Cloud data platform Snowflake reported better than expected 2nd quarter earnings Wednesday. $SNOW shares popped over 18% in extended trading. The software company raised FY23 product revenue guidance and raised non-GAAP gross margin guidance.
When the Snowflake (SNOW) debuted on September 16, 2020, it became the largest software IPO in history.
Snowflake Inc. NYSE: SNOW Reported Earnings After Close Wednesday
Snowflake Q2 2022 Earnings
- EPS: Loss of 70 cents
- Revenue: $497 million vs. $467 million expected, according to Refinitiv, growing 83% year over year, a slight downtick from last quarter’s 85% growth.
- Product revenue grew 83% year over year to $466.3 million. *
- Snowflake had 6,808 customers in the quarter, above the FactSet consensus estimate of 6,739, according to StreetAccount.
*Product revenue is a key metric for Snowflake since it recognizes revenue based on platform consumption.
SNOW uses a consumption-based model in which product revenue is directly linked to a customer’s platform usage. SNOW’s customers purchase credits to use the platform. Consequently, there is no limit to how much a customer can spend during a given period. Of course, this is dependent on the demand for data, in the WFA economy data is king.
- Snowflake said it anticipates product revenue will be between $500 and $505 million in its third quarter, and between $1.91 billion and $1.92 billion for the full year.
- Product gross profit margins, operating income margins and adjusted free cash flow are expected to be 75%, 2% and 17% respectively for the full year.
Snowflake IPO Recap
Snowflake raised its estimated IPO price by around 30% in a new S-1 filing Monday. Snowflake revealed in a filing that Berkshire Hathaway and Salesforce each agreed to buy $250 million of stock at the IPO price in a concurrent private placement. This saw the stock open almost triple of expectations just a week ago before the announcement of the private sales and a hesitant market post Covid.
SNOW Opens …..
Berkshire Hathaway and Salesforce agreeing to buy shares in concurrent private sales.
Berkshire Hathaway also agreed to buy 4.04 million shares in a secondary transaction from former CEO Bob Muglia. At the midpoint of the new estimated price range of $110, Berkshire Hathaway’s total stake in Snowflake after the IPO would be valued at $674.4 million, compared with the roughly $550 million it would have been worth at the midpoint of the previous range.
Popular initial public offerings this year.
Inari Medical has risen 297% since its May IPO, BigCommerce has gained 252% since its August IPO, and Schrodinger is up 212% since its February IPO. The Renaissance IPO ETF is up nearly 60% this year.
The IPO market ground to a halt in April, so much of what you’re seeing now is some pent-up demand for IPOs with the explosion of stocks higher since the depth of despair in the Covid market swoon. Demand is pumped by y fiscal and monetary stimulus,
Snowflake gives businesses new ways to store and access data in the cloud, rather than relying on databases tied to hardware. The company is growing fast, reporting that revenue in the first half of 2020 more than doubled to $242 million from $104 million a year earlier.
However, Snowflake faces a complicated relationship with Amazon Web Services as it relies on AWS to host a significant portion of its business, while also competing against the Amazon Redshift cloud data warehouse offering.
From The TradersCommunity News Desk