Snowflakes Shares fell as much as 16% in extended trading on Wednesday after the data analytics software maker disappointed analysts by saying it did not expect a positively adjusted operating profit margin. for the current quarter.
Here’s how the company did it:
- Income: Lost 53 cents per share
- Turnover: $422.4 million, compared with $412.8 million as expected by analysts, according to Refinitiv.
The company’s revenue grew about 85% year-over-year in the quarter ended April 30, according to a report. declare. During the previous quarter, revenue increased 101%. Most of Snowflake’s revenue comes from product sales, up 84%, compared with 102% in the previous quarter. The figure illustrates the use of Snowflake’s software to store and execute queries on data stored in its system.
Snowflake reported no adjusted operating margin, while analysts surveyed by StreetAccount had predicted a -1.2% profit margin. Snowflake’s net loss amounted to $165.8 million, compared with $203.2 million in last year’s quarter.
Mike Scarpelli, chief financial officer of Snowflake, said in a meeting with analysts: “Last year, we saw some customers have much higher consumption than expected.
“Today, some customers face a more challenging operating environment, specific customers consume less than we anticipated, and amid a changing economic landscape, we believe that businesses Their products are unique, most notably consumer-facing cloud companies.Although these customers are still growing, we believe that as long as they are impacted by economic fluctuations macro, then consumption will be affected.”
An analyst put Facebook’s parent company on Meta . Platform, Netflix or Peloton, all of which posted lower-than-expected first-quarter revenue, along with retailers Amazon, Target and Walmart, none of which were as profitable as analysts had thought. Scarpelli said none of the companies the analyst asked were among those that downgraded Snowflake’s results.
Scarpelli said the slowdown came in April, prompting executives to reset their forecasts for specific customers for the entire financial year, Scarpelli said. The past two weeks of May have been strong, but macroeconomic concerns have made leaders feel more cautious, Scarpelli said.
During this quarter, Snowflake took steps to become more relevant in specific industries. It announced a Retail Data Cloud based on an expanded partnership with Amazon, as well as Life science and healthcare data cloud. One of Snowflake’s rivals, the privately held Databricks, has also begun to focus on industries. Scarpelli said Snowflake has switched to a vertical rather than geographical approach in its sales organization.
Snowflake had 6,322 customers at the end of the quarter, up from 5,944 at the end of January.
According to the guidance, management has called for product revenue growth for the fiscal second quarter of 71% to 73% and an adjusted operating margin of -2%. Analysts polled by StreetAccount had expected a growth of 72% and a corrected margin of 0.3%.
For the full fiscal year, Snowflake continued to grow product revenue from 65% to 67% and adjusted operating margins 1%. The StreetAccount consensus is 66% product revenue growth and 1% adjusted operating margin.
Snowflake’s software rapidly expanded, with 120% revenue growth, as Launched on the New York Stock Exchange in September 2020 and growth has not slowed much. But investors have become less favorable to the stock, along with other tech companies that are growing fast but generating no income. After-hours moves aside, Snowflake stock is down about 61% since the start of the year, compared with a 16% drop for the US stock index S&P 500 over the same period.
Sales forcethrough the joint venture branch of the company, sell the rest of the Snowflake shares it obtained through its initial public offering during the first quarter. With Snowflake’s share price cut, Rosenblatt Securities upgraded it to a buy rating from the equivalent of a hold on Monday.
“Snowflake is not a growth company by any means, and we invest only with defined expectations of business return,” Chief Executive Officer Frank Slootman said during the conference call. “Investment in research and development must lead to innovation and differentiation. Investment in sales and marketing must lead to effective growth, and investment in G&A focuses on the efficiency of systems and processes. Our strategic focus on continuous growth informs all of our investments, along with free improvement- generating cash flow.”
Scarpelli said Snowflake still plans to add more than 1,500 employees during the full financial year.
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