LinkedIn-backed Confluent Reports S-1 as Annual Sales Over $ 300 Million

Seven years after leaving LinkedIn, cloud software developer Confluent goes public.

Confluent, which sells software that developers can use to move data quickly for use within applications, released its IPO prospect on Tuesday, seeking to become the latest enterprise company to move from an open source project to a multi-billion dollar public company.

Revenue in the first quarter was up 51% from the prior year to $ 77 million, with the majority of its sales being through subscriptions. The company’s lost revenue increased to $ 44.5 million from $ 33.6 million, as sales and marketing costs increased.

At the core of Confluent’s software is Apache Kafka, which was started within LinkedIn. Confluent founders Jay Kreps, Jun Rao and Neha Narkhede, created Kafka in 2011 and then formed Confluent in 2014 with an investment of approximately $ 500,000 from LinkedIn. The company was most recently valued at $ 4.5 billion in a round last year led by Coatue Management and Altimeter Capital.

“We implemented it at scale for early use cases on LinkedIn, handling data flows with billions of messages,” wrote Confluent CEO Kreps in a prospectus letter. “But even then, our ambition was greater. Kafka was built to be open source and we wanted it to do much more than just serve a use case in an enterprise. ”

Before Confluent, Cloudera and Hortonworks gained momentum by commercializing Apache Hadoop, which originated within Internet companies such as Facebook, Google, and Yahoo. Hortonworks spun off from Yahoo and merged with Cloudera in 2019.

As independent companies and later as a combined entity, Cloudera and Hortonworks struggled to find a viable business model. Earlier Tuesday, Cloudera agreed to sell to private equity firms in a $ 5.3 billion deal.

In the local software arena, Confluent said Cloudera poses some competition, along with IBM and Oracle. However, its core business is with the big cloud infrastructure providers Amazon, Microsoft, and Google, which also have competitive offerings of some kind.

Confluent had $ 167 million in non-cancellable purchase obligations, primarily related to cloud deals, at the end of 2020. The company received 18% of its revenue from its cloud service in the first quarter, down from 12% in the quarter of the previous year. .

Confluent, which has about 1,500 employees, said in its prospectus that more than 70% of Fortune 500 companies are estimated to have used Kafka. Its clients include Citigroup, Humana, Intel and Walmart, according to the Confluent website.

Confluent said it offers traditional license offerings to customers and also has a community license for its software available that provides access to its source code. The company said it “explicitly restricts others, including cloud providers, from taking this source code and using it to offer a competing SaaS or software-as-a-service offering.” Amazon introduced a Kafka-based service in 2018.

Morgan Stanley, JPMorgan Chase and Goldman Sachs are the main underwriters of the IPO. The stock will trade on the Nasdaq under the symbol “CFLT.”

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