Specialist
Former Director, Product Marketing at Confluent Inc
Agenda
- Operating environment for Confluent amid the shift towards Apache Kafka
- Assessment of the Confluent platform and data-streaming capabilities
- Decelerating growth implications and trajectory with new product launches
- Outlook post-IPO and comparison to Cloudera's (NYSE: CLDR) path
Questions
1.
Could you give an overview of what Confluent does and its role within the Kafka ecosystem? Could you also describe what Kafka is?
2.
Could you discuss some examples of Kafka in practice on LinkedIn or another more common application? Kafka’s management frequently mentions data in motion, and I know the company came from LinkedIn.
3.
What are your thoughts on Kafka’s growth, as Confluent’s growth clearly is a function of that? What do you think may be driving Kafka’s growth? What else could potentially threaten that growth beyond Pulsar, which is another architecture on the market?
4.
What is Confluent’s target market? You mentioned a huge rate of adoption in the Fortune 500, and I understand those companies have very different IT organisations that can potentially manage to run this without Confluent. Would you highlight any broader market trends that investors should monitor?
5.
How much of a driver for Confluent is the M&A these legacy companies and cloud-native companies are going through? How much might that add to Confluent’s value proposition? There’s a lot of difficulty in integrating systems when discussing M&A in IT.
6.
Confluent’s management team put out a fairly large TAM, claiming USD 50bn across a few different market segments and that growing at a 22% CAGR to reach USD 91bn in 2024. What’s your high-level sense for the size of the market the company is claiming? Are there any key assumptions we should be challenging?
7.
What’s your overview of the competitive landscape across the cloud providers such as AWS and Azure and the legacy players pivoting to Kafka? How is Confluent differentiated?
8.
Who would you say has the closest comparable offering to Confluent?
9.
There don’t seem to be any smaller players also commercializing the software around Kafka. You mentioned internal developers that can use the open-source technology on their own and might not need Confluent. Could you help us understand the complexity here? In the longer term, might internal IT teams develop their own skills to manage Kafka without the need for Confluent? Is this a legitimate longer-term threat to the company?
10.
When Confluent comes to a company trying to build up on Kafka, it not only has the expertise but also over 100 prebuilt connectors. I understand this is very appealing to developers because it makes Kafka much easier to integrate and use. Could this moat of prebuilt connectors potentially be diminished longer term if new players enter the market? Do you think the company has a considerable competitive moat over any new entrant?
11.
How would you differentiate between Kafka and Pulsar? Pulsar seems to be on a similar trajectory to Kafka, although not at the same scale yet. How would you expect the adoption of both to compare in coming years? Splunk and DataStax have just picked Pulsar to power their next-generation systems. Could this disrupt Kafka’s growth?
12.
What do you think Pulsar would have to do as a broader community to really begin threatening Kafka? You seem quite confident that Kafka won’t fall to Pulsar, but how confident are you that Pulsar won’t put a material dent in Kafka any time soon?
13.
What use cases might Pulsar be able to win from Kafka, given you mentioned this as a factor?
14.
Confluent experienced very impressive growth in the past year. How would you assess the company’s continued growth trajectory? Where do you think a lot of this growth will come from? Could you split this between new customers and increasing the spend and consumption of current customers?
15.
There’s been a great acceleration on the cloud side and it’s clearly the future for Confluent. What are your expectations for the growth of cloud vs on-prem platform? Cloud makes up 20% of the company’s subscription revenue. How might this split change, given the customer makeup? What’s the timeline to ramp up to 50% or more?
16.
Are you familiar with Cloudera and its history with Hadoop?
17.
People often draw parallels between Cloudera with Hadoop and Confluent with Kafka. Would you point to any key differentiators in the two situations that might keep Confluent immune to a similar outcome?
18.
What 2-3 questions would you have for Confluent’s management if you were assessing the company for investment, maybe on the technical side, to understand how it’s positioned?
19.
What about the threat of Kubernetes becoming easier to work with and the ability for certain developers to bypass Confluent Cloud by starting clusters on their end but with Kubernetes? Is this a technical risk or is this overblown?
