EX-99.1 3 cflt-ex99_1.htm EX-99.1 EX-99.1

Exhibit 99.1

Confluent Announces Second Quarter 2023 Financial Results

Second quarter revenue of $189 million, up 36% year over year
Second quarter Confluent Cloud revenue of $84 million, up 78% year over year
Remaining performance obligations of $791 million, up 34% year over year
1,144 customers with $100,000 or greater in ARR, up 33% year over year

 

MOUNTAIN VIEW, Calif. -- August 02, 2023 -- Confluent, Inc. (NASDAQ: CFLT), the data streaming pioneer, today announced financial results for its second quarter of 2023, ended June 30, 2023.

“Data streaming is a mission critical component of the modern data stack,” said Jay Kreps, co-founder and CEO, Confluent. “That’s evidenced by our beat of guided metrics every quarter that we’ve been public, including this second quarter where we saw a strong 78% year-over-year growth in Confluent Cloud revenue. Our rapid pace of innovation is fueling customer demand and success.”

“We delivered another strong quarter, with 36% revenue growth and more than 20 points of improvement in both GAAP and non-GAAP operating margins year over year,” said Steffan Tomlinson, CFO, Confluent. “These results underscore our leadership position in a $60 billion data streaming market, and our team’s track record of driving durable and efficient growth.”

Second Quarter 2023 Financial Highlights

(In millions, except per share data and percentages)

Q2 2023

Q2 2022

Y/Y Change

Total Revenue

$189.3

$139.4

36%

Remaining Performance Obligations

$791.4

$591.3

34%

GAAP Operating Loss

$(119.4)

$(117.3)

$(2.1)

Non-GAAP Operating Loss

$(17.3)

$(46.8)

$29.5

GAAP Operating Margin

(63.1%)

(84.1%)

21.0 pts

Non-GAAP Operating Margin

(9.2%)

(33.5%)

24.3 pts

GAAP Net Loss Per Share

$(0.35)

$(0.42)

$0.07

Non-GAAP Net Income (Loss) Per Share

$0.00

$(0.16)

$0.16

Net Cash Used in Operating Activities

$(29.1)

$(33.5)

$4.4

Free Cash Flow

$(35.2)

$(36.9)

$1.7

A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure is provided in the financial statement tables included in this press release. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section titled “Non-GAAP Financial Measures.”

 

 


 

 

Financial Outlook

For the third quarter and fiscal year 2023, Confluent expects:

Q3 2023 Outlook

FY 2023 Outlook

Total Revenue

$193.5-$195.5 million

$767-$772 million

Non-GAAP Operating Margin

~ (10%)

~ (10%)

Non-GAAP Net Income (Loss) Per Share

$(0.01)-$0.00

$(0.05)-$(0.02)

A reconciliation of forward-looking non-GAAP operating margin and non-GAAP net income (loss) per share to the most directly comparable GAAP measures is not available without unreasonable effort, as certain items cannot be reasonably predicted because of their high variability, complexity and low visibility. In particular, the measures and effects of our stock-based compensation expense specific to our equity compensation awards and employer payroll tax-related items on employee stock transactions are directly impacted by the timing of employee stock transactions and unpredictable fluctuations in our stock price, which we expect to have a significant impact on our future GAAP financial results.

Conference Call Information

Confluent will host a video webcast to discuss the company’s second quarter 2023 results as well as its financial outlook today at 4:30 p.m. Eastern Time/1:30 p.m. Pacific Time. Open to the public, investors may access the webcast, earnings press release, supplemental financial information, and investor presentation on Confluent’s investor relations website at investors.confluent.io before the commencement of the webcast. A replay of the webcast will also be accessible from Confluent’s investor relations website a few hours after the conclusion of the live event.

