#1CONFLUENT Introducing Confluent June 2021#2Disclaimer This presentation and the accompanying oral presentation (referred to herein collectively as the "presentation") include express and implied forward-looking statements. All statements contained in this presentation other than statements of historical facts, including expectations of Confluent, Inc. ("we," "us," "our," or "Confluent") regarding our revenue, revenue mix, expenses and other results of operations; future financial performance, business strategy and plans; potential market and growth opportunities; competitive position; technological or market trends; addressable market opportunity; and our objectives for future operations, are forward-looking statements. The words "anticipate," believe," "continue," "estimate," "expect," "intend," "may," "will" and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and other factors, including but not limited to, our ability to sustain our growth rates, our sales and marketing capabilities, our ability to attract new customers or expand potential customer and sales pipeline, overall economic conditions, our ability to achieve market acceptance of our data-in-motion platform, and risks related to cybersecurity and data privacy incidents and protection of our intellectual property rights. Moreover, we operate in very competitive and rapidly changing environments, and new risks may emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. You should not rely upon the forward-looking statements as predictions of future events. The future events and trends discussed in this presentation may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance, achievements or events and circumstances reflected in the forward- looking statements will occur. Except to the extent required by law, we do not undertake to update any of these forward-looking statements after the date of this presentation to conform these statements to actual results or revised expectations. In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this presentation. While we believe such information provides a reasonable basis for these statements, such information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements. This presentation also contains statistical data, estimates and forecasts made by independent parties and by us relating to market size and growth, as well as other data about our industry and business. These data involve a number of assumptions and limitations, and we have not independently verified the accuracy or completeness of these data. Neither we nor any other person makes any representation as to the accuracy or completeness of such data or undertakes any obligation to update such data after the date of this presentation. In addition, projections, assumptions and estimates of our future performance and the future performance of the markets in which we operate are necessarily subject to a high degree of uncertainty and risk. The Gartner content described herein (the "Gartner Content") represents research opinions or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. ("Gartner"), and are not representations of fact. The Gartner Content speaks as of its original publication date (and not as of the date of this presentation), and the opinions expressed in the Gartner Content are subject to change without notice. This presentation includes certain non-GAAP financial measures as defined by Securities and Exchange Commission ("SEC") rules. Because not all companies calculate non-GAAP financial information identically (or at all), the presentations herein may not be comparable to other similarly titled measures used by other companies. Further, such non-GAAP financial information of Confluent should be considered in addition to, and not as superior to or as a substitute for, the historical consolidated financial statements of Confluent prepared in accordance with GAAP. Refer to the slides in the section titled "GAAP to Non- GAAP Reconciliations" at the end of this presentation for a reconciliation of our non-GAAP financial metrics to the most directly comparable GAAP financial metrics. We have filed a registration statement (including a preliminary prospectus) on Form S-1 (File No. 333-256693) with the SEC for the offering to which this presentation relates. Such registration statement has not yet become effective. The securities proposed to be offered pursuant to such