Snowflake (SNOW) reported a loss for the April quarter that met estimates while revenue topped Wall Street targets, though growth decelerated. Snowflake stock tumbled on Thursday as its product revenue outlook came in only slightly ahead of views.
“Snowflake’s Q1 product revenue growth reflected a slowing of consumption patterns on macro headwinds in April, which impacted activity among specific high-growth customers due to a pull-forward of demand in the prior year,” said JPMorgan analyst Mark Murphy in a report. “However, 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.”
At Cowen, analyst Derrick Wood said: “Management indicated that consumption growth on its platform trended down in April, weighed down by a handful of larger customers in consumer-facing markets who are seeing slower end-market demand.”
The enterprise software maker reported a 53-cents-a-share loss for Snowflake stock using generally accepted accounting principles, or GAAP, compared with a loss of 70 cents per share a year earlier.
Analysts polled by FactSet expected the company to report a loss of 53 cents a share.
Snowflake stock tumbled 10.9% to 118.30 in early trading on the stock market today. The company released earnings after the market close on Wednesday.
Snowflake Stock: Product Revenue Guidance Meets Views
Analysts also estimated Snowflake would report zero-cents earnings on an adjusted basis. But the company does not break out adjusted earnings in its releases.
Snowflake said first-quarter revenue jumped 85% to $ 422.4 million from a year earlier. Analysts had estimated Snowflake revenue at $ 413.7 million. Revenue climbed 101% and 110% in the two previous quarters.
The Snowflake earnings report said product revenue rose 84% to $ 394.4 million vs. estimates of $ 389 million.
For the current quarter ending in July, Snowflake said it expects product revenue of $ 437.5 million at the midpoint of guidance vs. analyst estimates of $ 436.6 million.
Shares Down 61% For 2022
In addition, Snowflake said it now has 206 customers with “trailing 12-month product revenue greater than $ 1 million,” up from 184 such customers as of Jan. 31.
Snowflake sells data analytics and management tools that run on cloud computing platforms such as Amazon Web Services, part of Amazon.com (AMZN).
Snowflake is not an SaaS company, however. Instead, it uses a consumption-based business model based on how much data its customers crunch and store.
“Given greater volatility of a consumption-based revenue model, Snowflake’s business is reacting in real-time to macro-impacted customers modulating and optimizing their consumption,” said Deutsche Bank analyst Brad Zelnick in a report. “We note management indicated it is only seeing reduced consumption from hypergrowth consumer tech companies and no real impact from other customers.”
Heading into the Snowflake earnings report, the software stock had retreated 61% in 2022. Snowflake stock holds a Relative Strength Rating of 10 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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