Shares of Confluent, Inc. (CFLT) plunged 11.84% in Thursday's trading session following the cloud data streaming platform provider's disappointing second-quarter guidance and lowered full-year outlook, despite beating first-quarter expectations.

Confluent reported better-than-expected Q1 results on Wednesday after the market close, with revenue of $271.1 million, up 24.8% year-over-year, and adjusted earnings per share of $0.08. However, the company's Q2 revenue guidance of $267.5 million fell 3.9% below analysts' estimates, while full-year revenue guidance was lowered to $1.11 billion at the midpoint, down 1.3% from previous expectations.

CEO Jay Kreps cited a slowdown in new use case additions among larger customers as a key factor impacting cloud consumption growth. "We are taking a conservative approach in our guidance, not assuming a rebound in consumption given the current environment," Kreps stated during the earnings call. The company also noted that some larger customers began focusing on cost optimization efforts in March, a trend that continued into April.

Adding to the negative sentiment, several analysts cut their price targets for Confluent following the earnings report. Canaccord Genuity lowered its target from $38 to $32, Bernstein reduced its target from $35 to $32, and Needham slashed its target from $40 to $26. These downgrades reflect growing concerns about Confluent's growth trajectory in the face of macroeconomic uncertainties and customer optimization efforts.

Despite the challenges, Confluent reported some positive developments, including a record addition of 340 new customers in Q1 and strong traction with new offerings like WarpStream and Freight Clusters. However, these bright spots were overshadowed by the cautious outlook, leading to the significant stock price decline on Thursday.