IBM’s $11 Billion Confluent Deal: 5 Things To Watch

IBM’s deal for Confluent, should it close, comes with some opportunities for solution providers partnered with one or both vendors.

IBM’s $11 billion purchase of Confluent isn’t set to close until the middle of 2026, but the deal gives solution providers plenty of opportunities to get excited for once the deal closes.

The addition of 11-year-old, Mountain View, Calif.-based Confluent’s data streaming and event processing technology to the portfolio of 114-year-old, Armonk, N.Y.-based mainframe, hybrid cloud and artificial intelligence products vendor IBM sets up new and improved ways solution providers can talk to their customers about unlocking AI use cases, modernizing IT estates and more.

Both Confluent and IBMhave sought this year to increase the overall percentage of company revenue that comes through the channel, according to CRN’s 2025 Channel Chiefs.

[RELATED: Confluent To Spur Partner Integrations, Development With $200M Investment]

IBM-Confluent Deal

The two vendors have had something of a technology partnership over the years, which could simplify integrations of the product portfolios and cross-selling opportunities for solution providers.

A Confluent Platform for IBM Cloud Pak for Integration, as an example, powered a product that extended Bulgaria-based DSK Bank’s integration layer extension project back in 2022, according to an IBM statement from the time. That platform was installed on Red Hat OpenShift with IBM InfoSphere Change Data Capture (CDC).

Users of IBM’s webMethods enterprise middleware suite have had the ability to integrate with Confluent Kafka systems and services. And Confluent Platform users have had options for IBM MQ Source Premium and IBM MQ Sink Premium connectors for bi-directional flow of real time data events for the mainframe.

Here’s more on what solution providers need to watch as IBM and Confluent try to close the deal and start integrating their products.

Partner Program Investments

IBM Senior Vice President for Ecosystem, Strategic Partners and Initiatives Kareem Yusuf recently suggested to CRN an evolution to the vendor’s partner program that better aligns its programs and incentives with business strategy, works with service partners on measuring influence and better maps products to the customer segments they best serve.

This strategy bodes well for solution providers partnered with one or both of the vendors assuming the deal closes and product integration is swift.

Likewise, Confluent has been at work investing in its partner program, just this summer committing to invest $200 million over the next three years to expand the reach and capabilities of the company’s global partner ecosystem around its data streaming platform.

Although it’s not yet clear what happens to that fund once the deal closes in the middle of 2026, no doubt shared solution providers between the two vendors and their own separate ecosystems will be exploring cross-selling and upselling opportunities as the two portfolios integrate.

While IBM appears to have been mostly integrating HashiCorp’s products and partner motions into its own, Red Hat has maintained its own separate partner program due to the importance of cloud neutrality to Red Hat’s business model.

During Confluent’s most recent quarterly earnings report in October, Confluent CEO Jay Kreps said that partners sourced more than 25 percent of the vendor’s new business over the last twelve months, up from 20 percent the prior quarter, according to a call transcript.

“This is a clear sign of the consistency and scale we're building through our established partner relationships, which are instrumental in broadening our footprint and driving customer expansion,” Kreps said.

Integration Opportunity Across IBM Portfolio

IBM owning Confluent is logical and makes strategic sense, with Confluent data streaming complementing IBM’s hybrid cloud, automation and data and AI software offers, according to a William Blair report. Data streaming and event processing represent one of the fastest-growing segments of the data infrastructure market.

Organizations modernizing their infrastructure and adopting AI-driven applications makes real-time data and data streaming architectures that go beyond traditional, non-real-time batch processing essential, the investment firm said. IBM has had a gap in real-time streaming abilities in its end-to-end data and AI stack.

IBM and Confluent said in the deal announcement that the latter’s total addressable market doubled over the past four years from $50 billion to $100 billion in 2025. This is IBM’s largest acquisition since buying HashiCorp for $6.4 billion in February.

Confluent has more than $1 billion in annual revenue, making it the leading vendor for connecting modern cloud services and enterprise software through real-time streaming, ditching legacy, slower batch-style data movement, Bernstein said in a report.

Confluent is an opportunity for IBM customers relying on legacy middleware tools, Bank of America said in a report. Confluent should add a layer of data in motion to the IBM portfolio, adding to the multicloud management and infrastructure automation capabilities from HashiCorp, Linux and containers capabilities of Red Hat, financial operations (FinOps) technology of Apptio, AI operations (AIOps) of Instana and more.

Real-time capabilities in Watsonx.data would take the IBM product to another level. For Turbonomic, Confluent should improve its ability to monitor and optimize Kafka, according to Bank of America. Confluent should become accretive to IBM’s earnings before interest, taxes, depreciation and amortization (EBITDA) in the first year of ownership and then accretive to free cash flow (FCF) in the second year.

Confluent was founded in 2014 by former LinkedIn engineers Jay Kreps, Jun Rao and Neha Narkhede who developed the Apache Kafka open-source data and event streaming platform that Confluent’s platform is based on. Kreps serves as Confluent’s CEO, although his role after the acquisition isn’t yet clear.

In May, IBM bought DataStax, a developer of database, data streaming and application development software, in a bid to expand the data management capabilities of its IBM Watsonx AI product portfolio–perhaps opening up the door to further innovation after the Confluent deal closes.

IBM’s Open-Source Commercialization Success

IBM has already gained a reputation for the commercialization of open source software in the years since buying Red Hat and as it works on integrating HashiCorp, according to Bernstein. The IBM deal likewise is a chance for Confluent to drastically scale to global distribution.

