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Here's Why Confluent Stock Is Surging Today

By Keith Noonan – Nov 5, 2021 at 2:53PM

Key Points

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After a strong Q3 performance, Confluent is now up roughly 85% year to date.

What happened

Shares of Confluent (CFLT -6.35%) are making big gains following the company's third-quarter earnings report. The data analytics specialist's stock was up roughly 13% as of 2:30 p.m. EDT in Friday's trading.

Confluent published its Q3 results after the market closed on Nov. 4, posting sales and earnings for the period that topped the market's expectations. The company reported a non-GAAP (adjusted) loss per share of $0.17 on revenue of $102.6 million, while the average analyst estimate had called for a per-share loss of $0.23 on sales of $90.7 million. 

A dollar sign and a bar chart.

Image source: Getty Images.

So what

Confluent's sales jumped roughly 67% year over year in the third quarter, and the business showed signs of strong momentum in multiple key performance categories. Revenue from the cloud segment jumped 245% year over year to reach $27 million, and the company's number of customers with contracts worth at least $100,000 in annualized recurring revenue hit 644 at the end of the period -- up 48% year over year. Confluent's dollar-based net retention rate also exceeded 130% in the period, meaning that existing customers spent 30% more than they had in Q3 of 2020.

Now what

Confluent is guiding for fourth-quarter sales to come in between $108 million and $110 million. Management expects to post an adjusted per-share loss between $0.21 and $0.23 in the period. Guidance for Q4 came in significantly ahead of the average analyst estimate's previous target for a per-share loss of $0.25 on revenue of roughly $95 million in the period. 

For the full-year period, Confluent is targeting an adjusted loss between $0.90 and $0.92 on revenue between $376 million and $378 million. The company now has a market capitalization of roughly $22 billion and is valued at about 58 times the midpoint of this year's expected sales. 

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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