Confluent’s second quarter results were met with a sharp market downturn, as management cited persistent consumption optimization by large customers and a more measured pace of new use case adoption. CEO Jay Kreps described these trends as part of a broader industry shift, noting, “Customers are happy, they plan to be using more data streaming over time, [but] are putting effort into making sure what they bought, they’re getting the most value out of.” Continued optimization, especially among top customers, weighed on cloud revenue growth, while the company found some relief from deepening customer commitments and strong results in its platform and Flink businesses.

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While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Confluent’s Q2 Earnings Call

• Matthew George Hedberg (RBC): Asked about the persistence of cloud optimization and whether it was broad-based or customer-specific. CEO Jay Kreps explained it was a widespread trend, with some unique cases like an AI customer shifting to self-management, but overall a continued optimization pattern across large clients.
• Jason Noah Ader (William Blair): Questioned why, despite changes to sales compensation and product expansion, growth improvements remain elusive. Kreps replied that while positive tailwinds are emerging in DSP and AI, these need to reach greater scale to offset headwinds from large customer optimizations.
• Brad Alan Zelnick (Deutsche Bank): Sought clarity on how operational enhancements, such as new sales team structures, would impact growth and over what time frame. Kreps pointed to early signs of improved late-stage pipeline but cautioned that more time is needed to see material results.
• Peter Weed (Bernstein): Inquired about weaker growth in the $20,000 to $100,000 customer segment and whether this signals a future growth challenge. Kreps admitted recent changes led to less focus here but said new initiatives—especially CSP takeouts—aim to address this gap.
• William Miller Jump (Truist Securities): Asked whether the shift of a large AI customer to Confluent Platform indicated a broader trend and if DSP growth was enough to counteract cloud deceleration. Kreps responded that the AI opportunity spans both cloud and platform, and DSP growth, while promising, remains smaller than optimization headwinds for now.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will watch for (1) evidence that new use case expansion and late-stage pipeline progress translate into higher cloud and DSP revenue, (2) the pace of Flink and WarpStream adoption as customers scale real-time AI and analytics workloads, and (3) the effectiveness of recent go-to-market and partner ecosystem changes in driving broader customer acquisition. Sustained progress in offsetting optimization headwinds will be critical.

Confluent currently trades at $16.50, down from $26.38 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).

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