Comerica Q2 Earnings Top Estimates on Strength in NII & Loan Growth
Results benefited from a rise in net interest income (NII) and loan balance. Yet, lower deposit balances, decline in non-interest income and weak asset quality were concerning.
Net income attributable to common shareholders (GAAP basis) was $187 million, which declined 6.5% from the year-ago quarter.
Comerica's Revenues & Expenses Rise
Total quarterly revenues were $849 million, up 3% year over year. The top line surpassed the consensus estimate by 0.5%.
Quarterly NII rose 7.9% on a year-over-year basis to $575 million. The net interest margin increased 30 basis points year over year to 3.16%.
Total non-interest income was $274 million, down 5.8% on a year-over-year basis.
Non-interest expenses totaled $561 million, up 1.1% year over year. The rise was primarily due to an increase in Salaries and benefits expense and Occupancy expense.
The efficiency ratio was 65.78% compared with the prior-year quarter's 67.77%. A fall in this ratio indicates increased profitability.
CMA's Loans Balance Rise & Deposit Declines
As of June 30, 2025, total loans rose 2.5% on a sequential basis to $51.2 billion. Total deposits declined 2.4% from the previous quarter to $60 billion.
Comerica's Credit Quality Deteriorates
The company recorded a provision for credit loss of $44 million in the second quarter compared with no provision in the year-ago quarter.
The allowance for credit losses was $735 million, which rose 2.5% year over year.
Total non-performing assets rose 10.2% year over year to $249 million.
The allowance for credit losses to total loans ratio was 1.44% as of June 30, 2025, up from 1.38% as of June 30, 2024. Also, the company recorded net charge-offs of $28 million, significantly up from $11 million recorded in the year-ago quarter.
CMA's Capital Position Mixed Bag
The total capital ratio was 13.74%, down from 14.02% in the year-ago quarter. The Common Equity Tier 1 capital ratio was 11.94%, up from 11.55% in the prior-year quarter.
As of June 30, 2025, CMA's tangible common equity ratio was 8.04%, up from 6.49% in the prior-year quarter.
Comerica's Capital Distribution Activities
The company repurchased $100 million of common stock under the share repurchase program.
Our View on CMA
The company's decent capital position will aid capital distribution activities in the upcoming period, boosting investor confidence in the stock. Its focus on improving operational efficiency will support financials. The rise in NII looks encouraging. However, weak asset quality and a rise in expenses remain near-term concerns.
Comerica Incorporated Price, Consensus and EPS Surprise
Comerica Incorporated price-consensus-eps-surprise-chart | Comerica Incorporated Quote
Currently, Comerica carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Synovus Financial Corp. SNV reported second-quarter 2025 adjusted earnings per share of $1.48, which surpassed the Zacks Consensus Estimate of $1.25. This compares favorably with the earnings of $1.16 per share a year ago. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
SNV's results benefited from strong year-over-year growth in NII and non-interest revenues, along with a fall in provisions for credit losses. Also, improving loan balances were a tailwind. An increase in expenses, however, was a major headwind.
First Horizon Corporation's FHN second-quarter 2025 adjusted earnings per share (excluding notable items) of 45 cents surpassed the Zacks Consensus Estimate of 41 cents. This compares favorably with 36 cents in the year-ago quarter.
FHN's results benefited from a rise in NII and non-interest income, along with a decline in expenses. Also, lower provisions and a rise in loans and deposit balances were other positives.
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First Horizon Corporation (FHN) : Free Stock Analysis Report
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Business Wire
2 hours ago
- Business Wire
Cactus Announces Second Quarter 2025 Results
HOUSTON--(BUSINESS WIRE)--Cactus, Inc. (NYSE: WHD) ('Cactus' or the 'Company') today announced financial and operating results for the second quarter of 2025. Second Quarter Highlights Revenue of $273.6 million and operating income of $60.8 million; Net income of $49.0 million and diluted earnings per Class A share of $0.59; Adjusted net income (1) of $53.2 million and diluted earnings per share, as adjusted (1) of $0.66; Net income margin of 17.9% and adjusted net income margin (1) of 19.5%; Adjusted EBITDA (2) and Adjusted EBITDA margin (2) of $86.7 million and 31.7%, respectively; Cash flow from operations of $82.8 million; Cash and cash equivalents of $405.2 million, with no bank debt outstanding as of June 30, 2025; Signed an agreement to acquire a 65% majority interest in Baker Hughes' Surface Pressure Control business; and In July 2025, the Board of Directors approved an 8% increase in the dividend to $0.14 per Class A share per quarter and declared a quarterly dividend of that amount. Financial Summary Three Months Ended June 30, March 31, June 30, 2025 2025 2024 (in thousands) Revenues $ 273,575 $ 280,319 $ 290,389 Operating income (3) $ 60,805 $ 68,612 $ 79,819 Operating income margin 22.2 % 24.5 % 27.5 % Net income $ 49,047 $ 54,105 $ 63,059 Net income margin 17.9 % 19.3 % 21.7 % Adjusted net income (1) $ 53,249 $ 58,816 $ 65,192 Adjusted net income margin (1) 19.5 % 21.0 % 22.4 % Adjusted EBITDA (2) $ 86,677 $ 93,841 $ 103,637 Adjusted EBITDA margin (2) 31.7 % 33.5 % 35.7 % Expand (1) Adjusted net income, Adjusted net income margin and diluted earnings per share, as adjusted are non-GAAP financial measures. These figures assume Cactus, Inc. held all units in its operating subsidiary at the beginning of the period. Additional information regarding non-GAAP financial measures, including the definitions of these measures and the reconciliation of GAAP to non-GAAP financial measures are in the Supplemental Information tables. (2) Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures. See the definitions of these measures and the reconciliation of GAAP to non-GAAP financial measures in the Supplemental Information tables. (3) Operating income reflects certain expenses related to the FlexSteel acquisition, including expenses related to the remeasurement of the earn-out liability associated with the FlexSteel acquisition and intangible amortization expenses related to purchase price accounting. See the reconciliation of GAAP to non-GAAP financial measures in the Supplemental Information tables for further details. Expand Scott Bender, CEO and Chairman of the Board of Cactus, commented, 'Our second quarter performance highlights the benefits of portfolio diversification achieved through the FlexSteel acquisition, as cash flows and revenues remained resilient despite falling U.S. land activity levels. Spoolable Technologies revenues increased and margins exceeded expectations on improved manufacturing efficiency in the quarter. Pressure Control revenues declined more than expected, largely driven by lower frac equipment rental, while our product sales outperformed the quarter-over-quarter decline in the average U.S. land rig count reflecting our market share strength. Pressure Control margins were unfavorably impacted by tariffs as we exited the second quarter, particularly given the unexpected doubling of the Section 232 tariff announced and implemented in the quarter.' 'In the third quarter of 2025, we anticipate that the U.S. land rig count will continue to decline, although we believe that the majority of the reductions for 2025 are behind us provided commodity prices remain relatively stable near today's levels. We expect revenues to be down modestly in both segments, following the lower average domestic activity levels.' Mr. Bender concluded, 'The second quarter was transformational for Cactus as we announced the agreement to acquire a 65% majority interest in Baker Hughes' Surface Pressure Control business. Our integration planning work is progressing smoothly, and I am particularly pleased with the customer response to our Joint Venture announcement. Adjusting to lower North American activity levels and tariff uncertainties that have negatively impacted margins, we have recently taken action to right-size our organization to align with expectations for the second half of the year. The current softness in the North American market and the ongoing tariff uncertainty emphasized the strategic rationale for our planned acquisition of the Surface Pressure Control business of Baker Hughes, which will provide Cactus with a broader geographic footprint and further revenue diversification.' Segment Performance We report two business segments, Pressure Control and Spoolable Technologies. Corporate and other expenses not directly attributable to either segment are presented separately as Corporate and Other expenses. Pressure Control Second quarter 2025 Pressure Control revenue decreased $10.5 million, or 5.5%, sequentially, primarily due to lower rental revenues and lower sales of wellhead and production related equipment resulting from reduced activity levels in the quarter. Operating income decreased $12.0 million, or 22.1%, sequentially, with margins declining 510 basis points due to tariff impacts to product margins and increased legal expenses and reserves recognized in connection with litigation claims. Adjusted Segment EBITDA decreased $11.7 million, or 18.0%, sequentially, with Adjusted Segment EBITDA margins decreasing 450 basis points. Spoolable Technologies Second quarter 2025 Spoolable Technologies revenues increased $3.6 million, or 3.9%, sequentially, due to higher customer activity levels in the seasonally stronger second quarter. Operating