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IPO Confluent

Event streaming platform
IPO
Medium risk

Revenues in 2019-2020

Invest in IPO Confluent

This investment idea is no longer available. New applications are not accepted

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Investment Idea Details
The Company

Founded by Apache Kafka creators Jay Kreps, Jun Rao and Neha Narkhede, Confluent empowers enterprises to better capture event data on a real-time basis. This data could encompass feeds from internet-enabled sensors on the manufacturing floor, mentions of a certain word or phrase on Twitter, or up-to-the-second retail inventory updates so websites accurately reflect what's available in stores. That information is then dumped into a data lake or warehouse for analysis or to feed into machine learning algorithms.

Confluent sells software that developers can use to quickly move data for use inside applications. The founders of Confluent created Kafka in 2011 and then formed Confluent in 2014 with an investment of about $500,000 from LinkedIn.

Market Opportunity

Confluent is well-positioned to succeed in the large and growing market for data infrastructure. Its technology supports both cloud and on-premises environments because enterprises today are in different stages of their journey to the cloud. This strategy enables Confluent to serve every type of company, in every industry, and in every geography.

The company targets the following market segments: Application Infrastructure & Middleware, Database Management Systems, Data Integration Tools and Data Quality Tools, and Analytics and Business Intelligence. The aggregate of these four markets represents a total market size of approximately $149 billion. Confluent serves approximately $50 billion of this total market today and this number will increase to $91 billion in 2024 due to the estimated annual growth of the total market by 22%.

Risks

Confluent's main services are more of a complement to services provided by the AWS, Microsoft or Google Cloud, however, it competes directly with some products from those cloud providers. Its other main rivals are legacy relational database providers like Oracle, messaging vendors like MuleSoft, ETL providers like Informatica, and on-premises event data services from Red Hat and Cloudera.

Dollar-based net retention rate has steadily declined over the years. It went from 177% in 2018 to 134% in 2019, and finally to 125% in 2020 — which is considered about average for the industry. Confluent attributes the decline to the impact of the COVID-19 pandemic, and the initial impact of existing customers transitioning to our usage-based Confluent Cloud offering.

Financials

Confluent will be listed on Nasdaq under the CFLT ticker. Morgan Stanley, JPMorgan Chase and Goldman Sachs are the leading underwriters. During the IPO Confluent will place 23 million shares at $33, which will lead to a valuation close to $8.3 billion. In the IPO Prospectus, the company reported that in 2020 its revenue has increased by 60% and comprised $237 million. Confluent also shows gross margin, which equals to 68%. The net loss in 2020 increased from $33.6 million to $44.5 million, but this was mainly due to a one-time settlement of $119 million paid in shares, for administrative services.

The main investors of Confluent are Benchmark Capital Partners, Sequoia Capital, also Microsoft after the takeover of Linkedin owns shares of the company. The company’s valuation on IPO corresponds to the P/S 35x multiplier. Confluent can be compared to Snowflake, which is also developing a data management platform. It is traded with the P/S 103x multiplier and shows 110% revenue growth while it gross profitability similar to that of Confluent.

The strong positioning of Confluent, the growing revenue, as well as the interest of investors in the data management solutions market, will contribute to the successful placement of the company. The expected yield is average, up to 40%.

How IPO Investments Work
1. Collection of funds

2-3 weeks before the start of the company publishes information about the opening of trading: financial statements for 3 years, a description of the company's business, plans for the future, as well as the risks that management sees in their own business. We analyze such offers and publish the best ones. Investors apply for deposits. Before the deadline for applications, you can change the request or cancel it.

Publication
21 Jun
Threshold amount
$50
2. Buy shares

We submit one large application for the purchase of shares by pre-subscription with reduced price to large investors. The application may be rejected in part or in full. Over the past three years, our applications have been rejected only three times. The next day, or every other day, we'll know at what price and at what percentage the order is executed, and we'll post it on «The my investment page».

Submit applications before
22 Jun
3. Start Bidding

The price of shares is rising from the first day due to the demand of investors deprived of the opportunity to buy shares before trading. Most of the stocks we've been recommending buying over the past three years have been starting to trade on the stock exchange at tens of percent higher than the price at which customers bought the shares. There comes a Lock up period when it is forbidden to sell shares purchased by subscription. Typically lasts 3 months.

Start Bidding
24 Jun
Return forecast
Medium (up to 40%)
4. Receiving profit

After the expiration of the Lock Up period, the investment is automatically closed and the investor receives a profit on account of the deduction commissions UT. You can always view the results of your past investments in investment archive.

End
27 Sep
Early profit fixation

Although no shares are allowed to be sold during the lock-up period, our traders seek to offer investors fixed profit by way of using various financial instruments, including forwards, options, short positions etc.

From the investor’s point of view this means that he or she may close an investment by paying a certain part of its value (as a rule, approximately 15 percent). This is due to high prices for the instruments which are employed to ensure availability of fixed profit. As such, you shall press any relevant button in the Investor Account as soon as it is active.

The closing procedure is similar to commencement of investment business. You shall file a bid which is executed within a business day by UT. So, your investment is closed at the price currently prevailing on the stock exchange. However, we rarely recommend using this feature, since upon expiry of an applicable lock-up period the average performance is higher.

Fee

FOR ENTRY

3 per cent of the share price. This fee is charged as soon as your investment bid is confirmed.

FOR EXIT

1.75 per cent of the purchase price paid for your shares as soon as trading is closed. This fee is charged upon closure of any relevant investment.

SUCCESS

20 per cent of the profit your derive. This fee is charged only if you show positive performance as of the moment any relevant investment is closed.

TO EARLY EXIT

Usually, 15 per cent (depends on the stock exchange environment). It is calculated per each investment individually.

Advantages Enjoyed by Those Investing with United Traders

RELIABILITY

Our risk managers ensure proper support throughout the entire transaction.

IN THE PROFIT FROM THE FIRST DAY

Such an approach allows it to limit extra risks related to bankruptcy of start-ups and considerably increase profit vs investors purchasing shares on open Market.

LOW ENTRY THRESHOLD

Millions of dollars are required to buy shares on a subscription basis. We have generated a pool of traders and investors which enables any newbie to participate in any transaction as aforesaid by investing just USD50 or more.

Invest in IPO Confluent

This investment idea is no longer available. New applications are not accepted

View more ideas