Snowflake earnings for the January quarter showed a narrower-than-expected loss but SNOW stock tumbled on fiscal 2023 revenue guidance that merely edged by expectations.
Snowflake released fourth-quarter earnings after the market close on Wednesday. In afternoon trading on the stock market today, Snowflake stock retreated 15.4% to close at 224.02.
"SNOW delivered another quarter of triple digit product growth but fell short of lofty expectations," said Jefferies analyst Brent Thill in a report.
For full-year fiscal 2023 which ends in January, Snowflake forecast product revenue of $1.89 billion at the midpoint of its forecast, about 66% growth, edging by analyst estimates of $1.87 billion.
While SNOW stock offers stellar revenue growth, it trades at a high multiple despite a recent correction in software stocks.
"Snowflake's growth at scale bests every other software company in history, but given the multiple, expectations are understandably very high," said Deutsche Bank analyst Brad Zelnick in a report.
He added: "But of all reasons to 'miss' we believe this is about as good as it gets — basically tech platform enhancements are driving improved price/performance for customers that is initially weighing on consumption (revenue) while expanding share of a theoretically infinite market."
Snowflake Narrows Its Losses
Snowflake said fourth-quarter revenue jumped 101% to $384 million from a year earlier, slowing from 110% growth in the October quarter. Analysts had estimated Snowflake revenue at $373 million.
Snowflake stock reported a loss of 43 cents a share using generally accepted accounting principles, or GAAP, compared with a loss of 70 cents per share a year earlier. Analysts expected the company to report a loss of 50 cents a share.
Snowflake stock does not break out adjusted earnings in its earnings releases. Analysts estimated a 3-cent profit on an adjusted basis.
In addition, Snowflake announced the acquisition of Streamlit. Terms were not disclosed.
SNOW Stock: Large Customer Growth Continues
In addition, Snowflake said it now has 184 customers with "trailing 12-month product revenue greater than $1 million," up from 148 such customers as of Oct. 31.
Snowflake sells data analytics and management tools that run on cloud computing platforms such as Amazon Web Services. Competition has been heating up for Snowflake stock.
Snowflake is making infrastructure changes that impact how customers are billed.
"SNOW's platform enhancements caused a modest negative revenue impact in Q4," said Mizuho Securities analyst Gregg Moskowitz in a report. "However, this is merely the tip of the iceberg. A broader rollout of warehouse scheduling service, along with a new AWS chipset, should result in a much more material impact in fiscal 2023."
He added: "Specifically, management anticipates a gross revenue reduction of about $165 million, clearly very large and quite unexpected. This is expected to be offset by $68 million in revenue from additional workloads as customers leverage the price-performance improvements to consume more."
Snowflake pulled off the largest initial public offering ever by a software company in September 2020. The Snowflake IPO raised $3.4 billion.
Snowflake stock had retreated 22% in 2022 heading into the earnings report.
The software maker owns a Relative Strength Rating of 38 out of a best-possible 99, according to IBD Stock Checkup.
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Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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