income improved $4.2 million, or 17.5%, sequentially, on higher volume, while margins increased 340 basis points on higher operating leverage. Adjusted Segment EBITDA was higher by $4.4 million, or 13.2%, sequentially, with Adjusted Segment EBITDA margins improving 320 basis points. Corporate and Other Expenses Second quarter 2025 Corporate and Other expenses were flat sequentially. Second quarter Corporate and Other expenses contained $3.5 million of transaction-related expenses related to the announced plan to acquire a majority interest in Baker Hughes' Surface Pressure Control business, flat from the first quarter. Liquidity, Capital Expenditures and Other As of June 30, 2025, the Company had $405.2 million of cash and cash equivalents, no bank debt outstanding, and $222.6 million of availability on our revolving credit facility. Operating cash flow was $82.8 million for the second quarter of 2025. During the second quarter, the Company made dividend payments and associated distributions of $10.4 million. Net capital expenditures were $11.1 million during the second quarter of 2025. For the full year 2025, the Company now expects net capital expenditures to be in the range of $40 to $45 million, inclusive of capital directed towards supply chain diversification efforts and efficiency improvements in the Baytown manufacturing facility. We are continuing to evaluate our capital spending program for the year given lower market activity levels. As of June 30, 2025, Cactus had 68,574,875 shares of Class A common stock outstanding (representing 85.9% of the total voting power) and 11,259,495 shares of Class B common stock outstanding (representing 14.1% of the total voting power). Quarterly Dividend The Board of Directors has approved a quarterly cash dividend of $0.14 per share of Class A common stock with payment to occur on September 18, 2025 to holders of record of Class A common stock at the close of business on August 29, 2025. A corresponding distribution of up to $0.14 per CC Unit has also been approved for holders of CC Units of Cactus Companies, LLC. Conference Call Details The Company will host a conference call to discuss financial and operational results tomorrow, Thursday July 31, 2025 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time). The call will be webcast on Cactus' website at Please access the webcast for the call at least 10 minutes ahead of the start time to ensure a proper connection. Analysts and institutional investors may click here to pre-register for the conference call. An archived webcast of the conference call will be available on the Company's website shortly after the end of the call. About Cactus, Inc. Cactus designs, manufactures, sells or rents a range of highly engineered pressure control and spoolable pipe technologies. Its products are sold and rented principally for onshore unconventional oil and gas wells and are utilized during the drilling, completion and production phases of its customers' wells. In addition, it provides field services for its products and rental items to assist with the installation, maintenance and handling of the equipment. Cactus operates service centers throughout North America and Australia, while also providing equipment and services in select international markets. Cautionary Statement Concerning Forward-Looking Statements Certain statements contained in this press release and oral statements made regarding the matters addressed in this release constitute 'forward-looking statements' within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of Cactus' control, that could cause actual results to differ materially from the results discussed in the forward-looking statements. Forward-looking statements can be identified by the use of forward-looking terminology including 'may,' 'believe,' 'expect,' 'intend,' 'anticipate,' 'plan,' 'should,' 'estimate,' 'continue,' 'potential,' 'will,' 'hope,' 'opportunity,' or other similar words and include the Company's expectation of future performance contained herein. These statements discuss future expectations, contain projections of results of operations or of financial condition, or state other 'forward-looking' information. You are cautioned not to place undue reliance on any forward-looking statements, which can be affected by assumptions used or by risks or uncertainties. Consequently, no forward-looking statements can be guaranteed. When considering these forward-looking statements, you should keep in mind the risk factors and other factors noted in the Company's Annual Report on Form 10-K, any Quarterly Reports on Form 10-Q and the other documents that the Company files with the Securities and Exchange Commission. The risk factors and other factors noted therein could cause actual results to differ materially from those contained in any forward-looking statement. Cactus disclaims any duty to update and does not intend to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this press release. (1) Represents the elimination of inter-segment revenue for sales from our Pressure Control segment to our Spoolable Technologies segment. (2) Dilution for the three months ended June 30, 2025, June 30, 2024, and the six months ended June 30, 2025, excludes 11.3, 13.4 and 11.4 million shares of Class B common stock, respectively, as the effect would be antidilutive. Dilution for the six months ended June 30, 2024 includes an additional $24.9 million of pre-tax income attributable to non-controlling interest adjusted for a corporate effective tax rate of 26.0% and 13.7 million weighted average shares of Class B common stock plus the effect of dilutive securities. Expand Cactus, Inc. Condensed Consolidated Balance Sheets (unaudited) June 30, December 31, 2025 2024 (in thousands) Assets Current assets Cash and cash equivalents $ 405,177 $ 342,843 Accounts receivable, net 207,283 191,627 Inventories 246,420 226,796 Prepaid expenses and other current assets 14,471 13,422 Total current assets 873,351 774,688 Property and equipment, net 349,161 346,008 Operating lease right-of-use assets, net 22,117 24,094 Intangible assets, net 155,998 163,991 Goodwill 203,028 203,028 Deferred tax asset, net 207,106 219,003 Investment in unconsolidated affiliates 5,773 — Other noncurrent assets 7,995 8,516 Total assets $ 1,824,529 $ 1,739,328 Liabilities and Equity Current liabilities Accounts payable $ 83,142 $ 72,001 Accrued expenses and other current liabilities 64,128 75,416 Current portion of liability related to tax receivable agreement 20,297 20,297 Finance lease obligations, current portion 7,354 7,024 Operating lease liabilities, current portion 5,042 4,086 Total current liabilities 179,963 178,824 Deferred tax liability, net 2,197 2,868 Liability related to tax receivable agreement, net of current portion 259,732 258,376 Finance lease obligations, net of current portion 11,681 10,528 Operating lease liabilities, net of current portion 17,944 20,078 Other noncurrent liabilities 4,475 4,475 Total liabilities 475,992 475,149 Equity 1,348,537 1,264,179 Total liabilities and equity $ 1,824,529 $ 1,739,328 Expand Cactus, Inc. Condensed Consolidated Statements of Cash Flows (unaudited) Six Months Ended June 30, 2025 2024 (in thousands) Cash flows from operating activities Net income $ 103,152 $ 112,874 Reconciliation of net income to net cash provided by operating activities Depreciation and amortization 31,564 30,047 Deferred financing cost amortization 559 560 Stock-based compensation 12,371 10,373 Provision for expected credit losses 300 589 Inventory obsolescence 902 3,035 Gain on disposal of assets (389 ) (1,674 ) Deferred income taxes 12,775 7,915 Change in fair value of earn-out liability — 16,180 Changes in operating assets and liabilities: Accounts receivable (15,715 ) (358 ) Inventories (20,253 ) (4,340 ) Prepaid expenses and other assets (1,009 ) 429 Accounts payable 11,175 (8,577 ) Accrued expenses and other liabilities (11,052 ) 12,442 Payments pursuant to tax receivable agreement — (15,277 ) Net cash provided by operating activities 124,380 164,218 Cash flows from investing activities Investment in unconsolidated affiliate (6,000 ) — Capital expenditures and other (22,168 ) (17,371 ) Proceeds from sales of assets 1,661 3,317 Net cash used in investing activities (26,507 ) (14,054 ) Cash flows from financing activities Payments on finance leases (3,940 ) (3,954 ) Dividends paid to Class A common stock shareholders (18,153 ) (16,135 ) Distributions to members (8,743 ) (8,617 ) Repurchases of shares (5,710 ) (8,489 ) Net cash used in financing activities (36,546 ) (37,195 ) Effect of exchange rate changes on cash and cash equivalents 1,007 (258 ) Net increase in cash and cash equivalents 62,334 112,711 Cash and cash equivalents Beginning of period 342,843 133,792 End of period $ 405,177 $ 246,503 Expand Cactus, Inc. – Supplemental Information Reconciliation of GAAP to non-GAAP Financial Measures Adjusted net income, diluted earnings per share, as adjusted and adjusted net income margin (unaudited) Adjusted net income, diluted earnings per share, as adjusted and adjusted net income margin are not measures of net income as determined by GAAP but they are supplemental non-GAAP financial measures that are used by management and external users of the Company's consolidated financial statements. Cactus defines adjusted net income as net income assuming Cactus, Inc. held all units in its operating subsidiary at the beginning of the period, with the resulting additional income tax expense related to the incremental income attributable to Cactus, Inc. Adjusted net income also includes certain other adjustments described below. Cactus defines diluted earnings per share, as adjusted as Adjusted net income divided by weighted