Red Hat and HashiCorp brought strong communities with subscription business models while IBM added global distribution, enterprise support and cross-selling. For IBM customers, open source software is appealing for preventing vendor lock-in.

Bank of America estimated an additional 2 percent growth to IBM’s software business in 2026 and 2027–representing about $600 million in revenue contribution by Confluent should the deal close by the middle of 2026. The investment firm estimates about 10 percent incremental growth to IBM’s data software business in 2026 and 2027 from Confluent.

Confluent could bring greater developer and open source ecosystem influence to IBM, according to William Blair. Likewise, IBM’s distribution muscle should help with Confluent’s adoption and monetization.

IBM should see $500 million in run rate operating expense (OpEx) saving, with about 80 percent of that realized by 2027, according to the firm. Bernstein predicts pro forma net income of $13.7 billion for 2027 due to revenue and cost synergies.

IBM will also help grow Confluent sales overseas and in other markets where IBM has a stronger footprint. Confluent is currently used in 40 percent of the Fortune 500 with 40 percent penetration internationally.

One of Confluent’s biggest selling points has been its neutrality with the hyperscaler cloud it works with, which could make its acquisition by IBM a concern if not for how well IBM subsidiary Red Hat has maintained its similar cloud neutrality in the years since its acquisition by Big Blue.

Confluent plus Red Hat pushes that business further into the role of ultimate enterprise open-source Switzerland platform for cloud-native use cases, according to Bernstein.

Data Streaming Essential For AI

Data streaming and event processing are only growing in importance as AI adoption scales, according to a report by Bernstein.

Generative AI is more easily delivered in web or mobile applications built for Java virtual machines (VMs) and other cloud-native technology, adding to Confluent’s popularity and essential role in an AI tools stack, according to the investment firm. GenAI has been harder to deliver through service-oriented architecture for the likes of Windows Server or Linux.

A unified platform between IBM and Confluent that has real-time streaming data, application, application programming interface (API), data integration, data governance and more creates a smart data platform play, according to the investment firm. Data streaming should improve attach rates and cross-selling opportunities for IBM–and its solution providers.

In its most recent quarterly earnings report, Confluent said it had more than 100 AI-native customers on its platform, 21 of them spending more than $100,000 in annual recurring revenue, according to a William Blair report. Confluent also revealed that ChatGPT maker OpenAI is in the process of migrating to its products.

Adding in IBM’s security and compliance prowess should enable more enterprises and regulated industries the comfort in adopting Confluent’s data movement abilities, according to Bernstein.

Confluent should also prove helpful for companies launching AI agents and agentic AI thanks to the vendor’s ability to keep data clean across systems and apps plus connecting, processing and governing reusable and reliable data, according to a Wedbush report.

Buying Confluent also unlocks more opportunities for IBM–and its ecosystem–to knock down data silos to simplify, automate and integrate the disparate systems needed to power AI. With AI vendors and users alike mindful of the reports around AI return on investment (ROI) failure rates, Confluent might hold a key to preventing typical AI buildout issues, according to the investment firm.

Although IBM already has a Kafka-based Event Streams offer for customers, IBM has partnered with Confluent for advanced features since 2020, Bank of America said in a report.

Confluent Overcoming Tough Early 2025

For the company’s 2025 third quarter, ended Sept. 30, Confluent reported total revenue of $298.5 million, up 19 percent from $250.2 million one year earlier. The company reported a net loss of $66.5 million for the quarter.

After a disappointing first half of 2026–due in part to an AI-native customer reducing Confluent Cloud usage and shifting to self-managing internal data platforms–Confluent showed signs of improvement, with life under IBM’s massive international distribution operation set to take the vendor to another level.

On October’s quarterly earnings call, Kreps said Confluent had tightened employee alignment to drive more use cases into production and drive consumption. As a result, the vendor saw more than 40 percent sequential growth in late-stage pipeline.

A report by William Blair commended the work of Chief Revenue Officer Ryan Mac Ban, who took on the role in April after a brief stint as senior vice president and global head of sales. Mac Ban has helped built out specialist teams to bolster multi-product adoption, the investment firm said.

The number of customers with more than $20,000 in annual recurring revenue grew 7 percent year on year. Those with more than $100,000 in ARR grew 10 percent and those with more than $1 million in ARR grew 27 percent, the highest level in two years, according to William Blair.

More multi-tenant offers by Confluent enabling flexible deployments across on-premises and cloud environments pushed win rates above 90 percent in cloud service provider (CSP) displacement deals, a fourfold increase in customer consumption over the past three quarters and more than double the uplift in average deal size, according to the investment firm.

Executives on the call suggested better-than-expected 2025 cloud revenue of $619 million, up 26 percent year on year. They also suggested they expect platform revenue of about $495 million, up 15 percent year on year, in line with prior forecasting, according to a report by KeyBanc. They also raised their earnings margin guide to 7 percent from 6 percent.

Confluent showed growth in its Apache Flink open-source framework for high-throughput, low-latency stream processing, with annual recurring revenue growing 70 percent quarter on quarter to the low double-digit millions of dollars of annual recurring revenue, according to KeyBanc. More than 1,000 customers use Flink, with more than 12 customers contributing $100,000 in ARR and four customers with more than $1 million ARR.

WarpStream, a Kafka-compatible data streaming product with a diskless, cloud-native architecture that Confluent acquired in 2024, saw consumption grow eightfold year on year.