The sharp increase in the provision for income taxes in Q4 2023 was primarily driven by a **foreign current tax expense of $26.4 million** due to an **intra-group transfer of acquired intellectual property** related to the acquisition of immerok GmbH, which was recorded as a non-current liability. Additionally, a **U.S. deferred tax asset of $17.8 million** was recognized from a step-up in the tax basis of the intellectual property, but this benefit was entirely offset by a full valuation allowance because it was deemed unlikely that the asset would be realizable.  **[0000950170-24-018036_cflt-20231231.htm:178]** **[0000950170-24-012189_cflt-ex99_1.htm:0]** 

What caused the sharp increase in Provision for Income Taxes in Q4 2023?

The jump in **Subscription Revenue** in Q3 2024 was driven by robust growth from both **existing customers**—reflected in a dollar‐based net retention rate of **117%**—and **new customers** acquired within the prior 12 months. Additionally, a significant shift in the revenue mix toward **Confluent Cloud**—which grew **42% year-over-year** to contribute **54% of subscription revenue**—combined with strong demand in key industries (including reaching 10 of the top 10 U.S. banks in the financial services sector) were key factors in the overall increase.  **[0000950170-24-119042_cflt-20240930.htm:42]** **[0000950170-24-119042_cflt-20240930.htm:44]** **[CFLT_3404783_4]** 

What drove the jump in Subscription Revenue in Q3 2024?

The reduced net loss in Q3 2024 was largely due to **improved operating performance** and **enhanced income components**. Specifically, **total revenue increased by 25%** with a **27% jump in subscription revenue**, contributing to a higher gross profit (with margins rising from **72% to 75%**) and a reduction in operating loss by **$14,969 thousand**. Additionally, **other income increased by $4,966 thousand** owing to better yields on cash and marketable securities, which further helped offset a slight rise in stock-based compensation expenses.  **[0000950170-24-118963_cflt-ex99_1.htm:0]** **[0000950170-24-119042_cflt-20240930.htm:44]** **[0000950170-24-119042_cflt-20240930.htm:41]** 

What contributed to the reduced Net Loss in Q3 2024?

The operating loss was lower in Q4 2023 primarily due to **strong revenue growth**—total revenue increased by **26%** to **$213.2 million** and subscription revenue grew by **31%**—which helped offset operating expenses, combined with an improved **non-GAAP operating margin of 5.3%** that signified better operational efficiency, and proactive **cost management** efforts that notably reduced sales and marketing expenses as a percentage of total revenue.  **[0000950170-24-012189_cflt-ex99_1.htm:0]** **[CFLT_3372229_5]** 

Why was Operating Loss lower in Q4 2023?

217c31543e9c88a86a28e100e383af39e8c3eaf065ce794ef61a384f75f091fa

Operating cash flow turned positive in Q4 2023 primarily due to **improved operating performance**—with a reduction in GAAP operating losses—coupled with significant **non‑cash adjustments** (notably **stock‑based compensation** and **amortization of deferred contract acquisition costs**). Additionally, favorable changes in working capital, such as increases in **deferred revenue** and **accrued expenses**, along with stronger seasonal collections, contributed to the positive shift in operating cash flow.  **[0000950170-24-012189_cflt-ex99_1.htm:0]** **[0000950170-24-012189_cflt-ex99_1.htm:11]** **[0000950170-24-018036_cflt-20231231.htm:130]** 

Why did operating cash flow turn positive in Q4 2023?

The swing to a negative operating cash flow in Q1 2024 was primarily driven by a **lower net loss**—reflecting improved revenues and cost management—as well as **higher non‑cash adjustments** (notably increased stock-based compensation and amortization of deferred contract acquisition costs). Additionally, **changes in operating assets and liabilities**—such as a decrease in accrued expenses and improved accounts receivable collections—also contributed to the overall improvement in net cash used in operating activities.  **[0000950170-24-054470_cflt-ex99_1.htm:9]** **[0000950170-24-054610_cflt-20240331.htm:43]** **[0000950170-24-054470_cflt-ex99_1.htm:0]** 

What contributed to the swing to a negative operating cash flow in Q1 2024?