average shares outstanding, as adjusted. Cactus defines Adjusted net income margin as Adjusted net income divided by total revenue. The Company believes this supplemental information is useful for evaluating performance period over period. (1) Represents non-routine charges related to severance benefits. (2) Reflects transaction fees and expenses recorded in connection with the announced acquisition of a majority interest in Baker Hughes' Surface Pressure Control business. (3) Reflects amortization expense associated with the step-up in intangible value due to purchase price accounting. (4) Represents adjustments for the remeasurement of the earn-out liability associated with the FlexSteel acquisition. (5) Represents the increase or decrease in tax expense as though Cactus, Inc. owned 100% of its operating subsidiary at the beginning of the period, calculated as the difference in tax expense recorded during each period and what would have been recorded, adjusted for pre-tax items listed above, based on a corporate effective tax rate of 25% on income before income taxes for the three months ended June 30, 2025 and March 31, 2025, and 26.0% for the three months ended June 30, 2024. (6) Reflects 68.5, 68.2, and 66.1 million weighted average shares of basic Class A common stock outstanding and 11.3, 11.4 and 13.4 million additional shares for the three months ended June 30, 2025, March 31, 2025, and June 30, 2024, respectively, as if the weighted average shares of Class B common stock were exchanged and cancelled for Class A common stock at the beginning of the period, plus the effect of dilutive securities. Expand Cactus, Inc. – Supplemental Information Reconciliation of GAAP to non-GAAP Financial Measures EBITDA, Adjusted EBITDA and Adjusted EBITDA margin (unaudited) EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are not measures of net income as determined by GAAP but are supplemental non-GAAP financial measures that are used by management and external users of the Company's consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. Cactus defines EBITDA as net income excluding net interest, income tax and depreciation and amortization. Cactus defines Adjusted EBITDA as EBITDA excluding the other items outlined below. Cactus management believes EBITDA and Adjusted EBITDA are useful because they allow management to more effectively evaluate the Company's operating performance and compare the results of its operations from period to period without regard to financing methods or capital structure, or other items that impact comparability of financial results from period to period. EBITDA and Adjusted EBITDA should not be considered as alternatives to, or more meaningful than, net income or any other measure as determined in accordance with GAAP. The Company's computations of EBITDA and Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. Cactus defines Adjusted EBITDA margin as Adjusted EBITDA divided by total revenue. Cactus presents this supplemental information because it believes it provides useful information regarding the factors and trends affecting the Company's business. Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, 2025 2025 2024 2025 2024 (in thousands) Net income $ 49,047 $ 54,105 $ 63,059 $ 103,152 $ 112,874 Interest income, net (2,518 ) (2,325 ) (1,405 ) (4,843 ) (2,094 ) Income tax expense 14,276 16,832 18,165 31,108 31,589 Depreciation and amortization 15,886 15,678 15,001 31,564 30,047 EBITDA 76,691 84,290 94,820 160,981 172,416 Severance expenses (1) 177 — — 177 — Transaction related expenses (2) 3,502 3,487 — 6,989 — Remeasurement loss on earn-out liability (3) — — 2,876 — 16,180 Stock-based compensation 6,307 6,064 5,941 12,371 10,373 Adjusted EBITDA $ 86,677 $ 93,841 $ 103,637 $ 180,518 $ 198,969 Revenue $ 273,575 $ 280,319 $ 290,389 $ 553,894 $ 564,512 Net income margin 17.9 % 19.3 % 21.7 % 18.6 % 20.0 % Adjusted EBITDA margin 31.7 % 33.5 % 35.7 % 32.6 % 35.2 % Expand (1) Represents non-routine charges related to severance benefits. (2) Reflects transaction fees and expenses recorded in connection with the announced acquisition of a majority interest in Baker Hughes' Surface Pressure Control business. (3) Represents adjustments for the remeasurement of the earn-out liability associated with the FlexSteel acquisition. Expand Cactus, Inc. – Supplemental Information Reconciliation of GAAP to non-GAAP Financial Measures Adjusted Segment EBITDA and Adjusted Segment EBITDA margin (unaudited) Adjusted Segment EBITDA and Adjusted Segment EBITDA margin are not measures of net income as determined by GAAP but are supplemental non-GAAP financial measures that are used by management and external users of the Company's consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. Cactus defines Adjusted Segment EBITDA as segment operating income excluding depreciation and amortization and the other items outlined below, in each case, that are attributable to the segment. Cactus management believes Adjusted Segment EBITDA is useful because it allows management to more effectively evaluate the Company's segment operating performance and compare the results of its segment operations from period to period without regard to financing methods or capital structure, or other items that impact comparability of financial results from period to period. Adjusted Segment EBITDA should not be considered as an alternative to, or more meaningful than, net income or any other measure as determined in accordance with GAAP. The Company's computations of Adjusted Segment EBITDA may not be comparable to other similarly titled measures of other companies. Cactus defines Adjusted Segment EBITDA margin as Adjusted Segment EBITDA divided by total segment revenue. Cactus presents this supplemental information because it believes it provides useful information regarding the factors and trends affecting the Company's business.
Business Wire
2 hours ago
- Business Wire
Allstate Reports Second Quarter 2025 Results
NORTHBROOK, Ill.--(BUSINESS WIRE)--The Allstate Corporation (NYSE: ALL) today reported financial results for the second quarter of 2025. 'Allstate had strong operating and financial performance in the second quarter while executing our growth strategies,' said Tom Wilson, who leads The Allstate Corporation. 'Revenues increased to $16.6 billion and net income was $2.1 billion for the quarter. Adjusted net income* was $1.6 billion, $5.94 per diluted share, which excludes a $643 million gain from the Employer Voluntary Benefits business divestiture.' 'In addition to strong financial results, we are creating shareholder value by increasing growth and proactively managing investments and capital. Total policies in force increased to 208 million, 4% higher than last year, led by Protection Plans. Personal property-liability policies have begun to grow due to expanded distribution, new products and increased marketing. Protection Plans continued to expand with international revenues up 30% above the prior year. The $77.4 billion investment portfolio generated $754 million of income in the quarter while lowering overall portfolio risk. Redeployment of capital out of the health businesses was completed on July 1 with the sale of Group Health, bringing total divestiture proceeds to $3.25 billion for this segment,' concluded Wilson. Second Quarter 2025 Results Total revenues of $16.6 billion in the second quarter of 2025 were $919 million or 5.8% higher than the prior year quarter. Net income applicable to common shareholders was $2.1 billion in the second quarter of 2025 compared to $301 million in the prior year quarter, reflecting strong operating results and a $643 million gain, after-tax, from the sale of the Employer Voluntary Benefits business. Adjusted net income* was $1.6 billion, or $5.94 per diluted share, compared to $429 million in the prior year quarter. Adjusted net income return on common shareholders equity* was 28.6%. * Measures used in this release that are not based on accounting principles generally accepted in the United States of America ('non-GAAP') are denoted with an asterisk and defined and reconciled to the most directly comparable GAAP measure in the 'Definitions of Non-GAAP Measures' section of this document. NM = not meaningful Expand Property-Liability earned premiums of $14.3 billion increased 7.5% in the second quarter of 2025 compared to the prior year quarter, primarily driven by higher average premiums and modest policy in force growth. Underwriting income was $1.3 billion compared to a loss of $145 million in the prior year quarter. Premiums written increased 5.4% compared to the prior year quarter driven mainly by higher average premiums. Policies in force increased by 0.6% as a 31.3% decline in commercial policies partially offset growth in personal property-liability. Property-Liability combined ratio was 91.1 for the quarter which was an improvement of 10.0 points versus the prior year quarter due to improved underlying margins and favorable prior year non-catastrophe reserve reestimates. Allstate Protection auto insurance generated strong margins while accelerating new business growth, which increased policies in force compared to the prior year quarter. Written and earned premiums grew 2.7% and 4.9% compared to the prior year quarter, respectively, primarily due to higher average premiums. Auto insurance rate increases result in an annualized premium impact of 0.4% in the second quarter, reflecting continued moderation in loss cost trends. Auto insurance policies in force have begun to grow due to expanded distribution, increased marketing, new products and sophisticated rating plans. Policies grew by 0.5% as a 24.8% increase in new business was negatively impacted by reductions in New