Confluent Inc (CFLT)- Reality Bites Hard...
... but warning signs are still there after the 30% haircut
In last week’s Confluent Inc (CFLT)- Signs of Weakness Remain we warned that the balance sheet was still showing signs of weak revenue growth. On Wednesday, the company experienced another major setback as its stock price plummeted 30% due to concerns about weak cloud revenue.
CFLT reported that large customers are reviewing their software requirements and are optimizing the number of subscriptions they need. That is expected to hurt CFLT's cloud growth. That it beat by a penny is not a surprise – it picked up 1.6 cents by cutting cash R&D as a percentage of sales by 250 basis points. But with the growth rate potentially slowing, the stock under $20, still selling for 50x earnings, and very dependent on using its stock as a currency, investors may want to review the full risk profile here:
We take another look behind CFLT’s latest numbers below: