Q3 2021 Confluent Inc Earnings Call
Hi, everyone welcome to the current law in Q3, 2021 earnings conference call I'm, Shane Z from Investor Relations and I'm joined by Jay Crafts, co founder and CEO and Steffan Tomlinson CFO.
During today's call management will make forward looking statements, including statements regarding our financial outlook for fiscal fourth quarter of 2021 fiscal year, 2020, one fiscal first quarter and fiscal year 2020 to increase adoption of our platform, our ability and positioned to capitalize on the shift to cloud growth in revenue total custom.
Remaining performance obligations and dollar based net retention rate our market opportunity and our overall future prospects. These forward looking statements are subject to risks and uncertainties some of which are beyond our control, which could cause actual results to differ materially from those anticipated by these statements.
Further information on risk factors that could cause actual results to differ is included in our SEC filings, including our Form 10-Q for the quarter ended June 30th 2021 and Form 10-Q for the quarter ended September 30th 2021 that will be filed with the SEC. We assume no obligation to update these statements after today's call except as required by law.
As a reminder, certain financial measures used on today's call are expressed on a non-GAAP basis. We use these non-GAAP financial measures internally to facility analysis of our financial and business trends and for internal planning and forecasting purposes. These non-GAAP financial measures have limitations and should not be considered in isolation from or as a sub.
Q4 financial information prepared in accordance with GAAP.
A reconciliation between these GAAP and non-GAAP financial measures is included in our earnings press release, and supplemental financials, which can be found on our investor relations website at investors thought confluent that IL and with that I'll hand, the call over to Jay.
Thanks, Shane welcome everyone to our third quarter earnings call I'm pleased to say, our third quarter results exceeded our expectation and our guidance on all metrics. The outperformance we've seen as a result of great product market fit the secular tailwind driving the adoption of data in motion and cloud and a lot of hard work by Archie I'll get into these drivers in a moment, but first let me.
Touch on the numbers revenue in the third quarter totaled $102 6 million. This is significant for two reasons first this is our first quarter ever achieving over $100 million in quarterly revenue and we've managed to hit this milestone less than seven years and second revenue growth of 67% year over year represents a further accelerate.
<unk> the growth we saw last quarter.
Growth and consequent card revenue also accelerated coming in at 245% year over year, well outpacing the growth of the overall business Concord cloud represents 26% of total revenue in the quarter.
Our team has continued to execute well and we feel very good about our position heading into the fourth quarter, which is reflected in our increased guidance for the balance of 2021 Stefan will elaborate further on the financials in a moment.
First I want to use the opportunity to talk a little bit more about our space. We have a very technical product and I imagine. Many of you are still relatively new to our story. So I'll spend a little time today on the data in motion paradigm and our platform before we get into more of the specifics from the third quarter.
The underlying macro change that's driving confluence success is that virtually all businesses are becoming defined end to end in software. It isn't just that there are more software applications, but increasingly the core activities of the business the production and distribution of goods and services interactions with customers are driven by software to.
Do this these software systems must connect end to end to the different parts of the business and operate in real time as the business execute out in the real World. This transformation is really being driven by customer demand in today's world consumers expect the best digital experiences from the organizations that they interact with these experiences go beyond.
Simply a user interface or app, but touch everything from logistics to operations to backend processes that together create a customer experience.
At the core of all the software that drives. This is data data management has traditionally been about storage that is data at rest databases have long been the mainstay of data management and storage is exactly what they are built to do they help you safely store your data and look up our process the right bits as you need it but.
But now the explosion of software and data. It means that there are more databases applications analytics platforms, and SaaS layers and increasingly all of these systems need to work together in real time to help operate the business isn't enough anymore to have all these systems existing as disconnected storage silos. They all have to integrate in real.
Confluence role is extending support in the infrastructure layer to cover the other half of data management the management of data in motion the databases have traditionally ignored.
This problem is very different from the world of data at rest it isn't about storing piles of data for individual disconnected applications data and motion requires a platform that helps support the real time flow and processing of data between applications. As it is generated to help drive the operations of the business.
