Confluent, Inc.

Q3 subscription revenue increased 19% year over year to $286.3 million, or 96% of total revenue. Confluent Cloud revenue grew 24% to $161 million, and Confluent Platform revenue grew 14% to $125.4 million. Subscription gross margin was 81.8%; non-GAAP operating margin was 9.7% (about 10%, up 340 bps); adjusted free cash flow margin was 8.2%; and EPS was $0.13. The company ended Q3 with $1.99 billion in cash, cash equivalents, and marketable securities. For Q4 FY25, management guided subscription revenue to $295.5 million-$296.5 million (about 18% growth), non-GAAP operating margin to about 7%, and non-GAAP EPS to $0.09-$0.10. For FY25, it guided subscription revenue to $1.1135 billion-$1.1145 billion (about 21% growth), non-GAAP operating margin to about 7%, non-GAAP EPS to $0.39-$0.40, and adjusted free cash flow margin to about 6%. It also modeled Q4 cloud revenue at about $165 million (about 20% growth, ~56% of subscription revenue).

Jay Kreps framed the quarter as evidence that the go-to-market changes are working, especially the specialization model for DSP and tighter field alignment around consumption. He emphasized that late-stage pipeline reaching production is a meaningful indicator because those workloads then drive future consumption, and he said he has high confidence in that pipeline. Strategically, he leaned heavily into Confluent’s role as the context layer for enterprise AI, arguing that real-time, governed data is what enables agents and applications to move from prototypes to production.

Rohan Sivaram highlighted broad operating leverage: subscription revenue was $286.3 million, subscription gross margin was 81.8%, operating margin reached a record 9.7%, and adjusted free cash flow margin was 8.2%. He pointed to customer metrics including 2,533 customers with $20,000+ ARR, 1,487 customers with $100,000+ ARR, and 234 customers with $1 million+ ARR; NRR stabilized at 114% and GRR remained close to 90%. On capital allocation, he said WarpStream consumption has grown nearly 8x in one year and that Flink has become a low 8-figure ARR business since the Immerok acquisition.

Analysts focused on whether the improved pipeline and RPO should be viewed as reliable leading indicators, and management said RPO is the key forward indicator for Platform while Cloud is more driven short term by new use cases moving into production. Questions also centered on optimization, the large cloud customer moving to self-hosted, and whether cloud growth has bottomed; management said optimization is back to normalized, healthy levels and that the customer move creates a low single-digit impact to Q4 cloud revenue. On Flink, management said adoption is broadening with both real-time pipeline and operational use cases, and that the product will be a material contributor in FY26. Asked about Databricks’ structured streaming, Jay said the companies are still complementary and serve different users, though there is some overlap.