registration statement may not be sold, nor may offers to buy be accepted, prior to the time the registration statement becomes effective. You should read the preliminary prospectus in such registration statement and other documents we have filed with the SEC for more complete information about us and the offering. You may get these documents for free by visiting the SEC's website at www.sec.gov. Alternatively, copies of the prospectus may be obtained from Morgan Stanley & Co. LLC, Attention: Prospectus Department, 180 Varick Street, 2nd Floor, New York, NY 10014; or J.P. Morgan Securities LLC, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, or by telephone at (866) 803-9204, or by email at [email protected]. This presentation shall not constitute an offer to sell or the solicitation of an offer to buy securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.#3Offering Summary Issuer Ticker / Listing Shares Offered Filing Range Use of Proceeds Lock-Up Expected Pricing Lead Bookrunners Bookrunners Co-Managers Confluent, Inc. CFLT/Nasdaq 23,000,000 (100% Primary) $29- $33 per share We intend to use the net proceeds we receive from this offering for general corporate purposes, including working capital, operating expenses, and capital expenditures. Immediate release of 15% of vested equity for current non-executive employees, which exclude officers, directors, founders, other investors, and former employees; additional 25% of vested equity for substantially all equity holders except former employees beginning upon second trading day after Q2'21 earnings release; all released at earlier of second trading day after Q3'21 earnings release and 181 days. June 23, 2021 Morgan Stanley, J.P. Morgan Goldman Sachs & Co. LLC, BofA Securities, Citigroup, Barclays, Credit Suisse, Deutsche Bank Securities, UBS Investment Bank, Wells Fargo Securities Cowen, D.A. Davidson & Co., JMP Securities, KeyBanc Capital Markets, Piper Sandler#4Confluent at a Glance Founded in 2014 by the Original Creators of Apache Kafka -$50B Total Addressable Market¹ $263M +53% YoY Total Revenue TTM as of Q1'21 2,540 +142% YoY Total Customers $39M +109% YoY Confluent Cloud Revenue TTM as of Q1'21 561 +50% YoY Customers with $100K+ in ARR Note: Financials and metrics other than TAM data are as of or for stated period ended March 31, 2021; revenue based on trailing twelve months as of March 31, 2021 GAAP net loss TTM as of Q121 was $241M. TAM calculations performed by Confluent; source: Gartner, Forecast: Enterprise infrastructure Software, Worldwide, 2018-2024, 4020 Update, December 2020; Source: Gartner, Forecast: Enterprise Application Software, Worldwide, 2018-2024, 4020 Update, December 2020.#5Confluent is on a mission to set data in motion.#6The digital realm is as important as the physical world in how business is transacted.#7Businesses are Becoming Software Then Now Banking Online Banking ARE YOU Mortgage APPROVED Taxi Grocery#8Old World ...for productivity tools at the edges of a company Software is... New World ...a platform for directly transacting business#9Top Picks for Joshua Trending Now Breaking Bad shameless SURVIVING ESCOBAR ALLAS J New Releases Because you watched Nar BEYONTZ STRANGER THINGS SING Schins FREE COMORRON FOSTERS MOANA Kas Rich front-end New A customer experiences SUBURRA BLOOD ON ROME New Girl PABLO ESCOBAR MISTY are you here BABYSITTER ALIAS JJ.. LA CELEBRIDAD DEL MAL RIVERDALE Q Search BABY DADDY NEW EPISODES STRANGER THINGS ANTHONY BOURDAIN PARTS FORKROWN RA нате STRANGE Back DOCTOR off#10Real-time back-end operations 10 10#11New use cases need new capabilities. This requires total connectivity and instant reaction, all the time, in real-time. 11#12The Foundational Assumption of Every Database: Data at Rest. Simple, static real-time queries Databases Data at rest I Slow, daily batch processing 12#13Databases Bring Point-in-Time Queries to Stored Data. This Leads to a Giant Mess in Data Architecture. Apps SaaS DB App LINE OF BUSINESS 01 Apps DB DB Data Warehouse App DB Soos App DB SaaS App DB Apps DB App Apps App DB DB App LINE OF BUSINESS 02 SaaS SaaS Apps Apps DB DB DB App App App DB Soos DB App DB SaaS App DB PUBLIC CLOUD Soos Apps DB SaaS DB DB App Data Warehouse DB Apps SaaS Apps DB App 13#14Data in motion: Ubiquitous real-time data and continuous real-time processing. 