Confluent uses its investor relations website and may use its Twitter, LinkedIn, and Facebook accounts as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

 

 


 

Forward-Looking Statements

This press release and the earnings call referencing this press release contain forward-looking statements including, among other things, statements regarding (i) our financial outlook, including expected revenue mix, Confluent Cloud sequential revenue growth, operating margins and margin improvements, targeted or anticipated gross and operating margin levels, achievement of non-GAAP operating margin breakeven exiting the fourth quarter of fiscal 2023, improvements in unit economics, continued business momentum, and expected revenue growth rate and efficient growth, (ii) our market and category leadership position, (iii) our expected investments in research and development and go-to-market functions, (iv) our expected capital allocation to drive efficient growth and rate and pace of investments, (v) our expectations and trends relating to Confluent Cloud growth, (vi) rates of Confluent Cloud consumption and demand for and retention of data streaming platforms like Confluent in the face of budget scrutiny, (vii) continued higher interest rates and macroeconomic uncertainty as well as our expectations regarding the effects of macroeconomic pressure on our go-to-market motion and durability of our offering with customers, (viii) our pricing, our win rate and deal cycles and customer behaviors such as budget scrutiny, (ix) customer growth, retention and engagement, (x) ability for Confluent Cloud to provide cost savings for users and customers, including lower total cost of ownership, and drive greater monetization of the open source Kafka user base as a result, (xi) increased adoption of our platform and fully managed solutions for data streaming in general, (xii) dependence of businesses on data in motion, (xiii) growth in and growth rate of revenue, customers, remaining performance obligations, dollar-based net retention rate, and gross retention rate, (xiv) our ability to increase engagement of customers for Confluent and expand customer cohorts, (xv) our market opportunity, (xvi) our consumption-oriented strategy, (xvii) our go-to-market strategy, (xviii) our product differentiation and market acceptance of our products, including over open source alternatives, (xix) our strategy and expected results and market acceptance for our Flink offering and timing for launch of that offering, (xx) our expectations for market acceptance of stream processing, (xxi) our ability to meet near-term and mid-term financial targets, (xxii) and our overall future prospects. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “seek,” “plan,” “project,” “target,” “looking ahead,” “look to,” “move into,” and similar expressions are intended to identify forward-looking statements. Forward-looking statements represent our current beliefs, estimates and assumptions only as of the date of this press release and information contained in this press release should not be relied upon as representing our estimates as of any subsequent date. These forward-looking statements are subject to risks, uncertainties, and assumptions. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. Risks include, but are not limited to: (i) our limited operating history, including in uncertain macroeconomic environments, (ii) our ability to sustain and manage our rapid growth, including following our recent restructuring, (iii) our ability to attract new customers and retain and sell additional features and services to our existing customers, (iv) inflationary conditions, economic uncertainty, recessionary risks, and exchange rate fluctuations, which have resulted and may continue to result in customer pullback in information technology spending, lengthening of sales cycles, reduced contract sizes, reduced consumption of Confluent Cloud or customer preference for open source alternatives, as well as the potential need for cost efficiency measures, (v) our ability to increase consumption of our offering, including by existing customers and through the acquisition of new customers, and successfully add new features and functionality to our offering, (vi) our ability to achieve profitability and improve margins annually, by our expected timelines or at all, (vii) the estimated

 


 

addressable market opportunity for our offering, including our Flink offering and stream processing, and our ability to capture our share of that market opportunity, (viii) our ability to compete effectively in an increasingly competitive market, (ix) our ability to successfully execute our go-to-market strategy and initiatives, (x) our ability to attract and retain highly qualified personnel, (xi) breaches in our security measures or unauthorized access to our platform, our data, or our customers’ or other users’ personal data, (xii) our reliance on third-party cloud-based infrastructure to host Confluent Cloud, and (xiii) general market, political, economic, and business conditions, including continuing impacts from the COVID-19 pandemic. These risks are not exhaustive. Further information on these and other risks that could affect Confluent’s results is included in our filings with the Securities and Exchange Commission (“SEC”), including our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, and our future reports that we may file from time to time with the SEC. Additional information will be made available in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 that will be filed with the SEC, which should be read in conjunction with this press release and the financial results included herein. Confluent assumes no obligation to, and does not currently intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Non-GAAP Financial Measures

