Confluent, Inc. (CFLT): Business Model Canvas [Dec-2025 Updated]

You're trying to figure out if the massive investment thesis around real-time data streaming still holds up for Confluent, Inc. (CFLT) as we hit late 2025. Honestly, the story isn't just about Apache Kafka anymore; it's about the relentless pivot to the fully managed Confluent Cloud, which pulled in $161 million in Q3 2025 alone. They're successfully threading the needle, using strategic cloud partnerships to drive over 25% of new business while building that critical, real-time context layer for the AI boom. But can they convert that 9.7% non-GAAP margin into something more substantial while managing high R&D costs? That's the real question you need to answer defintely. Dive into the full Business Model Canvas below to see exactly how they're structuring the engine powering this shift.

Confluent, Inc. (CFLT) - Canvas Business Model: Key Partnerships

You're looking at how Confluent, Inc. scales its reach and embeds its Data Streaming Platform (DSP) across the enterprise landscape. Honestly, for a company focused on data in motion, the partner ecosystem isn't just helpful; it's the primary multiplier for capturing that projected $100 billion data streaming market opportunity by the end of 2025.

The data shows this strategy is working. Partner-sourced deals now account for over 25% of Confluent, Inc.'s new business over the last twelve months leading up to late 2025. Considering Confluent, Inc.'s full-year 2025 revenue guidance was between $1.113-$1.114 billion, that partnership contribution is substantial, giving them reach without Confluent, Inc. having to massively scale its own direct sales force, which feeds right into their margin efficiency story. To double down on this, Confluent, Inc. announced a $200 million commitment spread over the next three years to supercharge this ecosystem, which is actually above what they originally intended to spend. This investment is aimed at getting partners to embed the DSP into their own offerings, which is the core of the OEM push.

Strategic alliances with major cloud providers are the bedrock here. You see this validated by the 2025 Partner Awards:

• Amazon Web Services (AWS) was named Global Partner of the Year for 2025.
• Microsoft (Azure) secured the Cloud Innovation Partner of the Year for 2025.
• Confluent, Inc. itself won the 2025 Google Cloud Partner of the Year award for Data & Analytics - Ingestion.

These cloud relationships are critical because Confluent, Inc.'s platform integrates deeply, offering Confluent Cloud Enterprise clusters on Google Cloud Platform and supporting AI application deployment via Google Distributed Cloud.

The technology integrations are what make the platform sticky, especially as customers focus on AI. The ability to move data seamlessly to analytical engines is key. For example, the Tableflow feature integrates with catalogs like Snowflake Open Catalog, streamlining access for analytical engines including Snowflake. Furthermore, Confluent, Inc.'s managed connectors help send fresh data to systems like Snowflake and MongoDB. The partnership momentum extends to other major data players, with MongoDB winning Technology Partner of the Year for 2025. And just recently, Confluent, Inc. announced a major partnership with Salesforce to connect the data streaming platform to the CRM, aiming to unlock AI-driven personalized customer experiences.

Here's a quick look at how the different partner categories are being recognized and incentivized:

Partner Category	Key 2025 Award/Focus	Example Partner Mentioned
Cloud Provider (CSP)	Global Partner of the Year (2025)	Amazon Web Services (AWS)
Global System Integrator (GSI)	GSI Partner of the Year (2025)	Accenture
Technology Partner	Technology Partner of the Year (2025)	MongoDB
OEM/ISV/MSP Focus	Target of $200 million investment	Jio Platforms, Allium Data

When you look at joint go-to-market efforts, you see Confluent, Inc. actively engaging system integrators (SIs) and resellers to drive adoption and migration projects. They've expanded relationships with global IT services providers like Infosys and EY. This is backed by direct investments in regional SIs, such as Onibex and Psyncopate, to build out data integration and migration expertise around the platform. The OEM program, launched in late 2024, is specifically designed to let these partners embed the Confluent platform into their own service offerings, which is a direct path to international growth for the Confluent Platform. If onboarding takes 14+ days, churn risk rises, so these SI partnerships are defintely key to accelerating time-to-value.

The focus on these channels aligns with the broader market reality; Confluent, Inc. cannot capture the $60 billion data streaming market opportunity alone.

Confluent, Inc. (CFLT) - Canvas Business Model: Key Activities

You're looking at the core engine driving Confluent, Inc.'s growth as they move into what they call 'Act 3' of their journey. These are the daily, critical tasks that translate their open-source roots into enterprise revenue and profitability. Honestly, the numbers show a clear pivot toward efficiency and cloud dominance.