14#15APACHE kafka® Created by the founders of Confluent while at LinkedIn Over Two-Thirds of the Fortune 500 estimated to be using Apache Kafka >60,000 Kafka meetup members >200 global meetup groups 15#16A New Paradigm is Required for Data in Motion: Continuously Processing Evolving Streams of Data in Real-time A Sale 100 Real-time 10100 010100110 Data 10100 011 10 1 A Trade A Shipment A Customer Experience Real-time Stream Processing QUERY Rich Front-end Customer Experiences 10 00 1 0010 1 011001010 00101 110 101 Real-time Back-end Operations 16#17From Giant Mess to Central Nervous System Apps SaaS DB App LINE OF BUSINESS 01 Apps DB DB Data Warehouse App DB Soos App DB SaaS App DB Apps DB App Apps App DB DB App LINE OF BUSINESS 02 SaaS SaaS Apps Apps DB DB DB App App App DB SaaS DB App DB SaaS App DB PUBLIC CLOUD SaaS Apps DB SaaS DB DB App Data Warehouse DB Apps SaaS Apps DB App#18From Giant Mess to Central Nervous System Apps DB DB Apps Soos App App App DB Data Warehouse Apps DB SaaS App SaaS Apps DB DB SaaS App SaaS App DB Data Warehouse Apps App App Apps SaaS DB DB Apps 18#19A New Category in Data Infrastructure CISCO ORACLE bmc IBM snowflake ORACLE Data Analytics & Warehousing / OLAP Microsoft Pivotal SAP hp teradata. databricks vmware Collaboration Applications IT Management Data Infrastructure Data in Motion CONFLUENT Infrastructure zoom salesforce servicenow Google mongoDB. DATADOG ORACLE workday. Databases/DBaaS / OLTP slack cassandra Microsoft ca redislabs HOME OF REDIS aws 19#20Confluent is Becoming the Central Nervous System of the Modern Technology Stack CISCO ORACLE IBM bmc snowflake ORACLE Pivotal Microsoft SAP hp teradata. databricks vmware zoom salesforce servicenow Google mongoDB. ORACLE SPE DATADOG cassandra slack workday Microsoft ca technologies redislabs HOME OF REDIS aws 20#21Use Cases Across All Industries + Retail Drive consumer analytics & streamline operations Healthcare Provide patients better choices & doctors better insight Banking Combat fraud & remain competitive Automotive Amplify vehicle intelligence & safety Common In All Industries Infrastructure Use Cases Inventory Management Connected Health Records Capital Management Advanced Navigation Data Pipelines Personalized Promotions Data Confidentiality & Accessibility Early-On Fraud Detection Environmental Factor Processing Hybrid Cloud Integration Product Development & Introduction Dynamic Staff Allocation Optimization Market Risk Recognition & Investigation Fleet Management Microservices Sentiment Analysis Integrated Treatment Preventive Regulatory Scanning Predictive Maintenance Security and Fraud Streaming Enterprise Messaging Proactive Patient Care Real-Time What-If Analysis Threat Detection & Real-Time Response Systems of Scale for High Traffic Periods Real-Time Monitoring Trade Flow Monitoring Traffic Distribution Optimization Customer 360 - Streaming ETL 21#22Why Confluent? Challenge Siloed data for pricing, promotions, and athletes purchases • Complexity, scalability and resiliency issues with multiple software solutions Solution • Confluent's cloud managed service provides a real-time view of merchandise and reduces the burden of managing and operating the platform Results • Consistent omnichannel experience and positive athletes service interaction. Minimized downtime across multiple cloud providers • Data in sync across different environments in real-time DICK'S SPORTING GOODS 22#23Why Confluent? Challenge Siloed data and point-to-point integrations, which slow down innovation • Needed to modernize infrastructure and migrate to the cloud quickly for key initiatives Solution • Confluent's complete, cloud-native service supports KeyBank's national digital bank initiative and cloud migration by providing data in motion to cloud-based applications Results • Significant reduction in system integration effort and application development time Cost savings from usage reduction in mainframe MIPS, IBM MQ, and ETL process software Risk mitigation with enterprise support from Confluent KeyBank T 23#24Why Confluent? Challenge Millions of people turned to Instacart in early 2020, putting customer-facing applications, backend systems, and business processes to test Solution • Confluent's cloud-native service enables Instacart to elastically scale and deliver the resilience needed for an always-on service to support its growing business Results • Enhanced ability to address high customer demand • Real-time inventory updates • End-to-end order