Confluent (CFLT) 30 Oct 242024 Q3 Earnings call transcript

Welcome to the Confluent Third Quarter 2024 Earnings Conference Call. I'm Shane Xie -from Investor Relations, and I'm joined by Jay Kreps, Co-Founder and CEO; and Rohan Sivaram, CFO.

During today's call, management will make forward-looking statements regarding our business, operations, sales strategy, market and product positioning, financial performance and future prospects, including statements regarding our financial guidance for the fiscal fourth quarter of 2024 and fiscal year 2024.

These forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those anticipated by these statements. Further information on risk factors that could cause actual results to differ is included in our most recent Form 10-Q filed with the SEC. to by statements law. obligation except today's no required as assume update after these call, We and made Unless on expressed basis, today's otherwise, call comparisons stated certain are on financial a basis. a year-over-year on measures used all are non-GAAP financial for We and facilitate analysis business planning and forecasting internally of use measures to financial our these and non-GAAP internal trends purposes.

A should substitute release And These non-GAAP and accordance we reconciliation as IR in a will for can that, isolation non-GAAP is call the with after information to Jay. found considered finally, these financial with website Confluent the financial measures earnings included on between GAAP. not website have and earnings GAAP report in from I'll turn be supplemental our limitations financials, press in to which post our financial and over prepared And remarks. at prepared measures investors.confluent.io. or IR our be our

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experiences millions By data overall Flink Flink We're third margins. In and incredibly using Flink help as over the turn with position tapping into of deliver to walk a $XX I'll personalized to opportunity and the strong threat about us. our Rohan its provider XX of and consistent the through telecom billion Confluent win of consumers processes even the for and to financials. excited tens I'm category. and of next the analyzes team I'm visibility quarter our its network prime things dollars network reduced Platform's to saved boosting pleased for significantly results, detection. ahead has experts, in data With performance streaming such that, churn, excited offering years. closing, I'm customers to more

QX leadership Thanks, margin and market commitment quarter efficient for XX% and $XXX.X in Jay. Good both our revenue total positive of The subscription representing growth over demonstrate we the revenue. gross and growth, XX% to our afternoon, These top guidance grew of data grew accounted margin. our QX, operating drove strength revenue another driving Platform to Confluent In results high million streaming flow record XX% end line robust the free and term. cash ARR average revenue. XX% Confluent million. million, of greater banks demand non-GAAP everyone. margin ago. our of to for during XX% XX subscription financial still top and industry. long exceeding customer in Platform the early ARR Cloud healthy as stabilization their XX% grew and attributed U.S. of for in XX% with by the the these are services a serve of of Confluent majority driven for quarter. is to an $X their cohort to XX accounted substantial million $XXX.X subscription than to digital cloud. Platform was The year banks revenue We move consumption compared to native the saw We in Confluent revenue $XXX.X

they pleased of also adopting consumption to we a are customers, revenue DSP saw cases focus cloud QX with use trajectory While cost onetime cloud remain largest whom low benefit. conscious, and our were X-figure implementing revenue shifting new many products. our their growth of the

Revenue we benefit, grow this overall expectations. continued revenue. from cloud Adjusted still faster handily our substantially DSP exceeded consensus than for to

in least and days, XX top at our categories. new early X pleased products we cloud across our adoption the have with XX all product of XX customers. its are monetization adopted cloud large have products While adopted customers DSP of remains by X

grow exhibited faster much profile. multiproduct NRR continue Additionally, and to at a customers higher clip a

XX% from grew to geographic U.S. $XXX.X outside from Revenue the million. to revenue. million. grew of XX% Revenue mix Turning total $XX.X the to U.S.

reached gross of Moving a reached record record target. I'll our XX.X%, above points, the rest long-term XXX high unless margin on to gross well of a new referring statement. XX%, while up total of stated be margin to Subscription also basis income otherwise. non-GAAP results,

continued outperformance strong by margin be to gross our the Cloud improving unit Our economics Confluent Platform margin driven of and Confluent offering.