This press release includes the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (research and development, sales and marketing, general and administrative), non-GAAP operating loss, non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per share, free cash flow, and free cash flow margin. We use these non-GAAP financial measures and other key metrics internally to facilitate analysis of our financial and business trends and for internal planning and forecasting purposes. We believe these non-GAAP financial measures, when taken collectively, may be helpful to investors because they provide consistency and comparability with past financial performance by excluding certain items that may not be indicative of our business, results of operations, or outlook. However, non-GAAP financial measures have limitations as an analytical tool and are presented for supplemental informational purposes only. They should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. In particular, other companies, including companies in our industry, may report non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (research and development, sales and marketing, general and administrative), non-GAAP operating loss, non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per share, free cash flow, free cash flow margin, or similarly titled measures but calculate them differently, which reduces their usefulness as comparative measures. Further, free cash flow is not a substitute for cash used in operating activities. The utility of free cash flow is limited as such measure does not reflect our future contractual commitments and does not represent the total increase or decrease in our cash balance for any given period. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures, as presented below. We define non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (research and development, sales and marketing, general and administrative), non-GAAP operating loss, non-GAAP operating margin, non-GAAP net income (loss), and non-GAAP net income (loss) per share as the respective GAAP balances, adjusted for, as applicable, stock-based compensation expense; employer taxes on employee stock transactions; amortization of acquired intangibles; common stock charitable donation expense;

 


 

acquisition-related expenses; restructuring and other related charges; amortization of debt issuance costs; and income tax effects associated with these adjustments. We define free cash flow as net cash used in operating activities less capitalized internal-use software costs and capital expenditures and free cash flow margin as free cash flow as a percentage of revenue. We believe that free cash flow and free cash flow margin are useful indicators of liquidity that provide information to management and investors about the performance of core operations and future ability to generate cash that can be used for strategic opportunities or investing in our business.

Other Business Metrics

Remaining performance obligations (“RPO”) represent the amount of contracted future revenue that has not yet been recognized as of the end of each period, including both deferred revenue that has been invoiced and non-cancelable committed amounts that will be invoiced and recognized as revenue in future periods. RPO excludes pay-as-you-go arrangements. RPO may also fluctuate due to a number of factors, including the timing of renewals, average contract terms, seasonality, and dollar amount of customer contracts. RPO as a metric is not necessarily indicative of future revenue growth because it does not account for the actual timing of customers’ consumption or future expansion.

Customers with $100,000 or greater in annual recurring revenue (“ARR”) represent the number of customers that contributed $100,000 or more in ARR as of period end. We define ARR as (1) with respect to Confluent Platform customers, the amount of revenue to which our customers are contractually committed over the following 12 months assuming no increases or reductions in their subscriptions, and (2) with respect to Confluent Cloud customers, the amount of revenue that we expect to recognize from such customers over the following 12 months, calculated by annualizing actual consumption of Confluent Cloud in the last three months of the applicable period, assuming no increases or reductions in usage rate. Services arrangements are excluded from the calculation of ARR. Prior to the first quarter of 2023, ARR with respect to Confluent Cloud customers excluded pay-as-you-go arrangements and was based on contractual commitments over the following 12 months, regardless of actual consumption. We adjusted our methodology for calculating ARR commencing with the first quarter of 2023 to incorporate actual consumption of Confluent Cloud and applied this change retroactively. For purposes of determining our customer count, we treat all affiliated entities with the same parent organization as a single customer and include pay-as-you-go customers. Our customer count is subject to adjustments for acquisitions, consolidations, spin-offs, and other market activity.

Dollar-based net retention rate (“NRR”) as of a period end is calculated by starting with the ARR from the cohort of all customers as of 12 months prior to such period end (“Prior Period Value”). We then calculate the ARR from these same customers as of the current period end (“Current Period Value”), and divide the Current Period Value by the Prior Period Value to arrive at our dollar-based NRR. The dollar-based NRR includes the effect, on a dollar-weighted value basis, of our Confluent Platform subscriptions that expand, renew, contract, or attrit. The dollar-based NRR also includes the effect of annualizing actual consumption of Confluent Cloud in the last three months of the applicable period, but excludes ARR from new customers in the current period. Our dollar-based NRR is subject to adjustments for acquisitions, consolidations, spin-offs, and other market activity.

