Confluent (NASDAQ: CFLT), a data streaming company, recently announced its Q4 results, surpassing market expectations for both revenue and earnings. The company reported $261 million in revenue and adjusted earnings of $0.09 per share, slightly above analysts’ consensus estimates of $257 million and $0.06 per share. The positive results were driven by new customer acquisitions. Additionally, Confluent’s forward-looking guidance exceeded market expectations, further boosting investor confidence. Separately, CROX reports earnings tomorrow. Will the stock pop on the news? See How Might Crocs Stock React To Upcoming Earnings?
Since the start of 2024, CFLT stock has risen by 34%, slightly outperforming the S&P 500 index, which has gained 27%. The AI-driven demand for real-time data streaming has significantly benefited Confluent. However, for investors seeking growth with less volatility than an individual stock, the High-Quality portfolio has consistently outperformed the S&P 500, achieving over 91% returns since its inception.
How Did Confluent Perform In Q4?
Confluent reported $261 million in Q4 revenue, reflecting a 23% year-over-year increase. Subscription revenue grew by 24% to reach $251 million. The company’s cloud offerings were a key growth driver, posting a 38% year-over-year increase. Additionally, Confluent’s customer base with annual revenues of $0.1 million or more expanded by 12%. The company also announced a strategic partnership with Jio Platforms to serve as the primary data streaming provider for Jio Cloud Services in India, along with an expanded collaboration with Databricks.
Despite strong revenue growth, the company’s operating margin declined slightly by 10 basis points to 5.2% in Q4. The bottom-line earnings remained stable at $0.09 per share, consistent with the previous year. Looking ahead, Confluent forecasts revenue between $1.117 billion and $1.121 billion, with earnings of $0.35 per share in 2025.
How Does This Impact CFLT Stock?
Following its Q4 earnings beat, Confluent’s stock surged by 12% in after-hours trading, driven in part by its newly announced partnerships. However, CFLT stock has experienced considerable volatility in recent years, with annual returns fluctuating significantly compared to the broader S&P 500 index.
In contrast, the Trefis High Quality Portfolio, consisting of 30 stocks, has shown more stability while outperforming the S&P 500 over the past four years. What makes it stand out? The HQ Portfolio stocks have historically provided higher returns with lower risk compared to the benchmark index, offering a smoother investment experience, as demonstrated by the HQ Portfolio performance metrics.
Given the current uncertain macroeconomic environment—marked by potential interest rate cuts and ongoing trade tensions—could CFLT follow the same trajectory as in 2022, 2023, and 2024 and underperform the S&P over the next year, or will it stage a recovery? We believe there is still room for growth. At its current price of $30, CFLT trades at 10x trailing revenue, aligning with its three-year average price-to-sales ratio. Strong revenue growth and strategic partnerships could further drive future sales, supporting a higher valuation multiple. As an aside, see What’s Happening With McDonald’s Stock?
While CFLT stock appears to have growth potential, it’s useful to compare it against industry peers using key performance metrics. Explore more company comparisons at Peer Comparisons.
Invest with Trefis Market-Beating Portfolios.
Explore all Trefis Price Estimates.