This new platform forms a key component of the emerging Nextgen data architecture, which we think over time will be a requirement for every company by using data in this way companies can make it far easier to tap into data for any part of the company and operate on it in real time, the streams of data both trigger custom applications to take action as.
Well as enabling real time processing and enrichment of the data and integration into other data systems data and motion makes it possible to do this in a decoupled way because of the published subscribed nature of the usage any part of the business can publish the real time stream of data about its own operation and any other part of the business can choose to tap into that stream to <unk>.
Reactor processing.
As a result these capabilities are critical for companies to be able to build around software and data, which is in turn critical for their success in the modern competitive landscape.
In this sense the rise of data in motion right at the heart of digital transformation.
This kind of real time architecture has long been desirable.
But was long believed to be too difficult for all but the most critical applications. However, our platform makes realtime easy.
Indeed, our goal is to make processing real time data streams as easy and ubiquitous as the infrastructure around storage and batch process.
Our product strategy is laser focused on the scope to do this we're building around three key pillars being cloud native being a complete offering for data in motion and being everywhere.
These three pillars represent key aspects of making this new paradigm the new default standard.
As well as key aspects of differentiation that separate us from competitors. We think this differentiation is key to our success in driving confluence high growth and in particular is the driving factor behind the outsized growth of our cloud offering.
Let me go through each of these three pillars in more depth.
First being cloud native confluence cloud was architected in the ground up to operate as an elastically scalable multi tenant cloud service. These capabilities can sound superficial, but a true cloud native services is far more than just putting open source Apache Kafka on the cloud cloud services are fundamentally different from solutions that might have been designed for an on premise.
Environment and different in a way that is transformative for the customers to adopt them. This flexibility gets customers out of a world in which they are infrastructure dictates that our pace of innovation. What's more of this difference isn't just added features it cuts right to the heart of how these systems are designed and built by being cloud native we're able to offer the same protocol of Kafka on our plan.
One that is completely server lists and elastic and also integrates natively with many other software solutions and technologies and the major cloud providers to help customers manage their data easily insecure developing these capabilities required some of our deepest R&D investments and has enabled us to add a feature set that as a generation ahead of any competitor.
Our cloud native capabilities are particularly relevant for customers, who are often operating at large scale. Two great. Examples are square and gain site both of which have turned to confluent cloud for their data streaming platform square is a rapidly growing financial services software and payments organization with an ever increasing volume of payments new.
Joining daily.
They needed a scalable reliable and secure data streaming solution with a merchant receives customers' order through their website or they need to process payroll a lot needs to happen in real time, we're helping power square seller business with a number of use cases that connect the point of sale payment processing to report it.
Gain site SaaS service that helps businesses build long lasting relationships with customers uses conflict for real time data integration to bring together the insights to help maximize the customer experience and further actions that ensure their success.
Our cloud Native Foundation is it just a factor for larger companies, though consequent cloud. It seems success across customers of all sizes are cloud focused commercial sales organization was one of our fastest growing segments. This quarter, which further speaks to the strong product market fit of confluent cloud for digital native organizations.
Great example of this is I food.
Global food delivery leader in Brazil, which has recently migrated to our fully managed cloud service running on AWS. They now manage more than 4 million orders per month everything from order placement to payment processing to delivery Etfs are handled with confluent to make sure the right food gets the right customer as fast as possible.
The second pillar of our product differentiation as completeness in order for customers to be able to truly harness the power of data and motion they need a complete offering that makes developing in this new paradigm.
Costco is a great foundational layer for building around data streams, but its just one layer in a modern data in motion stack trying to assemble this stack in bits and pieces and operate all of these is a huge challenge for companies and that is why we brought together the essential elements of the stack into a complete unified product our product gives customers.
Robust set of connectors that allow them to plug into the many systems holding data in their organization. We also give them a rich streaming sequel Air case equal, which allows them to extend the database skill set their team already has to the new world of real time stream, one solution, which brings together many of these capabilities is helping customers migrate and modernize their.
Analytics platform, we recently launched our first priority partner solution focused on cloud data warehouse modernization a key challenge for organizations is feeding these modern warehouses with data that may come from cloud environments or legacy systems on premise as part of that organizations need a solution that connects data from any system, while maintaining the <unk>.