percentage Operating points of consecutive points. margin Free more percentage flow flow. cash profitability a X.X% to to XX X was margin improvement. ninth high cash and of a of record, X.X%, our also XX points record approximately or in quarter representing expanded margin Turning expanding

count This marks margins income with using both for our XXX.X share at cash the for And billion weighted we and in our Fully outstanding. securities. cash third of quarter driving was equivalents and positive approximately XXX.X QX treasury under diluted $X.XX operating average stock track reflects shares team's flow quarter diluted million marketable cash, the per and share margin record was million. scale. ended $X.XX free method expansions third Net

to WarpStream our to Over data high-scale expect be workloads requirements lakes. data In form such across we we on workloads factor. financials. 'XX, BYOC do WarpStream into to the During WarpStream have native to our observability fiscal acquisition for suited impact streaming the well quarter, natives acquired material time, and it expands as particularly further reach segments. feeding customer not driver year is WarpStream growth our with a platform expect a we more logging, and differentiate as relaxed latency digital include

now metrics. Turning to business other

in for During overall win business, notable year-over-year rates and both the third a sequentially. quarter, new we increase saw

with cloud-native above as start-ups and were smaller complete we favorably our compete against win Our well rates platform. ubiquitous XX%

momentum logo a customer Xx and at approximately the in acquisition and add the QX growth to Total sequential accelerated customers, This add of ago XX% expansions. X,XXX, representing quarter. translated new to of count ended sustained XXX customer sequential year

customers a furniture data ARR, Fortune online ARR the companies a of large base. our to and leading providers, and one and lifestyle bringing $X respectively. continues of take carmaker, New airline the our added largest in kit largest We streaming a the company, $XXX,XXX-plus in million hold customers The X,XXX top one XX customers many in world's platform XX plus X XXX, with in to total meal effects more. include online U.S. network X retailer, of customer

to $XXX,XXX-plus continue than ARR represent customers XX% revenue. more of our Our

believe QX. Our to implementation remained This native We digital of saw shifting technology, ARR products. large use help and around GRR care, customers and variety including a case adopting of current million-plus into from NRR more. from continued new cost above industries, we and stabilize many retail, DSP October, customers travel has customers QX in our NRR $X services include XXX%, will health our financial their XX%. new while focus trend optimization which levels was

Turning guidance. to now

to subscription our increasing non-GAAP in addition are revenue, raising free We full flow margin. QX and cash EPS margin, outlook revenue non-GAAP operating year

million of For of and $XXX revenue share to non-GAAP the per range XXXX, be be of the we to subscription in to diluted growth approximately million, XX% X% non-GAAP to quarter operating $X.XX. fourth approximately $XXX income be expect margin representing net

to cash share the representing to non-GAAP XXXX, be be million, income of XX% and year margin growth range raising of margin X% full subscription to are For we approximately to operating revenue to non-GAAP be approximately in million be to free $XXX.X $XXX.X between flow net X%. X% per diluted $X.XX

tech the as XX in we streaming company, as category a major back Looking at established have a years the stack. last data

$X profitability customers. less than from great business extend than streaming billion more of enabled exceeded just to revenue Cloud inception, including world-class $XX data the a have We our the by X,XXX run growth billion revenue XX% across As our rate market continued since Confluent XXX XX and run innovation We pioneer, Fortune leadership in delivering outcomes just for customers, X This $X.X we years. has rate at variety and in scale. our growing serve industries. more than years including of to million journey

and to sustained well profitability X.X% the range above our free the X.X%. gross first for contributions employees These We in of our generation in cash at support. midterm and a for our XXXX for flow history, margin, the thank positive for target I'd margin threshold. we for your XX-year-old flow like operating margin target your of with and fantastic positive are company. investors full long-term record and partners to our non-GAAP free non-GAAP XX% time QX continued and expect important a with customers within Confluent's margin positive now metrics year. operating exit And total cash margin milestones

critical driving companies will ahead, deliver than data cloud, be reinforces cash in a free drive significant companies a the of becoming ultimately streaming and success growth to of to more tailwind secular the and services, over vision durable for software differentiated Harnessing the generating data flow Looking power stronger era. and of AI. ever their runway. intersection puts us our long AI AI position while products in The

our excited capturing ever than opportunity about ahead. are We market more

Before Management Investor will that San to announce Q&A, the X. the turning XXXX years. like update Thursday, will few next we provide Francisco driving host to on in date. would I March Day on save an for growth profitable Please

Now I take Jay questions. will your and

Stanley, Sanjit with first RBC. our from today, come Morgan And by Instructions] Singh [Operator question followed will

on Congrats solid margin particularly the very seeing you're year-over-year. a that the expansion revenue QX, and acceleration

you're of quarters, I a with guess Are looks the of So it there's you couple group, terms use it like on look quarter-by-quarter? of and new see the confidence where at and optimization? is native sort point of native been Or in stabilized. when customers more past fits starts digital go your kind to those Jay, getting we starting past at cases, bringing from and digital still touch

and I kind think mixture in set kind customers, is of a of of largest they've they I changes the optimization their we bulk what new with in activities to need cases. like terms quarter conversation environment. in Look, of like feel of done do of felt use do larger each the Yes.

