Jason Ader: Good luck. Thanks.
Shane Xie: Thanks, Jason. We’ll take our next question from Michael Turrin with Wells Fargo, followed by Mizuho.
Michael Turrin: Hey. Great. Thanks. I appreciate you taking the question. Jay, back to Flink, is there a way for us to think about the customers you see as best suited to take advantage of the offering? I’m wondering if the addition of platform is important from that perspective? And then, any early sense you can provide us around how getting newer products to GA can help as the go-to-market conversations are shifting more towards consumption profile and away from bookings.
Jay Kreps: Yeah. Yeah, I’m happy to do that. So, we’ve certainly seen interest across our customer base. One of the things that we will see is a slightly different dynamic between the Confluent Platform, Flink offering and the cloud offering. With the cloud offering, the early versions of the cloud offering tend to be best suited to new use cases, just beginning development. Whereas there’s more of a lift and shift opportunity on-premise, as well as suiting new use cases. Over time, as that cloud offering reaches feature completeness and proves itself out with customers, there will be more of a shift of existing Flink workloads. That’s the behavior we saw with Kafka, where the early adoption was the incremental use case and the lift and shift of kind of large install bases took more time.
So I think we’ll see a similar behavior here, and that’s what we’ve seen out of customers. Nonetheless, across the full set of customers, there’s a ton of eagerness. So people are kind of lining up, even if there’s some feature they’re waiting on, they’re eagerly awaiting the delivery of that feature. So, yeah, I think that we’ll see growth on both dimensions. In terms of why we added it to the software offering, Confluent Platform, that was by popular demand, originally the intention was just to do it in cloud. Ultimately, we have a set of customers that have pretty extensive on-premise operations and some of them are very big Flink users, and they were very eager to have an offering for them as well. And for us, our goal is to serve customers everywhere and so as soon as we had capacity to kind of take on the development of that, we added plans for that and built it out.
Michael Turrin: Great. Rohan, if I may just, if you can comment from your perspective on how the go-to-market changes you’ve made are progressing and how that impacts your confidence around the initial fiscal year guide you framed alongside Q3. It’s encouraging to see the numbers move up, but just any additional context is useful? Thanks.
Rohan Sivaram: Absolutely. Well, Jay touched on it. I mean, the early indicators from the consumption transformation have been very positive. And we’ve gone through, made a lot of changes with respect to processes, systems. And some of the early data points, for example, if you look at the customer ads that we had in Q1, it’s the highest we’ve had in five quarters. Obviously, early, but very positive. And then when you look at our Q1 performance in general, we’re very pleased with our total revenue performance and particularly our cloud revenue performance and the growth we saw, 45% year-over-year. And that momentum has actually continued into the month one of the second quarter as well. So when you kind of put this into context, Michael, for the full year, we’ve increased our full year guidance from 22% to 23%.
And what has also happened is we’ve delivered a strong Q1 with a strong guide for Q2. So that has somehow derisked the second half of the year in a manner which, I’m candidly very happy about. And more importantly, when you look at the growth rates, first half versus second half, that was obviously a point of discussion same time last quarter. Now we’re looking at flattish because of the derisk nature of our first half performance. So, overall, I would say, early indication is very positive, feel good about our full year guide and obviously happy about our Q1 performance.
Michael Turrin: Very clear. Thank you.
Shane Xie: Thanks, Michael. We’ll take our next question from Gregg Moskowitz with Mizuho, followed by Needham.
Gregg Moskowitz: Hey. Thank you for taking the questions. Jay, obviously, there’s a lot of buzz in the industry around Apache Iceberg. So once Tableflow becomes GA, what are your expectations on the adoption curve among your install base? Also, do you think that it will help you land new logos as well?
Jay Kreps: Yeah. Yeah, I think it will. We were actually expecting a fair amount of enthusiasm around this. As you said, there’s a great deal of buzz around Iceberg. Despite that, I think we were actually surprised by how widespread the interest was. And we felt like, well, in many ways, sometimes the analytics environment is kind of a little bit to the side of the team that we naturally serve. We weren’t sure if they would have a direct interest in that. But in fact, it’s been a huge drop and topic of discussion in almost every conversation that I’ve had with customers. So now it’s on us to deliver a GA product. This is just the first step in that journey. So it’d be too early to project the rate of adoption or revenue contribution or whatever.
