,536	-	15,603	-	8,367	- 14,195
Net cash provided by financing activities	27,492	26,177	10,974	30,004	13,096	17,202	19,504	30,801
Effect of exchange rate changes on cash and cash equivalents	(308 )	(1,198 )	1,417	(673 )	(200 )	393	(1,589 )	537
Net (decrease) increase in cash and cash equivalents	(30,817 )	4,400	32,718	(13,388 )	(25,045 )	11,278	63,374	(107,419 )
Cash and cash equivalents at beginning of period	343,460	312,643	317,043	349,761	336,373	311,328	322,606	385,980
Cash and cash equivalents at end of period	$ 312,643	$ 317,043	$ 349,761	$ 336,373	$ 311,328	$ 322,606	$ 385,980	$ 278,561

‌Confluent, Inc. Reconciliation of GAAP to Non-GAAP Measures - Fiscal Quarters (in thousands, except percentages, share and per share data) (unaudited)

Three Months Ended
	Q2'23		Q3'23		Q4'23		Q1'24			Q2'24			Q3'24			Q4'24			Q1'25
Reconciliation of GAAP total gross profit to non-GAAP total gross profit:
Total gross profit on a GAAP basis	$	131,365	$	143,632	$	156,127		$	156,016		$	170,005		$	186,496		$	193,655	$	202,002
Total gross margin on a GAAP basis		69.4%		71.8%		73.2%			71.8%			72.3%			74.5%			74.1%		74.5%
Add: Stock-based compensation-related charges(1)		10,432		9,095		8,932			10,623			11,630			11,340			11,626		10,575
Add: Amortization of acquired intangibles		127		129		195			502			501			585			780	461
Non-GAAP total gross profit	$	141,924	$	152,856	$	165,254		$	167,141		$	182,136		$	198,421		$	206,061	$	213,038
Non-GAAP total gross margin	75.0%		76.4%		77.5%				76.9%			77.5%	79.3%					78.9%		78.6%
Reconciliation of GAAP subscription gross profit to non-GAAP subscription gross profit:
Subscription gross profit on a GAAP basis	$	132,300	$	145,166	$	157,980		$	158,547		$	171,839		$	187,689		$	195,416	$	204,063
Subscription gross margin on a GAAP basis		75.0%		76.7%		77.9%			76.6%			76.5%			78.3%			78.0%		78.2%
Add: Stock-based compensation-related charges(1)		7,179		6,350		6,309			7,905			9,292			8,999			9,242		8,708
Add: Amortization of acquired intangibles		127		129		195			502			501			585			780	461
Non-GAAP subscription gross profit	$	139,606	$	151,645	$	164,484		$	166,954		$	181,632		$	197,273		$	205,438	$	213,232
Non-GAAP subscription gross margin		79.1%		80.1%		81.1%			80.7%			80.8%			82.2%			82.0%		81.7%