So going on us feel a that trajectory quarter we puts better forward. this good see growth and did

segment So think we yes, I we feel that think confident the when do pretty end. year about about

examples And I Flink. really appreciate on the X customer

cases this in Flink are exploring the customers we base where stage represent start in As we cases? where the to use broader is, at onboard now sort And terms are look their of in that like early these of sort do beta of to getting of kind of consumers environments. use these

think Yes. representative. they're Yes, I very Yes.

of of networking across released the to We've enthusiasm. them. of and getting it you seen announced We've unlocks Java product out support the ton clouds programs, Python will that had and support as of so and EA we've be GA. programmatic some direct can we've and a write bunch on through the a So all private going

And of so starting yes, use we're production to cases. ramp

ones. to Platform product and not And limited land was GA. these but just of that towards that availability able early nice customers, the still going is in though Cloud It some Confluent we've been even Link are just Confluent customers, also

we're year enthusiasm and so excited seeing really of in that actually customer a we're base, ton us ahead. And in about where yes, takes the the

by Matt from followed question next JPMorgan. our take Hedberg with RBC We'll

Congrats all see question it well. in go-to-market. the and to my stabilized. to a as the great I of digitally my guess acceleration congrats cloud as follow-up was question, Sanjit's Maybe the is native on

guys some a they're the the of kind made little of paying off You really Can you And start trend. at keep the you're level customers that when year. talk looks of like about looking more in seeing. changes on process? talk to record then the consumption adding. those, you're guys maybe terms I bit consumption you of But that It know and land. fast are that they what customers those comment about trying land maybe accelerate that like the

happy I'm Yes, to do Yes. that.

think journey. Kafka made that. And customers this of of land into pleased with the We've more and ongoing year, and with team large was doing our were open really progress I year. compensation sales set the reach product-led So the more building ton the side to sales our users goals source of a as both that's really We're one of we an broaden in what this as on quickly. well

We like, I using XXX,XXX go there's feel to them work in years look, all. think we'll Kafka. continue organizations want the to ahead. We get that on

also So targeting. numbers, been about really It's on lands yes, important. both the about but sales has these focus

to we I more with. the intentional think about customers we're much wanted land

targeting accounts, ones Confluent which and sales highest or we're have side. We are the of XXXX, are propensity on this the that the those the potential idea

ROI into it right product-led different landing try will just really to try also the the sure we're but getting out more companies. On to their customers, through projects, land university fluctuate. and high things and customers, that students them not making but side, with We track getting

of customers it And of so But better all in the has. their pace. customers course, quarter-to-quarter landing faster at more And then, a as a on count we will follow we through terms think we're way that total fluctuate adoption. these customer trajectory do

able earlier production of Our goal done that. see was get into a in towards these out start into We've cases. customers now more usage and journey. the that We've ramp of companies other lot expansion kind to been use definitely

the pretty of feel And organizations. good so overall trajectory we these about

into positive definitely So a next that's factor year. heading

Yes. great. That's

So I side, the momentum expansion a on think lot too. of

demand. I guess, Jay, prepared sort remarks, of your seeing you in AI mentioned early Gen

mentioned more of you within customer bit to consumption, showing you comments some how how maybe base? just think more about identifying Is the that talk little [indiscernible]. conversations? I like it a up actually your that's kind translating that those in of specifics on you're Can

Yes, absolutely. Yes.

