SNOW Stock Tumbles As Snowflake Offers Weak Product Revenue Guidance

Snowflake (SNOW) reported third-quarter earnings that met expectations while revenue beat Wall Street targets. The business software maker’s product revenue forecast came in below expectations. SNOW stock first fell and then reversed.




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The company announced its third-quarter results after the market closed on Wednesday. For fiscal 2024, which begins with the April 2023 quarter, Snowflake said it expects product revenue growth of 47%, below consensus estimates of 52%.

Since Snowflake’s business model is consumption-based rather than subscription-based, bearish investors have raised concerns about a possible US recession dampening demand. Snowflake’s revenue is tied to the amount of data its customers analyze and store on cloud computing platforms.

For the quarter ending Oct. 31, Snowflake said it lost 63 cents per share compared to a loss of 51 cents a year earlier. Analysts polled by FactSet had expected Snowflake to post a loss of 63 cents per share.

The company reports its results using generally accepted accounting principles, or GAAP. Snowflake does not detail adjusted earnings in its publications.

Third-quarter revenue soared 67% to $557 million, the software maker said. Analysts had forecast revenue of $539.4 million.

Stock SNOW: Earnings outlook not improving

Snowflake’s revenue report also indicates that product revenue increased 67% to $522.8 million from estimates of $505.2 million.

At UBS, analyst Karl Keirstead said in a report: “To be clear, 67% revenue growth in the third quarter and the guide to 47% growth in fiscal year 2024 are very impressive in this macro (economy) and certainly not talking about anything ‘broken’ with Snowflake.That said, investor expectations were high in this print.

For the current quarter ending in January, Snowflake expects revenue of $537.5 million amid its outlook. Analysts expected $549.2 million.

SNOW stock initially fell on earnings release. But Snowflake stock reversed 2.1% to nearly 146 in morning trade on the stock market today.

snowflake stock was down 57% for 2022 before the earnings report.

Snowflake sells data management and analysis tools that run on cloud computing platforms such as Amazon Web Services, which is part of Amazon.co.uk (AMZN).

In the middle of the bear market software growth stocks, the software stock has a relative strength rating of 17 out of the best possible 99, according to 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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