fulfillment support • Reallocation of technical resources towards core product innovations instacart#25Why Confluent? Challenge • Existing systems fell short of collecting, aggregating and providing access to data from real-time feeds from 6 million devices to achieve key business objectives Solution • Confluent was selected to build a real-time monitoring platform, enabling SunPower to ingest all the energy data flowing from its products and to improve fleet management Results • Dramatic improvement in customer satisfaction, as demonstrated by the increase in user rating, boosting referral-based sales • Faster processing and conversion of data to actionable insights, which facilitate bringing new features to market rapidly SUNPOWERⓇ 25#26Customer Expansion Journey ARR $ in millions One of the Largest Agencies in the Public Sector 36x $0.2 $0.4 $8.8 $7.0 $1.4 $0.9 ALALLA $0.5 Q3'16 Q3'17 Q3'19 Q1'21 Q4'17 Q4'18 Q4'19 Q1'21 One of the World's Largest Telecom Conglomerates Large scale deployment to build out a modern cyber threat detection platform in its global network. 21x $0.1 $0.5 Expansion of customer facing and back-end mission critical workloads to different business units worldwide. A Major Global Financial Institution 13x Note: The expansion multiple is calculated based on the land ARR and the G121 ending ARR, using actual unrounded ARR numbers The customer examples shown on this slide ore illustrative only and may not be representative of growth of other customers within the same vertical(s). $2.8 $7.0 $6.6 Q4'17 Q4'18 Q4'19 Q1'21 Fast adoption and expansion of use cases among different banking businesses across the globe. A Leading Health Benefits Provider 6x $0.3 $0.5 $1.0 $1.8 Q4'18 Q4'19 Q2'20 Q1'21 Migrated from OS Kafka for stability and reliability. Rapid expansion of use cases across systems and applications. 26#27Proven Success Across Industries FINANCIAL SERVICES Goldman Sachs Morgan Stanley RBC KeyBank EURONEXT homepoint BNP PARIBAS ING PNC COMMUNICATIONS & MEDIA NETFLIX Telefónica ticketmaster unity Intrado LUMEN 8x8 SLice sky INSURANCE B GENERALI CENTENE Corporation & Ladder Vitality sara BAADER PRUDENTIAL AUTOMOTIVE/TRANSPORTATION Lufthansa DB TRAILAR beam DriveCentric TECHNOLOGY PayPal Square servicenow. instacart Robinhood Grab AppDirect V VIEWPOINT A TRIMBLE COMPANY CONSUMER/RETAIL Walmart nuuly Advance do Auto Parts do DICK'S SPORTING GOODS 4040 THE HOME Domino's adeo Shiptů Sainsbury's HEALTHCARE alight. RECURSION surescripts TRAVEL Expedia priceline.com A ACCOR 27#28Using Confluent Everywhere Fully-Managed Confluent Cloud Apache Kafka Re-engineered for the Cloud Available on the leading public clouds Microsoft aws Azure Self-Managed Confluent Platform The Enterprise Distribution of Apache Kafka Deploy on any platform, on-prem or cloud VM Both: Subscription option available where price scales with usage 20#29Why Confluent Wins Focus Deep focus on data in motion • End-to-end operationalized customer journey • Expanding mindshare and innovation in the new category of data in motion Support at large scale with mission- critical use cases Differentiated Product Cloud-native: Kafka re-imagined for the cloud Complete: Connectors, security & governance, SQL processing Everywhere: Spans all major clouds and on-premises 29#30Our Product Advantage Open Source Open Source Apache Kafka Connectivity CONFLUENT aws Stream Processing Enterprise Security & Governance Confluent Server Multi-cloud SaaS & Private Cloud Microsoft Azure ...100s more features 000 A complete Data-in-Motion mem Platform Kafka completely re- engineered to be cloud-native Fully managed service, everywhere 30#31Customer Journey with Confluent VALUE Experimentation / early interest 1 Identify a project 2 Mission critical, in production, but disparate lines of business (LOBs) 3 Mission critical, connected LOBS INVESTMENT & TIME 4 Individual Use Case Individual Team Project Product, Support, Training, Partners, Technical Account Management... Central Nervous Multi-Use Case Multi- Team Platform System 5 31#32Developer-led Motion and Enterprise Sales Motion are Complementary Awareness of Solution Evaluation <1> Development Self-service Adoption Pay as you go Community download Enterprise Sales Committed contract Production 32#33Network Effects Drive Further Expansion Web Custom Apps Microservices Monitoring Analytics ...and more Applications Bring Data In Motion CONFLUENT Data In Motion Brings New Applications any source NoSQL Oracle any destination Mainframes Salesforce Marketo Twitter AWS, Azure, GCP Data Warehouse ()) !!! 