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On Thursday, Bernstein analysts adjusted their outlook on Confluent Inc (NASDAQ:CFLT), reducing the price target to $32.00 from the previous $35.00, while sustaining an Outperform rating on the company’s shares. According to InvestingPro data, analyst targets for CFLT range from $22 to $42, with the company currently trading at $23.81. Despite not being profitable in the last twelve months, analysts expect profitability this year. The revision follows Confluent’s first-quarter 2025 subscription revenue, which surpassed the guide’s midpoint by 2.9%, marking the best performance in a year. Despite the strong top-line results, with an impressive 73.3% gross margin and 24% year-over-year revenue growth, the stock experienced a sell-off in after-hours trading, dropping nearly 10%.
The analysts noted that while the overall subscription revenue was robust, the Confluent Cloud segment met consensus expectations but did not exceed them. This outcome led to a sense of disappointment among investors. Confluent attributed the cloud segment’s performance to large enterprises’ normalization activities, including the rationalization of expenses and a slower rollout of new projects that began in March and extended into April.
Confluent’s management expressed caution regarding the current market conditions, indicating a lack of confidence that customers would resume growth as they might in different circumstances. As a result, the company has chosen to lower its full-year guidance to reflect a more prudent approach.
The price target adjustment by Bernstein reflects the mixed results of Confluent’s recent performance and the company’s conservative stance on future expectations. Despite the reduction in the price target, Bernstein continues to see the potential in Confluent, maintaining an Outperform rating and signaling a belief in the company’s long-term prospects.
In other recent news, Confluent Inc. has reported its first-quarter 2025 earnings, surpassing expectations with an earnings per share of $0.08, compared to the forecasted $0.07. The company also exceeded revenue projections, posting $271.1 million against an anticipated $264.46 million. Despite these positive results, the company’s stock experienced a decline in aftermarket trading, which analysts attribute to conservative guidance due to macroeconomic uncertainties. Confluent’s subscription revenue increased by 26% year-over-year, with Confluent Cloud revenue growing by 34%, aligning with Street estimates.
Analysts have adjusted their price targets for Confluent following the earnings report. Evercore ISI reduced its price target to $28 from $29 while maintaining an Outperform rating, citing the company’s strong operating leverage and growth prospects. Goldman Sachs also lowered its target to $24 from $25, maintaining a Neutral rating, and highlighted concerns over slower consumption trends among larger customers. Confluent’s management has projected a subscription revenue range of $1.100 billion to $1.110 billion for fiscal year 2025, reflecting a growth of approximately 19-20%.
The company added 340 new customers, the highest in three years, and gained 16 new million-dollar-plus ARR customers, demonstrating robust growth. Despite the positive performance, Confluent has adopted a conservative outlook due to broader economic uncertainties, which has been reflected in its stock performance. Analysts remain cautious, with some noting the need for further evidence of market expansion and robust free cash flow generation to enhance Confluent’s profile.
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