Highlights:
- Future product sales for Snowflake are expected to be between USD 500 million and USD 505 million, representing 60% to 62% growth.
- Some believe that Snowflake is building the groundwork for a new “supercloud” concept by establishing a single system with cloud regions layered on top of the cloud provider layer.
Cloud data warehouse provider Snowflake Inc’s stock soared high by more than 17% in after-hours trading recently. The development has come close on the heels of the company’s impressive second-quarter financial results and increased guidance for the remainder of the year.
Company losses increased during the quarter and amounted to USD 223 million compared to USD 190 million during the same time a year ago. The loss before certain charges, such as stock compensation, came to 64 cents per share while its sales increased to USD 497 million, up from just USD 272 million a year ago. The market had forecast a loss of 56 cents per share on revenue of USD 467 million.
In addition, the firm also registered product revenue of USD 466.3 million, an increase of 83% year-over-year and well above the company’s expectation of USD 435 million to USD 440 million and the USD 439 million expected by analysts.
Frank Slootman, Chairman and Chief Executive Officer of Snowflake, pointed out another positive metric: The company’s product gross margin exceeded 75% before certain cost deductions. Slootman added, “Snowflake’s next frontier of innovation is aimed at transforming how cloud applications are built, deployed, sold, and transacted. We look forward to executing against this growth opportunity.”
A cloud data warehouse provider, Snowflake, can be used by enterprises to consolidate all their data in a single solution and facilitate more efficient data analysis, reporting, and business intelligence. Since businesses only pay for the resources they use, and the service may be expanded as needed, they view it as an economical option.
Some believe that Snowflake is building the groundwork for a new “super cloud” concept by establishing a single system with cloud regions layered on top of the cloud provider layer. Some analysts from market research firms describe it as an abstraction layer that resides above and across hyper-scale infrastructure, connecting on-premises workloads and eventually stretching to the network edge.
The firm also showed promise in other metrics. The remaining performance obligations, a measure of future work, were up 78%, to USD 2.7 billion, at the end of the quarter. At the same time, the rate at which a company can count on keeping its customers increased to 171 percent from a year earlier. The company announced a total of 6,808 customers, with 246 contributing more than USD 1 million annually in sales.
Snowflake’s results should encourage more people to use cloud services because they work well. They follow equally successful findings from public cloud infrastructure providers Amazon Web Services Inc., Microsoft Corp., and Google LLC.
“Snowflake delivered a very strong beat on a revenue, operating margins, and cash flow basis, demonstrating the robustness of the business model,” Evercore ISI analyst Kirk Materne told Barron’s.
Future product sales for Snowflake are expected to be between USD 500 million and USD 505 million, representing 60% to 62% growth. Wall Street had predicted USD 502 million for third-quarter sales, the midpoint of which is slightly below that range.
However, it was the increased fiscal guidance that piqued the interest of investors. Snowflake has revised its full-year product sales forecast to between USD 1.905 and USD 1.915, representing a growth of 67%-68%. Also anticipated were full-year product gross margins of 75%, operating margins of 2%, and an adjusted free cash flow margin of 17%. The company’s original full-year revenue goal was between USD 1.885 billion and USD 1.95 billion. According to estimates from Wall Street, goods sales are expected to bring in USD 1.897 billion for the whole year.
