Cloud stock Confluent (CFLT) has lagged behind the market in the past year, with shares up only 25% compared to the Nasdaq-100 Technology Sector index’s 49% jump. However, the company’s recent performance indicates a potential turnaround.
In the first quarter of 2024, Confluent reported a 25% increase in revenue to $217 million, along with a non-GAAP profit of $0.05 per share, beating analysts’ expectations. The company also provided solid guidance for the current quarter, expecting revenue of $229.5 million and earnings of $0.045 per share at the midpoint of its range.
Confluent’s success can be attributed to the growth of its cloud and subscription businesses. Confluent Cloud saw a 45% year-over-year increase in revenue, while subscription revenue rose 29%. The company added new customers and saw existing customers increase their spending.
With a total addressable market estimated to reach $100 billion by 2025, analysts expect Confluent’s revenue growth rate to improve in the coming years. Furthermore, the company’s bottom line could see a 124% annual growth rate over the next five years.
If Confluent can achieve earnings of $2.25 per share by 2028 and trades at a multiple in line with the Nasdaq-100, its stock price could increase significantly. Investors looking for growth opportunities may want to consider investing in Confluent before its potential surge in value.