33#34Competitive Landscape Legacy Data Infrastructure Relational DBs ORACLE ESB & Messaging MuleSoft IBM TIBCO ETL Informatica talend ORACLE On-Premises Streaming Red Hat CLOUDERA Cloud Providers Partners & Competitors Microsoft aws Google 34#35Cloud Competitive Landscape CONFLUENT Microsoft PLS SE STRATLY PROHET Dataflow Google Event Hubs amazon Pub/SubmBUTION OF Kinesis MSK Cloud Native Complete O O O O O Everywhere O OO O O 35#36Multiple Levers of Growth in a Large and Growing TAM Easy and Frictionless Land with Cloud Pay-As-You-Go Grow and Harness our Partner Ecosystem Expand in Underpenetrated Segments (e.g. Commercial, Tech) Continued International Expansion Enterprise-Wide Expansion via Solutions Selling Productize Use Cases Up-The-Stack#37One Team, One Mission: Set Data in Motion Jay Kreps Co-Founder & CEO Linked in Stephanie Buscemi Chief Marketing Officer salesforce SAP Larry Shurtz Chief Revenue Officer salesforce ORACLE Jun Rao Co-Founder Linked in Cheryl Dalrymple Chief People Officer POLYVORE Google AdMob Roger Scott Chief Customer Officer New Relic. ORACLE Erica Schultz President, Field Operations New Relic. ORACLE Steffan Tomlinson Chief Financial Officer Google Cloud paloalto Ganesh Srinivasan Chief Product & Engineering Officer Uber Linked in Board of Directors Jay Kreps Co-Founder & CEO of Confluent Neha Narkhede Co-Founder of Confluent Matt Miller Sequoia Capital Mike Volpi Index Ventures Eric Vishria Benchmark Capital Jonathan Chadwick Former EVP, CFO/coo at VMware Greg Schott Former CEO and Chairman at Mulesoft Lara Caimi Chief Customer and Partner Officer at ServiceNow Alyssa Henry EVP and General Manager at Square#38Financial Highlights 38#39Large and Fast-Growing Total Addressable Market 2021 Total Addressable Market -$50B $31B Application Infrastructure & Middleware2. Analytics & Business Intelligence³6 $7B $7B $4B Database Management Systems Data Integration Tools & Data Quality Tools2.7 Calculations performed by Confluent based on Gartner data and estimates for 2024 total market size. Source: Gartner, Forecast: Enterprise infrastructure Software, Worldwide, 2018-2024, 4G20 Update, December 2020. Source: Gartner, Forecast: Enterprise Application Software, Worldwide, 2018-2024, 4020 Update, December 2020. *Excluding Full Life Cycle API Management, BPM Suites, TPM, RPA, and DXPs. Total Addressable Market Growth 22% CAGR 2021-2024 $Excluding Prerelational-era DBMS. *Excluding other Traditional Bi Platforms. Excluding other Data Integration Software. -$50B 2021 $91B¹ 2024 39#40The Power of Our Model Fully-Managed Confluent Cloud 18% of Q1'21 revenue | 124% y/y growth Committed subscription or pay-as-you-go Priced based on type of cluster, compute power, data transfer, and storage used Revenue recognized based on customer usage¹ Professional services and education services Self-Managed Confluent Platform 70% of Q1'21 revenue | 43% y/y growth Committed subscription Priced per node running on physical or virtual computing machines Portion of upfront license revenue, substantial majority ratable over contract term Services | 12% of Q1'21 revenue | 30% y/y growth Priced on time-and-materials basis; attached to subscriptions sales Revenue recognized based on completion and utilization. *For contracts that are not usage-based, revenue from Confluent Cloud is recognized ratably over the non-cancelable contractual term of the arrangement. Effective G3 2020, usoge-based contract is the default offering for Confluent Cloud.#41Significant Revenue Growth at Scale Annual Revenue $ in millions 90%+ CAGR FY18-FY20 $65 FY18 $150 FY19 $237 FY20 $29 $34 $38 Quarterly Revenue $ in millions $48 $51 $54 | $61 $70 $77 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21#42Early International Expansion and Accelerating Adoption of Confluent Cloud Revenue Mix by Geography $ in millions $150 32% 68% FY'19 $237 34% 66% FY'20 US $51 32% 68% Q1'20 International $77 36% 64% Q1'21 Revenue Mix by Product $ in millions $150 13% 10% 77% FY'19 Confluent Platform $237 12% 13% 75% FY'20 $51 14% 12% 74% Q1'20 Confluent Cloud $77 12% 18% 70% Q1'21 PS & Education 42TE#43Fast-Growing Confluent Cloud Revenue Annual Confluent Cloud Revenue $ in millions Q1 Confluent Cloud Revenue $ in millions Cloud Revenue % of