York and New Jersey and lower customer retention. Policy growth was 1.9% over the prior year, excluding New York and New Jersey, which have pending regulatory requests which would open these markets. The recorded auto insurance combined ratio of 86.0 in the second quarter of 2025 was a 9.9 point improvement from the prior year quarter, reflecting higher average earned premiums, moderating loss costs and favorable prior year non-catastrophe reserve releases. Prior year non-catastrophe reserve reestimates were favorable $415 million in the second quarter, a 4.3 point combined ratio impact, reflecting improvement in loss trends. The underlying auto insurance combined ratio* of 87.8 in the second quarter of 2025 was a 5.7 point improvement from the prior year quarter, as higher average earned premiums continued to outpace loss and expense trends. Allstate Protection homeowners insurance generated an underwriting loss of $76 million compared to a loss of $375 million in the prior year. Underlying margins improved and policies in force increased. Written premiums and earned premiums increased by 14.3% and 15.9% compared to the prior year quarter, respectively, due to higher average premium and policies in force growth of 2.3%. A 13.7% increase in Allstate brand homeowners insurance average gross written premium compared to the prior year quarter reflects continued rate increases and higher insured home replacement costs. Catastrophe losses of $1.6 billion in the quarter were in line with the prior year quarter. The recorded homeowners insurance combined ratio of 102.0 was 9.5 points below the second quarter of 2024, due to higher average premiums and favorable underlying trends. The underlying combined ratio* of 58.6 improved by 4.9 points compared to the prior year quarter primarily driven by higher average premiums and favorable non-catastrophe claim frequency. ------------------------------------------------------------------------------------------------------------------------------------------------------- Protection Services continues to broaden protection to customers through five businesses that include embedded Allstate branded offerings in non-insurance purchases. Revenues increased to $867 million in the second quarter of 2025, 12.2% higher than the prior year quarter, primarily due to Allstate Protection Plans. Adjusted net income of $60 million increased by $5 million compared to the prior year quarter. Protection Services Results Three months ended June 30, Six months ended June 30, ($ in millions) 2025 2024 % / $ Change 2025 2024 % / $ Change Total revenues (1) $ 867 $ 773 12.2 % $ 1,727 $ 1,526 13.2 % Allstate Protection Plans 563 483 16.6 1,103 947 16.5 Allstate Dealer Services 148 148 — 294 294 — Allstate Roadside 56 51 9.8 111 117 (5.1 ) Arity 59 52 13.5 138 91 51.6 Allstate Identity Protection 41 39 5.1 81 77 5.2 Adjusted net income $ 60 $ 55 $ 5 $ 115 $ 109 $ 6 Allstate Protection Plans 51 41 10 96 81 15 Allstate Dealer Services 4 6 (2 ) 8 12 (4 ) Allstate Roadside 11 8 3 22 19 3 Arity (8 ) (2 ) (6 ) (14 ) (6 ) (8 ) Allstate Identity Protection 2 2 — 3 3 — (1) Excludes net gains and losses on investments and derivatives. Expand Allstate Protection Plans continued to expand distribution relationships and product offerings. Revenue of $563 million increased $80 million, or 16.6%, compared to the prior year quarter reflecting strong international growth. Adjusted net income of $51 million in the second quarter of 2025 was $10 million higher than the prior year quarter. Allstate Dealer Services generated revenue of $148 million and adjusted net income of $4 million, a slight decline compared to $6 million in the prior year quarter due to higher loss costs. Allstate Roadside revenue of $56 million in the second quarter of 2025 increased 9.8% compared to the prior year quarter reflecting increased bundling with Allstate branded Affordable, Simple, Connected auto insurance products and higher third-party sales. Adjusted net income of $11 million in the second quarter was $3 million higher than the prior year quarter. Arity revenue of $59 million increased $7 million compared to the prior year quarter, due to higher lead generation revenue. Adjusted net loss of $8 million in the second quarter of 2025 compared to a $2 million loss in the prior year reflecting increased operating expenses. Allstate Identity Protection revenue of $41 million in the second quarter of 2025 increased 5.1% compared to the prior year quarter reflecting growth in the employee benefits channel. Adjusted net income of $2 million in the second quarter of 2025 was unchanged compared to the prior year quarter. ----------------------------------------------------------------------------------------------------------------------------------------------------- Allstate Health and Benefits The sale of the Employer Voluntary Benefits business closed on April 1, 2025, generating a financial book gain of $643 million, after-tax, in the second quarter of 2025. The sale of the Group Health business closed on July 1, 2025, generating a financial book gain of approximately $500 million that will be recorded in the third quarter of 2025. Operating results were reported in the Health and Benefits segment, and the assets and liabilities of the business are classified as held for sale for the second quarter. Premiums and contract charges for health and benefits decreased 50.4%, or $239 million, compared to the prior year quarter primarily due to the sale of the Employer Voluntary Benefits business. Adjusted net income of $4 million in the second quarter was $54 million lower than prior year quarter attributable to the sale of the Employer Voluntary Benefits business and increased benefit utilization in the Group Health and Individual Health businesses. Allstate Health and Benefits Results Three months ended June 30, Six months ended June 30, ($ in millions) 2025 2024 % Change 2025 2024 % Change Premiums and contract charges $ 235 $ 474 (50.4 )% $ 722 $ 952 (24.2 )% Employer voluntary benefits — 246 NM 243 494 (50.8 ) Group health 123 120 2.5 247 238 3.8 Individual health 112 108 3.7 232 220 5.5 Adjusted net income $ 4 $ 58 (93.1 ) $ 34 $ 114 (70.2 )% Employer voluntary benefits — 28 NM 22 45 (51.1 ) Group health 9 28 (67.9 ) 21 56 (62.5 ) Individual health (5 ) 2 NM (9 ) 13 NM Expand ----------------------------------------------------------------------------------------------------------------------------------------------------- Allstate Investments uses a proactive approach to balance risk and return for the $77.4 billion portfolio. Net investment income of $754 million in the second quarter of 2025, increased by $42 million from the prior year quarter primarily due to market-based portfolio growth, partially offset by lower performance-based income. (1) Investment expenses are not allocated between market-based and performance-based portfolios with the exception of investee level expenses. (2) Includes investments held for sale. Expand Market-based investment income was $733 million in the second quarter of 2025, an increase of $66 million, or 9.9%, compared to the prior year quarter, reflecting increased asset balances and slightly higher fixed income yields in the $67.1 billion market-based portfolio. Performance-based investment income totaled $79 million in the second quarter of 2025, a decrease of $28 million compared to the prior year quarter reflecting lower private equity valuation increases. The overall portfolio allocation to performance-based assets provides a diversifying source of higher long-term returns; volatility in reported results is expected. Net losses on investments and derivatives were $144 million in the second quarter of 2025, compared to losses of $103 million in the prior year quarter. Second quarter 2025 losses were driven by sales of fixed income securities partially offset by valuation increases on equity instruments. Unrealized net capital gains improved by $492 million to the prior quarter as lower interest rates resulted in higher fixed income valuations and prior unrealized loss balances were converted to realized through fixed income sales. Total return on the investment portfolio was 1.4% for the second quarter of 2025 and 5.4% for the latest twelve months. Macroeconomic impacts are regularly monitored through our integrated Enterprise Risk and Return Management framework. In the second quarter of 2025, investment risks were lowered by reducing public equity and high yield bond allocations and shortening the fixed income portfolio duration. Proactive Capital Management 'Allstate's results support our growth strategy creating shareholder value,' said Jess Merten, Chief Financial Officer. 