right, X being kind the AI set there's I So example of growth mean impacts. of OpenAI One that. is an in providers, of

second a these cases around of really of I And a new The initial customer thing enterprise is about There, set X really wider use The that. applications. of cases AI it's to base. is the happening. delivering use kind in set things data there's think

push that and investment larger is leading thinking infrastructure I companies is overall. data in towards more think the this

this, of takes think, time. All I

I like know to immediate in people investors, every to layer. pop some an be talked I infrastructure this going felt is when

companies around of rise The faster. at set case. AI case a now, think some to would either. were I happening. didn't oh, these people that very new of tech cases I I applications real are this. There's think, a talk enterprises of bases. the When that conservative definitely materialize. customers definitely There's upfront think things to different use are cases we people and there's slower. something a we move The But that's the Different use never more be bit set going very think the don't in customers. are

positive that's for us. a think I thing very

our with Bora by Pinjalim from JPMorgan take question Barclays. follow next We'll

especially starting of on source into to WarpStream. general, to unlocked conversation, of migration well. broadly picked Kafka? a opportunity wanted in to large it like. to Is quarter WarpStream the as bring want Talking that as I kind open you ask channel, me of is ask from we your relates to WarpStream, But On up you Jay, by kind true? I you seems

Yes. Yes, absolutely.

the keeps progress was about going land to We've we of to migration pretty see step, So open time team in the often And up kind some one really set appealing company These kind companies we're have the accounts, the open is we some of them on source this there's existed In but for something are this while. to of a a to this reason since where help to accomplish a native Confluent very excited take it in bring think hard and wholesale us running these has year fully the some companies. thing really was that large managed cloud and jump. been thought big them, we're to large those a some to so users actually of in cases, digital allows place, in before, of source confident savings, but like is even that that some into it cost it that beneficial. And that. there nice you can open fold, started big get us that's in where of the takes ahead. the start halfway

Yes. cloud kind of for bit, Rohan, NRR but like seems the a little one downticked Understood. And your accelerated. Rohan.

core there lagging, expansion a where to little the you or if So I'm cloud downtick cloud bit from the Was portion long right? take the trends out working. a trying reconcile X, organic and

a base run it, business. it's $X.X when be and the very cloud results, NRR it really results our the QX actually double-click very and of you XX%, continues you at Yes, look the at to with solid. rate pleased Pinjalim, business And health of We is we're thanks dynamics the for look growth. question. grew when billion the installed your cloud the Listen, into you for

for side of QX. in Our greater the business are overall called -- the on the is X drivers for XX%. there especially And that cloud GRR we than performance out

you the And stabilization up That question, native our moved I some we is Why That's are adopting specific have new around in these when important? digital use because NRR into made And listen, taking larger customers, our your of these we customers that's see X I around that DSP. marginal. that did customer important consumption. QX. and look was of saw trends the at second, cloud cases of comment the for To very levels. why stabilization it's mean, kind base, current

what of a are not the with there gives But couple to stability I'll QX levels. these around call drivers to around current out confidence call whole lot is of to So us that the we from entering out NRR respect move XXX XXX. with the

we use Yes. the set And we're of growing is a of trajectory, a us for just but A of years and I'd investments. been of this of Confluent, being pure about seeing in new over just the longer and in X.X we cases on, from I come driver work use these that the signs or customers. usage has adopted the base. broader good aggressive that in really remarks with this the I kind the think set otherwise really fruition, that's customer about starting longer-term now probably period feel those only inaccessible trajectory say, you or expounded. And add, excited when have to Kafka spend would kind a address you lot solid our for items that's that too the to the actually Like can been product history, of allows when customers think of platform case you release to has mentioned how last, difficult. in not more obvious product trajectory, think I development most in to think But prepared to more less really about as I that's that think of a expansion all do.

Our by Deutsche. from next followed Barclays, Raimo question Lenschow with

when us a more one opportunity called that guys? as And out where me because questions. of could started like that like you work for about That Jay. from got using cloud in that the Because you those Congrats for extra a stream, one-off guys remember help Two if Rohan, actually be the how bigger I you theory Jay, a think like out, this well. bit terms Can One subscription, than they actually want kind in or even theory, opportunity you are like like cloud. the of of we serverless, is cetera. for little would in Is on were you be moment? helpful. to Kafka little as for you kind thing? help be of like, then okay, more quarter broader modern you that in at be there bit a you do get et more like

Yes. Yes.

