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Snowflake Shares Tumble 15% on Conservative Guidance, Analysts Worried About 'Consumption Unknowns'

Stock Markets May 26, 2022 13:06
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By Senad Karaahmetovic

Shares of Snowflake (NYSE:SNOW) are down more than 15% in premarket trading Thursday after the cloud-based data warehousing company reported its Q1 results.

SNOW reported a loss per share of 53c in Q1, compared to a loss per share of 70c in the year-ago period. The company reported $422.4 million in revenue, up 85% YoY, and above the analyst consensus of $413.9 million.

Product revenue totaled $394.4 million, up 84% YoY, topping the consensus estimates of $387.7 million. The net revenue retention rate stood at 174% in the period, compared to 168% in the same period last year and the estimated 161.2%. SNOW reported a Q1 gross margin of 71%, while analysts were looking for 70.4%.

Looking ahead to Q2, Snowflake expects product revenue in the range of $435 million to $440 million, while analysts were estimating $437.8 million. SNOW expects the adjusted operating margin to be down 2% in the second quarter.

For the full fiscal 2023, Snowflake expects product revenue in the range of $1.89 billion to $1.90 billion, compared to the previous forecast range of $1.88 billion to $1.90 billion, while analysts are estimating $1.91 billion.

Oppenheimer analyst Ittai Kidron maintained an Outperform rating and cut the price target to $230.00 per share to reflect lower market multiples.

“Snowflake delivered another solid quarter with multiple multi-million dollar deals and NRR >170%. Still, the company is taking a conservative stance on expectations due to a tougher macro environment (in-line guidance). While cognizant of potential for revenue slowdown in a recession, we remain confident in Snowflake’s ability to gain share and drive new workloads long-term. FCF and >$5B cash provide stability,” Kidron told clients.

Piper Sandler analyst Brent A. Bracelin also cut the price target, from $300.00 to $165.00 per share to mirror lowered estimates on limited visibility.

“Management commentary around slower consumption at consumer-facing clouds in April hit a nerve with investors concerned that macro headwinds could further temper growth given Snowflake's usage-based revenue model,” Bracelin said.

Snowflake Shares Tumble 15% on Conservative Guidance, Analysts Worried About 'Consumption Unknowns'
 

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