As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the data infrastructure industry, including Confluent (NASDAQ:CFLT) and its peers.
Generating insights from system level data is an increasing priority for most businesses, but to do so requires connecting and analyzing piles of data stored and siloed in separate databases. This is the demand driver for cloud based data infrastructure software providers, who can more readily integrate, distribute and process information vs. legacy on-premise software providers.
The 5 data infrastructure stocks we track reported a satisfactory Q3. As a group, revenues beat analysts’ consensus estimates by 1% while next quarter’s revenue guidance was 1.2% below.
Thankfully, share prices of the companies have been resilient as they are up 5.6% on average since the latest earnings results.
Confluent (NASDAQ:CFLT)
Built by the original creators of Apache Kafka, the popular open-source messaging system, Confluent (NASDAQ:CFLT) provides a data infrastructure platform that enables organizations to connect their applications, systems, and data layers around real-time data streams.
Confluent reported revenues of $298.5 million, up 19.3% year on year. This print exceeded analysts’ expectations by 2.1%. Despite the top-line beat, it was still a mixed quarter for the company with an impressive beat of analysts’ billings estimates but full-year revenue guidance missing analysts’ expectations significantly.
Confluent achieved the fastest revenue growth but had the weakest full-year guidance update of the whole group. The company added 48 enterprise customers paying more than $100,000 annually to reach a total of 1,487. Unsurprisingly, the stock is up 34.7% since reporting and currently trades at $29.87.
Is now the time to buy Confluent? Access our full analysis of the earnings results here, it’s free for active Edge members.
Best Q3: Teradata (NYSE:TDC)
Pioneering data warehousing technology in the 1980s before "big data" was a common term, Teradata (NYSE:TDC) provides cloud-based data analytics and AI platforms that help large enterprises integrate, analyze, and leverage their data across multiple environments.
Teradata reported revenues of $416 million, down 5.5% year on year, outperforming analysts’ expectations by 2.4%. The business had a very strong quarter with a solid beat of analysts’ billings estimates and an impressive beat of analysts’ EBITDA estimates.
Teradata pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 51.2% since reporting. It currently trades at $31.32.
Is now the time to buy Teradata? Access our full analysis of the earnings results here, it’s free for active Edge members.
Slowest Q3: Oracle (NYSE:ORCL)
Starting as a database company in 1977 and now powering mission-critical systems across the globe, Oracle (NYSE:ORCL) provides enterprise software and hardware products and services that help businesses manage their information technology needs.
Oracle reported revenues of $16.06 billion, up 14.2% year on year, falling short of analysts’ expectations by 0.8%. It was a softer quarter as it posted a slight miss of analysts’ revenue estimates and a slight miss of analysts’ remaining performance obligation estimates.
Oracle delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 11.9% since the results and currently trades at $197.26.
Read our full analysis of Oracle’s results here.
Elastic (NYSE:ESTC)
Built on the powerful open-source Elasticsearch technology that powers search functionality for thousands of websites worldwide, Elastic (NYSE:ESTC) provides a search and AI platform that helps organizations find insights from their data, monitor applications, and protect against security threats.
Elastic reported revenues of $423.5 million, up 15.9% year on year. This result surpassed analysts’ expectations by 1.3%. More broadly, it was a satisfactory quarter as it also produced EPS guidance for next quarter exceeding analysts’ expectations but a significant miss of analysts’ billings estimates.
The company kept the number of enterprise customers paying more than $100,000 annually flat at a total of 1,550. The stock is down 4.2% since reporting and currently trades at $78.63.
Read our full, actionable report on Elastic here, it’s free for active Edge members.
C3.ai (NYSE:AI)
Named after the three Cs of its original focus—carbon, cloud computing, and customer relationship management—C3.ai (NYSE:AI) provides enterprise AI software that helps organizations develop, deploy, and operate large-scale artificial intelligence applications across various industries.
C3.ai reported revenues of $75.15 million, down 20.3% year on year. This print was in line with analysts’ expectations. Overall, it was a strong quarter as it also logged a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ billings estimates.
C3.ai achieved the highest full-year guidance raise but had the slowest revenue growth among its peers. The stock is up 3.7% since reporting and currently trades at $15.75.
Read our full, actionable report on C3.ai here, it’s free for active Edge members.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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