<unk> ability and security to work across multi cloud and hybrid environments. Our cloud data warehouse modernization solution enables customers to extract data real time transform it into the REIT structures to support analytics and transported across cloud environments and regions to any one of a number of next generation analytics technologies.
<unk>, Google Big query, AWS, redshift, and snowflake or Azure synapse.
This solution truly illustrates the completeness of our platform. It is built on our ecosystem of over 122 sectors and our stream processing capabilities that make it easy to capture transform and transparently deliver real time data streams from existing databases infrastructure layers and SaaS API.
How do we take this solution to market is a great example of our partnership with the major cloud providers.
The ability to unlock data for ingestion as these next generation data warehouses is a key blocker for the growth of these next generation analytics services and a great point of collaboration and joint go to market between confluence in the cloud providers.
Our third pillar is being everywhere and in Q3, we have continued to strengthen the capabilities to support this pillar most.
Most recently with the launch cluster linking for constant cloud organizations today are becoming increasingly geographically distributed with data living in a number of different heterogeneous environments throughout the business managing data securely across these environments is a huge challenge cluster linking introduces a new way to transparently linked together kafka clusters and defer.
Geographies cloud providers or environments to create a unified fabric for data in motion. This seamlessly spans all the parts of the company.
An early user of this functionality is namely, namely as a fast growing HR software company and they are architectural requirements spanned geographies multiple cloud environments to serve their diverse customer base cluster linking makes real time global data sharing disaster recovery and workload migrations easy for them.
A great example that puts all three of these pillars together as instant card instant card experienced record growth at the onset of the pandemic, which required them to be able to scale elastically to meet the need they evaluated a handful of different data and motion auctions and selected consequent cloud due to the combination of cloud native capabilities that would let them scale elastically to support the growth.
Their business, the completeness of our offering and our ability to be everywhere spanning the environments and availability zones or product required. They have complex problems to solve in real time with inventory customer service in stock.
We believe our platform and the larger movement around data and motion represents a significant step change, making data accessible across an organization, but in order to truly unlock customers' data.
It isn't enough just to make it easy we also have to make it safe as data powers more of the operations of the company the quality correctness compliance and lineage of data becomes an existential concern.
This is a difficulty that was compounded by the explosion of new data types as well as an explosion in the level of regulation and risk around data when.
When organizations had one monolithic team did everything in only a few places where data resided it was much easier to control data integrity and governance customers now need to do this across a diverse organization that is innovating and changing in many areas in parallel which is a substantial challenge.
The key to addressing this challenge as a product offering we announced in Q3 called stream governance. This takes the best practices for decentralized Federated data governance and applies it automatically with constant stream governance is offered as a fully managed cloud solution and delivers a simple self service experience that enables customers to use.
Cover understand and trust their data flows this new suite of capabilities establishes trust in the real time data moving throughout our customers' businesses and empowers teams across any organization to quickly put event streams to work. There are three key capabilities of stream governance. The first is our stream catalog, which.
Helps users find the data they need this allows individuals across teams to collaborate within our centralized organized digital library for data in motion, which allows any user at any skill level to put data to use right away our customers like care dot com really value. This when it comes to finding managing and paying for family care data confidence.
Critical.
Next is stream lineage <unk>. This is like Google maps for your data flows created in real time on the actual flow of data. It provides an always up to date version of how data is flowing in the organization and who is consuming it with a better understanding of where data originated and where its going how it's transformed and when it arrives developers can move.
<unk> forward with assurance, there work won't cause negative or unexpected downstream impact.
Richie Brothers for example, the global industrial asset auctioneer in one of our great customers depends on stream lineage for their real time online bidding system, it makes buying and selling industrial equipment like giant Earth moving trucks easier.
And finally stream quality, which helps us avoid bad data enforces schemas and ensures compatibility, which enables organizations to scale data integrity without adding operational complexity we.
We believe that standardizing around well defined and agreed upon scheme of structures allows teams to develop resilient data in motion pipelines prepared for safe compatible evolution overtime.
