Confluent's Strategic Roadmap to Boost Cloud Consumption Growth in 2025 Q2

Confluent's Strategy to Accelerate Cloud Consumption Growth Amid Optimization Trends

Confluent acknowledges ongoing consumption optimization by large customers, which has led to slower use case adoption and month-over-month growth rates notably below historical averages. Despite this, the company has outlined a multi-faceted approach to accelerate cloud consumption growth and expand its footprint:

1. Strengthening Field Execution and Account Ownership

• Improving coverage ratios between Account Executives (AEs), Sales Engineers (SEs), and post-sales roles to provide a higher-touch, integrated approach.
• This enhances account ownership and aligns more tightly with customers to drive use cases into production.
• Early results include a sequential increase of over 40% in late-stage pipeline progression.

2. Building Out DSP Specialist Team for Multiproduct Selling

• Expanding a dedicated team focused on Data Streaming Platform (DSP) sales plays, including pricing strategy, go-to-market messaging, and streamlined migration offerings.
• This team supports combined tooling and professional services to accelerate customer production go-lives.
• Early success is evident with customers accelerating DSP use cases, contributing to growth in Flink ARR (tripled in two quarters, nearing $10 million).

3. Doubling Down on Key Growth Areas

• Displacing Cloud Service Provider (CSP) Streaming Offerings:

  • Confluent has achieved win rates above 90% in replacing CSP streaming products with its own offerings like Freight Clusters, Enterprise Clusters, and WarpStream.
  • This strategy targets customers currently using CSP offerings, leveraging improved product capabilities and total cost of ownership (TCO).
  • WarpStream has shown positive trends, enabling customers to increase Confluent spend by 30% while reducing overall cloud infrastructure costs by roughly 50%.

• Expanding Partner Ecosystem:

  • Partners have sourced over 20% of Confluent's business in the past year.
  • New OEM programs and AI accelerator partnerships with leading AI vendors have been launched.
  • Deepened collaborations with major system integrators (e.g., Infosys, EY) to broaden market reach and co-innovate.

• Growing DSP and AI Use Cases:

  • Rapid growth in Flink and AI production workloads, with AI use cases expected to grow 10x across hundreds of customers.
  • AI-driven real-time data streaming is becoming a critical component of enterprise AI architectures.

4. Contractual Commitments and Long-Term Customer Relationships

• Despite short-term consumption headwinds, some customers have committed to larger multiyear deals, reflected in a 31% growth in Remaining Performance Obligations (RPO).
• These commitments indicate confidence in long-term growth and provide a foundation for future consumption expansion.

5. Sales Compensation Alignment

• Sales reps are compensated on incremental consumption, aligning incentives to drive cloud usage growth.
• Adjustments continue to optimize this model to unlock more use cases and DSP offerings.

Summary

Confluent is addressing the current cloud consumption optimization by large customers through operational enhancements in sales execution, focused multiproduct selling, aggressive displacement of CSP offerings, and leveraging a strong partner ecosystem. The company is also capitalizing on emerging growth in DSP and AI workloads, which are expected to drive future cloud consumption. While near-term consumption growth is expected to remain below historical levels, these strategic initiatives and customer commitments position Confluent to accelerate cloud consumption growth over the medium to long term.