Developing and enhancing the Data Streaming Platform (DSP)

This is where the R&D budget goes, building out the platform that turns data into real-time streams. They aren't just maintaining the core; they're adding major processing capabilities. For the twelve months ending September 30, 2025, Research and Development Expenses hit $0.475B, which was a 20.69% increase year-over-year from the prior period.

The focus on stream processing is intense, especially with Apache Flink. In Q3 2025, Flink Annual Recurring Revenue (ARR) for Confluent Cloud grew more than 70% sequentially. Plus, new tech like WarpStream, which they acquired, saw its consumption grow almost 8x in its first year. They are also merging batch and streaming with new concepts like Tableflow.

Here's a look at the scale of their development focus:

• Research and Development Expenses (TTM Sep 30, 2025): $0.475B
• Flink ARR for Confluent Cloud Sequential Growth (Q3 2025): >70%
• Number of customers using Flink (Q3 2025): Over 1000
• WarpStream Consumption Growth (First Year): Almost 8x

Building real-time AI/GenAI features like Confluent Intelligence

The narrative here is positioning the Data Streaming Platform (DSP) as the essential 'connective tissue' for AI and GenAI applications, providing the real-time context models need. This isn't just marketing fluff; IT leaders are clearly aligning their spending with this view. The company is focused on making sure AI agents have instant access to trustworthy data.

The 2025 Data Streaming Report confirms this strategic alignment:

Metric (2025 Report)	Finding
IT Leaders Boosting DSP Investments	90% plan to increase investments in DSPs in 2025
DSPs Easing AI Adoption	89% of IT leaders see DSPs easing AI adoption
DSPs Fueling Real-Time AI Data	87% say DSPs will be used more to feed AI systems with real-time, contextual, and trustworthy data

Maintaining and contributing to the Apache Kafka open-source project

The health of the underlying open-source project is a key activity that underpins the entire commercial offering. While specific contribution hours aren't public, the adoption numbers show the massive scale of the ecosystem they steward. It's table stakes for enterprise adoption.

The reach of the core technology is substantial:

• Apache Kafka Adoption in Fortune 100 Companies: More than 80%
• Estimated Global Organizations Using Apache Kafka: Over 100,000

Global sales and marketing to drive cloud consumption and adoption

Sales and marketing efforts are laser-focused on driving consumption within Confluent Cloud, which is now the primary growth engine. They are successfully shifting the revenue mix, as evidenced by the Q3 2025 figures. Full fiscal year 2025 subscription revenue guidance sits between $1.1135 billion and $1.1145 billion.

In Q3 2025, Subscription Revenue was $286.3 million, growing 19% year-over-year, but Confluent Cloud revenue was $161 million, growing faster at 24% year-over-year. This means Confluent Cloud accounted for 54% to 56% of total subscription revenue that quarter. The commitment from the enterprise base is strong, with Remaining Performance Obligations (RPO) accelerating 43% year-over-year in Q3 2025.

Here's how the customer base and geography looked in mid-2025:

Metric	Value / Growth
Customers with $100,000+ ARR (Q2 2025)	1,439 (up 10% Y/Y)
Customers with $1M+ ARR (Q1 2025)	210 (up 25% Y/Y)
US Revenue (Q2 2025)	$164.3 million (15% growth)
International Revenue (Q2 2025)	$117.9 million (29% growth)

Managing cloud infrastructure and ensuring 99.99% multi-zone uptime

Operational excellence is non-negotiable when you are the backbone for real-time enterprise operations. Confluent Cloud's Kora engine is explicitly backed by a 99.99% uptime SLA for production workloads. To be fair, that four-nines level means the maximum allowable downtime per year is only about 52 minutes and 34 seconds. This reliability focus is translating directly into better financial efficiency.

The company is successfully scaling profitably, projecting a full fiscal year 2025 Non-GAAP Operating Margin of around 7%. They actually exceeded that in Q3 2025, hitting a record high of 9.7%. Also, the Adjusted Free Cash Flow Margin reached 8.2% in Q3 2025, showing they are generating cash efficiently from their growing consumption base.