Really excited about stream governance as extends the completeness of our platform capabilities that are essential for a successful data in motion strategy and it represents one of the single most requested features from our customers.
With better visibility into and control over data governance customers can leverage our data in motion platform for mission critical use cases without having to invest stair software engineering resources into building tools for monitoring and managing the quality of their data.
Stream governance also serves to illustrate more general point I would like to make about our space data in motion as a genuinely new category and they are building a new category in paradigm comes with a number of challenges. It has one very big advantage, which is that unlike most of the data stack all the white space around data and motion is not yet filled in there are little.
Hundreds of use cases and product opportunities around data in motion that we see our customers and the larger ecosystem development and because that ecosystem is just coming into being console that has an enormous opportunity to expand our position in scope introduce additional capabilities. This is quite different from our more mature space, where all these niches have been filled in by <unk>.
Scale mature competitors. This is something that for me makes our future product roadmap very exciting you can ask yourself. The question. If there was a central nervous which captured the real time flow of data and a company what else would naturally grow in and around that stack. The possibilities are endless and if we execute quickly and effectively many of the key elements of this ecosystem.
Some can be confluent products stream governance is one small step into this larger problem at helping companies rebuilt around real time data, but it is a good illustration of how we can go beyond the raw infrastructure of moving and processing bites and deeper into the larger problem of managing and using data in motion.
As we continue to build a market leading product in a new category. We've made a number of key hires to support our expansion one of the recent notable hires was Chad Graboski, our new SVP of engineering, who joined US from Google Chad was head of Big Quarry Engineering at Google and had extensive experience, leading and scaling google's cloud data analytics platform.
<unk> tools and machine learning services together with gas Srinivasan, our chief product officer. The team will continue to innovate and build great products for our customers to set their data in motion.
And finally, I'm really pleased with the interest and participation we've seen it Kafka summit surround the world more than 51000 people registered to attend to three summit, we held in America, EMEA and APAC. This year, an increase of over 40% year over year. This momentum is also evidenced the talent market. According to Linkedin talent insights more than 60000 jobs.
<unk> global each day are targeting those skilled and Kafka. This has been noted by industry observers as well.
Works, a premier technology consultancy and analysts recently noted in their radar publication on tech trends that quote Kafka continues towards its status as a de facto standard for asynchronous published subscribed messaging at volume. They further noted that they were seeing increasing standardization around these key platforms like Kafka.
<unk> and the cloud service providers and far less interest in newer challengers to these emerging standards. This matches our observations we think it's a very positive sign for the larger movement towards data English.
With that I'll turn the call over to Stephen to walk through the financials.
Thanks, Jay Good afternoon, everyone Q3 was another strong quarter as we exceeded the high end of our guidance on all metrics and continue to see accelerating growth in revenue and a robust net retention rate.
These results underscore the power of our industry, leading platform for data in motion and our ability to execute and capture the large and growing market opportunity in front of us.
Turning to our customer metrics, we added approximately a 190 net new customers this quarter, bringing total customer count to approximately 3020 up 75% year over year.
Our growth in large customers continues to be robust. We ended the third quarter was 664 customers with at least $100000 in air are up 48% year over year.
74 customers with at least $1 million in <unk> of 90% year over year the growth in our customers is driven by the complete cloud native and everywhere aspects of our product differentiation. The network effects of data in motion and our continued improvement in go to market with broad based momentum across enterprise and commercial segments coupled with.
Our strong partnership with cloud service providers, driven by strong gross retention and expansion across both of our product offerings Q3 dollar based net retention rate or <unk> was greater than 130% for the second quarter in a row.
Exceeding our near term target threshold of 120%.
It was in line with our long term target of above 130%.
Our thesis is that over time compound cloud with its elasticity and consumption based model should have a higher NRI than cop one platform. The thesis played out nicely. This quarter as we noted in our last earnings call, we expect fluctuation in our or to continue.
With that said, we're pleased with the progress we've made in increasing and our R. And we remain operationally focused on driving and consistently above our near term threshold and long term targets.
Turning to revenue Q3, total revenue was $102 6 million growing 67% year over year, an acceleration from 64% in Q2.
