What happened
Confluent (CFLT 1.71%) stock is seeing big sell-offs again this Friday. The data-streaming company's share price was down roughly 15.6% in the daily trading session as of noon ET.
Confluent released first-quarter earnings results after the market closed yesterday, and shares are falling despite results for the period coming in better than the market had anticipated. The company reported a non-GAAP (adjusted) loss per share of $0.19 on sales of $126 million, while the average analyst estimate had guided for a loss of $0.21 per share on sales of $119.49 million.
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So what
Despite Q1 sales and earnings coming in ahead of the market's targets, investors and analysts fixated on Confluent's slowing sales growth. Revenue grew roughly 64% year over year in the quarter, which was in line with sales growth in the last fiscal year but below the 71% growth that the company posted in 2021's fourth quarter.
With the Federal Reserve recently announcing a 50-basis-point increase for interest rates and making comments broadly perceived to have bearish implications for the stock market, scrutiny of companies with growth-dependent valuations has intensified. Following the Q1 release, multiple analysts cut their one-year price targets on the stock, which likely added to selling momentum at a time when growth stocks are already under pressure.
Now what
Confluent expects second-quarter revenue to be between $130 million and $132 million, with the midpoint of that target range coming in a bit below the average analyst estimate's pervious target for revenue of $131.79 million. Management expects an adjusted loss per share between $0.19 and $0.21, with the midpoint of that range being in line with the market's target.
For the full year, management is targeting sales between $554 million and $560 million, representing annual growth of 43.6% at the midpoint. Meanwhile, the average analyst estimate had estimated revenue at $558.82 million. The company's guidance for an adjusted loss between $0.73 and $0.79 per share was roughly in line with the average target for a per-share loss of $0.76.
Confluent now has a market capitalization of roughly $6.7 billion and is valued at approximately 12 times this year's expected sales.
