Confluent stock surged early Wednesday after the data software company reported fourth-quarter earnings and sales ahead of expectations. The company also announced an expanded partnership with AI startup Databricks.
Confluent earned an adjusted 9 cents per share on sales of $261 million for the December-ended quarter, the software firm said in a late Tuesday news release. Analysts polled by FactSet projected the Mountain View, Calif.-based company to post adjusted earnings of 6 cents per share on sales $257 million.
For the same period a year earlier, Confluent posted adjusted earnings of 9 cents per share on sales of $213 million.
The data software company also exceeded estimates for subscription revenue, a metric closely watched by analysts. Subscription sales grew 24% year-over-year to $251 million.
For the current quarter, Confluent guided for subscription-related revenue of $253.5 million at the midpoints of its range, ahead of the $252.6 million that analysts were projecting. The company also guided for Q1 adjusted earnings between 6 and 7 cents per share, compared to estimates of 6 cents per share.
On the stock market today, Confluent stock gained more than 9% % at 32.97 in early trades. Shares are in an 11-month consolidation pattern with a 34.08 handle buy point.
Confluent AI Push
Confluent offers data streaming software, which it describes as a central nervous system for an enterprise's data. The 10-year-old company has the attention of some investors as an artificial intelligence play. Its software is utilized by a list of firms that includes OpenAI to help move and sort data in real-time.
"Our momentum reflects the increasing importance of a complete data streaming platform to power mission-critical and real-time AI applications," Confluent Chief Executive Jay Kreps said in the company's earnings release. "The significant partnerships and product innovations we unleashed over the past year have put us in a great position to advance our category lead in 2025."
On that note, Confluent also announced an expanded partnership with Databricks late Tuesday. Confluent will integrate its data streaming software and Databricks' Data Intelligence Platform to "empower enterprises with real-time data for AI-driven decision-making," according to the announcement.
A rival to Snowflake, Databricks is among the highest-valued U.S. startups, with a recent $10 billion funding round that valued it at $62 billion.
Following Confluent's earnings report, Mizuho analyst Gregg Moskowitz reiterated an outperform call on the stock with a price target of 38, up from 32. Confluent Cloud's 38% growth beat Wall Street estimates, he said in a research note, while the Databricks partnership is "exciting"
"More broadly, we continue to expect data streaming adoption will go much higher over the medium-term and beyond, and we view Confluent's platform as best-in-class," Moskowitz wrote to clients.
Confluent Stock: Technical Ratings
Prior to earnings, Confluent fell 4% in Tuesday trading to close at 30.10. Shares have gained 8% so far this year, entering Wednesday trading, and are down 5% compared to 12 months ago.
Coming into the report, Confluent stock had an IBD Composite Rating of 95 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
Further, Confluent's IBD Relative Strength Rating was 83 out of 99. The RS Rating means that CFLT stock has outperformed 83% of all stocks in IBD's database over the past year.