 


 

About Confluent

Confluent is the data streaming platform that is pioneering a fundamentally new category of data infrastructure that sets data in motion. Confluent’s cloud-native offering is the foundational platform for data in motion – designed to be the intelligent connective tissue enabling real-time data, from multiple sources, to constantly stream across the organization. With Confluent, organizations can meet the new business imperative of delivering rich, digital front-end customer experiences and transitioning to sophisticated, real-time, software-driven backend operations.

Investor Contact

Shane Xie

investors@confluent.io

Media Contact

Taylor Jones

pr@confluent.io
 

 

 


 

Confluent, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

 

June 30,

 

 

December 31,

 

 

2023

 

 

2022

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

312,643

 

 

$

435,781

 

Marketable securities

 

1,534,912

 

 

 

1,491,044

 

Accounts receivable, net

 

188,705

 

 

 

178,188

 

Deferred contract acquisition costs

 

39,180

 

 

 

35,883

 

Prepaid expenses and other current assets

 

64,218

 

 

 

57,229

 

Total current assets

 

2,139,658

 

 

 

2,198,125

 

Property and equipment, net

 

43,599

 

 

 

29,089

 

Operating lease right-of-use assets

 

11,870

 

 

 

29,478

 

Goodwill and intangible assets, net

 

45,814

 

 

 

-

 

Deferred contract acquisition costs, non-current

 

67,533

 

 

 

68,401

 

Other assets, non-current

 

19,166

 

 

 

19,756

 

Total assets

$

2,327,640

 

 

$

2,344,849

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

2,459

 

 

$

21,439

 

Accrued expenses and other liabilities

 

112,495

 

 

 

105,331

 

Operating lease liabilities

 

7,618

 

 

 

7,375

 

Deferred revenue

 

300,786

 

 

 

290,185

 

Total current liabilities

 

423,358

 

 

 

424,330

 

Operating lease liabilities, non-current

 

21,394

 

 

 

25,136

 

Deferred revenue, non-current

 

27,187

 

 

 

32,644

 

Convertible senior notes, net

 

1,086,389

 

 

 

1,084,500

 

Other liabilities, non-current

 

7,926

 

 

 

8,762

 

Total liabilities

 

1,566,254

 

 

 

1,575,372

 

Stockholders’ equity:

 

 

 

 

 

Preferred stock

 

-

 

 

 

-

 

Class A common stock

 

2

 

 

 

2

 

Class B common stock

 

1

 

 

 

1

 

Additional paid-in capital

 

2,228,574

 

 

 

1,980,335

 

Accumulated other comprehensive loss

 

(9,806

)

 

 

(9,456

)

Accumulated deficit

 

(1,457,385

)

 

 

(1,201,405

)

Total stockholders’ equity

 

761,386

 

 

 

769,477

 

Total liabilities and stockholders’ equity

$

2,327,640

 

 

$

2,344,849

 

 

 


 

Confluent, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

(unaudited)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

Subscription

$

176,488

 

 

$

127,018

 

 

$

337,055

 

 

$

240,938

 

Services

 

12,797

 

 

 

12,389

 

 

 

26,532

 

 

 

24,608

 

Total revenue

 

189,285

 

 

 

139,407

 

 

 

363,587

 

 

 

265,546

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

Subscription(1)(2)

 

44,188

 

 

 

35,608

 

 

 

87,093

 

 

 

69,211

 

Services(1)(2)

 

13,732

 

 

 

13,901

 

 

 

28,971

 

 

 

26,075

 

Total cost of revenue

 

57,920

 

 

 

49,509

 

 

 

116,064

 

 

 

95,286

 

Gross profit

 

131,365

 

 

 

89,898

 

 

 

247,523

 

 

 

170,260

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Research and development(1)(2)

 

85,677

 

 

 

64,472

 

 

 

170,567

 

 

 

122,133

 

Sales and marketing(1)(2)

 

127,770

 

 

 

112,754

 

 

 

256,394

 

 

 

219,456

 

General and administrative(1)(2)

 

36,343

 

 

 

29,979

 

 

 

71,698

 

 

 

57,460

 

Restructuring and other related charges

 

943

 

 

 

-

 

 

 

34,325

 

 

 

-

 

Total operating expenses

 

250,733

 

 

 

207,205

 

 

 

532,984

 

 

 

399,049

 

Operating loss

 

(119,368

)

 

 

(117,307

)