Three Months Ended
	Q2'23		Q3'23		Q4'23		Q1'24			Q2'24			Q3'24			Q4'24			Q1'25
Reconciliation of GAAP operating expenses to non-GAAP operating expenses:
Research and development operating expense on a GAAP basis	$	85,677	$	91,237	$	86,948		$	97,571		$	106,060		$	102,720		$	114,886	$	116,801
Research and development operating expense as a percentage of total revenue on a GAAP basis		45.3%		45.6%		40.8%			44.9%			45.1%			41.1%			44.0%		43.1%
Less: Stock-based compensation-related charges(1)		36,726		38,464		36,972			41,424			41,866			42,259			45,938		43,835
Less: Acquisition-related expenses		3,841		3,841		3,841			4,362			4,472			5,870			10,046	9,641
Non-GAAP research and development operating expense	$	45,110	$	48,932	$	46,135		$	51,785		$	59,722		$	54,591		$	58,902	$	63,325
Non-GAAP research and development operating expense as a percentage of total revenue	23.8%		24.4%		21.6%				23.8%			25.4%	21.8%					22.5%		23.4%
Sales and marketing operating expense on a GAAP basis	$	127,770	$	128,624	$	119,911		$	131,352		$	132,865		$	137,968		$	145,194	$	146,259
Sales and marketing operating expense as a percentage of total revenue on a GAAP basis		67.5%		64.3%		56.2%			60.5%			56.5%			55.1%			55.6%		53.9%
Less: Stock-based compensation-related charges(1)		34,377		33,095		31,406			35,780			35,332			33,639			35,178		32,757
Less: Acquisition-related expenses	1,076		1,076		1,076		-			-			-			717			1,076
Non-GAAP sales and marketing operating expense	$	92,317	$	94,453	$	87,429		$	95,572		$	97,533		$	104,329		$	109,299	$	112,426
Non-GAAP sales and marketing operating expense as a percentage of total revenue		48.8%		47.2%		41.0%			44.0%			41.5%			41.7%			41.8%		41.5%
General and administrative operating expense on a GAAP basis	$	36,343	$	31,874	$	33,948		$	38,444		$	39,429		$	39,471		$	39,359	$	40,120
General and administrative operating expense as a percentage of total revenue on a GAAP basis		19.2%		15.9%		15.9%			17.7%			16.8%			15.8%			15.1%		14.8%
Less: Stock-based compensation-related charges(1)		14,223		11,333		12,857			15,158			15,872			14,599			14,837		14,410
Less: Acquisition-related expenses		281		148		650			225			6			1,169			302	14
Non-GAAP general and administrative operating expense	$	21,839	$	20,393	$	20,441		$	23,061		$	23,551		$	23,703		$	24,220	$	25,696
Non-GAAP general and administrative operating expense as a percentage of total revenue		11.5%		10.2%		9.6%			10.6%			10.0%			9.5%			9.3%		9.5%

Three Months Ended
		Q2'23			Q3'23				Q4'23				Q1'24				Q2'24				Q3'24				Q4'24		Q1'25
Reconciliation of GAAP operating loss to non-GAAP operating (loss) income:
Operating loss on a GAAP basis	$	(119,368	)	$	(108,632	)		$	(84,680	)		$	(111,351	)		$	(108,349	)		$	(93,663	)		$	(105,784	)	$	(101,178	)
GAAP operating margin		(63.1%)			(54.3%)				(39.7%)				(51.3%)				(46.1%)				(37.4%)				(40.5%)			(37.3%)
Add: Stock-based compensation-related charges(1)		95,758			91,987				90,167				102,985				104,700				101,837				107,579			101,577
Add: Amortization of acquired intangibles		127			129				195				502				501				585				780			461
Add: Acquisition-related expenses		5,198			5,065				5,567				4,587				4,478				7,039				11,065			10,731
Add: Restructuring and other related charges		943			529				-				-				-				-				-		-
Non-GAAP operating (loss) income	$	(17,342	)	$	(10,922	)		$	11,249			$	(3,277	)		$	1,330			$	15,798			$	13,640		$	11,591
Non-GAAP operating margin		(9.2%)			(5.5%)				5.3%				(1.5%)				0.6%				6.3%				5.2%		4.3%
Reconciliation of GAAP net loss to non-GAAP net income:
Net loss on a GAAP basis	$	(103,425	)	$	(92,670	)		$	(94,096	)		$	(92,967	)		$	(89,900	)		$	(74,144	)		$	(88,054	)	$	(67,574	)
Add: Stock-based compensation-related charges(1)		95,758			91,987				90,167				102,985				104,700				101,837				107,579			101,577
Add: Amortization of acquired intangibles		127			129				195				502				501				585				780			461
Add: Acquisition-related expenses		5,198			5,065				5,567				4,587				4,478				7,039				11,065			10,731
Add: Restructuring and other related charges		943			529				-				-				-				-				-			-
Add: Amortization of debt issuance costs		950			961				963				953				953				964				966			945
Add: Income tax effects and adjustments(2)(3)		507			328				29,373				(260	)			(175	)			(1,529	)			(1,272	)		(17,156	)
Non-GAAP net income	$	58		$	6,329			$	32,169			$	15,800			$	20,557			$	34,752			$	31,064		$	28,984
Non-GAAP net income per share, basic	$	0.00		$	0.02			$	0.10			$	0.05			$	0.06			$	0.11			$	0.09		$	0.09
Non-GAAP net income per share, diluted	$	0.00		$	0.02			$	0.09			$	0.05			$	0.06			$	0.10			$	0.09		$	0.08
Weighted-average shares used to compute non-GAAP net income per share, basic		297,827,200			303,896,632				309,101,119				314,203,181				319,415,586				324,317,971				329,406,849			335,755,902
Weighted-average shares used to compute non-GAAP net income per share, diluted		339,296,142			346,974,638				342,370,878				350,195,868				354,236,764				353,577,179				362,149,550			367,802,218

