Big-data company Confluent Inc. had a strong debut today as it entered the Nasdaq stock exchange, as its shares climbed 25% on their first day of trading.

The company raised $828 million in its initial public offering as it sold 23 million shares at $36 each, above a projected range of $29 to $33. The stock, which trades under the ticker symbol “CFLT,” ended the day at $45.02. That gave it a market value of $11.4 billion.

And Confluent wasn’t the only company to launch a successful IPO. Doximity Inc., a provider of a healthcare platform for doctors, raised $606 million and today saw its shares more than double in their debut today, to $53, resulting in a market capitalization of $9.5 billion.

Confluent sells an event streaming platform that’s based on the open-source Apache Kafka software. Kafka is used by enterprises to track events that happen inside their organization in real time, such as a sale, trade, order or customer response. It makes this data easily accessible in real-time streams and provides support for fault-tolerant and highly scalable messaging systems.

It’s said that the open-source version of Kafka is deployed at more than 80% of the Fortune 100, where it’s used by information technology teams to stream diagnostics info from clouds and data center infrastructure to monitoring applications. Marketing teams can also use Kafka to transport website activity metrics to analytics systems.

In fact, the platform supports many different use cases, wherever it might be useful to stream data in real time. With enterprises becoming more complex, with data living in various clouds, Kafka has only become more valuable. The main advantage is its speed, since it can transport trillions of data points per day with a latency of just milliseconds.

Confluent sells a commercial version of the Apache Kafka platform, called Confluent Cloud, that’s available as a service on clouds such as Amazon Web Services, Google Cloud and Microsoft Azure. It’s also available direct as the Confluent Platform.

Confluent co-founder and Chief Executive Jay Kreps told CNBC in an interview today that his company sees the big cloud providers as partners.

“One of the reasons they like working with us is because we help connect all these new layers that are in the cloud into a lot of the data that exists in other clouds or on premise,” Kreps said. “Really tying that together around a central nervous system is a huge problem that companies have to face.”

Confluent says some of its most notable clients include Walmart Inc., Robert Bosch GmbH, Expedia Group Inc., The Home Depot Inc., Disney+, Hotstar and ING Groep NV.

Despite the company’s strong Nasdaq debut today, question marks remain about Confluent’s prospects in the longer term. The company’s pre-IPO prospectus showed that its revenue rose 58% last year, to $236.8 million. However, its research and development costs rose by 81% in the same period and stock-based compensation also soared, which meant Confluent posted a net loss of $229.8 million in 2020, following a $95 million loss in 2019.

Plenty of other companies built on open-source software have struggled to maintain profitability. For example, the database firm MongoDB Inc. made its public debut in 2017 and is still unprofitable four years later, as is Elastic NV, which entered the stock market in 2018.

Then there’s Cloudera Inc., a big-data platform provider based on Apache Hadoop, which famously merged with its main rival Hortonworks Inc. in 2019. At the time, both companies’ stocks were dropping and they were burning through cash. Cloudera did eventually become profitable, but that wasn’t enough to satisfy investors and it ultimately became a private company again after being bought out by private equity firms KKR and CD&R.

That said, Confluent remains an interesting bet and it definitely has both its fans and a compelling offering. Analyst Holger Mueller of Constellation Research Inc. told SiliconANGLE the secret to success for companies whose offerings based on open-source is to take a software-centric approach with license options that are deployed across key public clouds and perhaps also on-premises. “Confluent is following that playbook to a tee, so it looks very promising,” he added.

Sean Knapp, co-founder and CEO of data engineering startup Ascend.io, told SiliconANGLE that accelerated growth in digital products and services has led to strong interest in real-time data. As such, he said he is very optimistic about Confluent’s chances.

“[Interest in real-time data] has led to Apache Kafka becoming an integral part of many organizations’ data infrastructures, and Confluent’s continued, explosive growth is a testament to how quickly that happened,” Knapp said. “Confluent has caught the attention of startups and the Fortune 500 alike, particularly as companies rely on data more than ever to fuel their digital business.”

Photo: Confluent