 

 

(285,461

)

 

 

(228,789

)

Other income, net

 

17,610

 

 

 

1,186

 

 

 

32,795

 

 

 

370

 

Loss before income taxes

 

(101,758

)

 

 

(116,121

)

 

 

(252,666

)

 

 

(228,419

)

Provision for income taxes

 

1,667

 

 

 

1,510

 

 

 

3,314

 

 

 

2,199

 

Net loss

$

(103,425

)

 

$

(117,631

)

 

$

(255,980

)

 

$

(230,618

)

Net loss per share, basic and diluted

$

(0.35

)

 

$

(0.42

)

 

$

(0.87

)

 

$

(0.84

)

Weighted-average shares used to compute net loss per share, basic and diluted

 

297,827,200

 

 

 

278,268,980

 

 

 

294,862,197

 

 

 

275,593,362

 

 

(1) Includes stock-based compensation expense as follows:

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Cost of revenue - subscription

$

6,914

 

 

$

6,018

 

 

$

13,242

 

 

$

11,331

 

Cost of revenue - services

 

3,125

 

 

 

2,328

 

 

 

5,902

 

 

 

4,190

 

Research and development

 

35,420

 

 

 

25,337

 

 

 

65,435

 

 

 

45,422

 

Sales and marketing

 

32,889

 

 

 

24,746

 

 

 

61,376

 

 

 

45,808

 

General and administrative

 

13,811

 

 

 

10,437

 

 

 

25,493

 

 

 

19,484

 

Total stock-based compensation expense

$

92,159

 

 

$

68,866

 

 

$

171,448

 

 

$

126,235

 

 

(2) Includes employer taxes on employee stock transactions as follows:

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Cost of revenue - subscription

$

265

 

 

$

70

 

 

$

586

 

 

$

403

 

Cost of revenue - services

 

128

 

 

 

80

 

 

 

218

 

 

 

157

 

Research and development

 

1,306

 

 

 

342

 

 

 

2,975

 

 

 

1,381

 

Sales and marketing

 

1,488

 

 

 

1,048

 

 

 

2,571

 

 

 

1,728

 

General and administrative

 

412

 

 

 

130

 

 

 

912

 

 

 

440

 

Total employer taxes on employee stock transactions

$

3,599

 

 

$

1,670

 

 

$

7,262

 

 

$

4,109

 

 

 

 


 

Confluent, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(103,425

)

 

$

(117,631

)

 

$

(255,980

)

 

$

(230,618

)

Adjustments to reconcile net loss to cash used in operating activities:

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

3,256

 

 

 

1,810

 

 

 

6,378

 

 

 

3,060

 

Net (accretion) amortization of (discounts) premiums on marketable securities

 

(10,588

)

 

 

(469

)

 

 

(19,721

)

 

 

236

 

Amortization of debt issuance costs

 

950

 

 

 

947

 

 

 

1,889

 

 

 

1,883

 

Amortization of deferred contract acquisition costs

 

11,053

 

 

 

8,925

 

 

 

21,537

 

 

 

17,395

 

Non-cash operating lease costs

 

977

 

 

 

2,200

 

 

 

2,184

 

 

 

4,475

 

Lease abandonment charges

 

-

 

 

 

-

 

 

 

15,667

 

 

 

-

 

Stock-based compensation, net of amounts capitalized

 

92,159

 

 

 

68,866

 

 

 

171,448

 

 

 

126,235

 

Deferred income taxes

 

5

 

 

 

30

 

 

 

10

 

 

 

26

 

Other

 

572

 

 

 

355

 

 

 

851

 

 

 

559

 

Changes in operating assets and liabilities, net of effects of a business combination:

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

(19,361

)

 

 

(25,244

)

 

 

(11,293

)

 

 

(12,462

)

Deferred contract acquisition costs

 

(13,806

)

 

 

(10,643

)

 

 

(23,966

)

 

 

(22,723

)

Prepaid expenses and other assets

 

(9,198

)

 

 

(12,136

)

 

 

(6,057

)

 

 

(20,121

)

Accounts payable

 

(7,395

)

 

 

7,275

 

 

 

(18,720

)

 

 

7,452

 

