Snowflake reported disappointing Q4 results below street estimates

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Snowflake is a cloud computing-based data warehousing company. It offers a cloud-based data storage and analytics service, generally termed "data warehouse-as-a-service". It has announced the Q4 results yesterday, let us look at the key numbers:

Earning - The company reported a loss of 43 cents per share (adjusted). In the previous quarter, the company reported a loss of 51 cents per share.

Revenue - Snowflake reported revenue of $383.8 million in the fourth quarter, higher than analysts' estimate of $372.6 million. The revenue increased by 101% YoY and 12% growth sequentially. The vast majority of Snowflake’s revenue comes from product revenue, which reflects the use of its service for storing and running queries on a variety of data. 

Gross Margins - For the fourth quarter, the adjusted gross margin reported by the company was at 70%. It is below the street estimate of 70.9%. However, the margins are 62% higher than two year-ago periods.

FY23 Outlook - The company has called for 65% to 67% product revenue growth. It is in line with analysts who were expecting growth of 66%, on average.

Acquisition - Snowflake informed that it plans to acquire data start-up Streamlit. Snowflake agreed to pay $800 million for Streamlit.

Other Updates - The company had almost 6,000 customers at the end of the fiscal fourth quarter. The headcount soared 60% during the past year, nearing 4,000 at the end of the quarter. The company has 184 customers with trailing 12-month product revenue greater than $1 million.

Share target price - The 24 analysts offering 12-month price forecasts for Snowflake Inc. have a median target of $339.50, with a high estimate of $575 and a low estimate of $210.

The Snowflake stock crashed more than 30% post the result and closed 15.35% lower at $224.05 per share.

Snowflake Q4 Results Review:

The topline reported by the company is higher than the street estimates, but the bottom-line has suffered. In Q4, the company reported the slowest revenue growth since at least 2019. Also, the outlook for future quarters disappointed the market. The company forecasts that the growth in product revenue growth will be slow, and this segment makes up the most of total revenue. 

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