Snowflake Reported Huge Revenue Growth in Its First Quarterly Report. Here’s Why the Stock Is Falling.
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Snowflake shares are sagging in late trading Wednesday after the cloud-based data warehouse firm posted mixed results in its first earnings report as a public company.
Snowflake (ticker: SNOW) went public in mid-September at $120 a share, more than doubling on the first of trading to $254. The stock has gradually traded higher from there, trading as high as $342 on an intraday basis. Expectations for the company have been sky high, leaving the stock vulnerable to a bout of profit-taking, which seems to be what’s unfolding in the wake of today’s earnings report.
For the fiscal third quarter ended October 31, Snowflake posted total revenue of $159.6 million, up 119% from a year ago, with product revenue of $148.5 million, up 115%. (Wall Street was expecting $147.5 million, although it isn’t clear if that reflects the outlook for overall revenue or for the company’s preferred measure, which is product revenue.)
Snowflake reported “remaining performance obligations” of $927.9 million, up 240%, with a “net revenue retention rate,” a measure of repeat business, of 162%, a gaudy level few other companies ever match.
Snowflake reported an operating loss of $48.1 million and negative free cash flow. The company had a net loss of $1.01 a share, wider than the analyst forecast for a loss of 26 cents a share.
Snowflake is projecting January quarter product revenue of $162 million to $167 million, up between 97% and 103%, with an operating margin of -30%. For the full year, Snowflake sees product revenue of $538 million to $543 million, with product gross margin of 68% and operating margin of -40%.
“We are pleased with our performance this first quarter as a public company,” Snowflake CEO Frank Slootman said in a statement. “The period was marked by continued strong revenue growth coupled with improving unit economics, cash flow, and operating efficiencies.”
In late trading, Snowflake shares are down 3%, to $284.
Write to Eric J. Savitz at eric.savitz@barrons.com