Stock Story -
Data warehouse-as-a-service Snowflake (NYSE:SNOW) announced better-than-expected results in Q1 CY2024, with revenue up 32.9% year on year to $828.7 million. It made a non-GAAP profit of $0.14 per share, down from its profit of $0.15 per share in the same quarter last year.
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Snowflake (SNOW) Q1 CY2024 Highlights:
- Revenue: $828.7 million vs analyst estimates of $785.9 million (5.4% beat)
- EPS (non-GAAP): $0.14 vs analyst expectations of $0.17 (19.7% miss)
- Product Revenue Guidance for Q2 CY2024 is $807.5 million at the midpoint
- Gross Margin (GAAP): 67.1%, up from 66.4% in the same quarter last year
- Free Cash Flow of $331.5 million, similar to the previous quarter
- Net Revenue Retention Rate: 128%, down from 131% in the previous quarter
- Remaining Performance Obligations: $5.0 billion, up 46% year on year
- Market Capitalization: $54.34 billion
Founded in 2013 by three French engineers who spent decades working for Oracle (NYSE:ORCL), Snowflake (NYSE:SNOW) provides a data warehouse-as-a-service in the cloud that allows companies to store large amounts of data and analyze it in real time.
Data StorageData is the lifeblood of the internet and software in general, and the amount of data created is accelerating. As a result, the importance of storing the data in scalable and efficient formats continues to rise, especially as its diversity and associated use cases expand from analyzing simple, structured datasets to high-scale processing of unstructured data such as images, audio, and video.
Sales GrowthAs you can see below, Snowflake's revenue growth has been incredible over the last three years, growing from $228.9 million in Q1 2022 to $828.7 million this quarter.
Unsurprisingly, this was another great quarter for Snowflake with revenue up 32.9% year on year. On top of that, its revenue increased $54.01 million quarter on quarter, a very strong improvement from the $40.53 million increase in Q4 CY2023. This is a sign of acceleration of growth and great to see.
Looking ahead, analysts covering the company were expecting sales to grow 19.8% over the next 12 months before the earnings results announcement.
Large Customers Growth This quarter, Snowflake reported 485 enterprise customers paying more than $1m annually, an increase of 24 from the previous quarter. That's in line with the number of contracts wins in the last quarter but quite a bit below what we've typically observed over the last year, suggesting that the sales slowdown we observed in the last quarter could continue.
Key Takeaways from Snowflake's Q1 Results We enjoyed seeing Snowflake exceed analysts' revenue, net revenue retention, and RPO expectations this quarter. It also added more new customers than anticipated. These factors are sending the stock price up, especially because market sentiment was negative going into the quarter; there was high uncertainty regarding demand after last quarter's results because the company changed its CEO and issued weak guidance. The company's updated full-year guidance easily cleared analysts' estimates, calming fears of a softer spending environment. Overall, this was a good quarter for Snowflake. The stock is up 7.3% after reporting and currently trades at $175.17 per share.
