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Investing.com - Guggenheim has reduced its price target on Confluent Inc (NASDAQ:CFLT) to $29.00 from $31.00 while maintaining a Buy rating on the data integration company’s stock. According to InvestingPro data, Confluent maintains a strong financial position with a current ratio of 4.42, indicating robust liquidity. The company’s market capitalization stands at approximately $9 billion.
The price target adjustment follows Confluent’s quarterly results, which triggered a more than 25% drop in after-hours trading despite the company’s cloud growth of $7.8 million exceeding consensus estimates of $7 million. Cloud New ARR still grew approximately 5% year-over-year, according to Guggenheim’s analysis. InvestingPro data shows the company achieved impressive revenue growth of 24.11% over the last twelve months, with a robust gross profit margin of 73.92%.
Guggenheim cited continued optimizations among large customers, particularly "a large AI native customer," as key factors leading to Confluent’s net revenue retention rate declining to 114% and an implied cloud exit rate of 18% versus Street expectations of 24%. The firm projects a fourth-quarter cloud exit rate of 21% and subscription exit rate of 19%.
Despite these concerns, Guggenheim highlighted several positive developments, including Flink approaching $10 million in ARR, cRPO growing 21% year-over-year, RPO growing 31%, and two dozen displacements against a single cloud service provider in the second quarter.
The third-quarter guidance came in only $0.5 million below consensus, while full-year subscription guidance was raised by approximately $3 million, matching the second-quarter upside, with Guggenheim characterizing the guidance as "reasonably conservative."
In other recent news, Confluent Inc. reported its financial results for the second quarter of 2025, revealing mixed outcomes. The company exceeded earnings per share (EPS) expectations with a reported EPS of $0.09, surpassing the anticipated $0.08. However, Confluent’s revenue fell short, coming in at $270.8 million compared to the forecasted $278.29 million. This represented a 2.69% shortfall in revenue projections. In other developments, Stifel downgraded Confluent’s stock from Buy to Hold, adjusting its price target to $21.00 from $30.00. The downgrade reflects concerns over Confluent’s cloud business, particularly due to ongoing usage optimization by current customers and a slowdown in new workloads. These recent developments highlight the challenges and opportunities facing Confluent as it navigates its financial landscape.
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