What Happened?

Shares of data infrastructure software company, Confluent (NASDAQ:CFLT) jumped 22.6% in the afternoon session after the company delivered strong fourth-quarter results, with revenue and operating profit exceeding expectations. Subscription revenue, which makes up the bulk of sales, grew 24%, led by a 38% jump in Confluent Cloud revenue, a clear sign that customers are embracing its platform. Looking ahead, Confluent's optimistic EPS guidance for next quarter significantly outpaced analysts' forecasts, and its full-year EPS guidance came in slightly above Wall Street estimates. On the other hand, the full-year sales outlook fell below consensus estimates by a narrow margin. Still, the quarter reinforced that Confluent is on track, supported by the momentum in the cloud segment.

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What The Market Is Telling Us

Confluent’s shares are very volatile and have had 22 moves greater than 5% over the last year. But moves this big are rare even for Confluent and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 7 months ago when the stock dropped 14.9% on the news that the company reported weak second quarter earnings results. However, Confluent stopped providing guidance, which sometimes drives skepticism in the market. In addition, management called out slower than expected growth in consumption among some digital native customers. On the other hand, its revenue outperformed Wall Street's estimates during the quarter. Overall, this was a mixed but weaker quarter for the company.

Confluent is up 31% since the beginning of the year, and at $37.02 per share, has set a new 52-week high. Investors who bought $1,000 worth of Confluent’s shares at the IPO in June 2021 would now be looking at an investment worth $822.30.

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