Snowflake Shares Fall; Revenue Beats, But Co. Points to Consumption Headwinds
By Michael Dabaie
Snowflake shares were fell 10.5% to $118.85 after revenue came
in ahead of estimates, but the company said some customers'
consumption is being hit by macroeconomic headwinds.
The data cloud company after the bell Wednesday reported
first-quarter revenue was $422.4 million, up 85% and beating
FactSet consensus for $413.7 million. Loss per share narrowed to 53
cents, a bit wider than FactSet consensus of a 52-cent loss.
Product revenue was up 84% to $394.4 million.
Snowflake guided for fiscal 2023 product revenue of $1.885
billion to $1.9 billion, versus previous guidance for $1.880
billion to $1.9 billion. Guidance for second-quarter product
revenue was $435 million to $440 million, representing 71% to 73%
Chief Finance Officer Michael Scarpelli said in the company's
conference call that last year some customers had
"Today, some customers face a more challenging operating
environment. Specific customers consume less than we anticipated
amid shifting economic circumstances we believe are unique to their
businesses, most notably consumer facing cloud companies," Mr.
"Although these customers are still growing, we believe as long
as they are impacted by macroeconomic headwinds their consumption
will be impacted. Consumption patterns may fluctuate from
quarter-to-quarter," he said in the call.
J.P. Morgan analysts said in a research note that "despite the
near-term drag on revenue upside, we remain impressed by the
company's robust [free cash flow] generation and long-term growth
trajectory at scale."
Mr. Scarpelli said in the call: "Some of our large customers
where we saw a decline, we've taken down their forecast, but we
have others that are offsetting partially some of that."
"What I will say is April, we did see weakness in week-over-week
growth in our total revenue by customer. But to be honest, the last
two weeks of ... May has been very strong. But just given
everything in the macro headwinds we're hearing, we're going to be
a little bit more cautious going into the full year," Mr. Scarpelli
Oppenheimer analysts said in a note that further moderation of
revenue growth is possible if the U.S. enters a recession, but most
Snowflake customers would see limited decline in spend.
"We continue to see a long trajectory of rapid revenue
increases, and believe Snowflake ... can easily weather a storm and
emerge stronger," Oppenheimer said.
Write to Michael Dabaie at email@example.com
(END) Dow Jones Newswires
May 26, 2022 10:30 ET (14:30 GMT)
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