Key operational and efficiency metrics for 2025:

• Confluent Cloud Uptime SLA: 99.99%
• Allowable Yearly Downtime for 99.99% SLA: 52 minutes and 34 seconds
• FY 2025 Non-GAAP Operating Margin Projection: Around 7%
• Q3 2025 Non-GAAP Operating Margin Achieved: 9.7%
• Q3 2025 Adjusted Free Cash Flow Margin: 8.2%

Finance: finalize the Q4 2025 cash flow forecast based on the 7% operating margin projection by next Tuesday.

Confluent, Inc. (CFLT) - Canvas Business Model: Key Resources

You're looking at the hard assets that make Confluent, Inc. run-the things they own or control that are essential to delivering their value proposition. It's not just about the software; it's about the people and the infrastructure that make the software work at scale.

The foundation here is definitely the deep, proprietary knowledge base. Confluent, Inc. was founded by the original creators of Apache Kafka, which gives them an inherent advantage in understanding and extending the core technology. This expertise is codified in their platform extensions and their continued commitment to the Apache Kafka project itself, which remains licensed under Apache 2.0.

The company's intellectual property is also protected through grants, such as the patent for Cluster deployment across multiple private cloud environments, granted in May 2024. This focus on multi-cloud deployment is a key differentiator.

Here's a look at the core IP and expertise:

• Founded by the original creators of Apache Kafka.
• Commitment to contributing to Apache Kafka under the Apache 2.0 license.
• Proprietary innovations like the Kora cloud-native engine.
• Patented methods for multi-cloud cluster deployment (e.g., US11995478B2).

The fully managed Confluent Cloud platform infrastructure is the primary delivery vehicle for much of their revenue. This infrastructure is designed for massive scale and multi-cloud flexibility, running on Amazon Web Services, Microsoft Azure, and Google Cloud, often within the customer's own cloud account via WarpStream. The platform is built on the heritage of Apache Kafka and Apache Flink®.

Key infrastructure capabilities include:

Infrastructure Component	Key Feature/Metric	Deployment Scope
Confluent Cloud Engine	Powered by Kora, cloud-native engine	Elastic scaling, 99.99% uptime SLA for production
Data Replication	Cluster Linking	Sync data across regions, clouds, and organizations
Storage Optimization	Tiered Storage	Potential to reduce storage costs by up to 70%
Connectors	Over 120+ pre-built and fully managed connectors	Integrate with databases, data lakes, and SaaS apps

You can't run that infrastructure without top-tier people. Confluent, Inc. invests heavily in highly specialized software engineering and product talent to maintain and advance this complex, real-time platform. They operate with a remote-first model, hiring across 25+ countries, which suggests a broad net for specialized skills. Attracting and retaining this talent is a real expense, reflected in their cost structure; for example, total compensation for a Software Engineer at L2 level starts around $188K per year, with the highest reported packages reaching over $505K annually for L5b roles in the United States.

The market traction validates the strength of this resource base. As of Q3 2025, Confluent, Inc. reported a large base of 1,487 customers with $100k+ ARR. That's a significant cohort of enterprises relying on their platform for mission-critical data streaming.

Financially, the balance sheet supports ongoing operations and investment. As of Q1 2025, Confluent, Inc. held cash and equivalents of $279 million. That's the liquidity cushion you want to see while they continue to invest in R&D and sales to capture the market opportunity.

To summarize the current financial footing:

• Customers with $100k+ ARR (Q3 2025): 1,487
• Cash and Equivalents (Q1 2025): $279 million
• Top end of reported Software Engineer total compensation (US): $505,264 per year

Finance: draft 13-week cash view by Friday.

Confluent, Inc. (CFLT) - Canvas Business Model: Value Propositions

You're looking at the core reasons customers choose Confluent, Inc. over alternatives, especially as real-time data becomes the backbone for everything from finance to AI. Here's the breakdown of the value they deliver, grounded in their late 2025 performance metrics.

Fully managed, elastic, and scalable data streaming (Confluent Cloud)

The cloud offering is clearly the growth engine. In the third quarter of fiscal 2025, Confluent Cloud revenue hit $161 million, marking a 24% year-over-year increase. This segment now accounts for 56% of the total subscription revenue. For the largest enterprises, the platform scales significantly; enterprise clusters can scale up to beyond 10 ECKUs per cluster, delivering over 7.5 GB per second of combined throughput. The success in landing big deals is clear: as of Q3 2025, Confluent had 234 customers with an Annual Recurring Revenue (ARR) exceeding $1 million, a 27% year-over-year acceleration in that tier.

