Snowflake Revenue Beats Estimates and Full-year Guidance is Raised

Cloud data analytics vendor Snowflake, who had the biggest U.S. software IPO ever in 2020, reported its financial results this week.

The company, who received an upgrade from Goldman Sachs earlier in the month, reported revenue that beat estimates and also raised its full-year guidance.

Shares were falling in after-hours trading on Wednesday as much as 8% however, as the company barely met expectations for product revenue for the full fiscal year. This is Snowflake’s main source of total income.

For the first quarter, the company reported a loss of 70 cents a share on $228.9 million. According to analysts per Refinitiv, revenue was expected to be only $212.9 million.

Revenue surged 110% year over year in the fiscal first quarter, which ended on April 30.
In the previou quarter revenue had increased by 117%. The net loss for Snowflake however grew to $203.2 million from $93.6 million.

According to Mike Scarpelli, Snowflake’s CFO, renegotiations with cloud providers benefited the company’s gross margin.

He also said the company is working on new chip technologies that could bring performance gains. “That’s more next year,” Scarpelli said.

Looking ahead the company expects fiscal second quarter it expects to generate $235 million to $240 million in product revenue, which delivered 93% of Snowflake’s total revenue in the fiscal first quarter. At the middle of the range that would represent 171% growth. The FactSet consensus estimate was for $235.4 million.

For the full 2022 fiscal year Snowflake called for $1.020 billion to $1.035 billion in product revenue. At the middle of the range this implies 86% growth and is more than the $1.02 billion FactSet consensus.

“With the stock ~50% off its highs from December 2020 relative to a 1% decline for our broader software coverage and +4% for the Nasdaq over the same time period, we believe investor expectations have become more balanced and see a path towards outperformance, as we believe the durability of growth is not fully reflected in the company’s current valuation,” Goldman Sachs analysts wrote this month as they upgraded their rating from “hold” to the equivalent of buy.
Snowflake also said in its earnings release that it no longer has a corporate headquarters, as its workforce is “globally distributed.”

The company designated Bozeman, Montana, as its principal executive office because it’s required by the SEC to have one and that’s where CEO Frank Slootman and CFO Mike Scarpelli are based.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.