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Investing.com - Stifel downgraded Confluent Inc (NASDAQ:CFLT) from Buy to Hold on Thursday, while reducing its price target to $21.00 from $30.00. According to InvestingPro data, the company maintains strong liquidity with a current ratio of 4.42 and holds more cash than debt on its balance sheet.
The downgrade comes as Confluent faces significant headwinds in its cloud business, including continued usage optimization by existing customers and slowing activity in new workloads. Despite these challenges, the company has maintained a robust gross profit margin of 73.92% and achieved revenue growth of 24.11% over the last twelve months.
Stifel highlighted several concerns, including lackluster new customer additions and an artificial intelligence customer that is transitioning from Confluent’s cloud offering to a self-managed platform. Get deeper insights into Confluent’s performance metrics and growth potential with InvestingPro, which offers exclusive access to over 30 key financial metrics and expert analysis.
The financial services firm noted that Confluent’s net revenue retention (NRR) declined 300 basis points quarter-over-quarter to 114% and is expected to decrease further in upcoming quarters.
Stifel also pointed to Confluent’s planned $200 million investment in its partner channel over the next three years, which combined with slower near-term revenue growth, could limit margin expansion and free cash flow upside.
In other recent news, Confluent Inc. reported its financial results for the second quarter of 2025, delivering mixed outcomes for investors. The company exceeded expectations with an earnings per share (EPS) of $0.09, compared to the anticipated $0.08, resulting in a 12.5% surprise. However, Confluent’s revenue fell short, reaching $270.8 million, which was below the forecasted $278.29 million, marking a 2.69% shortfall. These recent developments highlight the company’s ongoing financial performance challenges. Additionally, analysts have not provided any upgrades or downgrades following the earnings report. There are no new mergers or acquisitions reported at this time. Investors will likely keep a close eye on Confluent’s future earnings and revenue reports for further insights.
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