'Adjusted net income return on equity* was 28.6% for the latest 12 months. Divestiture of the Employer Voluntary Benefits and Group Health businesses positions those businesses for success and reallocates capital to Allstate's strategic growth opportunities. Shareholders also benefited from a 9% increase in the quarterly dividend to $1.00 per common share, and we repurchased $341 million of common stock.' Visit for additional information about Allstate's results, including a webcast of its quarterly conference call and the call presentation. The conference call will be at 9 a.m. ET on Thursday, July 31. Financial information, including material announcements about The Allstate Corporation, is routinely posted on Forward-Looking Statements This news release contains 'forward-looking statements' that anticipate results based on our estimates, assumptions and plans that are subject to uncertainty. These statements are made subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements do not relate strictly to historical or current facts and may be identified by their use of words like 'plans,' 'seeks,' 'expects,' 'will,' 'should,' 'anticipates,' 'estimates,' 'intends,' 'believes,' 'likely,' 'targets' and other words with similar meanings. We believe these statements are based on reasonable estimates, assumptions and plans. However, if the estimates, assumptions or plans underlying the forward-looking statements prove inaccurate or if other risks or uncertainties arise, actual results could differ materially from those communicated in these forward-looking statements. Factors that could cause actual results to differ materially from those expressed in, or implied by, the forward-looking statements may be found in our filings with the U.S. Securities and Exchange Commission, including the 'Risk Factors' section in our most recent annual report on Form 10-K. Forward-looking statements are as of the date on which they are made, and we assume no obligation to update or revise any forward-looking statement. About Allstate The Allstate Corporation (NYSE: ALL) protects people from life's uncertainties with a wide array of protection for autos, homes, electronic devices, and identities. Products are available through a broad distribution network including Allstate agents, independent agents, major retailers, online, and at the workplace. Allstate is widely known for the slogan 'You're in Good Hands with Allstate.' For more information, visit THE ALLSTATE CORPORATION AND SUBSIDIARIES ($ in millions, except per share data) Three months ended June 30, Six months ended June 30, Revenues Property and casualty insurance premiums $ 15,041 $ 13,952 $ 29,739 $ 27,464 Accident and health insurance premiums and contract charges 235 474 722 952 Other revenue 747 679 1,509 1,348 Net investment income 754 712 1,608 1,476 Net gains (losses) on investments and derivatives (144 ) (103 ) (493 ) (267 ) Total revenues 16,633 15,714 33,085 30,973 Costs and expenses Property and casualty insurance claims and claims expense 10,249 10,801 21,064 20,302 Accident, health and other policy benefits 188 291 521 587 Amortization of deferred policy acquisition costs 2,076 2,001 4,163 3,940 Operating costs and expenses 2,135 2,019 4,380 3,904 Pension and other postretirement remeasurement (gains) losses — (9 ) 78 (11 ) Restructuring and related charges 15 13 31 23 Amortization of purchased intangibles 57 70 116 139 Interest expense 100 98 200 195 Total costs and expenses 14,820 15,284 30,553 29,079 Gain on disposition of operations 890 — 890 — 2,703 430 3,422 1,894 Income tax expense 604 83 727 349 Net income 2,099 347 2,695 1,545 Less: Net (loss) income attributable to noncontrolling interest (10 ) 16 (9 ) (4 ) Net income attributable to Allstate 2,109 331 2,704 1,549 Less: Preferred stock dividends 30 30 59 59 Net income applicable to common shareholders $ 2,079 $ 301 $ 2,645 $ 1,490 Earnings per common share: Net income applicable to common shareholders per common share - Basic $ 7.86 $ 1.14 $ 9.98 $ 5.65 Weighted average common shares - Basic 264.6 264.1 264.9 263.8 Net income applicable to common shareholders per common share - Diluted $ 7.76 $ 1.13 $ 9.85 $ 5.58 Weighted average common shares - Diluted 267.9 267.1 268.4 266.8 Expand Definitions of Non-GAAP Measures We believe that investors' understanding of Allstate's performance is enhanced by our disclosure of the following non-GAAP measures. Our methods for calculating these measures may differ from those used by other companies and therefore comparability may be limited. Adjusted net income (loss) is net income (loss) applicable to common shareholders, excluding: Net gains and losses on investments and derivatives Pension and other postretirement remeasurement gains and losses Amortization or impairment of purchased intangibles Gain or loss on disposition Adjustments for other significant non-recurring, infrequent or unusual items, when (a) the nature of the charge or gain is such that it is reasonably unlikely to recur within two years, or (b) there has been no similar charge or gain within the prior two years Related income tax expense or benefit of these items Net income (loss) applicable to common shareholders is the GAAP measure that is most directly comparable to adjusted net income. We use adjusted net income as an important measure to evaluate our results of operations. We believe that the measure provides investors with a valuable measure of the Company's ongoing performance because it reveals trends in our insurance and financial services business that may be obscured by the net effect of net gains and losses on investments and derivatives, pension and other postretirement remeasurement gains and losses, amortization or impairment of purchased intangibles, gain or loss on disposition and adjustments for other significant non-recurring, infrequent or unusual items and the related tax expense or benefit of these items. Net gains and losses on investments and derivatives, and pension and other postretirement remeasurement gains and losses may vary significantly between periods and are generally driven by business decisions and external economic developments such as capital market conditions, the timing of which is unrelated to the insurance underwriting process. Gain or loss on disposition is excluded because it is non-recurring in nature and the amortization or impairment of purchased intangibles is excluded because it relates to the acquisition purchase price and is not indicative of our underlying business results or trends. Non-recurring items are excluded because, by their nature, they are not indicative of our business or economic trends. Accordingly, adjusted net income excludes the effect of items that tend to be highly variable from period to period and highlights the results from ongoing operations and the underlying profitability of our business. A byproduct of excluding these items to determine adjusted net income is the transparency and understanding of their significance to net income variability and profitability while recognizing these or similar items may recur in subsequent periods. Adjusted net income is used by management along with the other components of net income (loss) applicable to common shareholders to assess our performance. We use adjusted measures of adjusted net income in incentive compensation. Therefore, we believe it is useful for investors to evaluate net income (loss) applicable to common shareholders, adjusted net income and their components separately and in the aggregate when reviewing and evaluating our performance. We note that investors, financial analysts, financial and business media organizations and rating agencies utilize adjusted net income results in their evaluation of our and our industry's financial performance and in their investment decisions, recommendations and communications as it represents a reliable, representative and consistent measurement of the industry and the Company and management's performance. We note that the price to earnings multiple commonly used by insurance investors as a forward-looking valuation technique uses adjusted net income as the denominator. Adjusted net income should not be considered a substitute for net income (loss) applicable to common shareholders and does not reflect the overall profitability of our business. The following tables reconcile net income (loss) applicable to common shareholders and adjusted net income (loss). Taxes on adjustments to reconcile net income (loss) applicable to common shareholders and adjusted net income (loss) generally use a 21% effective tax rate. Adjusted net income (loss) return on Allstate common shareholders' equity is a ratio that uses a non-GAAP measure. It is calculated by dividing the rolling 12-month adjusted net income by the average of Allstate common shareholders' equity at the beginning and at the end of the 12-months, after excluding the effect of unrealized net capital gains and losses. Return on Allstate common shareholders' equity is the most directly comparable GAAP measure. We use adjusted net income as the numerator for the same reasons we use adjusted net income, as discussed previously. We use average Allstate common shareholders' equity excluding the effect of unrealized net capital gains and losses for the denominator as a representation of common shareholders' equity primarily applicable to Allstate's earned and realized business operations because it eliminates the effect of items that are unrealized and vary significantly between periods due to external economic developments such as capital market conditions like changes in interest rates, the amount and timing of which are unrelated to the insurance underwriting process. We use it to supplement our evaluation of net income (loss) applicable to common shareholders and return on Allstate common shareholders' equity because it excludes the effect of items that tend to be highly variable from period to period. We believe that this measure is useful to investors and that it provides a valuable tool for investors when considered along with return on Allstate common shareholders' equity because it eliminates the after-tax effects of realized and unrealized net capital gains and losses that can fluctuate significantly from period to period and that are driven by economic developments, the magnitude and timing of which are generally not influenced by management. In addition, it eliminates non-recurring items that are not indicative of our ongoing business or economic trends. A byproduct of excluding the items noted above to determine adjusted net income return on Allstate common shareholders' equity from return on Allstate common shareholders' equity is the transparency and understanding of their significance to return