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Confluent goes IPO as Kafka event streaming goes mainstream

The lead commercial vendor behind the open source Apache Kafka event streaming platform goes public as the market opportunity for data in motion grows.

Confluent went public on Thursday with an IPO on the NASDAQ stock exchange under the stock symbol CFLT, with an initial share price of $36.

Founded in 2014 and based in Mountain View, Calif., Confluent had previously raised $456 million in funding to grow the company's event data streaming technologies, which are based on the open source Apache Kafka platform.

Confluent's co-founder and CEO, Jay Kreps, helped create Kafka while he was a staff engineer at LinkedIn, where he worked for seven years before starting Confluent.

Leading up to the IPO, Confluent over the past year has added capabilities to its Confluent Cloud and Confluent Platform -- based on Kafka -- that enable more scalability for event streaming.  

Confluent has also expanded beyond Kafka with its ksqlDB event steaming database that is purpose-built for Kafka.

Confluent driving the move to event streaming data

The driving force behind Confluent is organizations' growing demand for real-time data, which is at the core of the vendor's event streaming capabilities.

At the Kafka Summit Europe virtual conference on May 12 hosted by Confluent, major brand users including BMW Group, Porsche and Sony Playstation outlined how they benefit from the event streaming technology.

"Confluent continues to be a strong player in the shift by enterprises to become much more event-driven, particularly in supply chain and digital operations," said IDC analyst Maureen Fleming. "This is especially true where enterprises are competing and monetizing speed and where rapid and data-intensive collection of data for AI is required."

Confluent event streaming enables organizations to use data in motion

Fleming said she sees Confluent as the dominant vendor in the market for continuous collection and delivery of data over highly distributed systems. It's an approach that Confluent often refers to as "data in motion. 

Screenshot of Confluent event data streaming platform
Confluent's event data streaming platform based on Apache Kafka enable users to benefit from data in motion.

Fleming noted that Confluent's sound financial performance reflects the rapid advances in the technologies used to enable event-driven operations.

In its S-1 IPO filing with the U.S Securities and Exchange Commission, Confluent reported that it had more than 2,500 customers and was achieving total revenue growth of 51% year over year for the first quarter of 2021.

The opportunity for an event-driven architecture could potentially be large, with Confluent estimating in the IPO filing that the total addressable market might be worth as much as $50 billion.

"Over time as this type of architecture becomes more ingrained in how businesses operate, Confluent will continue to be a big beneficiary of this shift," Fleming said.

Confluent continues to be a strong player in the shift by enterprises to become much more event-driven, particularly in supply chain and digital operations.
Maureen FlemingAnalyst, IDC

The Kafka connection

David Menninger, an analyst at Ventana Research, said he was also optimistic about Confluent's prospects. The vendor's association with the open source Apache Kafka platform is a key driver of growth for Confluent, he said.

Kafka is so widely used for event streaming to the point that Menninger called it ubiquitous. With that wide usage, he noted that any organization using the open source version of Kafka is a prospect for Confluent's licensed product. 

"We see fundamental changes occurring in enterprise data architectures," Menninger said. "Data in motion will replace data at rest as the primary way in which organizations process data."

Data at rest is the traditional approach to accessing data in which it is first loaded into a database where it "rests" and then is accessed. The data in motion approach enables organization to use data as it is moving from an event source.

"It's not that data at rest goes away, but the first instance of data in most organizations will be data in motion," Menninger explained. "Then it will be stored to a database for historical and other non-real-time analyses. Confluent has positioned itself well to take advantage of this trend."

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