The surge in operating cash flow for Q3 2024 was driven by several factors. **First**, there was a **reduction in net loss** (from **$348.7 million** to **$257.0 million**) that helped diminish the amount of cash used in operating activities.  **[0000950170-24-118963_cflt-ex99_1.htm:9]** **[0000950170-24-119042_cflt-20240930.htm:9]**  **Second**, increased **non-cash charges**—including higher stock-based compensation, amortization of deferred contract acquisition costs, and depreciation and amortization—boosted the reconciliation to cash flow from operations.  **[0000950170-24-119042_cflt-20240930.htm:49]** **[0000950170-24-119042_cflt-20240930.htm:9]**  **Lastly**, notable changes in operating assets and liabilities, such as increased accounts receivable and deferred contract acquisition costs, along with a decrease in accrued expenses and other liabilities, contributed further to this change.  **[0000950170-24-119042_cflt-20240930.htm:49]** **[0000950170-24-119042_cflt-20240930.htm:9]** 

What factors drove the further surge in operating cash flow in Q3 2024?

e8a1f1f428bfd4ad00e5f40f8fba7274c5e7bb0f7838ee02d2d9cf58bdd62153

The jump in Goodwill in Q3 2024 is primarily attributed to business combinations or acquisitions, specifically the acquisition of WarpStream, which contributed significantly to the increase from **$51,998 thousand** in Q4 2023 to **$164,366 thousand** in Q3 2024.  **[0000950170-24-119042_cflt-20240930.htm:5]** **[CFLT_3404783_5]** 

Why did Goodwill jump so markedly in Q3 2024?

The rise in accounts receivable in Q3 2024 was driven primarily by the overall growth of Confluent's **sales** along with the **timing of billings and collections**. This led to an increase from **$229,962 thousand** in Q4 2023 to **$278,667 thousand** in Q3 2024, a change of **$50,235 thousand**.  **[0000950170-24-119042_cflt-20240930.htm:5]** **[0000950170-24-119042_cflt-20240930.htm:49]** 

What drove the rise in accounts receivable in Q3 2024?

The drop in total liabilities in Q1 2024 was primarily driven by a significant decrease in **Accounts Payable** (from **$6,714 thousand** to **$1,882 thousand**) and in **Accrued Expenses and Other Liabilities** (from **$141,847 thousand** to **$96,739 thousand**). While there were increases in other components, such as **Operating Lease Liabilities (current)** and **Convertible Senior Notes, Net**, these were not enough to offset the steep declines in the aforementioned categories.  **[0000950170-24-054610_cflt-20240331.htm:5]** 

What factors contributed to the drop in total liabilities in Q1 2024?

The significant drop in **other non-current liabilities** in Q2 2024—from **$35,233 thousand** at the end of 2023 to **$12,023 thousand** in June 2024—is attributed to actions such as the **settlement, reclassification, or reduction of long-term obligations** (e.g., deferred compensation, lease liabilities). However, the documents do not provide a specific explanation for this change.  **[0000950170-24-088632_cflt-20240630.htm:5]** 

Why did other non-current liabilities fall sharply in Q2 2024?

The documents indicate that **Confluent, Inc.** experienced an increase in **intangible assets, net** from **$3,492 thousand** in Q4 2023 to **$8,704 thousand** in Q3 2024, but they do not provide specific reasons for this change.  **[0000950170-24-119042_cflt-20240930.htm:5]** 

What explains the significant increase in intangible assets in Q3 2024?

34fab2f65eeafd0ed2ff6e71ba1f21ee027cbe6bd8649be0930d5a5c4d2751ef

a6478bc1f913e001b2ddd1523b11a69a6c190f5c766312a72aa674476d4eecca

Subscription Revenue (USD, thousands)

Services Revenue (USD, thousands)

Total Revenue (USD, thousands)

Subscription Cost of Revenue (USD, thousands)

Services Cost of Revenue (USD, thousands)

Total Cost of Revenue (USD, thousands)

Gross Profit (USD, thousands)

Research and Development Expenses (USD, thousands)

Sales and Marketing Expenses (USD, thousands)

General and Administrative Expenses (USD, thousands)

Total Operating Expenses (USD, thousands)

Operating Loss (USD, thousands)

Other Income, Net (USD, thousands)

Loss Before Income Taxes (USD, thousands)