Total Revenue 250%+ CAGR FY18-FY20¹ $3 4% FY18 $14 10% FY19 $31 13% FY20 124% y/y growth Based on actual unrounded revenue calculation. Calculation with rounded revenue as shown results in 221% CAGR FY18-FY20. $6 12% Q1'20 $14 18% Q1'21 Key milestones ● November 2017: General availability of Confluent Cloud • September 2019: 50% of all customers on Confluent Cloud (includes self-serve, pay-as- you-go customers) • August 2020: Confluent Cloud available through the marketplaces of the three leading cloud providers#44Strong Customer Commitments Remaining Performance Obligations (RPO) $ in millions CRPO as % of RPO $166 Q1'20 Q2'20 Q3'20 Q4'20 69% y/y growth $281 -71% Q1'21 Note: CRPO, or current remaining performance obligations, represent the amount of contracted future revenue expected to be recognized in the next 12 months. • RPO represents contracted revenue that has not yet been recognized, including o Deferred revenue not yet recognized o Non-cancelable backlog that will be invoiced • We are not a SaaS-only model o Our model consists of consumption- based, ratable, upfront, and service revenue components o RPO provides a good representation of our business unlike traditional SaaS metrics such as billings, which do not accurately reflect our hybrid model and billing terms#45Rapid Customer Growth & Large Customer Momentum Total Customers and Mix 142% y/y growth 1,050 2,540 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Confluent Platform Only Confluent Cloud Customers with 2 $100K in ARR 50% y/y growth 374 Q1'20 Q2'20 Q3'20 Q4'20 561 Q1'21 Customers with ≥ $1M in ARR 82% y/y growth 33 60 ||| Q1'20 Q2'20 Q3'20 Q4'20 Q1/21 Total customers represent the total number of customers at the end of each period. 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. Customers with $100,000 or greater in ARR represent the number of customers that contributed $100,000 or more in ARR as of period end. We define ARR as the subscription revenue we would contractually expect to receive from customers over the following 12 months assuming no increases or reductions in their subscriptions. ARR excludes services and pay-as-you-go arrangements. Customers with $1,000,000 or greater in ARR represent the number of customers that contributed $1,000,000 or more in ARR as of period end.#46Net Retention Rate 130% Q1'20 Dollar-Based Net Retention Rate TIT Q2'20 Q3'20 117% Q4'20 Q1'21 NRR Fluctuation: COVID-19 pandemic downturns Q2-Q3 2020, including customer churn to Kafka • Initial transition to usage-based offering for Confluent Cloud Timing related to expansion of large initial deal sizes >120% NRR Target Drivers: • Increased product differentiation. • Optimized customer lifecycle • Increased cloud adoption and usage Note: We calculate our dollar-based net retention rate as of a period end by starting with the ARR from the cohort of all customers as of the 12 months prior to such period and, or Prior Period Value. We then calculate the ARR from these same customers as of the current period end, or Current Period Value, which includes any growth in the value of subscriptions and is net of contraction or attrition over the prior 12 months Services and pay-as-you-go arrangements are excluded from the calculation of ARR. We then divide the Current Period Value by the Prior Period Value to arrive at our dollar-based net retention rate. The dollar-based net retention rate includes the effect, on a dollar-weighted value basis of our subscriptions that expand, renew, contract, or attrit, but excludes ARR from new customers in the current period.#47Gross Margin Healthy as Revenue Mix Shifts Total Gross Margin (Non-GAAP) 68% FY'19 70% FY'20 67% Q1'20 71% Q1'21 Confluent Platform Revenue Subscription Gross Margin (Non-GAAP) 79% Margin Drivers: Growing Confluent Cloud revenue mix FY'19 78% FY'20 76% Q1'20 Improving Cloud hosting costs due to scale and optimization 78% Q1'21 Note: Wo define non-GAAP gross margin and non-GAAP subscription gross margin as GAAP gross margin and GAAP subscription gross margin, respectively, excluding stock-based compensation expense and employer taxes on employee stock transactions. Refer to the slides in the section titled "GAAP to Non-GAAP Reconciliations at the end of this presentation for a reconciliation of our non-GAAP financial metrics to the most directly comparable GAAP financial matrics#48Improving Leverage While Investing for Growth S&M as % of Revenue (Non-GAAP) Total Opex as % of Revenue (Non-GAAP) 121% 108% 119% 112% FY'19 FY'20 Q1'20 Q1'21 -53% -38% -53% -41% Non-GAAP Operating Margin Note: Refer to the slides in the section titled "GAAP to Non-GA ALS 35% R&D as % of Revenue Gurk (Non-GAAP) 30% 35% 27% FY'19 FY'20 QT20 Q1'21 Mennonce 73% 64% 71% 69% FY'19 FY'20 Q1'20 Q1'21 G&A as % of Revenue (Non-GAAP) 14% 13% 14% 16% 1-GAAP Reconciliations at the end of this presentation for a reconciliation of our non-GAAP financial matrics to the most directly comparable GAAP financial metrics. FY'19 FY'20 Q120 Q1'21#49The Power of Our Land and Expand Model $300M $200M $100M FY15 FY16 ARR by Annual Cohorts 4.1x ARR multiple for FY17 cohort FY17 FY18 FY19 FY20 FY20 FY19 FY18 FY17 FY16 FY15 Note: We define ARR as the subscription revenue we would contractually expect to receive from customers over the following 12 months assuming no increases or reductions in their subscriptions. ARR excludes services and pay-as-you-go arrangements. The cohort for a given year represents customers that acquired their initial subscription purchase from us in that year. For example, the fiscal year 2017 cohort represents all customers that made their initial subscription from us between January 1, 2017 and December 31, 2017#50Investments Supported by Strong Unit Economics $21.0 ($43.5) (107%) FY18 2018 Cohort Contribution Margin Subscription Revenue ($ in millions) 51% $40.7 ($20.0) FY19 Associated Costs ($ in millions) 63% $46.7 ($17.3) FY20 Contribution Margin % Unit Economics • Upfront investment to land customers Payoff from expansion and lower cost of retaining customers Key Assumptions Associated costs include cost of subscription revenue and S&M expenses (excludes R&D and G&A spend) • S&M expenses allocated to cohort based on type of revenue activity (land, expand, renewal) and level of effort Note: The performance of the 2018 Cohort may not be representative of the performance of any other group of customers or periods, in particular due to changes in our revenue mix, including between Confluent Platform and Confluent Cloud. We expect that the contribution margin and contribution margin percentage of our customer cohorts will fluctuate from one period to another depending upon the number of customers remaining in each cohort, our ability to increase their subscription revenue, other changes in their subscriptions and changes in our revenue mix, as well as changes in our associated costs. 50#51Target Model Non-GAAP Metric Gross Margin Research & Development % of total revenue Sales & Marketing % of total revenue General & Administrative % of total revenue Operating Margin Free Cash Flow Margin FY19 Actual 68% 35% 73% 14% (53%) (48%) FY20 Actual 70% 30% 64% 13% (38%) (37%) Mid-Term Targets > 30% Annual Revenue Growth -70% -19% -38% -8% -5% -10% Long-Term Targets 72%-75% 16%-17% 27%-30% 6%-7% 20%-25% > 25% 51#52Key Takeaways Category Creating Company Founded by the Creators of Kafka 17 Strong Growth and Long-Term Margin Profile -$50 Billion 2021 Total Addressable Market¹ ITAM calculations performed by Confluent; source: Gartner, Forecast: Enterprise Infrastructure Software, Worldwide, 2018-2024, 4Q20 Update, December 2020; source: Gartner, Forecast Enterprise Application Software, Worldwide, 2018-2024, 4020 Update, December 2020. Expansion Driven by Network Effects $ Positioned to Capitalize on the Large and Growing Shift to Cloud 52#53GAAP to Non-GAAP Reconciliations 53#54GAAP to Non-GAAP Reconciliations (in thousands, except percentages) Total revenue Total gross profit on a GAAP basis Add: Stock-based compensation expense Add: Employer taxes on employee stock transactions Non-GAAP total gross profit Non-GAAP total gross margin Subscription revenue Subscription gross profit on a GAAP basis Add: Stock-based compensation expense Add: Employer taxes on employee stock transactions Non-GAAP subscription gross profit Non-GAAP subscription gross margin FY'19 $149,805 $100,436 2,155 1 $102,592 68% FY'19 $130,206 $101,811 1,161 $102,972 79% FY'20 $236,577 $161,101 4,317 25 $165,443 70% FY'20 $208,633 $159,350 2,572 $161,931 78% Q1'20 $50,904 $33,091 812 1 $33,904 67% Q1'20 $43,943 $32,929 462 1 $33,392 76% Q1'21 $77,028 $53,190 1,519 $54,709 71% Q1'21 $67,992 $52,235 975 $53,210 78%#55GAAP to Non-GAAP Reconciliations (in thousands, except percentages) Total revenue Operating expenses on a GAAP basis Less: Stock-based