Subscription revenue was $92 4 million accelerating to 70% growth year over year and accounted for 90% of total revenue.
Two components of our subscription revenue continued to exhibit strong growth.
<unk> platform revenue was $65 6 million up 40% year over year and accounted for 64% of total revenue.
Confluence cloud revenue was $26 8 million accelerating to 245% growth year over year and accounted for 26% total revenue up from 22% of total revenue last quarter and up from 13% in the year ago quarter.
Our strong performance in comp on cloud revenue was driven by the team's Jay discussed earlier, including the secular trend of cloud migration enhancements and features we've added to our cloud product in recent quarters and great execution by our go to market team turning to the geographic mix of revenue, we saw robust demand for our data in motion platform worldwide.
With revenues from outside the U S outpacing total revenue growth.
Revenue from the U S grew 59% year over year to $66 3 million, representing 65% of total revenue.
Revenue from outside the U S grew 82% year over year to $36 3 million, representing 35% of total revenue up from 32% in a year ago quarter.
Turning to remaining performance obligations or Rps, we ended the third quarter with $385 million in RPI up 75% year over year.
Current RPM, which is estimated to be 67% of <unk> was approximately $256 million up 65% year over year, an acceleration from 63% last quarter.
The main driver of RPM growth was the broad based strength across both of our subscription offerings.
We also saw a modest increase in multiyear deals, which is an endorsement of how our value proposition is resonating with customers before turning to gross margins and profitability I would like to note that I'll be discussing non-GAAP results unless otherwise noted.
Q3 total gross margin was 69, 4% down from 71, 6% a year ago.
Subscription gross margins were 76, 8% down from 78, 9% a year ago. The decline in gross margin was anticipated due to the higher mix and strong growth in comparable in cloud revenue.
As discussed on our last earnings call Commvault cloud has a lower gross margin profile than cop one platform we.
<unk> seen continued improvement in our cloud gross margin and we remain in our early days of achieving leverage and scale for the infrastructure that supports our cloud offering.
As compound cloud continues to scale and account for a larger share of total revenue. We anticipate total gross margin to fluctuate near or midterm target of approximately 70% turning to profitability operating loss was $42 6 million, representing an operating margin of negative 41, 6% compared to negative 32, 1% a year ago.
<unk>.
Free cash flow margin was negative 21% compared to negative 16, 7% a year ago.
Net loss per share was negative <unk> 17 cents using $259 2 million basic and diluted weighted average shares outstanding as a reminder, our profitability in FY 'twenty, one is being impacted by our planned to catch up on hiring given the pause we prudently took in FY 'twenty.
Additionally, we're continuing to invest for growth driven by a robust competitive positioning in a large market and the strong unit economics in our model.
Moving on to the balance sheet, we ended the third quarter with one point over $3 billion in cash cash equivalents in marketable securities turning now to guidance for the fourth quarter of 2021, we expect revenue to be in the range of $108 million to $110 million representing growth of 54% to 56% year over year non.
Non-GAAP operating loss in the range of negative 59 to negative 57 million and non-GAAP net loss per share in the range of negative 23 cents.
<unk> to negative 21 using.
Using approximately 264 million weighted average shares outstanding.
For fiscal year 2021, we are raising our guidance and now expect revenue to be in the range of $376 million to $378 million representing growth of 59% to 60% year over year.
Non-GAAP operating loss in the range of negative 170 to negative $168 million.
And non-GAAP net loss per share in the range of negative <unk> 92 to negative 90.
Using approximately 189 million weighted average shares outstanding.
I'd also like to provide some modeling points, which remained consistent with what we discussed last quarter, we expect FY 'twenty, one non-GAAP taxes to be in the range of $2 million to $3 million in FY 'twenty, one capital expenditures and amounts capitalized for internal use software costs to be approximately 2% to 3% of total revenue and finally, while we're.
Still early in the planning process for 2022, I'd like to provide an initial read on our expectations for revenue growth next year.
It was the panelists first of all thank you for taking my question and congratulations on just a tremendous worth right J I'm wondering if you're possibly seeing any effect from global supply chain issues.
