The analyst writes that CY24 estimates seem more reasonable post Q3 earnings results posted last week.

Given Confluent's core focus on data streaming (Kafka) and emerging data processing cross-sell (Flink), it is positioned for long-term profitable growth aided by a G2M evolution for Confluent Cloud, says the analyst.

The analyst sees Confluent as the market leader of the data streaming opportunity and says that compensating sales reps in CY24 on Confluent Cloud incremental consumption and new logos vs commitments creates a better alignment of customer ROI and can drive new logo land and expansions.

The analyst estimates revenue growth of 22% in CY24 (vs. 31% in CY23), assuming G2M evolution for Confluent Cloud, Israel revenue exposure, macro pressures, and headwinds related to two large customers.

Hedberg estimates revenue and adjusted EPS of $768.3 million and $(0.01) in FY23, $937.0 million and $0.17 in FY24, and $1.176 billion and $0.27 for FY25.

Price Action: CFLT shares are trading lower by 0.51% at $17.66 on the last check Monday.