Snowflake (SNOW) revenue Q1 2022

Snowflake banners adorn the New York Stock Exchange to market the software company’s debut in New York on September 16, 2020.

Source: Snowflake

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

This is how the company did it:

  • Merits: Loss of 70 cents per share
  • Revenue: According to Refinitiv, $ 228.9 million versus $ 212.9 million analyst expects.

Sales were up 110% year over year for the first quarter of the fiscal year ended April 30, according to a statement. In the previous quarter, sales rose by 117%. The company’s net loss increased from $ 93.6 million to $ 203.2 million.

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

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

In terms of projections, Snowflake anticipates product sales of $ 235 million to $ 240 million for the second quarter of fiscal year, representing 93% of total Snowflake sales for the first quarter of fiscal year. In the middle of the range, that would mean 171% growth. The forecast was above the FactSet consensus estimate of $ 235.4 million.

For the full 2022 fiscal year, Snowflake called for product sales of $ 1.020 billion to $ 1.035 billion, which is mid-range growth of 86% and above the FactSet consensus of $ 1.02 billion. In March, Snowflake forecast full year product sales of $ 1.00 to $ 1.02 billion. Snowflake also raised its adjusted operating margin forecast from -23% to -17%.

Excluding the after-business move, Snowflake stocks are 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 stocks to buy them for their hold equivalent.

“With the stock down ~ 50% from its highs since December 2020, compared to a 1% decline for our broader software coverage and + 4% for the Nasdaq over the same period, we believe investor expectations have gotten more balanced and see outperformance as one way in that direction, as we believe that the sustainability of growth is not fully reflected in the company’s current valuation, “the analysts write.

They said investors could take advantage of growth opportunities again and that Snowflake could introduce long-term growth and margin projections at its Snowflake Summit in June that could propel the stock.

CLOCK: Why this trader is buying Snowflake stock

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