Accrued expenses and other liabilities

 

24,109

 

 

 

24,609

 

 

 

7,552

 

 

 

1,756

 

Operating lease liabilities

 

(1,756

)

 

 

(2,413

)

 

 

(3,754

)

 

 

(4,910

)

Deferred revenue

 

3,388

 

 

 

20,047

 

 

 

5,143

 

 

 

39,254

 

Net cash used in operating activities

 

(29,060

)

 

 

(33,472

)

 

 

(106,832

)

 

 

(88,503

)

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

Capitalization of internal-use software costs

 

(5,330

)

 

 

(2,256

)

 

 

(9,886

)

 

 

(4,765

)

Purchases of marketable securities

 

(546,408

)

 

 

(763,479

)

 

 

(999,764

)

 

 

(1,167,362

)

Maturities of marketable securities

 

523,606

 

 

 

275,114

 

 

 

975,383

 

 

 

370,659

 

Purchases of property and equipment

 

(809

)

 

 

(1,184

)

 

 

(1,355

)

 

 

(2,071

)

Cash paid for a business combination, net of cash acquired

 

-

 

 

 

-

 

 

 

(45,802

)

 

 

-

 

Net cash used in investing activities

 

(28,941

)

 

 

(491,805

)

 

 

(81,424

)

 

 

(803,539

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock upon exercise of vested options

 

27,492

 

 

 

7,947

 

 

 

48,272

 

 

 

24,383

 

Proceeds from issuance of common stock upon early exercise of unvested options

 

-

 

 

 

71

 

 

 

-

 

 

 

416

 

Repurchases of unvested options

 

-

 

 

 

(683

)

 

 

(223

)

 

 

(695

)

Payments of debt issuance costs for convertible senior notes

 

-

 

 

 

-

 

 

 

-

 

 

 

(786

)

Proceeds from issuance of common stock under employee stock purchase plan

 

-

 

 

 

-

 

 

 

17,172

 

 

 

22,485

 

Net cash provided by financing activities

 

27,492

 

 

 

7,335

 

 

 

65,221

 

 

 

45,803

 

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

 

(308

)

 

 

20

 

 

 

(103

)

 

 

(26

)

Net decrease in cash, cash equivalents, and restricted cash

 

(30,817

)

 

 

(517,922

)

 

 

(123,138

)

 

 

(846,265

)

Cash, cash equivalents, and restricted cash at beginning of period

 

343,460

 

 

 

1,048,339

 

 

 

435,781

 

 

 

1,376,682

 

Cash, cash equivalents, and restricted cash at end of period

$

312,643

 

 

$

530,417

 

 

$

312,643

 

 

$

530,417

 

Reconciliation of cash, cash equivalents, and restricted cash within the consolidated balance sheets to the amounts shown above:

 

Cash and cash equivalents

$

312,643

 

 

$

529,667

 

 

$

312,643

 

 

$

529,667

 

Restricted cash included in other assets, current

 

-

 

 

 

750

 

 

 

-

 

 

 

750

 

Total cash, cash equivalents, and restricted cash

$

312,643

 

 

$

530,417

 

 

$

312,643

 

 

$

530,417

 

 

 

 


 

 

Confluent, Inc.

Reconciliation of GAAP Measures to Non-GAAP Measures

(in thousands, except percentages, share and per share data)

(unaudited)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Reconciliation of GAAP total gross profit to non-GAAP total gross profit:

 

Total gross profit on a GAAP basis

$

131,365

 

 

$

89,898

 

 

$

247,523

 

 

$

170,260

 

Total gross margin on a GAAP basis

69.4%

 

 

64.5%

 

 

68.1%

 

 

64.1%

 

Add: Stock-based compensation expense

 

10,039

 

 

 

8,346

 

 

 

19,144

 

 

 

15,521

 

Add: Employer taxes on employee stock transactions

 

393

 

 

 

150

 

 

 

804

 

 

 

560

 

Add: Amortization of acquired intangibles

 

127

 

 

 

-

 

 

 

240

 

 

 

-

 

Non-GAAP total gross profit

$

141,924

 

 

$

98,394

 

 

$

267,711

 

 

$

186,341

 