compensation expense Less: Employer taxes on employee stock transactions Non-GAAP Operating expenses Non-GAAP Operating expenses as a % of total revenue Total revenue Research and development (R&D) expense on a GAAP basis Less: Stock-based compensation expense Less: Employer taxes on employee stock transactions Non-GAAP R&D expense Non-GAAP R&D expense as a % of total revenue FY'19 $149,805 $198,544 16,462 105 $181,977 127% FY'19 $149,805 $58,090 6,268 20 $51,802 35% FY'20 $236,577 $394,276 139,024 495 $254,757 108% FY'20 $236,577 $105,399 33,755 81 $71,563 30% Q1'20 $50,904 $66,474 5,639 75 $60,760 119% Q1'20 $50,904 $19,742 2,046 9 $17,687 35% Q1'21 $77,028 $98,334 11,834 263 $86,237 112% Q1'21 $77,028 $24,313 3,511 121 $20,681 27% 55#56GAAP to Non-GAAP Reconciliations (in thousands, except percentages) Total revenue Sales and marketing (S&M) expense on a GAAP basis Less: Stock-based compensation expense Less: Employer taxes on employee stock transactions Non-GAAP S&M expense Non-GAAP S&M expense as a % of total revenue Total revenue General and administrative (G&A) expense on a GAAP basis Less: Stock-based compensation expense Less: Employer taxes on employee stock transactions Non-GAAP G&A expense Non-GAAP G&A expense as a % of total revenue FY'19 $149,805 $115,792 6,545 64 $109,183 73% FY'19 $149,805 $24,662 3,649 21 $20,992 14% FY'20 $236,577 $166,361 14,734 271 $151,356 64% FY'20 $236,577 $122,516 90,535 143 $31,838 13% Q1'20 $50,904 $38,317 2,373 22 $35,922 71% Q1'20 $50,904 $8,415 1,220 44 $7,151 14% Q1'21 $77,028 $58,509 4,976 103 $53,430 69% Q1'21 $77,028 $15,512 3,347 39 $12,126 16%#57GAAP to Non-GAAP Reconciliations (in thousands, except percentages) Total revenue Operating loss on a GAAP basis Add: Stock-based compensation expense Add: Employer taxes on employee stock transactions Non-GAAP operating loss Non-GAAP operating margin Total revenue Net cash used in operating activities Add: Capitalized internal-use software costs Add: Capital expenditures Free cash flow Free cash flow margin FY'19 $149,805 $(98,108) 18,617 106 $(79,385) (53)% FY'19 $149,805 $(68,834) (975) (1,954) $(71,763) (48)% FY'20 $236,577 $(233,175) 143,341 520 $(89,314) (38)% FY'20 $236,577 $(82,057) (3,610) (1,040) $(86,707) (37)% Q1'20 $50,904 $(33,383) 6,451 76 $(26,856) (53)% Q1'20 $50,904 $(31,031) (992) (346) $(32,369) (64)% Q1'21 $77,028 $(45,144) 13,353 263 $(31,528) (47)% Q1'21 $77,028 $(19,989) (596) (643) $(21,228) (28)% 57#58GAAP to Non-GAAP Reconciliations (in thousands, except percentages) GAAP Gross profit - subscription() Less: Revenue - subscription not associated with the 2018 Cohort(2) Add: Cost of revenue subscription not allocated to the 2018 Cohort (3) Less: GAAP Sales and marketing expense Add: Sales and marketing expense not allocated to the 2018 Cohort(4) 2018 Cohort contribution Subscription revenue associated with the 2018 Cohort 2018 Cohort contribution margin GAAP Revenue- subscription Less: GAAP Cost of revenue -subscription GAAP Gross profit-subscription (3) GAAP Cost of revenue- subscription Less: Stock-based compensation expense-cost of revenue- subscription Less: Employer taxes on employee stock transactions - cost of revenue -subscription Less: Cost of revenue- subscription allocated to the 2018 Cohort Cost of revenue -subscription not allocated to the 2018 Cohort FY'18 $56,405 (9,312) $47,093 FY'18 $9,312 (327) (3,021) $5,964 FY'19 $130,206 (28,395) $101,811 FY'19 $28,395 (1,167) (5,323) $21,911 FY'20 $208,633 (49,283) $159,350 FY'20 $49,283 (2,572) (4,859) $41,843 (2) GAAP Revenue subscription FY'18 $47,093 (35,393) 5,964 (54,531) GAAP Sales and marketing expense 14,362 $(22,505) $21,012 (107)% Less: Revenue -subscription associated with the 2018 Cohort Revenue subscription not associated with the 2018 Cohort Less: Stock-based compensation expense - sales and marketing Less: Employer taxes on employee stock transactions - sales and marketing Less: Sales and marketing expense allocated to the 2018 Cohort Sales and marketing expense not allocated to the 2018 Cohort FY'19 $101,811 (89,515) 21,911 (115,792) 102,322 $20,737 $40,691 51% FY'18 $56,405 (21,012) $35,393 FY'18 $54,531 (3,483) (36,686) $14,362 FY'19 $130,206 (40,691) $89.515 FY'19 $115,792 (6,545) (6,861) $102,322 FY'20 $159,350 (161,942) 41,843 (166,361) 156,470 $29,360 $46,691 63% FY'20 $208,633 (46,691) $161,942 FY'20 $166,361 (14,734) (271) 5,114 $156,470 58#59CONFLUENT