on common shareholders' equity variability and profitability while recognizing these or similar items may recur in subsequent periods. We use adjusted measures of adjusted net income return on Allstate common shareholders' equity in incentive compensation. Therefore, we believe it is useful for investors to have adjusted net income return on Allstate common shareholders' equity and return on Allstate common shareholders' equity when evaluating our performance. We note that investors, financial analysts, financial and business media organizations and rating agencies utilize adjusted net income return on common shareholders' equity results in their evaluation of our and our industry's financial performance and in their investment decisions, recommendations and communications as it represents a reliable, representative and consistent measurement of the industry and the company and management's utilization of capital. We also provide it to facilitate a comparison to our long-term adjusted net income return on Allstate common shareholders' equity goal. Adjusted net income return on Allstate common shareholders' equity should not be considered a substitute for return on Allstate common shareholders' equity and does not reflect the overall profitability of our business. The following tables reconcile return on Allstate common shareholders' equity and adjusted net income (loss) return on Allstate common shareholders' equity. ($ in millions) For the twelve months ended June 30, 2025 2024 Adjusted net income return on Allstate common shareholders' equity Numerator: Adjusted net income * $ 5,650 $ 3,551 Denominator: Beginning Allstate common shareholders' equity $ 16,592 $ 13,516 Less: Unrealized net capital gains and losses (938 ) (1,845 ) Adjusted beginning Allstate common shareholders' equity 17,530 15,361 Ending Allstate common shareholders' equity (1) 22,018 16,592 Less: Unrealized net capital gains and losses 36 (938 ) Adjusted ending Allstate common shareholders' equity 21,982 17,530 Average adjusted Allstate common shareholders' equity $ 19,756 $ 16,446 Adjusted net income return on Allstate common shareholders' equity * 28.6 % 21.6 % _____________ (1) Excludes equity related to preferred stock of $2,001 million for both periods shown. Expand Combined ratio excluding the effect of catastrophes, prior year reserve reestimates and amortization or impairment of purchased intangibles ('underlying combined ratio') is a non-GAAP ratio, which is computed as the difference between four GAAP operating ratios: the combined ratio, the effect of catastrophes on the combined ratio, the effect of prior year non-catastrophe reserve reestimates on the combined ratio, and the effect of amortization or impairment of purchased intangibles on the combined ratio. We believe that this ratio is useful to investors, and it is used by management to reveal the trends in our Property-Liability business that may be obscured by catastrophe losses, prior year reserve reestimates and amortization or impairment of purchased intangibles. Catastrophe losses cause our loss trends to vary significantly between periods as a result of their incidence of occurrence and magnitude, and can have a significant impact on the combined ratio. Prior year reserve reestimates are caused by unexpected loss development on historical reserves, which could increase or decrease current year net income. Amortization or impairment of purchased intangibles relates to the acquisition purchase price and is not indicative of our underlying insurance business results or trends. We believe it is useful for investors to evaluate these components separately and in the aggregate when reviewing our underwriting performance. The most directly comparable GAAP measure is the combined ratio. The underlying combined ratio should not be considered a substitute for the combined ratio and does not reflect the overall underwriting profitability of our business. The following tables reconcile the respective combined ratio to the underlying combined ratio. Underwriting margin is calculated as 100% minus the combined ratio. Allstate Protection - Auto Insurance Three months ended June 30, Six months ended June 30, 2025 2024 2025 2024 Combined ratio 86.0 95.9 88.6 96.0 Effect of catastrophe losses (2.2 ) (3.9 ) (2.2 ) (2.6 ) Effect of prior year non-catastrophe reserve reestimates 4.3 1.9 3.4 1.3 Effect of amortization of purchased intangibles (0.3 ) (0.4 ) (0.3 ) (0.4 ) Underlying combined ratio* 87.8 93.5 89.5 94.3 Effect of prior year catastrophe reserve reestimates (0.2 ) (0.1 ) (0.2 ) (0.1 ) Expand Allstate Protection - Homeowners Insurance Three months ended June 30, Six months ended June 30, 2025 2024 2025 2024 Combined ratio 102.0 111.5 107.1 97.1 Effect of catastrophe losses (42.8 ) (49.6 ) (46.3 ) (33.9 ) Effect of prior year non-catastrophe reserve reestimates (0.3 ) 1.9 — 1.6 Effect of amortization of purchased intangibles (0.3 ) (0.3 ) (0.3 ) (0.3 ) Underlying combined ratio* 58.6 63.5 60.5 64.5 Effect of prior year catastrophe reserve reestimates 0.5 (3.9 ) 0.3 (4.3 ) Expand
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Confluent Announces Second Quarter 2025 Financial Results
MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)-- Confluent, Inc. (NASDAQ: CFLT), the data streaming pioneer, today announced financial results for its second quarter of 2025, ended June 30, 2025. 'Confluent delivered a solid quarter, led by 28% year-over-year growth in Confluent Cloud revenue,' said Jay Kreps, co-founder and CEO, Confluent. 'Our DSP monetization continues to gain traction, with Flink ARR growing approximately 3x over the past two quarters. This reinforces our complete data streaming platform strategy and our strong positioning for a future shaped by agentic, real-time AI.' 'Our second quarter was highlighted by solid top-line growth and continued margin expansion,' said Rohan Sivaram, CFO, Confluent. 'Our results underscore the strength and flexibility of our data streaming platform, helping customers unlock the full value of real-time data across cloud, on-premises, and BYOC environments.' A reconciliation of forward-looking non-GAAP operating margin, adjusted free cash flow margin and non-GAAP net income per diluted share to the most directly comparable GAAP measures is not available without unreasonable effort, as certain items cannot be reasonably predicted because of their high variability, complexity and low visibility. In particular, the measures and effects of our stock-based compensation-related charges, which include stock-based compensation expenses, employer payroll taxes on employee stock transactions, and amortization of stock-based compensation capitalized in internal-use software, are directly impacted by the timing of employee stock transactions and unpredictable fluctuations in our stock price, which we expect to have a significant impact on our future GAAP financial results. Conference Call Information Confluent will host a video webcast to discuss the company's second quarter 2025 results as well as its financial outlook today at 4:30 p.m. Eastern Time/1:30 p.m. Pacific Time. Open to the public, investors may access the webcast, earnings press release, supplemental financial information, and investor presentation on Confluent's investor relations website at before the commencement of the webcast. A replay of the webcast will also be accessible from Confluent's investor relations website a few hours after the conclusion of the live event. Confluent uses its investor relations website and may use its X (Twitter), LinkedIn, and Facebook accounts as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Forward-Looking Statements This press release and the earnings call referencing this press release contain forward-looking statements including, among other things, statements regarding (i) our financial outlook, including expected subscription revenue, Confluent Cloud revenue, non-GAAP operating margin, free cash flow margin, adjusted free cash flow margin, non-GAAP net income per share, revenue mix, including Confluent Cloud subscription revenue mix, revenue run rates, Confluent Cloud and data streaming platform growth, adoption and traction, operating margins and margin improvements, targeted or anticipated gross and operating margin levels, earnings per share levels and improvements, in-product optimizations of Confluent Cloud, continued business momentum, and expected revenue, (ii) our market and category leadership position, (iii) our expectations and trends relating to growth of our Data Streaming Platform products, (iv) rates of Confluent Cloud consumption, Confluent Platform growth, and demand for and retention of data streaming platforms like Confluent, (v) customer growth, retention and engagement, and expansion of customers into new use cases, (vi) increased adoption of our offerings and fully managed solutions for data streaming in general, including from customers building generative AI applications, (vii) our expectations regarding the impact of operational improvements, including our sales and go-to-market strategies, (viii) growth in and growth rate of revenue, customers, dollar-based net retention rate, and gross retention rate, (ix) our ability to increase engagement of customers for Confluent and expand customer cohorts, (x) our market opportunity and our ability to capture our market opportunity, (xi) our go-to-market strategy, (xii) our product differentiation and market acceptance of our products, (xiii) our strategy and expected results and market acceptance for our Flink offering, Tableflow, Freight Clusters, and our other Data Streaming Platform offerings, (xiv) our expectations of meeting near-term and mid-term financial targets, (xv) our expectations regarding the generative AI landscape and our offerings, (xvi) our ability to drive long-term growth, (xvii) our expectations regarding the impact of our offerings, including WarpStream and Freight Clusters, (xviii) our expectations regarding our growth strategies and our partner ecosystem, including our Confluent OEM Program, and (xix) our overall future prospects. The words 'believe,' 'may,' 'will,' 'estimate,' 'continue,' 'anticipate,' 'intend,' 'expect,' 'seek,' 'plan,' 'project,' 'target,' 'looking ahead,' 'look to,' 'move into,' and similar expressions are intended to identify forward-looking statements. Forward-looking statements represent our current beliefs, estimates and assumptions only as of the date of this press release and information contained in this press release should not be relied upon as representing our estimates as of any subsequent date. These forward-looking statements are subject to risks, uncertainties, and assumptions. