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% growth.

Chief Finance Officer Michael Scarpelli said in the company's conference call that last year some customers had higher-than-expected consumption.

"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. Scarpelli said.

"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 said.

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 michael.dabaie@wsj.com

 

(END) Dow Jones Newswires

May 26, 2022 10:30 ET (14:30 GMT)

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