Data connectivity company Confluent announced Monday evening that it is acquiring startup WarpStream for an undisclosed amount to diversify its data streaming offerings. It’s an important deal that shines light on a new batch of data streaming startups while highlighting the shifting economics of the market.
There is evidence that this is an industry trend. For example, an anonymous source this week told Futuriom that Confluent recently lost a multiyear deal with Johnson Controls, which signed up instead with venture-backed startup Redpanda. That company, like WarpStream, has a BYOC solution. Futuriom was shown a contract in which the new package of data streaming services reduced JCI’s costs by more than 60% annually.
A Confluent spokesperson told Futuriom that the company doesn’t comment on specific customer contracts. The value of the Confluent deal was not disclosed, but Confluent revealed in a statement that the deal was “not material” to its financials for the remainder of 2024, indicating it was not a large price tag.
In addition to its flexible BYOC approach, Kreps cited WarpStream’s feature capabilities, including something called offset-preserving replication and direct-to-S3 writing using Confluent’s Freight clusters .Wall St. analysts backed up the idea that Confluent’s move on WarpStream is about diversification.
Ader also believes that Confluent was compelled to buy WarpStream because of that company’s growing popularity. “We have heard in the channel that WarpStream is a state-of-the-art solution, so this feels very much like a buy-versus-build decision for the Confluent engineering team with a TAM expansion motivation,” wrote Ader.