Confluent's Q2 Results Cause Shares to Plummet 30% Amid Cloud Growth Worries

Confluent's stock dropped over 30% after Q2 results showed a slowdown in cloud usage optimization. Analysts at Stifel downgraded the stock to Hold from Buy and reduced their price target to $21. The company's growth in cloud usage is a concern.

Confluent Inc. (NASDAQ:CFLT) has seen a significant drop in its stock price, falling over 30% following its Q2 2025 earnings report. The stock's decline was triggered by a slowdown in cloud usage optimization and a series of downgrades from prominent analysts.

According to the earnings report, Confluent's subscription revenue grew by 21% year-over-year, reaching $271 million. However, the company's cloud growth slowed to 28%, which was below the expected 30% growth rate [4]. This slowdown has raised concerns among analysts about the company's ability to sustain its growth trajectory.

Stifel, a leading financial services firm, downgraded Confluent's stock from Buy to Hold, reducing its price target to $21 from $30. The downgrade was driven by several factors, including a decline in net revenue retention, which fell 300 basis points to 114% quarter-over-quarter, and a planned $200 million investment in its partner channel over the next three years [1, 3]. These developments have led to margin pressure and limited free cash flow upside.

The company's cloud business has been facing headwinds, with customers optimizing their usage and some shifting to self-managed platforms. This has resulted in slower activity in new workloads and fewer new customer additions [1, 3]. Despite these challenges, Confluent has maintained a robust gross profit margin of 73.92% and achieved revenue growth of 24.11% over the last twelve months [3].

Confluent's stock has reached a 52-week low, touching $17.79, and has experienced a notable 1-year change, increasing by 27.97% [2]. While the company's financial health remains strong, with a current ratio of 4.42, investors are closely watching its future earnings and revenue reports for further insights.

References:
1. [Investing.com](https://ca.investing.com/news/stock-market-news/confluent-downgraded-on-cloud-growth-slowdown-execution-concerns-4130263)
2. [Investing.com](https://www.investing.com/news/company-news/confluent-stock-hits-52week-low-at-1779-usd-93CH-4163464)
3. [Investing.com](https://www.investing.com/news/analyst-ratings/stifel-downgrades-confluent-stock-to-hold-on-cloud-growth-concerns-93CH-4161965)
4. [Diginomica](https://diginomica.com/confluent-q2-2025-earnings-highlight-ai-momentum-data-streaming-vendor-navigates-cloud-optimization)