Let me that. try and address

open very project. So open is -- source good the a way is Kafka I kind source would this, say of it

software. area? can these good So at and look we support, customers, it need. it. a and in self-managed take that is we built Confluent the best a cloud fully sophisticated that look deployment at You try we full offering an for for things they in put product in download We've have itself, of a about elastically, we it our set Platform that of opportunity, all runs an cloud expands models balances each in things something that's looked we with and amazing at is back When do think managed possible is What extremely end really It's investment there's cloud piece offering, Cora, the if of that we making that. use It's in we something data, which bring of well, that. we there the hard there? kind of service. thought, your this own a When ton really

do platform the to should it reality architectural of very And and was deployment kind need divide a We have and from easier there. a hey, do into designed into that of in like, scratch but take product. wouldn't we the in they've that been would access good. we had that What had some actually of could really could it, good neither there Confluent Should be those something if that an I They way try that's and to and was and check try Like turn account box, we right it we it a us customer's that? that about WarpStream The made offering customers segment enough for model. be would is actually done that at looked excited a Kora way. it push way. is you have good to felt product. we We the really try think the deep take

now so these models. something kind is across of of really we good have we where feel deployment that each And best-in-class

I different really customer technology we is the something across the been so a make streaming that's customers powerful can across be company, with think the without they ubiquitous cases, to across or in. now And And in span parts hesitation really want use everything this our of that's across kind always of customers, And position to goal world, do a that's business. reservation.

a market, take revenue materializing. as second to the did into Raimo's up end pertains one international customers it part Raimo, of expand our basically existing question. new I'll plans benefit, to of not the had onetime which

some the revenue we credits. result, end quarter at a took As of the as unused

As we and cases on a very partner use speak, working customer are this we them. ours, is multiple strategic of with

QX was, performance, on QX underpinnings So performance the the if twofold, primary performance, I drivers. you say, very you our back, solid, and which was take know I'd of that commented step a

the one stabilization native The at one starting DSP second And was new of cases. adopting customers cloud some use and the was segment. larger net first our look of actually the to digital

you benefit, consensus third out, still which if called the But handily out beat -- you this was it adjust we expectations. onetime. our So

Bank William our Zelnick with Deutsche next by Blair. take We'll follow Brad question from

the appreciate your what early you're gear sales perhaps about green up to characterizing you But it hear it is to wins It's seeing takes in win thinking coming and And of all be year? seeing it into as revenue. inform current next out excitement improvements And for rates. time you're great as for the there I turn shoots? to capacity does too early how out

some can and address Rohan, some I to you want address may well. those, of as Yes.

So yes, the we've in definitely forward. seen line that draw positive We signs don't base. far customer too typically

kind which try I But IT don't we about is, native seen, maybe make pronouncement would So and spending and yes, segment, in think, of positive. we've very investment I acceleration stabilization in the year. big say, some digital next some

We've seen continued is broader base the cloud great. of customers, across expansion which

us look we at have good gives confidence. all of feel the capacity yes, we When about that. So sales in that we very that place,

new and sales of what that go about ramped reps, in to motion of next our in us year attrition. where Overall, we saw lower both as ramping good sales as of execute. than think So this we're we a just quarter kind good terms a is well puts target sales reps kind entering systems position as of with

a follow-up. Rohan, maybe just

seem out perhaps As did from you we years But growth. think that for visibility just it versus And to of about an models subscription where we exit that? about bias XX% would year, tell the the you that? that appreciate us the coming should you're next we I I down range give of there early at anything least And would about me the acceleration, begin be project have yet. you're can outcomes for for are next guiding thinking QX think as year, How that this look. mean, you that how QX couple of here last giving us guidance not is towards to lock the about you rate us and

shows early is But Yes, momentum, guidance. consistent you was the solid. We which I'll for software with up tell QX guiding not similar in out 'XX. year in say, Brad, most QX momentum other there. entered I'll a business fiscal we're companies of our what the with which is very

our -- we spoke about So and stabilization in also NRR.

you where half kind in second the are. of we as we with general, So at of the year, feel good look

with of has in us of year been big I'll points a Jay couple ahead, has your question product With that talk for to this respect it. say, the highest I to So had innovations we've the looking heard general, been, number year. a in about of this we're DSP processing, And curves. DSP it to look earlier S their company. be is DSP you the it seeing monetization. XXXX be in our Connect, of stages we're X when history all our of products, good governance of it And different their products. they're expecting the adoption stream be or products, where you've would reiterate mean, respect made. I kind at DSP focus us the around

of also driver again, but that exact as TBD, we general, and but lower couple have touched growth we area Table a one timing growth briefly that is was that's on of look ahead. feel -- as AI, still a we timing others Gen although The So Jay category AI. of then And Gen are couple Flow will a like in benefit drivers. from other list, in streaming the FedRAMP, ones which

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our Wells followed Blair, take William with next question Ader by Jason We'll Fargo. from

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want to Yes, you that, take Rohan?

to. happy you see well. as Jason, Yes, Yes. good to

QX, So the for specifically I'm assuming question is around our your cloud revenue.