Provision for Income Taxes (USD, thousands)

Net Loss (USD, thousands)

Net Loss per Share, Basic and Diluted (USD)

Weighted-average Shares Used to Compute Net Loss per Share, Basic and Diluted

e6f9daaf2d09e1e34cd3a591fe2d118873dd7503a997ab91a65f51d479794008

Cash and cash equivalents (USD, thousands)

Marketable securities (USD, thousands)

Accounts receivable, net (USD, thousands)

Deferred contract acquisition costs, current (USD, thousands)

Prepaid expenses and other current assets (USD, thousands)

Total current assets (USD, thousands)

Property and equipment, net (USD, thousands)

Operating lease right-of-use assets (USD, thousands)

Goodwill (USD, thousands)

Intangible assets, net (USD, thousands)

Deferred contract acquisition costs, non-current (USD, thousands)

Other assets, non-current (USD, thousands)

Total assets (USD, thousands)

Accounts payable (USD, thousands)

Accrued expenses and other liabilities (USD, thousands)

Operating lease liabilities, current (USD, thousands)

Deferred revenue, current (USD, thousands)

Total current liabilities (USD, thousands)

Operating lease liabilities, non-current (USD, thousands)

Deferred revenue, non-current (USD, thousands)

Convertible senior notes, net (USD, thousands)

Other liabilities, non-current (USD, thousands)

Total liabilities (USD, thousands)

Class A common stock (USD, thousands)

Class B common stock (USD, thousands)

Additional paid-in capital (USD, thousands)

Accumulated other comprehensive income (loss) (USD, thousands)

Accumulated deficit (USD, thousands)

Total stockholders’ equity (USD, thousands)

Total liabilities and stockholders’ equity (USD, thousands)

003529a3d36f19316638119fb8a5bf5de5509237f2b85e7070ed50981393ce43

Current Assets (USD, thousands)

Cash and Cash Equivalents (USD, thousands)

Accounts Receivable (USD, thousands)

Inventory (USD, thousands)

Non-Current Assets (USD, thousands)

Property, Plant, and Equipment (PP&E) (USD, thousands)

Intangible Assets (USD, thousands)

Current Liabilities (USD, thousands)

Accounts Payable (USD, thousands)

Short-term Debt (USD, thousands)

Accrued Expenses (USD, thousands)

Non-Current Liabilities (USD, thousands)

Long-term Debt (USD, thousands)

Lease Liabilities (USD, thousands)

Deferred Tax Liabilities (USD, thousands)

Shareholders' Equity (USD, thousands)

Retained Earnings (USD, thousands)

Common Stock (USD, thousands)

Additional Paid-in Capital (USD, thousands)

ebd447de9008bb056db42ac53ad16be0aeed1b572cacbd7c7ee5c6946a7f5ac0

Cost of Goods Sold (COGS) (USD, thousands)

Selling, General, and Administrative Expenses (SG&A) (USD, thousands)

Research and Development (R&D) (USD, thousands)

Depreciation and Amortization (D&A) (USD, thousands)

Interest Expense (USD, thousands)

Operating Income (EBIT) (USD, thousands)

Net Income (USD, thousands)

Earnings Per Share (EPS) - Basic (USD)

Earnings Per Share (EPS) - Diluted (USD)

f7b2c9826ab12823f15ad375573fad75fee97504203b1088a747e2b465af58c1

Number of total customers (count)

Number of customers with $100,000 or greater in ARR (count)

Dollar-based Net Retention Rate (percentage)

Remaining Performance Obligations (USD millions)

5709561456a0b4064a4f0574d23fc895c2534b767dd4c8b7a60aff4602265e8f

Adjustments for Non-Cash Items (USD, thousands)

Stock-Based Compensation (USD, thousands)

Changes in Working Capital (USD, thousands)

Capital Expenditures (CapEx) (USD, thousands)

Proceeds from / Repayments of Debt (USD, thousands)

Share Repurchases (USD, thousands)

Dividend Payments (USD, thousands)

Net Change in Cash (USD, thousands)

07d4cd9cb60165de2393aee1c9aaceb5037ffacf6f64cb5d9ddd01b57a6d63d7

Confluent (CFLT)

Financials