Software start-up Snowflake (SNOW-US) announced better-than-expected third-quarter results on Wednesday (30th), but its fourth-quarter earnings forecast spooked Wall Street, causing its stock price to fall more than 5% after hours.
The company forecast fourth-quarter product revenue of $535 million to $540 million, well below StreetAccount analysts’ forecast of $553 million. Snowflake expects full-year revenue between $1.919 billion and $1.924 billion.
Full-year product gross margin, operating margin and adjusted free cash flow are expected to be 75%, 3% and 21%, respectively.
Third quarter (end 10/31) key financial report data vs. analysts’ expectations Adjusted EPS: 11 cents vs. 4 cents (consensus estimate from Refinitiv survey) Revenue: 67% annual growth to $557 million vs. $539 million (Consensus Expectation, Refinitiv Survey)
Snowflake fell as much as 13% after the market. It was recently confirmed that Snowflake closed 4.64% higher in Wednesday trading hours, but fell 5.26% after the market to $135.39 per share. The stock is down about 58% so far this year.
Although revenue in the third quarter increased by 67% year-on-year, it was a sharp drop from the growth rate of 83% in the previous quarter, and product revenue, which accounted for the largest proportion of revenue, also increased by 67% year-on-year to US$523 million. Product revenue is a key metric for Snowflake, as the company recognizes revenue based on platform consumption.
Snowflake said it had 7,292 customers at the end of the third quarter.
CEO Frank Slootman stated that the company’s product revenue in the third quarter increased by 67% year-on-year, the non-GAAP product gross margin was 75%, and continued to drive strong growth on a large scale, coupled with strong unit economics, operating profit and free cash flow .
