Confluent Inc. (NASDAQ:CFLT) closed its fiscal year 2025 with a fourth-quarter earnings report that narrowly surpassed analyst expectations on the top and bottom lines. The data streaming platform provider reported results that reflect steady growth and improving profitability, though the market's immediate reaction was muted, with shares trading slightly lower in after-hours activity.
Earnings Snapshot: A Narrow Beat
For the quarter ended December 31, 2025, Confluent delivered revenue of $314.8 million, a 21% increase year-over-year. This figure slightly edged out the consensus analyst estimate of approximately $314.2 million. The company's performance was driven by its core subscription revenue, which grew 20% to $301.6 million.
On the profitability front, the non-GAAP earnings per share (EPS) came in at $0.12, exceeding the analyst forecast of $0.1009. This represents an improvement from the $0.09 reported in the same quarter last year.
The key quarterly results versus estimates are summarized below:
- Reported Revenue: $314.8 million
- Vs. Estimate: ~$314.2 million
- Result: Beat
- Reported Non-GAAP EPS: $0.12
- Vs. Estimate: $0.1009
- Result: Beat
Market Reaction and Context
Following the release, Confluent's stock price saw a slight decline in after-market trading, down approximately 0.2%. This tepid reaction to a modest earnings beat is likely influenced by the overarching corporate narrative currently surrounding the company. In December 2025, Confluent entered into a definitive agreement to be acquired by International Business Machines Corporation (IBM) for $31.00 per share in cash. This pending acquisition, valued at approximately $11 billion, effectively sets a near-term ceiling for the stock price and makes traditional quarterly performance metrics less impactful for near-term traders.
The company acknowledged this directly in its press release, stating it would not hold a conference call or provide financial guidance due to the pending transaction with IBM.
Fiscal Year 2025 and Financial Health
Beyond the quarterly beat, the full-year results for fiscal 2025 highlight a company scaling efficiently. Total revenue grew 21% to $1.17 billion. More notably, profitability metrics showed significant improvement:
- Non-GAAP operating income surged to $86.1 million for the year, up from $27.5 million in 2024.
- The non-GAAP operating margin expanded to 7.4%, a 4.5 percentage point improvement.
- Adjusted free cash flow saw a dramatic increase to $76.0 million, compared to $9.5 million in the prior year.
CEO Jay Kreps pointed to a 23% year-over-year growth in the Confluent Cloud segment and advancements in AI products as drivers for the quarter, reinforcing the company's "category leadership" in data streaming.
Looking Ahead: Estimates Without Guidance
With Confluent not providing formal guidance, investor focus may shift to independent analyst projections for the coming year. Current consensus estimates for fiscal 2026 anticipate continued growth, with sales projected around $1.38 billion. For the upcoming first quarter of 2026, analysts are modeling revenue of approximately $322.5 million.
It is important to note that these estimates were likely formulated prior to the IBM acquisition announcement and do not factor in the company's impending transition to a private entity under IBM's umbrella, which is expected to close by mid-2026 subject to approvals.
Conclusion
Confluent's Q4 2025 results demonstrate a business executing on its growth and margin expansion strategies, culminating in a year of stronger cash flow generation. The earnings and revenue beats, while slight, confirm the underlying operational strength. However, the market's subdued reaction underscores the current reality for shareholders: the stock's trajectory is now predominantly tied to the successful completion of the IBM acquisition at the agreed-upon $31 per share price, rather than quarterly earnings variances.
For a detailed look at historical earnings and future analyst estimates for Confluent, you can review the data here.
Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial analysis, or a recommendation to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
