Snowflake shares plunge 14% on third consecutive steering miss; analysts flags wealthy valuation

Snowflake (NYSE:) shares fell almost 14% in premarket Thursday after the corporate reported first-quarter earnings and guided decrease for Q2 and FY24.

Whereas got here in higher than anticipated, the corporate’s outlook upset buyers. Q1 EPS got here in at $0.15, higher than the consensus estimate of $0.06. Income grew 48% year-over-year to $623.6 million, beating the consensus estimate of $611.13M.

“Information has gravitational pull, and given the huge universe of knowledge Snowflake manages, it’s no shock that curiosity in information science, AI and machine studying is escalating whereas its makes use of are quickly evolving,” Frank Slootman, chairman and CEO of Snowflake, mentioned.

Product income was $590.1M, representing a 50% year-over-year development. The corporate now has 373 prospects with trailing 12-month product income better than $1M and 590 Forbes World 2000 prospects. The remaining efficiency obligations elevated 31% year-over-year to $3.4 billion.

The corporate expects Q2/24 product income within the vary of $620M-$625M, representing 33%-34% development, beneath the anticipated $647M.

For the total 12 months, the corporate expects product income of $2.6B, representing a 34% year-over-year development, down from the corporate’s prior forecast of $2.705B.

Talking on the earnings name, CEO Slootman mentioned Snowflake continues to function “in an unsettled demand setting.”

“Whereas enthusiasm for Snowflake is excessive, enterprises are preoccupied with prices in response to their very own uncertainties.”

Moreover, the corporate introduced Steve Burke’s appointment to its Board of Administrators, efficient instantly. Following the corporate’s annual assembly on July 5, John McMahon will step down from the Snowflake board after 10 years of service.

Stifel analysts marginally lowered the value goal on Purchase-rated SNOW shares on weaker-than-expected steering.

“Whereas it’s clear that optimization tendencies proceed, we consider future uptake of SNOW’s rising product set particularly AI and ML options, ought to assist offset these headwinds, permitting the corporate to maintain 30%+ income development in coming years,” they wrote in a observe.

Guggenheim analysts are rather more cautious on SNOW inventory as they reaffirmed the Promote ranking with a $105 per share value goal.

“We proceed to view Snowflake as a well-managed firm, and there’s no query that the gentle macro backdrop has had affect right here, however this information doubtless introduces questions on what sort of firm it’s. Is it a Cloud-based Information Platform firm that prospects make the most of to fulfill disparate information workloads, or is it a Cloud-based Information warehouse firm in an more and more aggressive market the place options have now replicated the early distinguishing options that separated Snowflake?” the analysts mentioned.

“Our subject work signifies little or no traction past information warehouse workloads, however once more the macro affect might be heavy right here. Regardless, at 21.7x EV/NTM Rec Rev, SNOW is the costliest enterprise software program firm on this planet … for now.”

(Further reporting by Senad Karaahmetovic)