Providing real-time, trustworthy context for AI and GenAI applications

This is where Confluent, Inc. is placing its strategic bet. They aim to be the necessary context layer for reliable AI systems. The adoption of their Data Streaming Platform (DSP) components, particularly Apache Flink, shows this momentum. In Q3 2025, Flink ARR specifically for Confluent Cloud grew more than 70% sequentially. Furthermore, over 1000 customers were actively using Flink during that quarter. When competing directly, Confluent has maintained win rates well above 90% against streaming offerings from the major Cloud Service Providers.

Simplifying complex data integration with 200+ pre-built connectors

You don't want your engineers building boilerplate integration code. Confluent offers a Marketplace where you can discover, explore, and activate 200+ Kafka connectors. These range from fully managed options to partner-verified integrations, designed to cut down the engineering time required for complex integrations that might otherwise take 12-24+ engineering months to build and maintain.

Multi-cloud and hybrid deployment flexibility (Cloud and Platform)

It's not just about the public cloud. For customers needing to keep data on-premises due to regulation or architecture, the Confluent Platform remains a key offering. In Q3 2025, Confluent Platform revenue grew 14% year-over-year, reaching $125.4 million. The introduction of Confluent Private Cloud brings cloud-native features, like centralized governance via Unified Stream Manager (USM), directly behind the firewall for hybrid environments.

Enterprise-grade governance and security for mission-critical data

For mission-critical data streams, governance and security aren't optional. The platform supports enterprise-grade controls like Single Sign-On (SSO), Role-Based Access Control (RBAC), and structured audit logs. For compliance in regulated environments, Confluent Platform deployments can be configured to meet the FIPS 140-2 standard for cryptographic modules. Furthermore, Confluent maintains the SSAE 18 SOC 2 certification, which covers security, availability, and confidentiality controls, and this report is available upon request. Financially, the commitment to a high-quality service is reflected in the Non-GAAP subscription gross margin, which stood strong at 81.8% in Q3 2025.

Finance: draft the Q4 2025 cash flow forecast update by Tuesday.

Confluent, Inc. (CFLT) - Canvas Business Model: Customer Relationships

You're looking at how Confluent, Inc. manages its customer interactions, which is heavily weighted toward usage and enterprise scale as of late 2025. The relationship structure clearly bifurcates between the self-serve cloud offering and the more traditional, high-touch enterprise sales for the self-managed platform.

Consumption-based pricing model for Confluent Cloud usage

Confluent Cloud bills are strictly based on resource consumption, meaning you only pay for what you use, when you use it. This pay-as-you-go structure is designed to match spend with actual workload. For the Stream component, Kafka clusters are billed based on eCKUs/CKUs ($/hour), networking ($/GB), and storage ($/GB-hour). The Process component, using Confluent Cloud for Apache Flink, is calculated based on CFUs ($/minute). To encourage scale and retention, Confluent announced throughput cost reductions in Q3 2025 for customers using PNI (Private Networking Interface); for Enterprise clusters, this was a 20% reduction ($0.05 → $0.04/GB), and for Freight clusters, it was a 40% reduction ($0.05 → $0.03/GB). As of Q1 2025, 55% of the $261 million in subscription revenues were cloud-based and usage-reliant. Confluent Cloud revenue hit $161 million in Q3 2025, marking a 24% year-over-year increase.

Dedicated account management for large enterprise customers

For your largest customers, the relationship shifts to dedicated, high-touch engagement, which is reflected in the growth of high-value accounts. Confluent has 70% of the Fortune 500 firms relying on their data streaming platform. As of Q3 2025, the company reported 1,487 customers with $100,000 or greater in Annual Recurring Revenue (ARR), which was up 10% year-over-year. Even higher up the value chain, as of Q1 2025, there were 210 customers exceeding $1 million in ARR, representing a 25% year-over-year growth in that cohort. This focus on large accounts is supported by strategic execution improvements, with early results showing a sequential increase of over 40% in late-stage pipeline progression.

Self-service options and free credits for developer onboarding

To bring new users onto the platform without immediate sales friction, Confluent maintains accessible entry points. The company offers a Free/Freemium Version of Confluent Cloud. This self-service provisioning allows developers to start building immediately, which is a key part of their strategy to monetize the open-source Kafka user base.

