Confluent (CFLT) the stock popped 25% to $30 on great results and guidance.
My last few recommendations in the past two weeks, when the price was $24, was to buy up to $26, with a 1-year target of $28, with a return potential of over 25% in the next 3-5 years.
Wouldn’t advise trying to jump in over $30, there was a short interest of 11% yesterday, so that contributed a ton to the post-earnings pop, but given the performance, I will buy on declines – I still see annual gains over 20% from here – some of the gains have been pulled forward with this jump.
Here are my forward estimates:
3 Year Revenue growth expected 27% – Current P/S 9, drops to 5.6 by 2026,
3-Year Adjusted Earnings growth expected – Management has guided to adjusted operating break even in 2024, and post-2024, I expect at least 35% to 40% operating profit growth (analysts’ estimates are even higher).
Summary of 2023 earnings
Q4 Non-GAAP EPS of $0.09 beats by $0.04.
Revenue of $213M (+26.0% Y/Y) beats by $7.72M.
- Fourth quarter subscription revenue of $203 million, up 31% year over year; fiscal year 2023 subscription revenue of $729 million, up 36% year over year
- Fourth quarter Confluent Cloud revenue of $100 million, up 46% year over year; fiscal year 2023 Confluent Cloud revenue of $349 million, up 65% year over year
- Confluent Crowd is their big growth catalyst
- 1,229 customers with $100,000 or greater in ARR, up 21% year over year
- Q1- 2024, Confluent guidance:
- Total revenue between $211 million and $212 million VS $210.54M consensus
- Subscription revenue between $199 million to $200 million
- Non-GAAP operating margin of approximately negative 4%
- Non-GAAP net income per diluted share between $0.00 to $0.02 vs $0.02 consensus
- Fiscal year 2024, Confluent guidance:
- Total revenue of approximately $950 million $935.29M consensus;
- Non-GAAP operating margin of approximately 0%
- Non-GAAP net income per diluted share of approximately $0.17 vs $0.17 Consensus