On the positive side, what I mean by that is perhaps driving retailers to more continual a real time processes to just try to get a better handle on on inventories ride, which have been fluctuating so much maybe reworking some of their distribution centers.
To to try to handle these challenges out there in the environment.
Yeah, that's it's a great point, we we definitely see a set of use cases or brown retail that have this much more real time ability to know, what's where when how and act faster off of it we don't see any immediate impact from this in the short term right and you know this is generally the case I think with these infrastructure.
<unk> that you know it's not the next day after that that you you know rework all your inventory management, but it often does provoke you know a longer term reaction and reflection on how this will be done going forward, we saw that with the pandemic, where you know maybe zoom you would buy it the day after but confluent in this larger investment in the infrastructure.
Okay in order leather really strong quarter that 245% closet is very impressive. My question was sort of thinking about where we are against what I think are the big opportunity and correct me, if I'm wrong I sort of bucket J V. The the big sort of opera his you're going for.
I think one would be sort of re imagining the the data pipeline with with screaming data that'd be one the second a whole new class of streaming apps I'm sort of the other side of Costa those downstream applications and then third maybe using consulate as a data store and analytics engine.
As well so the the two questions. There's one <unk> do I have those buckets right.
A and then secondly, like which across those three buckets, where are you seeing the both traps today and what do you think can be emerging opportunities. As you guys have been some product been up I think that's a great way of Bucketing. It you know the first two I think are very mainstream so we see companies building out you know pipelines for real time flow update up <unk>.
[noise] tween data system SaaS layers whenever needs to connect we see a whole set of real time applications being built you know those are very common in our customers you know that prevalence my vary from one customer to another but virtually anybody at scale has both you sketches you know so if you're you know if you have this dream of sales that are occurring in the business.
There are both data systems at that might need to be delivered to maybe your data warehouse. There's also real time activity in processing applications that work off with that and so those are very common no. The the newer thing is certainly what you described which is you know we have in our platform the ability to store data indefinitely and you know for <unk>.
Luckily for more kind of database datasets like the changes of all user profiles really store that complete data set and be able to do not just real time processing, but actually loved the historical data and work off of that so uhm, yeah that that is a pattern that we've seen customers I would say that's kind of the maybe the second wave People's Stark.
You know for the real time, and then that retention and longer term use case becomes very natural because you're just trying to turning the knob on what you're retaining and how you know as as use cases and then.
It makes total sense and Janie devoted a good part of your script talking about.
The new capabilities the platform you mentioned the governance.
Particular, one of notable importance.
Productivity in the second half might be contributing to that dynamic or maybe it's the fact that you're signing a lot more multiyear deals and that sort of pushes you into a fourth quarter cadence many way I'd love to hear a little bit more color on that.
We're still in the early stages of planning for FY 'twenty two.
That are hybrid Rev. Rec model works is we have a portion of our business for cop one platform that gets recognized upfront as folks know and then the hybrid component of our model. We have consumption based that's coming off of <unk> cloud and depending on the deal structure in in the deals that we have in the pipeline.
Q4 tends to be a seasonally strong quarter for us in that and that's it and that's applicable applicable to both complement platform <unk> cloud.
And when you look at other companies in the enterprise space, even with a similar model of ours like.
Like a mongo DB as an example, they see similar demand dynamics between Q4 to Q1 bridge.
But we'll see how Q4 ends and we'll give updated guidance post our Q4 earnings call around what obviously Q1 looks like and an update for the year. The second part of your question around seeing Q4, even being kind of more pronounced.
Next year in terms of sequential growth, we have made a lot of investments in the sales organization. It does take roughly four quarters for folks to get fully productive and and as part of the modeling and capacity analysis that we do.
Sure.
Basically kind of forecasting that to really.
See the seasonality pattern increase in Q4 of next year and Thats why we called it out on this call.
That seems pretty reasonable and Stefan and Jay Congrats on the amazing numbers.
Thanks, so much Paul.
Our next question comes from Raimo <unk> of Barclays, followed by Goldman Sachs.
Hey, Thank you and congrats from me as well two quick questions.