Professional services and training for complex deployments

When deployments get complex, Confluent offers structured support through professional and educational services. For instance, a 3-day face-to-face private training class for up to 10 people is listed at $6,000. The self-managed Confluent Platform pricing is structured around the number of 'Nodes,' where a Node is defined by specific hardware limits, like up to 56 processing cores or 50 TB total hard drive capacity.

High-touch sales for the Confluent Platform (self-managed)

The self-managed Confluent Platform still commands significant revenue, suggesting a more traditional, high-touch sales cycle for these deployments. In Q1 2025, Confluent Platform revenue reached $118.2 million. This segment saw an 18% growth rate in Q1 2025, which was its strongest Q1 performance in three years. This contrasts with the cloud revenue growth of 34% in the same quarter, indicating a different, likely more consultative, sales motion for the on-premise offering.

Here's a quick look at the key customer metrics as of late 2025:

Metric	Value (As of Period End)	Period End
Total Customers (Approximate)	~6,140	Q1 2025
Customers with $1M+ ARR	210	Q1 2025
Customers with $100K+ ARR	1,487	Q3 2025
Confluent Cloud Revenue	$161 million	Q3 2025
Confluent Platform Revenue	$118.2 million	Q1 2025
Flink ARR Growth (Sequential)	More than 70%	Q3 2025

The adoption of Data Streaming Platform (DSP) components, like Flink, is accelerating within the existing base, with Q3 Flink ARR growing more than 70% sequentially.

• Cloud consumption growth is sensitive to customer demand, as noted by management embedding modest declines in growth rates from Q2 through Q4 2025 due to consumption uncertainties among larger cloud customers.
• The company has achieved win rates above 90% when replacing Cloud Service Provider (CSP) streaming products with its own offerings.
• The platform is cited as enabling a 25% reduction in data management's total cost of ownership and a 5x return on investment.

Finance: review the Q4 2025 consumption forecast against the Q3 actuals by next Tuesday.

Confluent, Inc. (CFLT) - Canvas Business Model: Channels

You're looking at how Confluent, Inc. gets its Data Streaming Platform (DSP) into the hands of customers as of late 2025. It's a multi-pronged approach, balancing high-touch enterprise sales with scalable cloud delivery.

Direct sales force targeting large enterprises globally

The direct sales motion focuses heavily on landing and expanding within large accounts, evidenced by the growth in high-value customer cohorts. This team is compensated on incremental consumption, which aligns them with customer usage.

• Customers with $100,000 or greater in Annual Recurring Revenue (ARR) reached 1,487 in Q3 2025, a 10% year-over-year increase.
• Customers spending $1 million-plus in ARR grew to 234, showing a 27% year-over-year acceleration in Q3 2025.
• In Q1 2025, Confluent added 16 new customers in the $1 million-plus ARR tier.

Confluent Cloud (SaaS) accessible via web and cloud consoles

Confluent Cloud is the primary growth engine, representing the majority of subscription revenue. The consumption-based model here drives revenue based on how much data customers stream and process.

Metric	Q3 2025 Value	Year-over-Year Growth
Confluent Cloud Revenue	$161 million	24%
Subscription Revenue	$286.3 million	19%
Cloud Revenue as % of Subscription Revenue	Approx. 56%	Increasing

The adoption of specific technologies within the cloud offering is also a key indicator; Flink ARR for Confluent Cloud grew more than 70% sequentially in Q3 2025, with over 1000 customers using Flink during that quarter.

Cloud Provider Marketplaces (AWS, Azure, GCP) for procurement

Procurement flexibility is a stated channel strategy, allowing customers to use existing cloud commitments for Confluent purchases. This is supported by strong relationships with the hyperscalers.

• Confluent won the 2025 Google Cloud Partner of the Year award for Data & Analytics - Ingestion.
• Amazon Web Services (AWS) was recognized as both Global Partner of the Year and Cloud Partner of the Year at the 2025 Global Partner Awards.
• Microsoft (Azure) won the Cloud Innovation Partner of the Year award in 2025.

Confluent Platform for self-managed, on-premises deployments

While the cloud scales faster, the self-managed platform remains a significant revenue stream, often used in hybrid or on-premises environments. This segment shows resilience, supported by OEM partnerships.

