On Wednesday, JMP Securities updated its outlook on Confluent Inc (NASDAQ:CFLT), raising the price target to $40.00 from the previous $38.00, while maintaining a Market Outperform rating. The adjustment follows Confluent's first quarter of 2024 earnings release, which surpassed most analyst expectations.
Confluent reported non-GAAP earnings per share (EPS) of $0.05, exceeding the consensus estimate of $0.02. Total revenue reached $217 million, topping the expected $212 million and marking a 25% increase year-over-year. This growth, however, slightly decelerated from the previous quarter's 26%.
The company's Confluent Cloud revenue was another highlight, coming in at $107 million against a consensus of $105 million. This represents a robust 45% growth, albeit slightly lower than the 46% growth in the previous quarter. Despite a lower-than-anticipated current remaining performance obligations (cRPO) of $571 million, compared to the consensus of $584 million, the firm emphasized that Confluent's focus is on driving consumption rather than securing commitments.
Additionally, Confluent achieved a non-GAAP operating margin of negative 1.5%, which is an improvement over the anticipated negative 3.6%. This marks the seventh consecutive quarter where the company has improved its operating margin by over 10 percentage points.
InvestingPro Insights
Following JMP Securities' updated outlook on Confluent Inc (NASDAQ:CFLT), InvestingPro data provides a more granular view of the company's financial health and market performance. Confluent's market capitalization stands at approximately $8.83 billion, reflecting investor confidence in its growth trajectory. Despite the lack of profitability over the last twelve months, with an adjusted P/E ratio of -20.58, the company is trading at a high revenue valuation multiple, indicating high expectations for future earnings. Notably, Confluent has maintained a strong liquidity position, with liquid assets surpassing short-term obligations, and holds more cash than debt on its balance sheet, which is a positive sign for financial stability.
InvestingPro Tips highlight that analysts are mixed on Confluent's outlook, with 11 analysts revising their earnings downwards for the upcoming period, yet they predict the company will turn profitable this year. Additionally, the company has experienced a large price uptick over the last six months, with a 56.35% return, and year-to-date, the return stands at 18.93%. Confluent does not pay a dividend, which is typical for growth-focused tech companies reinvesting earnings into expansion.
For investors seeking more in-depth analysis and additional insights, InvestingPro offers further tips on Confluent, which can be accessed at https://www.investing.com/pro/CFLT. To enhance your investment decisions, use coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With over 8 additional tips available on InvestingPro, subscribers can gain a comprehensive understanding of Confluent's investment potential and market positioning.
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