Equity Research

Confluent, Inc.: Initiation of Research Coverage

William Blair initiated research coverage of Confluent, Inc. (CFLT $81.93), which provides event stream processing and data management solutions to enterprise customers.

Analyst Jason Ader estimated the company would generate revenue of $376.9 million in 2021 and $511.0 million in 2022, with 30%-plus sustained top-line growth.

“The ability to leverage insights from real-time data has become increasingly elusive,” Ader said. “This has fueled the development of technologies like Apache Kafka, which enable organizations to make real-time data available to all the services that depend on it, effectively creating data pipelines that deliver information instantaneously to where it is needed—expanding the universe of potential applications and ensuring that today’s mission-critical applications operate at high levels of usage and reliability. As the main commercial backer of Kafka, Confluent has pioneered a new category in infrastructure software—which it calls ‘data in motion,’ or event streaming. Put simply, the goal of Confluent’s software is to standardize and decouple interrelationships between producers and consumers of data and present these through a single pane of glass, ultimately helping companies make sense of their distributed, real-time data to meet critical business needs such as traffic data, stock data, health records, and inventory/fleet management.”

Ader continued, “Confluent benefits from its close association with open source Kafka, which enjoys the largest event streaming ecosystem by far and drives grassroots adoption and lead generation for Confluent. On the self-serve side, Confluent Cloud has been a significant catalyst for user engagement and free-to-paid conversion. While still less than 30% of revenue, Confluent Cloud is the fastest-growing part of the company’s business. By abstracting away back-end complexity via a fully managed, SaaS version of its data-in-motion platform, Confluent Cloud lowers the barrier to entry for customers and creates potential for significant use-case expansion. Looking ahead, we expect Confluent Cloud, together with a broadening of the platform’s feature set, better leveraging of its partner ecosystem, and international expansion, to power sustained growth.”

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Current Ratings Distribution (as of 11/17/21)

Coverage Universe
Outperform (Buy): 76%
Market Perform (Hold): 24%
Underperform (Sell): 1%

Inv. Banking Relationships*
Outperform (Buy): 33%
Market Perform (Hold): 12%
Underperform (Sell): 0%

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