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. Risks include, but are not limited to: (i) our limited operating history, including in uncertain macroeconomic environments, (ii) our ability to sustain and manage our rapid growth, (iii) our ability to increase consumption of our offerings, including by existing customers and through the acquisition of new customers, including by addressing customer consumption preferences, successfully adding new features and functionality to our offerings, and partnering with our customers to help them realize increased value in Confluent in an efficient and sustainable manner, (iv) our ability to successfully execute our go-to-market strategy and initiatives, (v) our ability to attract new customers and successfully ramp their consumption of our offerings, as well as retain and sell additional features and services to our existing customers, (vi) uncertain macroeconomic conditions, including high inflation, high interest rates, bank failures, global tariffs, taxes on multinational companies, geopolitical events, recessionary risks, and exchange rate fluctuations, (vii) the estimated addressable market opportunity for our Data Streaming Platform, and our ability to capture our share of that market opportunity, (viii) shifts in certain customers' data streaming strategies, (ix) our ability to compete effectively in an increasingly competitive market, (x) our ability to attract, ramp, and retain highly qualified personnel, and the impacts of attrition and related challenges, (xi) breaches in our security measures, intentional or accidental cybersecurity incidents or unauthorized access to our platform, our data, or our customers' or other users' personal data, (xii) our reliance on third-party cloud-based infrastructure to host Confluent Cloud, (xiii) public sector budgetary cycles and funding reductions or delays, or shifts in procurement strategies, (xiv) changes in legislation related to the taxation of business entities, and (xv) our ability to accurately forecast our future performance, business and growth. These risks are not exhaustive. Further information on these and other risks that could affect Confluent's results is included in our filings with the Securities and Exchange Commission ('SEC'), including our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, and our future reports that we may file from time to time with the SEC. Additional information will be made available in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 that will be filed with the SEC, which should be read in conjunction with this press release and the financial results included herein. Confluent assumes no obligation to, and does not currently intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Non-GAAP Financial Measures This press release includes the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (research and development, sales and marketing, and general and administrative), non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income, non-GAAP net income per share, free cash flow, free cash flow margin, adjusted free cash flow, and adjusted free cash flow margin. We use these non-GAAP financial measures and other key metrics internally to facilitate analysis of our financial and business trends and for internal planning and forecasting purposes. We believe these non-GAAP financial measures, when taken collectively, may be helpful to investors because they provide consistency and comparability with past financial performance by excluding certain items that may not be indicative of our business, results of operations, or outlook. However, non-GAAP financial measures have limitations as an analytical tool and are presented for supplemental informational purposes only. They should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. In particular, other companies, including companies in our industry, may report non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (research and development, sales and marketing, general and administrative), non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income, non-GAAP net income per share, free cash flow, free cash flow margin, adjusted free cash flow, adjusted free cash flow margin, or similarly titled measures but calculate them differently, which reduces their usefulness as comparative measures. Further, free cash flow and adjusted free cash flow are not substitutes for cash used in operating activities. The utility of free cash flow and adjusted free cash flow are limited as such measures do not reflect our future contractual commitments and do not represent the total increase or decrease in our cash balance for any given period. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures, as presented below. We define non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (research and development, sales and marketing, and general and administrative), non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income, and non-GAAP net income per share as the respective GAAP measures, adjusted for, as applicable, stock-based compensation-related charges which include stock-based compensation expense, employer taxes on employee stock transactions and amortization of stock-based compensation capitalized in internal-use software; amortization of acquired intangibles; acquisition-related expenses; amortization of debt issuance costs; and income tax effects associated with these adjustments as well as the non-recurring income tax expense or benefit associated with acquisitions and income tax benefit from the release of a valuation allowance on certain deferred tax assets. Non-GAAP gross margin and non-GAAP operating margin are defined as non-GAAP gross profit and non-GAAP operating income (loss) as a percentage of revenue, respectively. We define free cash flow as net cash used in operating activities less capitalized internal-use software costs and capital expenditures and free cash flow margin as free cash flow as a percentage of revenue. We define adjusted free cash flow as free cash flow excluding the non-recurring impact from a change to timing of certain cash compensation payments and adjusted free cash flow margin as adjusted free cash flow as a percentage of revenue. We believe that free cash flow, free cash flow margin, adjusted free cash flow, and adjusted free cash flow margin are useful indicators of liquidity that provide information to management and investors about the performance of core operations and future ability to generate cash that can be used for strategic opportunities or investing in our business. Definition Customers with $100,000 or greater in annual recurring revenue ('ARR') represent the number of customers that contributed $100,000 or more in ARR as of period end. We define ARR as (1) with respect to Confluent Platform customers, the amount of revenue to which our customers are contractually committed over the following 12 months assuming no increases or reductions in their subscriptions, and (2) with respect to Confluent Cloud and WarpStream customers, the amount of revenue that we expect to recognize from such customers over the following 12 months, calculated by annualizing actual consumption of Confluent Cloud and WarpStream in the last three months of the applicable period, assuming no increases or reductions in usage rate. Services arrangements are excluded from the calculation of ARR. For purposes of determining our customer count, we treat all affiliated entities with the same parent organization as a single customer and include pay-as-you-go customers. Our customer count is subject to adjustments for acquisitions, consolidations, spin-offs, and other market activity. Flink ARR is defined as (1) with respect to Confluent Platform customers, the amount of Confluent Platform for Apache Flink revenue to which our customers are contractually committed over the following 12 months assuming no increases or reductions in their subscriptions, and (2) with respect to Confluent Cloud customers, the amount of Confluent Cloud for Apache Flink revenue that we expect to recognize from such customers over the following 12 months, calculated by annualizing actual consumption of Confluent Cloud for Apache Flink in the last three months of the applicable period, assuming no increases or reductions in usage rate. About Confluent Confluent is the data streaming platform that is pioneering a fundamentally new category of data infrastructure that sets data in motion. Confluent's cloud-native offering is the foundational platform for data in motion – designed to be the intelligent connective tissue enabling real-time data, from multiple sources, to constantly stream across the organization. With Confluent, organizations can meet the new business imperative of