First for Jay if you think about the real time is because of the emerging new normal what's the appetite from your customers around all Lou.
<unk> more established cutoff.
Right.
Processing use cases to modernize that so at the moment, we're hearing a lot around like reinvesting.
We are measuring things around real time et cetera, but there's a whole new world of your either just kind of crazy and grow at over 21 years, where you think like you could probably do it a lot better and the new ways. So maybe speak to that one and then for Stefan if I look at the numbers like everything accelerated this quarter I'd kind of just the bookings moth as well which looked like.
Very very strong.
Just one thing to your question was there anything specific in terms of one large deal or anything that drove that because this looks like a very very amazing quarter.
Thank you.
Yes.
I'll take the first part of that.
I think the.
Question that you are kind of getting out as rounds.
Can you remind me the.
If you think about like there's a whole world of batch slightly spread.
What's the what's the appetite to kind of think about kind of modernizing that where I'll get a question. So the I would say there's really no reason you want things to be processed in batch like it doesn't there's nothing in the world that happens batch things in the world happen all the time continuously and in real time.
The migration happens as Theres, new demands whats, the new need that kind of drives us and as it gets easier and easier to do it. This way. So as this platform has got more mature as the set of people who know how to use it expands then more things get migrated.
And then also the kind.
Driving force I touched on this a little bit in the call.
So system, maybe even started with some light analytical.
Live around our platform already today and yeah. There there is a role for you know some real time analysis as well and we see customers building up Ah solutions around that that that feed off of confluence for sure and there there's actually a whole portfolio in the ecosystem of data stores that really specialize in trying to do.
After about that.
So yeah, so I I think that's it.
Fantastic area for us.
And on the long term revenue question cash.
It would keep route 59% year over year some of the drivers that go back to the large multiyear deals that we've done uhm and four copper platform deals that are multi you're in nature that will definitely positively impact longterm deferred revenue T V. A sense, though I mean <unk>.
Fortunately speaking, we have 202 million a total deferred revenue.
<unk> and long term deferred revenues about $22.4 million. So it's it's a relatively small portion, but you know you see when we see more multiyear deals coming in for cough, one platform, that's gonna impact longterm deferred rats.
The second part of your question you you know just a little bit about the growth into the ecosystem.
Yeah, it's a bit of a nuanced point, but I think it's important which is you know in.
In an established category everything that's adjacent to the categories filled in by you know a strong competitor and and a new category. It's open. So historically if you look at an older data about form like Oracle databases, yeah. They could kind of junk relatively easily up into a lot of the business applications that would.
Diving that and have offerings in H R and financials and all kinds of other things right and now of course today. If you make a next gen. Operational database you know maybe your Mongodb you don't necessarily have to be working [laughter] I guess, it sounds like you're doing that and so you know that's the difference I think in a category that's emerging versus a category.
Established what's interesting in this space is there so much excitement and use cases getting built in customers around data emotion I think that's just a very target rich environment for us to grow into and I think it's something that's exciting about the space is something that makes me excited about the opportunities for the company. So I just wanted to share that for Ya.
You mean products compound platform in confluence cloud our thesis is that comp clinical trial will have a higher and our our profile.
At the time, because it's elastic it's consumption based.
And.
And there's very little friction in terms of expansion.
Whereas with confluent platform, we're renegotiating deals et cetera.
And when we look at the profile of our revenue.
Base and the durability of revenue growth for cloud I don't think there is very much debate that cloud is where it's at going forward, but we also have to be mindful to be the central nervous system, we have to be both on prem and in the cloud. So there's going to be a dynamic at play where we have both.
Platform and cloud, we think cloud from a durability standpoint is going to be very strong and that should be a tailwind for NR, which is why we have.
All of that kind of somewhat into basically saying we have this 120% near term target we've been above that for two quarters in a row, we want to be above 130 consistently but it takes time. So before we set new benchmarks in place we want to see you know call it three or four quarters in a row of.
Great performance and NR before we.
We look to revisit the targets.
And just to provide a little bit about you know.
The product space that I think kind of helps drive that the question is okay.