QX. like of revenue the year that a the and XX% subscription versus was to Total ago X.X% before sequential QX in year

Yes. right. All

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onetime historical and the and out normalized take very cloud you So benefit, patterns. when more much it falls you isolate that business within trends

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then for And right. one All Jay. follow-up you, quick maybe

expected I of companies others in you other it of We've weaker than for for see Just lot talked seems some have and companies know that's of guys pressure see budgetary important federal you What the did talk the an of federal it, through that federal the kind business. kind area kind QX. heard you about like about in but of saw? a was guys. Did grapevine spending that some vertical?

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Oppenheimer. next our followed from take with question Michael We'll Fargo, Turrin Wells by

this I getting appreciate fit do great on landscape. the competitive cases to view I would AI the your AI see commentary start there get call. DSP around just discussion. use whole was positioning Confluent for Where It announcements that everywhere at throughout of solutions, streaming. go of we're streaming how within host hoping be Jay, focus Agentic which helpful. video back could the impacts to we we're overall getting specifically for the is and you

great. Yes, Yes. Yes. that's

is data AI. context around One this X all we're really the there's use So that seeing primary of AI. cases gathering for

So to decision-making. that enterprise all be wants used data the in

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quality very the it's dependent think of models. on the I

think We we think a and thing that's over positioned we're very going it. time, well be to big do to

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just innovation? shaping significant is 'XX for are on? layer layer cycle about up other growth Can efforts should on capabilities. wondering newer forward, we just That's given product we work Confluent X? going alongside these keep between as that thinking I'm as or stream Or the Rohan, progression those balance efficient margin motion about you about the the you you how a great. fairly think think how how

at more Yes. our points. us, operating Michael, by look you margins or XX really for XX when last quarters X we've the than improved percentage

is or our DNA growth profitability the the of around company. of and efficient growth part So philosophy really

make and continue key 'XX that thinking. on but ROI-based 'XX not only based that will every beyond. is into And decision So we

that's going to So not change.

efficient can and next the we're we'll how basically on think that our about continue drive have going not same as the growth, off profitability, So ball year, front. take is and eye philosophy you we to that growth to

Yes.

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around you asked product I think does point. think capabilities, that these it's But a specifically I how additional things. very as impact important we're adding

new investment of people including salespeople, the I put the build sell things, you around platform in think right? different that's all that effort, all you -- be able to important of the operate can happening you kind the many a now, understand it's that training to product cloud these to So products, getting areas.

the in You build capabilities. to investment make the out engineers

the to You things. these to put able in different around drive be all tools track and revenue targets

on cost an are time business. natural now. more as and of kind obviously force, some scale, DSP larger less to investments to up You sales We those a as extent, things And a of -- that's revenue right? And added of these you feel then the is come bearing kind numbers, as good the those obviously, train that businesses, we're weight that lot trajectory. to that these overall part still spend a very about are then a are of contributor positive the nascent thing. But

to don't about know going it. investing but oh, that's way think to if about, I not So It's that we're like the I that's next we're clear, true. year make start would thinking

for R&D the heavily have on go-to-market year. on the this been time side for several We side, years, investing some certainly

question Kidron Moskowitz. next our with by take We'll from Ittai Oppenheimer, followed

I'm for Jay, question. to go-to-market There's it. more X parts going you, of with start a

And motion? better the with about that, you fine-tune this? effort you, implement fruit do maybe First around you low-hanging focus of year think go-to-market becoming all, DSP for perhaps changes need clearly, improving next the to do you to in to still bigger lot see how in a comp of a your tied

good we we Look, Yes. about the feel set Yes. changes made. of really

this to can -- year do. don't rate. the some to -- Heading broader was shifts. year each to reach this where components a we there's need we of we'll I look very We've yes, do that incentivize aggressive call cloud thing? us orient plenty we drive I year, any thing? next a kind we is individual at we higher around some tweak at Well, that, that got that adjustment some of tweak Can tuning shift, into radical think these to So radical enable consumption a business DSP would actually That right? of

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think kind motion upsell If Kafka, around about has you other take the maybe in been better Kafka, where components interested you people source Kafka. open primarily of there's are Confluent, who there's

