Shares of Confluent, Inc. (CFLT) experienced a dramatic 24-hour plunge of 28.07% on Thursday, despite reporting better-than-expected second-quarter 2025 financial results. The sharp decline was primarily driven by the company's disappointing outlook for the third quarter, which fell short of investor expectations.

For Q2, Confluent reported adjusted earnings per share of $0.09, surpassing the analyst estimate of $0.08. Revenue came in at $282.3 million, beating the expected $278.4 million. The company's adjusted operating income reached $17.8 million, resulting in an adjusted operating margin of 6.3%. However, these positive results were overshadowed by the company's guidance for Q3.

Confluent projects Q3 adjusted EPS between $0.09 and $0.10, which is at the lower end of analyst expectations of $0.10. Additionally, the outlook for Q3 subscription revenue of $281-$282 million and the full-year subscription revenue forecast of $1.105-$1.11 billion were perceived as conservative by the market. This cautious outlook, combined with broader economic uncertainties, likely contributed to the sharp sell-off in Confluent's stock. The market's reaction was further amplified by Canaccord Genuity's decision to cut its target price for Confluent from $32 to $27, reflecting lowered expectations for the company's near-term performance.