delivering rich, digital front-end customer experiences and transitioning to sophisticated, real-time, software-driven backend operations. Confluent, Inc. Condensed Consolidated Statements of Operations (in thousands, except share and per share data) (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Revenue: Subscription $ 270,832 $ 224,702 $ 531,742 $ 431,604 Services 11,453 10,284 21,663 20,619 Total revenue 282,285 234,986 553,405 452,223 Cost of revenue: Subscription (1) 61,052 52,863 117,899 101,218 Services (1) 13,118 12,118 25,389 24,984 Total cost of revenue 74,170 64,981 143,288 126,202 Gross profit 208,115 170,005 410,117 326,021 Operating expenses: Research and development (1) 121,221 106,060 238,022 203,631 Sales and marketing (1) 143,631 132,865 289,890 264,217 General and administrative (1) 39,701 39,429 79,821 77,873 Total operating expenses 304,553 278,354 607,733 545,721 Operating loss (96,438 ) (108,349 ) (197,616 ) (219,700 ) Other income, net 21,109 21,853 41,519 42,703 Loss before income taxes (75,329 ) (86,496 ) (156,097 ) (176,997 ) Provision for (benefit from) income taxes 6,621 3,404 (6,573 ) 5,870 Net loss $ (81,950 ) $ (89,900 ) $ (149,524 ) $ (182,867 ) Net loss per share, basic and diluted $ (0.24 ) $ (0.28 ) $ (0.44 ) $ (0.58 ) Weighted-average shares used to compute net loss per share, basic and diluted 341,208,548 319,415,586 338,491,146 316,809,384 Expand (1) Includes stock-based compensation-related charges as follows: Expand Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Cost of revenue - subscription $ 10,382 $ 9,292 $ 19,090 $ 17,197 Cost of revenue - services 2,022 2,338 3,889 5,056 Research and development 48,653 41,866 92,488 83,290 Sales and marketing 32,068 35,332 64,825 71,112 General and administrative 13,796 15,872 28,206 31,030 Total stock-based compensation-related charges $ 106,921 $ 104,700 $ 208,498 $ 207,685 Expand Confluent, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (81,950 ) $ (89,900 ) $ (149,524 ) $ (182,867 ) Adjustments to reconcile net loss to cash provided by (used in) operating activities: Depreciation and amortization 7,344 5,842 13,949 10,153 Net accretion of discounts on marketable securities (5,952 ) (9,871 ) (12,799 ) (20,267 ) Amortization of debt issuance costs 957 953 1,902 1,906 Amortization of deferred contract acquisition costs 14,323 13,334 28,254 26,096 Non-cash operating lease costs 1,089 969 2,164 1,854 Stock-based compensation, net of amounts capitalized 101,997 99,107 194,572 194,429 Deferred income taxes 177 (273 ) (17,161 ) 342 Other 1,107 361 1,561 1,210 Changes in operating assets and liabilities, net of effects of business combinations: Accounts receivable (60,321 ) (58,018 ) (44,907 ) (28,658 ) Deferred contract acquisition costs (15,236 ) (15,296 ) (25,646 ) (25,028 ) Prepaid expenses and other assets (19,988 ) 3,703 (18,473 ) 1,774 Accounts payable 5,356 11,987 4,082 7,055 Accrued expenses and other liabilities 21,149 46,893 (28,679 ) 3,141 Operating lease liabilities (2,205 ) (1,994 ) (4,382 ) (3,929 ) Deferred revenue 50,268 793 46,448 (4,575 ) Net cash provided by (used in) operating activities 18,115 8,590 (8,639 ) (17,364 ) CASH FLOWS FROM INVESTING ACTIVITIES Capitalization of internal-use software costs (6,191 ) (4,776 ) (10,997 ) (10,315 ) Purchases of marketable securities (465,993 ) (455,883 ) (871,228 ) (899,190 ) Sales of marketable securities 6,144 12,744 6,144 12,744 Maturities of marketable securities 458,470 403,489 757,937 835,756 Purchases of investments in privately-held companies — (1,000 ) — (1,000 ) Purchases of property and equipment (919 ) (1,105 ) (2,348 ) (1,291 ) Net cash used in investing activities (8,489 ) (46,531 ) (120,492 ) (63,296 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of common stock upon exercise of vested options 6,062 13,096 22,668 27,497 Proceeds from issuance of common stock under employee stock purchase plan — — 14,195 15,603 Net cash provided by financing activities 6,062 13,096 36,863 43,100 Effect of exchange rate changes on cash and cash equivalents 1,342 (200 ) 1,879 (873 ) Net increase (decrease) in cash and cash equivalents 17,030 (25,045 ) (90,389 ) (38,433 ) Cash and cash equivalents at beginning of period 278,561 336,373 385,980 349,761 Cash and cash equivalents at end of period $ 295,591 $ 311,328 $ 295,591 $ 311,328 Expand Confluent, Inc. Reconciliation of GAAP Measures to Non-GAAP Measures (in thousands, except percentages, share and per share data) (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Reconciliation of GAAP total gross profit to non-GAAP total gross profit: Total gross profit on a GAAP basis $ 208,115 $ 170,005 $ 410,117 $ 326,021 Total gross margin on a GAAP basis 73.7 % 72.3 % 74.1 % 72.1 % Add: Stock-based compensation-related charges 12,404 11,630 22,979 22,253 Add: Amortization of acquired intangibles 466 501 927 1,003 Non-GAAP total gross profit $ 220,985 $ 182,136 $ 434,023 $ 349,277 Non-GAAP total gross margin 78.3 % 77.5 % 78.4 % 77.2 % Reconciliation of GAAP operating expenses to non-GAAP operating expenses: Research and development operating expense on a GAAP basis $ 121,221 $ 106,060 $ 238,022 $ 203,631 Research and development operating expense as a percentage of total revenue on a GAAP basis 42.9 % 45.1 % 43.0 % 45.0 % Less: Stock-based compensation-related charges 48,653 41,866 92,488 83,290 Less: Acquisition-related expenses 7,965 4,472 17,606 8,834 Non-GAAP research and development operating expense $ 64,603 $ 59,722 $ 127,928 $ 111,507 Non-GAAP research and development operating expense as a percentage of total revenue 22.9 % 25.4 % 23.1 % 24.7 % Sales and marketing operating expense on a GAAP basis $ 143,631 $ 132,865 $ 289,890 $ 264,217 Sales and marketing operating expense as a percentage of total revenue on a GAAP basis 50.9 % 56.5 % 52.4 % 58.4 % Less: Stock-based compensation-related charges 32,068 35,332 64,825 71,112 Less: Acquisition-related expenses (1,076 ) — — — Non-GAAP sales and marketing operating expense $ 112,639 $ 97,533 $ 225,065 $ 193,105 Non-GAAP sales and marketing operating expense as a percentage of total revenue 39.9 % 41.5 % 40.7 % 42.7 % General and administrative operating expense on a GAAP basis $ 39,701 $ 39,429 $ 79,821 $ 77,873 General and administrative operating expense as a percentage of total revenue on a GAAP basis 14.1 % 16.8 % 14.4 % 17.2 % Less: Stock-based compensation-related charges 13,796 15,872 28,206 31,030 Less: Acquisition-related expenses — 6 14 231 Non-GAAP general and administrative operating expense $ 25,905 $ 23,551 $ 51,601 $ 46,612 Non-GAAP general and administrative operating expense as a percentage of total revenue 9.2 % 10.0 % 9.3 % 10.3 % Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Reconciliation of GAAP operating loss to non-GAAP operating income (loss): Operating loss on a GAAP basis $ (96,438 ) $ (108,349 ) $ (197,616 ) $ (219,700 ) GAAP operating margin (34.2 %) (46.1 %) (35.7 %) (48.6 %) Add: Stock-based compensation-related charges 106,921 104,700 208,498 207,685 Add: Amortization of acquired intangibles 466 501 927 1,003 Add: Acquisition-related expenses 6,889 4,478 17,620 9,065 Non-GAAP operating income (loss) $ 17,838 $ 1,330 $ 29,429 $ (1,947 ) Non-GAAP operating margin 6.3 % 0.6 % 5.3 % (0.4 %) Reconciliation of GAAP net loss to non-GAAP net income: Net loss on a GAAP basis $ (81,950 ) $ (89,900 ) $ (149,524 ) $ (182,867 ) Add: Stock-based compensation-related charges 106,921 104,700 208,498 207,685 Add: Amortization of acquired intangibles 466 501 927 1,003 Add: Acquisition-related expenses 6,889 4,478 17,620 9,065 Add: Amortization of debt issuance costs 957 953 1,902 1,906 Add: Income tax effects and adjustments (1) 981 (175 ) (16,175 ) (435 ) Non-GAAP net income $ 34,264 $ 20,557 $ 63,248 $ 36,357 Non-GAAP net income per share, basic $ 0.10 $ 0.06 $ 0.19 $ 0.11 Non-GAAP net income per share, diluted $ 0.09 $ 0.06 $ 0.17 $ 0.10 Weighted-average shares used to compute non-GAAP net income per share, basic 341,208,548 319,415,586 338,491,146 316,809,384 Weighted-average shares used to compute non-GAAP net income per share, diluted 367,293,632 354,236,764 367,556,846 352,216,317 Expand (1) Income tax effects and adjustments for the six months ended June 30, 2025 includes an adjustment for the income tax benefit from the release of a valuation allowance on certain deferred tax assets. Expand The following table presents a reconciliation of free cash flow to net cash provided by (used in) operating activities, the most directly comparable GAAP measure, for each of the periods indicated (unaudited, in thousands, except percentages): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net cash provided by (used in) operating activities $ 18,115 $ 8,590 $ (8,639 ) $ (17,364 ) Capitalized internal-use software costs (6,191 ) (4,776 ) (10,997 ) (10,315 ) Capital expenditures (919 ) (1,105 ) (2,348 ) (1,291 ) Free cash flow $ 11,005 $ 2,709 $ (21,984 ) $ (28,970 ) Impact from compensation payments adjustment (1) — — 37,930 — Adjusted free cash flow $ 11,005 $ 2,709 $ 15,946 $ (28,970 ) Net cash provided by (used in) operating activities as a percentage of total revenue 6.4 % 3.7 % (1.6 %) (3.8 %) Free cash flow margin 3.9 % 1.2 % (4.0 %) (6.4 %) Adjusted free cash flow margin 3.9 % 1.2 % 2.9 % (6.4 %) Net cash used in investing activities $ (8,489 ) $ (46,531 ) $ (120,492 ) $ (63,296 ) Net cash provided by financing activities $ 6,062 $ 13,096 $ 36,863 $ 43,100 Expand (1) Represents an adjustment to reflect the non-recurring impact in the first quarter of 2025 from the change to timing of cash compensation payments for most of our non go-to-market employees implemented at the start of 2025. 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