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so I these a expand team for kind and lot that opens up vector of to of And the think customers. within another attack

areas I around I you think think of we'll but still kind gives interest land of there's in this Kafka, market. another way going to where

we'll just something -- build cases. related, us time, but makes that's not it think I another use path comp so gives over into And

Excellent.

is Second on the win question rates.

this that the the capturing is that than specific area think general. increased vendors if I that the quarter, you against they small also mentioned improved? win improve Is the also they win have rates more I'm you actually comment Or was correctly, XX%. commented but are

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well really XX% I hey, above competition. performance start-up against think like called specifically strong we out,

take We'll question next Mizuho, our Davidson. Moskowitz D.A. Gregg with by from followed

would performance periods. onetime And Confluent revenue ARR out? if QX seasonally quarter ever a or and record we've other cloud were be you Rohan, exclude called for we Confluent that an includes ARR that net not that it's But than higher strong net The your you whether that quarter to say impressive quarterly new new regardless. Confluent can any is seen, benefit

was Yes, is of larger our digital benefit double-click in net a the vast onetime Gregg, native for and from that adoption of handily revenue we the take the out, said still the what performance, of driver the out, performance, DSP beat called standpoint cloud into the stabilization new which that when really And case I use segment you you we is the expectations. majority consumption customers. if

handily is expectations that that and we beat very the what that, adjust I called I for we've you that one our hope But you onetime primary if still the I So were out. not drivers can broken first exactly. down tell helps.

then otherwise And wouldn't perhaps stream But medium term, from spoke Jay, whereas many I'm Okay. Work about earlier, foresee if on-prem they also potential deployments the anytime you content platform wondering over potentially open you work away adopting customers and source conversions. have their moved stream soon.

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our Rudy Needham. take followed from next question Kessinger D.A. with We'll by Davidson,

strong only Rohan, like that from looks first revenue, very onetime exclude XX low impact. to It you, margins. bps I if with it's gross XX figures

next meaningfully of more XX% incremental a those do is year? run kind rate So the products to in gross come DSP on from good as revenue just look forward? what And going margins like start

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X obviously Platform, software-type consistent gross fairly over are Confluent there So components, of margins, time. period a

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So one. that's

focus the around there's going products, DSP multi-tenant, more So thresholds out of DSP step are the side we our take and of multi-tenant we operating a at right, to well, tailwind those we're as is a lot that's business area X probably drivers. gross well to actually put a look And are of right? margins, operating, when becomes back been this and our second that you which there. be The kind includes above as where

our So an on as profile, it gross feel we about ahead. and good obviously keep margin look we will eye

appreciate or where commentary Do you Okay. current rates. source if just considers I open maybe And factor to then last few win do quarter. a I a on those when that as on comment going could rates, retention well rates trends on or does over calculate the customer not, you guess you churn the And I renewals in in. startup back you guess, a gross comment as win follow-up, include. win small gross

renewals, that. including be And I do not renewals would in do renewals. it We equally include include but high,

renewals. So with like it's not we're patting it

Cikos Mike go last question, by Cowen question. for for to followed our Needham next We'll a

We've Yes, we briefly the really comment the into see saying. was be To significant taken those growth said. to of largely as to consideration on things. positive margins. bit headwind anticipate Rohan when designing underline what a products that don't Just Rudy little multi-tenant, factor. we and cost what are on a a DSP

kind I cloud with We themselves. aspect So products then know be what and down often come new eventually of write a of upside think don't that in big we're doing. there'll

When for if cycle that that to cohort I this a to see did June So the into the far know quarter I into was because just that shift to show we that bleeding when calling actually quarter wanted did natives. as start optimization and up from focus you're back ago, on to as we're digital to you digital speaking right? back increased cycle July, that customers. those strength just that October behavior out start now native

Yes. that, to Yes, you to do speak want Rohan?

is shifted. of a we Yes. typically, when Mike, I consumption, like or in you -- that's mean it date also particular But you see not this X driven see by look business things. a things general, did did couple where it momentum at was

go-to-market the focus and is larger DSP. little for net been in that cloud and the us. our first starting customers our that is, little that's around had some early cases huge in the The saw again, That's piece of at the second that's some call, days, behind to quarter. some feel us. use larger looks that customers optimizations kind ones, our the adopting that by show a That's called we through up of And actually customer internal but a of every And also for larger numbers. we progressively just of earlier something out Jay

as more of I that's around And said, as QX, exited actually some QX So it. call bled trends momentum. I'd well. how it's And these as we into

