Snowflake shares fall after sales forecast CFO admits ‘cautious’

Shares of Snowflake Inc. fell more than 5% in after-hours trading on Wednesday, as the data software company’s executives posted quarterly revenue that beat expectations but were apprehensive about the quarterly revenue outlook. their IVs.

Revenue rose to $557 million from $334 million in the third quarter, while analysts were modeling $540 million. Snowflakes

reported product sales of $523 million, well above the FactSet consensus of $507 million.

Looking at the fourth fiscal quarter, Snowflake executives are predicting product sales of $535 million to $540 million, while the FactSet consensus is $553 million.

Chief Financial Officer Michael Scarpelli said on Snowflake’s earnings call that while the company has seen weaker consumption patterns in some segments, including smaller businesses, over the past six weeks, ” Recent consumer patterns give us confidence that our biggest and most strategic customers will continue to grow,” according to a transcript provided by Sentieo/AlphaSense.

However, he added that “with the holidays approaching and uncertainty about how our customers will operate, we believe it is more prudent to take a more prudent approach than to be responsible.” He noted that Snowflake remains “committed to generating meaningful free cash flow”.

Additionally, Scarpelli shared that based on current consumer trends, he expects product sales to grow about 47% in fiscal 2024, just slightly below analyst estimates. Analysts on average forecast fiscal year 2023 product revenue of $1.92 billion and 2024 product revenue of $2.91 billion, a growth of about 51%.

That’s actually better than some analysts were expecting, with Evercore ISI analyst Kirk Materne writing ahead of the call that he expects revenue to grow closer to 40% rather than 50%. .

“Ironically, in an investment climate where margins and FCF are becoming more and more important, we believe that proven leverage in the business is perhaps being overlooked in the initial response. ,” Materne wrote after the results were announced but before the call. “However, as we noted entering the quarter, we believe the stock will be stuck in a range until revenue expectations for 2024 come closer to +40% (St. level +50%).”

Shares fell more than 10% shortly after the release of the report but pared those losses midway through the earnings call to about 5% to 6%.

Snowflake recorded a net loss in its fiscal third quarter of $201 million, or 63 cents a share, compared with a loss of $155 million, or 51 cents a share, in the previous quarter. Analysts tracked by FactSet had predicted a loss of 63 cents per share on a GAAP basis.

The company posted adjusted net income per share of 11 cents, compared with 3 cents a year earlier, while analysts were modeling 5 cents.

Snowflake revealed that they have a total of 7,292 customers. The company reported $65 million in free cash, while analysts had expected $2 million. As it looks to the next financial year, Scarpelli expects that Snowflake will slow down hiring but will add more than 1,000 new employees.

Shares of Snowflake have fallen 58% in the past 12 months, as the S&P 500

fell 11%.

See more: Okta promises profits and stocks soar


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