Snowflake Earnings (SNOW) Q1 2022

Snowflake shares fell as much as 8% in extended trading on Wednesday after the data analytics software company barely met analysts’ expectations for product revenue, the company’s main source of total revenue. for the entire fiscal year.

Here’s how the company did it:

  • Profits: Loss of 70 cents per share
  • Income: $ 228.9 million, compared to $ 212.9 million that analysts expected, according to Refinitiv.

Revenues grew 110% year-on-year in the fiscal first quarter, which ended April 30, according to a statement. In the prior quarter, revenues increased 117%. The company’s net loss increased to $ 203.2 million from $ 93.6 million.

Renegotiations with cloud providers benefited the company’s gross margin, Mike Scarpelli, the company’s chief financial officer, said in a conference call with analysts. He said Snowflake implemented a storage compression change in April that will expand margins.

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

Regarding guidance, Snowflake said that in the second fiscal quarter it expects to generate $ 235 million to $ 240 million in product revenue, which generated 93% of Snowflake’s total revenue in the first fiscal quarter. In the middle of the range, that would represent growth of 171%. The projection beat the FactSet consensus estimate of $ 235.4 million.

For the full fiscal year 2022, Snowflake requested $ 1.02 billion to $ 1.035 billion in product revenue, which in the middle of the range implies growth of 86% and is more than the FactSet consensus of $ 1.02 billion. In March, Snowflake’s full-year guidance was $ 1.00 billion to $ 1.02 billion in product revenue. Snowflake also raised the adjusted operating margin forecast to -17% from -23%.

Excluding the after-hours movement, Snowflake’s stock is down about 17% year-to-date, while the S&P 500 Index is up nearly 12% over the same period.

Earlier this month, Goldman Sachs analysts upgraded their rating on Snowflake’s stock to buy from the hold equivalent.

“With the stock ~ 50% out of its December 2020 highs relative to a decrease of 1% for our broader software coverage and + 4% for the Nasdaq over the same time period, we believe the expectations of the Investors have become more balanced and we see a path to superior performance as we believe the durability of growth is not fully reflected in the current valuation of the company, ”the analysts wrote.

They said investors could go back to looking for growth opportunities, and that Snowflake could introduce long-term growth and margin guidance at its Snowflake Summit conference in June that could boost action.

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