Snowflake (SNOW) reported earnings that met expectations in the third quarter, with revenue beating Wall Street targets. The enterprise software maker’s product revenue guidance fell short of expectations. SNOW shares initially fell, then reversed, as investors focused on the improved outlook for free cash flow.
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“The key growth was a rapidly improving FCF story in a positive Snowflake,” Morgan Stanley analyst Keith Weiss said in a report. “For fiscal 2024, management expects an FCF margin of 23%—just 200 basis points below its long-term target of 25%.”
The company reported third-quarter earnings after the market closed on Wednesday. For the full-year financial year 2024, which starts in the April 2023 quarter, Snowflake said it expects product revenues to grow 47%, below consensus estimates of 52%.
Because Snowflake’s business model is consumption-based rather than subscription-based, bearish investors have raised concerns that a possible U.S. recession could limit demand. Snowflake’s revenue depends on how much data its customers collect and store on their cloud computing platforms.
For the quarter ended October 31, Snowflake said it lost 63 cents per share, compared with a loss of 51 cents a year earlier. Analysts polled by FactSet had expected Snowflake to post a loss of 63 cents a share.
The company reports results using generally accepted accounting principles, or GAAP. Snowflake does not separate adjusted earnings in its releases.
The software maker said revenue rose 67% to $557 million in the third quarter. Analysts had forecast revenue of $539.4 million.
SNOW Stock: Income Outlook Mises
In Snowflake’s earnings report, product revenue rose 67% to $522.8 million. $505.2 million.
“To be clear, guidance for 67% revenue growth in the third quarter and 47% growth in fiscal 2024 is very impressive in this macro (economy) and certainly speaks to nothing,” said Carl Keirstead, an analyst at UBS, in a report. broke with That is, the investor’s expectations went towards this print.”
For the current quarter ending in January, Snowflake expects product revenue of $537.5 million, at the midpoint of its forecast. Analysts had expected $549.2 million.
SNOW shares initially fell on the earnings release. But Snowflake shares rose 7.8% to close at 154.04. stock market today.
Snowflake reserve down 57% for 2022 entering the earnings report.
Snowflake sells data analytics and management tools that run on cloud computing platforms such as Amazon Web Services. amazon.com (AMZN).
In the middle of a bear market program growth resources, according to the software stock’s Relative Strength Rating, it has a best possible 17 out of 99. IBD Stock Check.
Follow Reinhardt Krause on Twitter @reinhardtk_tech For updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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