Confluent 2025 Q2 Earnings Misses Targets as Net Income Improves 8.8%

Confluent (CFLT) reported its fiscal 2025 Q2 earnings on July 30th, 2025. The company posted a 20.1% increase in revenue to $282.29 million, falling short of analyst expectations. Confluent's guidance for Q3 2025 suggests subscription revenue between $281 million and $282 million, with non-GAAP earnings per share ranging from $0.09 to $0.10. Despite the revenue growth, the company faces challenges in achieving higher expectations. The fiscal year 2025 outlook includes subscription revenue growth of approximately 20% and a non-GAAP net income per diluted share of about $0.36, indicating optimism despite current hurdles.

Revenue
The total revenue of Confluent saw a substantial increase of 20.1% to $282.29 million in the second quarter of 2025, rising from $234.99 million in Q2 2024.

Earnings/Net Income
Confluent narrowed its losses to $0.24 per share in Q2 2025, improving from a loss of $0.28 per share in Q2 2024, reflecting a 14.3% improvement. Furthermore, the company reduced its net loss to $81.95 million, an 8.8% improvement from the $89.90 million loss in the previous year. Despite sustained losses over several years, Confluent's EPS indicates ongoing financial challenges.

Post-Earnings Price Action Review
The strategy of investing in Confluent shares following a revenue increase on earnings release day and holding for 30 days has notably underperformed. Over the past three years, this approach resulted in a significant return of -69.61%, starkly lagging behind the benchmark return of 44.20%. The excess return was -113.81%, with a compounded annual growth rate (CAGR) of -25.37%. This indicates substantial losses and a declining portfolio value, highlighting the risks associated with this investment strategy.

CEO Commentary
Edward Kreps, Co-Founder, Chairman & CEO, commented on Confluent's second-quarter achievements, emphasizing a 21% growth in subscription revenue and a 28% rise in Confluent Cloud revenue. He noted that larger customers are committing to more substantial multiyear deals, contributing to a 31% increase in RPO. Kreps expressed confidence in operational enhancements aimed at improving execution and driving multiproduct sales, underscoring optimism about the business's potential in AI workloads and the partner ecosystem.

Guidance
For Q3 2025, Confluent anticipates subscription revenue to range between $281 million and $282 million, marking approximately 17% growth. The company expects a non-GAAP operating margin around 7% and non-GAAP net income per diluted share between $0.09 and $0.10. For the fiscal year 2025, the subscription revenue guidance has been raised to $1.105 billion to $1.11 billion, reflecting around 20% growth, with a projected non-GAAP operating margin of about 6% and non-GAAP net income per diluted share of approximately $0.36.

Additional News
Confluent announced a $200 million investment over the next three years to expand its global partner ecosystem, aiming to capitalize on a $100 billion market opportunity driven by rising demand for data streaming platforms. This initiative seeks to enhance partnerships with cloud service providers, independent software vendors, and system integrators, furthering Confluent's mission to enable real-time data management in an AI-driven world. The investment underscores a strategic move to strengthen collaboration and open new revenue streams, reflecting Confluent's commitment to innovation and growth.