(1)Represents stock-based compensation expense, employer taxes on employee stock transactions, and amortization of stock-based compensation capitalized in internal-use software. We began excluding amortization of stock-based compensation capitalized in internal-use software from our non-GAAP measures starting with the quarter ended March 31, 2024. The amounts of amortization of stock-based compensation capitalized in internal-use software were immaterial in both current and prior periods.

(2)Income tax effects and adjustments for the three months ended December 31, 2023 primarily consists of income tax expense related to an intra-group transfer of acquired intellectual property.

(3)Income tax effects and adjustments for the three months ended March 31, 2025 includes an adjustment for the income tax benefit from the release of a valuation allowance on certain deferred tax asset.

Three Months Ended
		Q2'23			Q3'23		Q4'23			Q1'24				Q2'24				Q3'24		Q4'24			Q1'25
Net cash (used in) provided by operating activities	$	(29,060	)	$	(9,060	)	$	12,235	$	(25,954	)		$	8,590			$	15,613			$	35,211	$	(26,754	)
Capitalized internal-use software costs		(5,330	)		(3,660	)		(4,299	)	(5,539	)			(4,776	)			(5,669	)			(5,420	)	(4,806	)
Capital expenditures		(809	)		(363	)		(1,116	)	(186	)			(1,105	)			(607	)			(669	)	(1,429	)
Free cash flow	$	(35,199	)	$	(13,083	)	$	6,820	$	(31,679	)		$	2,709			$	9,337			$	29,122	$	(32,989	)
Impact from compensation payments adjustment(1)		-			-			-		-				-				-				-		37,930
Adjusted free cash flow	$	(35,199	)	$	(13,083	)	$	6,820	$	(31,679	)		$	2,709			$	9,337			$	29,122	$	4,941
Net cash (used in) provided by operating activities as a percentage of total revenue		(15.4%)			(4.5%)			5.7%		(11.9%)				3.7%				6.2%				13.5%	(9.9%)
Free cash flow margin		(18.6%)			(6.5%)			3.2%		(14.6%)				1.2%				3.7%				11.1%		(12.2%)
Adjusted free cash flow margin		(18.6%)			(6.5%)			3.2%		(14.6%)				1.2%				3.7%				11.1%		1.8%
Net cash (used in) provided by investing activities	$	(28,941	)	$	(11,519	)	$	8,092	$	(16,765	)		$	(46,531	)		$	(21,930	)		$	10,248	$	(112,003	)
Net cash provided by financing activities	$	27,492		$	26,177		$	10,974	$	30,004			$	13,096			$	17,202			$	19,504	$	30,801

(1)Represents an adjustment to reflect the non-recurring impact in the first quarter of 2025 from the change to timing of cash compensation payments for most of our non go-to-market employees implemented at the start of 2025.

Remaining Performance Obligations ("RPO")

RPO represent the amount of contracted future revenue that has not yet been recognized as of the end of each period, including both deferred revenue that has been invoiced and non-cancelable committed amounts that will be invoiced and recognized as revenue in future periods. RPO exclude pay-as-you-go arrangements. As of March 31, 2025, the Company's RPO was $1,016.1 million, approximately 61% of which is expected to be recognized as revenue over the next 12 months and the substantial majority of the remainder in the next 13 to 36 months. Actual amounts or timing of revenue recognized may differ due to subsequent contract modifications.