Non-GAAP total gross margin

75.0%

 

 

70.6%

 

 

73.6%

 

 

70.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP operating expenses to non-GAAP operating expenses:

 

Research and development operating expense on a GAAP basis

$

85,677

 

 

$

64,472

 

 

$

170,567

 

 

$

122,133

 

Less: Stock-based compensation expense

 

35,420

 

 

 

25,337

 

 

 

65,435

 

 

 

45,422

 

Less: Employer taxes on employee stock transactions

 

1,306

 

 

 

342

 

 

 

2,975

 

 

 

1,381

 

Less: Acquisition-related expenses

 

3,841

 

 

 

-

 

 

 

11,521

 

 

 

-

 

Non-GAAP research and development operating expense

$

45,110

 

 

$

38,793

 

 

$

90,636

 

 

$

75,330

 

Non-GAAP research and development operating expense as a percentage of total revenue

23.8%

 

 

27.8%

 

 

24.9%

 

 

28.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing operating expense on a GAAP basis

$

127,770

 

 

$

112,754

 

 

$

256,394

 

 

$

219,456

 

Less: Stock-based compensation expense

 

32,889

 

 

 

24,746

 

 

 

61,376

 

 

 

45,808

 

Less: Employer taxes on employee stock transactions

 

1,488

 

 

 

1,048

 

 

 

2,571

 

 

 

1,728

 

Less: Acquisition-related expenses

 

1,076

 

 

 

-

 

 

 

2,152

 

 

 

-

 

Non-GAAP sales and marketing operating expense

$

92,317

 

 

$

86,960

 

 

$

190,295

 

 

$

171,920

 

Non-GAAP sales and marketing operating expense as a percentage of total revenue

48.8%

 

 

62.4%

 

 

52.3%

 

 

64.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative operating expense on a GAAP basis

$

36,343

 

 

$

29,979

 

 

$

71,698

 

 

$

57,460

 

Less: Stock-based compensation expense

 

13,811

 

 

 

10,437

 

 

 

25,493

 

 

 

19,484

 

Less: Employer taxes on employee stock transactions

 

412

 

 

 

130

 

 

 

912

 

 

 

440

 

Less: Acquisition-related expenses

 

281

 

 

 

-

 

 

 

842

 

 

 

-

 

Non-GAAP general and administrative operating expense

$

21,839

 

 

$

19,412

 

 

$

44,451

 

 

$

37,536

 

Non-GAAP general and administrative operating expense as a percentage of total revenue

11.5%

 

 

13.9%

 

 

12.2%

 

 

14.1%

 

 

 

 


 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Reconciliation of GAAP operating loss to non-GAAP operating loss:

 

Operating loss on a GAAP basis

$

(119,368

)

 

$

(117,307

)

 

$

(285,461

)

 

$

(228,789

)

Add: Stock-based compensation expense

 

92,159

 

 

 

68,866

 

 

 

171,448

 

 

 

126,235

 

Add: Employer taxes on employee stock transactions

 

3,599

 

 

 

1,670

 

 

 

7,262

 

 

 

4,109

 

Add: Amortization of acquired intangibles

 

127

 

 

 

-

 

 

 

240

 

 

 

-

 

Add: Acquisition-related expenses

 

5,198

 

 

 

-

 

 

 

14,515

 

 

 

-

 

Add: Restructuring and other related charges

 

943

 

 

 

-

 

 

 

34,325

 

 

 

-

 

Non-GAAP operating loss

$

(17,342

)

 

$

(46,771

)

 

$

(57,671

)

 

$

(98,445

)

Non-GAAP operating margin

(9.2%)

 

 

(33.5%)

 

 

(15.9%)

 

 

(37.1%)

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP net loss to non-GAAP net loss:

 

Net loss on a GAAP basis

$

(103,425

)

 

$

(117,631

)

 

$

(255,980

)

 

$

(230,618

)

Add: Stock-based compensation expense

 

92,159

 

 

 

68,866

 

 

 

171,448

 

 

 

126,235

 

Add: Employer taxes on employee stock transactions

 

3,599

 

 

 

1,670

 

 

 

7,262

 

 

 

4,109

 

Add: Amortization of acquired intangibles

 

127