Confluent passes $100 million quarterly run rate as data in motion resonates with end users

Confluent last week passed a significant milestone - its first quarter with over $100 million in revenue, achieved in less than seven years as the firm’s data in motion message resonates with organizations.

Stats from the quarter:

• Total revenue was $102.6 million, up 67% year-on-year.
• GAAP operating loss was $94.8 million.
• Subscription revenue was $92.4 million, up 70% year-on-year to account for 90% of total revenue.
• Confluent Cloud revenue growth of 245% outpaced the wider business and with the offering now making up more than a quarter (26%) of total revenue on $26.8 million.
• Confluent Platform revenue was $65.6 million, up 40% year over year and now 64% of total revenue.
• Approximately 190 net new customers signed during the quarter to bring the total count to 3,020, up 75% year over year.
• 664 customers are now delivering at least $100,000 in ARR, up 48% year over year
• 74 customers are delivering at least $1 million in ARR, up 90% year over year.

CEO and co-founder Jay Kreps pointed to an underlying macro-change that is driving all this:

Virtually all businesses are becoming defined end-to-end in software. It isn't just that there are more software applications, but increasingly the core activities of the business, the production and distribution of goods and services and interactions with customers, are driven by software. To do this, these software systems must connect end-to-end to the different parts of the business and operate in real-time as the business executes out in the real world.

At the core of all the software that drives this is data, he added:

Data management has traditionally been about storage, that is, data at rest. Databases have long been the mainstay of data management and storage is exactly what they're built to do. They help you safely store your data and lookup or process the right bits as you need it. But now the explosion of software and data means that there are more databases, applications, analytics, platforms, and SaaS layers. And increasingly, all of these systems need to work together in real-time to help operate the business. It isn't enough anymore to have all these systems existing as disconnected storage silos. They all have to integrate in real time.

This is where Confluent finds its role, extending support in the infrastructure layer to cover the other half of data management which the firm calls the management of data in motion. Kreps explained:

This problem is very different from a world with data at rest. It isn't about storing piles of data for individual disconnected applications. Data in motion requires a platform that helps support the real-time flow and processing of data between applications as it is generated to help drive the operations of the business. This new platform forms a key component of the emerging next-gen data architecture, which we think, over time, will be a requirement for every company. By using data in this way, companies can make it far easier to tap into data from any part of the company and operate on it in real time. The streams of data both trigger custom applications to take action, as well as enabling real-time processing and enrichment of the data and integration into other data systems.

Data in motion makes it possible to do this in a decoupled way because of the published subscriber nature of the usage. Any part of the business can publish the real-time stream of data at its own operation and any other part of the business can choose to tap into that stream to react or processing. As a result, these capabilities are critical for companies to be able to build around software and data, which is, in turn, critical for their success in the modern competitive landscape.

In this sense, the rise of data in motion is right at the heart of digital transformation. This kind of real-time architecture has long been desirable. What was long believed to be too difficult for all but the most critical applications? However, our platform makes real-time easy. Indeed, our goal is to make processing real-time data streams as easy and ubiquitous as the infrastructure around storage and batch process.

Use cases 

He pointed to a number of customer examples to illustrate his point, beginning with financial services firm Square:

They needed a scalable, reliable, and secure data streaming solution. When a merchant receives customer's order through their website or they need to process payroll, a lot needs to happen in real time. We're helping power Square's seller business with a number of use cases that connect the point-of-sale to payment processing to reporting.

Another use case of note is iFood, a mobile food delivery leader in Brazil, he added:

[They have] recently migrated to our fully managed cloud service running on AWS. They now manage more than four million orders per month. Everything from order placement to payment processing to delivery ETAs are handled with Confluent to make sure the right food gets to the right customer as fast as possible.

Then there’s Instacart, he said:

Instacart experienced record growth at the onset of the pandemic, which required them to be able to scale elastically to meet the need. They evaluated a handful of different data and motion options and selected Confluent Cloud due to the combination of cloud-native capabilities that would let them scale elastically to support the growth of their business, the completeness of our offering, and our ability to be everywhere, spanning the environments and availability zones their product required. They have complex problems to solve in real time with inventory, customer service, and stacking. We believe our platform and the larger movement around data in motion represents a significant step-change in making data accessible across an organization.

This is only the beginning, he concluded:

There are literally hundreds of use cases and product opportunities around data in motion that we see our customers and the larger ecosystem development. And because that ecosystem is just coming into being, Confluent has an enormous opportunity to expand our position and scope into these additional capabilities...You can ask yourself the question, if there was a central nervous system, which captured the real-time flow of data in a company, what else would naturally grow in and around that stack. The possibilities are endless.

My take

An impressive quarter with, as Kreps noted, a lot of potential for further expansion in the coming months and years.