Snowflake (SNOW) Reports Revenue Growth of 119% in First Quarter as Public Company, Analysts Raise PTs
In its first quarterly report since going public, Warren Buffett-backed Snowflake (NYSE: SNOW) posted a loss of $1.01 per share, which was narrower than the loss of $1.92 per share in the year-ago quarter. However, the loss was wider than the $0.26 loss per share expected by analysts.
Revenue was reported at $159.6 million, representing a 119% revenue growth on a year-to-year basis, against 121% revenue growth recorded in the prior quarter. The top-line results beat the consensus of $147.52 million.
“We are pleased with our performance this first quarter as a public company,” Snowflake CEO, Frank Slootman said. “The period was marked by continued strong revenue growth coupled with improving unit economics, cash flow, and operating efficiencies. Our vision of the Snowflake Data Cloud mobilizing the world’s data is clearly resonating across our customer base.”
In general, analysts rated the latest quarterly report from SNOW as solid. Cowen analyst J. Derrick Wood said he expects “continued consistency in superior growth”.
“This was a solid first qtr out of the gate w/ a 9% product rev beat & strong margin upside. While we only modestly increased ests, this was expected as mgmt has solid visibility into growth & it takes a guidance approach that is not nearly as conservative as many others. Indeed, we are still modeling over 85% growth next yr, which is nearly triple the large cap growth group,” Wood wrote in today’s research note sent to clients.
“We also note that 4Q consumption trends tend to be impacted by vacation seasonality, which can limit rev upside in a 4Q. We think SNOW's push into the large enterprise (which started last year) is set to take greater hold in CY21 & build the foundation for strong durable growth in the year's beyond. SNOW's unique transformative mkt position along w/ its superior growth +margin profile should continue to warrant a steep premium. Reiterate”
As for the third quarter, SNOW - which provides a cloud-based alternative solution to data warehouses - said it expects product revenue to come in between $162 million to $167 million, which would ultimately total an increase of 97% to 103% year-over-year.
“Mgmt tone was bullish as customers on avg are consuming more than expected, with upside in sectors like M&E and digital-first, offsetting distressed industries,” added Wood, who reiterated an “Outperform” rating on SNOW with a price target now raised to $310.00 per share from prior $295.00.
Similarly, Mizuho’s Gregg Moskowitz maintained a “Buy” rating on SNOW with a price target also hiked to $310.00 per share (up from $300.00).
“SNOW reported strong inaugural results, led by revenue growth of 119% Y/ Y in F3Q that easily beat our ~100% forecast, as the co. is seeing even more consumption than expected. F4Q guidance was roughly in line, but we believe it will likely prove conservative. We maintain that SNOW is enabling customers to transform from large data stores to data-driven organizations, and that companies will increasingly standardize on SNOW. Although SNOW already trades at a substantial premium, we believe the shares can go higher as the company continues to grow at elevated rates over the NTM and beyond,” Moskowitz said in a note.
SNOW share price is trading 2.7% lower in pre-open Thursday.