Metric	Q3 2025 Value	Q1 2025 Value
Confluent Platform Revenue Share (of Total Revenue)	42%	Approx. 45% (Implied from $118.2M Platform / $260.9M Sub)
Confluent Platform Revenue Growth (Q1 2025)	N/A	18% (Strongest Q1 in three years)

Partner ecosystem for deal sourcing and implementation

The partner ecosystem is a formalized, heavily invested channel, driving a substantial portion of the business and providing implementation scale. Confluent is actively incentivizing this channel.

• Well over 20% of Confluent's business in the past year was partner-sourced.
• Confluent announced a $200 million commitment over three years to expand its global partner ecosystem (announced mid-2025).
• Key System Integrator (GSI) partners recognized in 2025 include Accenture.

Finance: draft 13-week cash view by Friday.

Confluent, Inc. (CFLT) - Canvas Business Model: Customer Segments

You're looking at the core groups Confluent, Inc. targets with its data streaming platform, spanning from the largest global firms to individual developers starting out. Here's the breakdown of those key customer segments as of late 2025, grounded in the Q3 2025 financial reporting.

The enterprise segment is clearly the revenue engine, but the long tail of smaller users is crucial for platform adoption and future upselling.

• Large enterprises with $100,000+ Annual Recurring Revenue (ARR)
• Financial services and retail needing real-time backend operations
• AI-native companies (over 100 as of Q3 2025)
• Developers and small teams using the free-to-start Basic cloud tier
• Customers requiring private cloud or self-managed solutions

The high-value enterprise segment shows clear growth momentum, which is what you want to see when evaluating platform stickiness.

Customer Segment Detail	Metric	Value (as of Q3 2025)
Customers with $100,000+ ARR	Count	1,487
Customers with $100,000+ ARR	Year-over-Year Growth	10%
Customers with $100,000+ ARR	Net New in Q3	48
Customers with $1 Million+ ARR	Count	234
Customers with $1 Million+ ARR	Year-over-Year Growth	27%

For industry-specific traction, the platform is clearly embedded in core transactional sectors. Confluent Platform revenue, which often reflects on-premises or dedicated deployments, saw specific strength here.

• Financial services demand drove Confluent Platform revenue growth of 14% year-over-year, reaching $125.4 million in Q3 2025.

The focus on Artificial Intelligence is translating directly into customer acquisition at the high end. These AI-native customers are looking for the real-time context that data streaming provides for model performance.

• The number of AI-native customers stood at over 100 as of Q3 2025.
• Of those AI-native customers, 21 had $100,000 plus in ARR.

The developer and smaller team segment is served by the entry-level cloud tier, which is designed to be free to start. While the exact number of free-tier users isn't published, the total customer base gives you the scale of the top-of-funnel activity. The total customer count was reported at 5,800 in earlier 2025 reporting, which encompasses all users, including those on the free-to-start tier.

Finally, the deployment flexibility caters to highly regulated or security-conscious entities. This segment is evidenced by both customer behavior and product strategy.

• A large AI-native customer migrated from Confluent Cloud to a self-managed deployment in Q3 2025.
• Confluent launched a private cloud offering in Q3 2025, specifically targeting regulated industries.

Finance: review the Q4 2025 guidance for any changes to the expected mix between Cloud and Platform revenue.

Confluent, Inc. (CFLT) - Canvas Business Model: Cost Structure

You're looking at the expense side of the ledger for Confluent, Inc. as of late 2025. The cost structure is heavily weighted toward scaling the cloud offering and maintaining product leadership. Honestly, you see a clear trade-off between growth investment and near-term operating leverage.

The largest single cost component explicitly detailed for the quarter ending September 30, 2025, is Stock-Based Compensation (SBC). For the third quarter of 2025, Confluent, Inc. reported Stock-Based Compensation of $295.70M. This is a significant non-cash charge that management explicitly excludes when calculating non-GAAP results, which is common practice for high-growth technology firms. On a trailing twelve-month basis ending September 30, 2025, the SBC figure reached $0.979B, representing a 4.95% increase year-over-year.

Cloud infrastructure costs, which fall under Cost of Goods Sold (COGS) for the Confluent Cloud offering, are substantial, though the specific dollar amount for compute, storage, and data transfer isn't broken out separately from the total COGS. We know Confluent Cloud revenue was $161.0 million in Q3 2025, making up 54% of total revenue. The total Gross Profit for the quarter was $221.6 million, which implies a non-GAAP Gross Margin of approximately 74.2% ($221.6M / $298.5M total revenue).

