Shares of Confluent (CFLT +0.00%) charged sharply higher on Thursday, soaring as much as 35.4%. As of 10:56 a.m. ET, the stock was still up 30.7%.
The catalyst that sent the data streaming and cloud operator surging was its quarterly financial report, which was far better than many had feared.
NASDAQ: CFLT
Key Data Points
Investors breathe a sigh of relief
For the fourth quarter, Confluent generated revenue of $213 million, up 26% year over year, driven higher by subscription revenue that climbed 31%. This resulted in adjusted earnings per share (EPS) of $0.09.
To give its performance context, analysts' consensus estimates were calling for revenue of $205.3 million and adjusted EPS of $0.05, so Confluent sailed past expectations on both counts.
Management noted in the earnings release that the company achieved its first-ever quarter of $100 million in Confluent Cloud revenue, an increase of 46% year over year. The company also achieved a dollar-based net retention rate of 125%, which shows that existing customers are spending more on Confluent's services.
The company has been transitioning to a "fully consumption-oriented business," which better positions Confluent to capture more of the $60 billion data streaming platform market. Tepid results in Q3 had investors fearing the worst, concerned the shift had stalled. However, as the company illustrated this quarter, by making data available to companies for processing in real time, Confluent is giving those businesses an edge.
Gathering momentum
The current quarterly results aside, Confluent gave investors more reasons to celebrate. For the first quarter, management is guiding for revenue of $211.5 million at the midpoint of its guidance, and adjusted EPS of $0.01. For the full year, the company expects revenue of $950 million, ahead of Wall Street's expectations of $940 million.
CEO Jay Kreps noted that the data-in-motion market remains "highly fragmented," but Confluent's technology is removing some of the roadblocks that held this technology back, making it the odds-on favorite to succeed.