adoption answering follow-up sounds like been to that's customers? you've but you're to digital and there, use partially and online in That's new natives. terrific. for for headway more out more I coming now, customers for explained Is or have and get recovery coming the a are trying already, guys this that by or maybe DSP or it demand that from sense instilled the cases is make transformation existing projects starting over go-to-market pushing maybe function rolling who your you it have into that of a that guess, that

tune a of a customers, a any pure what and time of it's It's these sawtooth tend -- investments they over they native Customers make see in of even and Yes, They not you make to both. graph. a to period and right, the tune. long would combination of is right? up then digital going and investments then kind they

same it's intention We Even sought like did new in -- just time. tuning that customers of that period, at -- not occurred. did It further in little those all projects. making a we see more see bit quarter, in the pattern just the we recent customers more that hasn't an in but investments, time

the that's I in would whole, we've say, what seen. keeping with So on

would no your spend the distinction consumption on a on. the build. But of we past, goals definitely On what this There's products. were very targets just of comp a and a committed there's of the very distinct to as spend. in plays. into pipeline DSP goals it do new lot muscle course, comp really, way. well much possible these makes that is around There's Like intentional are tracking very specific effort side, to It's as in there focus. have purely a new we putting driving sales And is because that. We're the

or can revenue Flink we a those specific disproportionate have is components Connect of or and Now drive multipliers it whatever that's on in way.

so of the And are of a team. does making smaller the bit products terms I get of think that newer out kind help sure focus in the in some journey still that that

question last from with our take Cowen. Derrick We'll

with you. Jay, I'll start

some services. guys vertical highlighted recent it know deal you, for is know a in We obviously out this? industry I quarters? developing out Are this you've that don't medium trend in you the broader Anything there to but beneficial drove activity? strength term? what to more if You call starting Or big in called larger financial be is see could

a was this really got largest that where worth data institutions now wouldn't thing. the the to, there's sudden been even And some is say mean or a years. it shift And a build think in YYes. X-quarter there's in it's we've we substantial highlighting financial I services I back the I broad-based of exciting think a thought kind platform just happening. going stuff and point very financial services world. I

with these -- this powering many it's share data that most actually that kind systems positive that mean share volume. enables And how to economy a to really the it they're regular is the that in big industry. of that's just have. think institutions they of this larger critical to that we on of think a of it's internally, starting how but about enables There's them of And within them connect other just some is not terms I organizations, basis. into streaming thing. data they not in many

kind in customers. largest the out called We ARR and of penetration well. very the going it's yes, So

it We I they're about -- as on all a on reporting. huge a catalyst think businesses kind pushes a And huge this there's amount behind real-time payments, having quarter. experience, makes the would just it definitely the as particular when that spenders sense some sign nudges well machinery few modern and side of strength. of of of real-time the nature the real-time expect to pressure not as it's towards a as customer largest forward. IT regulatory well of slowdown. continued continue. you on say which nudges and No event-driven more of scenes that a kind There's those just amount There's

obviously maybe you. impressive. one is Understood. customer new Rohan, strength of for The very

something thinking model Copco are XX think or a and now? land an assume I think we how X from this expand because a about the just these conversions. X of months Is open like I you're wondering maybe that But of follow-on the or most consumption to source come could quarter expansion. of that in

Yes. million course, as focus is, about these then funnel. new way are something of the customers, that's we we customers think The ARR, to that And how internally successful well. total $X I customer a the plus bit top ARR I is quite of think $XXX,XXX-plus progressing

this motion, I total the growth customers, course, as focus just there. driving customer new of been mentioned, some on product out new on high-quality but coupled consumption that, which around it's led, that numbers our a with is two right? customers So of transformation, a things, top. of So logos. like big you And P&G of the part combination not landing examples very landing called our customer some there's

can obviously quarter-over-quarter. vary that But

than So the very over happy first look are that at those And X our mean, $XXX,XXX-plus we When when see that both for reminder, the we've and a look XX% XXX,XXX-plus And consistent ARR customers, at at I growth. period. customers best get million-dollar is ARR you way ARR XX-month greater to of of months, cohorts you're look seen. the good right, $X a momentum you plus as customers revenue. account

X, progress So with that we all are overall, pleased focus making. the we are the is across but

know nice of We it's our a our so call to This joining earnings today. you appreciate easy call. many earnings. evening. concludes Have We

Thanks, everyone.

you. Thank