Research and Development (R&D) and Sales and Marketing (S&M) are the other major operating expense buckets driving the business forward. While the exact dollar amounts for R&D and S&M for Q3 2025 aren't explicitly stated in the top-line summaries, we see the impact of S&M management. The company demonstrated operational leverage, as Sales and Marketing expense dropped 4.7 percentage points as a percentage of revenue year over year. This efficiency helped drive the overall operating performance.

Here's a quick look at how the key financial metrics related to operating costs stacked up for the third quarter of 2025:

Cost Component/Metric	Q3 2025 Amount (in millions)	Context/Related Metric
Stock-Based Compensation	295.70	Quarterly Expense
Total Revenue	298.5	Total recognized revenue
Gross Profit	221.6	Pre-Operating Expense Profit
Non-GAAP Operating Income	29.1	Resulting Income
Non-GAAP Operating Margin	9.7%	Resulting Margin

The focus on profitability is evident in the non-GAAP results. Confluent, Inc. achieved a Non-GAAP Operating Margin of 9.7% in Q3 2025, up 340 basis points from 6.3% in Q3 2024, resulting in a Non-GAAP Operating Income of $29.1 million. This margin performance is a direct result of revenue growth outpacing the growth of controllable operating expenses, even while investing heavily in product innovation.

However, you should note the guidance suggests a near-term cost pressure. Management projected the Non-GAAP Operating Margin to compress sequentially to approximately 7% for both Q4 2025 and the full year 2025. This expected compression signals an intentional, aggressive push to reinvest recent profitability gains back into the business, likely targeting R&D for new features like Streaming Agents and Flink adoption, and potentially increasing S&M spend to drive the next wave of customer acquisition.

The cost structure is characterized by these key elements:

• Cloud infrastructure costs embedded within COGS, supporting $161.0 million in Confluent Cloud revenue.
• High R&D investment necessary to maintain product leadership in the data streaming space.
• S&M spending that is being actively managed for efficiency, evidenced by the 4.7 percentage point year-over-year drop as a percentage of revenue.
• Significant non-cash expense from Stock-Based Compensation, totaling $295.70M for the quarter.
• A GAAP Operating Loss of $(83.3) million for the quarter, reflecting the high investment in stock compensation and operating expenses before non-GAAP adjustments.

Finance: draft 13-week cash view by Friday.

Confluent, Inc. (CFLT) - Canvas Business Model: Revenue Streams

You're looking at how Confluent, Inc. (CFLT) actually brings in the money as of late 2025. It's heavily weighted toward recurring subscription revenue, which is what you want to see in a modern SaaS-like model. The business clearly separates its revenue into the managed cloud offering and the self-managed platform licenses.

Here's the quick math on the major components based on the third quarter of 2025 results. The cloud piece is clearly the growth engine now, making up the majority of the subscription take.

Revenue Stream Component	Q3 2025 Amount	Growth Context
Confluent Cloud revenue (usage-based)	$161 million	Grew 24% year-over-year
Confluent Platform revenue (license/subscription)	$125.4 million	Grew 14% year-over-year
Total Subscription Revenue (Q3 2025)	$286.3 million	Grew 19% year-over-year

Looking out for the full fiscal year 2025, management has guided subscription revenue to a range between $1.1135 billion and $1.1145 billion. That's a solid number, definitely showing the stickiness of their contracts and consumption growth. The requested forecast of $1.11 billion-$1.11 billion for FY 2025 aligns closely with this raised guidance.

The growth story isn't just about the two main buckets; it's about the adoption of specific, higher-value features within the Data Streaming Platform (DSP). Revenue from these advanced features is embedded within the Confluent Cloud figures, but the adoption metrics tell you where the future dollar growth is coming from.

• Revenue from fully managed connectors and stream processing (Apache Flink) is being driven by accelerating adoption.
• More than 1,000 customers were using Flink in Q3 2025.
• Flink's cloud Annual Recurring Revenue (ARR) grew more than 70% sequentially in Q3 2025.
• Management highlighted accelerating adoption of DSP components, particularly Flink, to provide real-time context for AI systems.

Finally, you have professional services and training fees. This is a smaller component of the overall revenue mix. We know this because the company explicitly excludes services arrangements from the calculation of its key metric, Annual Recurring Revenue (ARR). If onboarding takes 14+ days, churn risk rises, so keeping services separate makes sense for ARR clarity.