But we feel that that has a ton of potential as it comes out onto the market. And as I said, it does kind of align with our business in, I think, a really fantastic way. Confluent is very much about opening up data and sharing it across an organization and this is a fantastic mechanism for us to do that. In many ways, the fragmentation of the analytics market made it hard to deliver data in the volume that we would like across all the different systems there and this really helps with that. And our ability to integrate that directly into Quora and offer that data in a very natural, low friction, low overhead way, I think, is a great competitive differentiation. And I think a huge boon to that area as well, where one of the challenges in that environment is always getting access to high quality, reliable data that’s up-to-date.
So, yeah, I think we’re very excited about it. Still early and we have to go finish the delivery of the product and make all the customers successful.
Gregg Moskowitz: All right. Very helpful. And then either for you or for Rohan, so we’ve spoken before about the potential to do a lot more business with SIs going forward. The new Accelerate with Confluent program, will that or can that be a difference maker in your view, and if so, why?
Jay Kreps: Yeah. Rohan, you want to take that?
Rohan Sivaram: Well, we’ll be happy to. Gregg, I mean, we’ve called it out before as well. When we think about the broader partner ecosystem, I’m kind of up leveling a little bit. That’s an opportunity, which is in early innings. Most of the opportunity is ahead of us. So specifically around SI and the Accelerate program that you called out, absolutely. That’s an opportunity for us to drive revenue. But again, it’s in early days, so it’s not that something you’re going to see next quarter or next month. It is a huge opportunity for us and we’re working very hard to make sure that we’re taking advantage of that opportunity. So long story short, I think SIs and in general, GSIs and the partner ecosystem will continue to be a focus for us as we look ahead.
Gregg Moskowitz: Thank you.
Shane Xie: Great. We’ll take our next question from Mike Cikos with Needham, followed by TD Cowen.
Mike Cikos: Hey. Thanks, Shane, and thanks, Jay. Thanks, Rohan. I wanted to come back to the multi-product adoption that you guys are citing today. And what I was thinking through, and I just wanted to stress test this, is it fair to think that your shift in this go-to-market to prioritize consumption over commitments is actually driving faster adoption across Confluent Platform or is it still too early to start seeing this in the numbers? This has been like a slow go, but that’s something to come as a result of this go-to-market transformation you guys have put in place?
Jay Kreps: Yeah. Yeah. It’s actually — it’s a very good observation. So this is a subtle point. But previously, the field team really sold commitments, which was just dollars. And so the incentive to drive adoption of these DSP components was much less, right? Of course, if the customer adopts Flink, they’ll consume more. As it comes time for them to renew next year, they might commit to more, but that payoff could be a year out. It’s somewhat delayed. In a consumption world, of course, as soon as the consumption ramps higher, the immediate compensation arrives, right? And so that payoff is much more immediate. And so the consumption transformation was actually quite important for driving adoption of these additional components around Kafka.
In terms of, have we seen that effect? Yeah, I think, we’ve seen an increased focus from our field team on these components. The use cases around that, it’s not like it just materializes overnight all in one quarter, that we’ll build that, getting that model right to be set up for multi-product delivery was actually a substantial motivation for us in doing this more quickly because we felt we had actually very good offerings now around Kafka and we wanted to make sure that we were set up to sell them.
Mike Cikos: Awesome. And then just to follow up on the go-to-market, a bit of a two-porter here, but I guess to start with Jay, like, it’s interesting. One of the things that I think you guys are calling out is this attacher scene from even higher quality customers, despite the fact that you’re not pressing on commitments, right? And I would have thought or the presumption would be that, if you’re not pressing on commitments, you might get some lower quality customers. So, can you kind of tease that out for folks? I think that would be beneficial. And then the…
Jay Kreps: Yeah.
Mike Cikos: … I guess the second piece for Rohan, if you could just articulate, like, I know there was a lot of angst into the first half of this year, given the go-to-market changes, but like, what more is there to do on your front now that you guys are kind of clicking along here with, call it, four months and change behind you?
Jay Kreps: Yeah. Yeah. It’s a great question. So I’ll start with a bit on customers. Yeah, so the change we made on the field side was to directly incentivize the land, as part of the comp plan, but not only that, to actually target a set of high potential customers that we felt were particularly important to land. And compensate even more highly for those, because those would be worth a lot more to Confluent, you know, as they ramped to large consumption. And so, what was exciting to us was not only did the volume of customers go up, but then as you said, yeah, those customers were actually better targeted into that set of high propensity spenders than they had been previously and that — I think that’s just the direct result of the incentives. And we had that differentiation because as you said, we wanted to make sure these are high quality customer additions that we’re picking up. And I’ll let you take the second half, Rohan.