That expansion, whether it's 121 30 now can you have high expansion over a very long period of time and our customer base I think one of the things to understand about this domain is infrastructure is a little bit slow and we talked about this with the supply chain stop right like you don't just put it in tomorrow and you're done.
In reality, what happens is usage is driven by each application that moves over the batch process that moved into real time, right and how quickly do enterprises turnover their set of applications.
Well, it's I mean, it's it's over decades in reality right like a lot of these things.
And last thing much much longer than anyone would like and so so that doesn't mean that.
The Bad news is we can't just come in and install the central nervous system over the weekend. The good news is we can grow as long as if we're successful and we remain the platform of choice in this space. We can grow in these customers over very long periods of time.
That's great congrats on lithium thank you.
Our next question comes from Patrick <unk> of JMP Securities followed by Colin.
Great. Thanks Shane.
So let me add my congratulations and then Jay is you as you look out to 2022, what are your top two or three priorities for Erika to get done and for the sales organization to get done.
Well Erika as her own fantastic.
Our priorities, there's a lot happening in our sales organization I would say this move to a consumption model for our cloud product, which we undertook.
Little over a year ago.
That's great that's been a boon to us it's something our customers love It allows us to land and expand faster, but I think we're just in the very early days of taking advantage of that and really building out. This journey from the lightest the lowest friction possible land in the product to expansion.
Over time this central nervous system vision that can take many years and we've built a lot of supporting elements that what services do people need as they get to scale, what do we need to do at the very top of the funnel to land in volume and make that really easy to get going with how do people progressed and what are the trigger points, but I think despite all of that.
We're a young company and Theres a lot more we can do there and as we do I think we can land in higher volume we can.
Expand faster with customers all of that is going to make us better and better. So that's certainly one of the areas. That's really on all of our minds is how did you not really well along with just the continued expansion and tuning of the business as we grow.
<unk> a larger set of companies I think just the raising the profile of the company, it's really important that we have.
We've tried to do a little bit to that.
Stephanie joined as our CMO.
Not long before the IPO and has really invested that book as part of the IPO.
And I think that awareness is actually a real boon to us and we're we're just starting to get to the scale, where that's possible as an early company. It's hard to really have brought awareness.
But as we do I think that's really important I think with new categories. There's often.
In early company that becomes closely associated with that and I think <unk> is becoming that for data in motion.
And a quick follow up.
It is a tough hiring environment out there how are you guys feeling about attracting and retaining good talent and driving new onboard to productivity as you go into next year.
Yeah, Yeah, it's as competitive as I have seen it in the tech world for talent.
We feel good.
We're on track with our plans.
But it's definitely work there is a silver lining on the war for talent on the technical side.
Is every company in the world is struggling to hire engineers.
You know a good chunk of our largest deals were cloud.
Surprising chunk of them and.
Got it that's great and.
And again the whole journey matters of course, yes, we want people to be able to start quicker with lower friction.
But we want that because we want them to graduate to where this is really a strategic platform in the company over time and so challenging for US is to really nail all the steps in that journey and make it happen consistently and regularly but yes. It is it is a mix. So we saw great success at the top end of the market. We saw great success at the low end of our commercial sales organization.
I shouldn't really killed it.
This quarter. So so yes, it really is a mix of company types.
Good to hear Jay Thanks, So much one more if I may please I know the global Si channel has been a big focus here can you remind us kind of where you are in that development. How critical is that channel to delivering on some of these bigger expand deals youre, obviously already seeing really good net revenue retention and expand activity.
But could we anticipate that as a potential catalyst as that that channel because it comes more online.
Yes, I think we're we're still early right. We are putting effort into that I think over time. This is going to be really important for us to grow into the role that we imagine with our customers and so we're certainly investing in it and I think it could contribute a lot over time, but it is still in the early days for us now.
Okay.
Alright. Thanks, Brad. This concludes the Q&A portion of our call I will now turn it back over to Jay for closing remarks.
Thanks, everyone for being with us on the call today.
Huge thanks to our team to our partners to our investors and especially to our customers and thank you all for being part of the journey and we'll see you again next quarter.
Okay.