{"id":18278,"date":"2022-03-03T01:09:11","date_gmt":"2022-03-03T01:09:11","guid":{"rendered":"https:\/\/mailinvest.blog\/index.php\/2022\/03\/03\/snowflake-shares-clobbered-on-weak-sales-guidance\/"},"modified":"2022-03-03T01:09:11","modified_gmt":"2022-03-03T01:09:11","slug":"snowflake-shares-clobbered-on-weak-sales-guidance","status":"publish","type":"post","link":"https:\/\/mailinvest.blog\/index.php\/2022\/03\/03\/snowflake-shares-clobbered-on-weak-sales-guidance\/","title":{"rendered":"Snowflake shares clobbered on weak sales guidance"},"content":{"rendered":"

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Shares of cloud data warehousing company Snowflake Inc. were hammered in after-hours trading after the company reported<\/a>\u00a0revenue and profit for the fourth quarter that beat analysts\u2019 estimates but issued guidance that pointed to a slowdown in its torrid growth rate.<\/p>\n

The fourth-quarter loss of $132.2 million, or 43 cents a share, on sales of $383.8 million was better than the 70 cents-per-share loss on revenue of $190 million the company reported a year ago and well ahead of expected earnings of 3 cents per share on sales of $373 million.<\/p>\n

Snowflake executives forecast first-quarter product revenue to be in the range of $383 million to $388 million and fiscal 2023 revenue to come in between $1.88 billion to $1.9 billion. That was better than analysts\u2019 forecast of $382 million for the quarter and $1.87 billion for the year, but the fact that Snowflake didn\u2019t beat forecasts by an even larger amount was taken as a negative.<\/p>\n

Snowflake has been such a highflier since its record 2020 initial public offering of stock that any slowdown in growth is seen as a warning. Its forecast of 65% to 67% top-line growth is below the annual doubling it has seen to date. In after-hours trading, shares were off more than 22% after initially dropping 30%.<\/p>\n

Tony Baer, founder and principal analyst at dbInsight, said competition and customer caution appear to be factors in Snowflake\u2019s slowing growth. \u201cFor enterprises, there is obvious hesitancy with committing to new investments,\u201d he said. \u201cThere\u2019s also the fact that Snowflake has been a victim of its own success and hype. Growth was bound to hit a wall at some point, and also now they have more competition.\u201d<\/p>\n

Product revenue for the quarter jumped 10% from a year ago, to $359.6 million. Remaining performance obligations rose 99%, to $2.6 billion, and net revenue retention rate was a very high 178%. The company said it now has 5,944 total customers and 184 customers with a trailing-12-month product revenue figure of greater than $1 million, up from 148 such customers last quarter. It closed seven deals of $30 million or more in total contract value last quarter, up from just one in the same quarter last year.<\/p>\n

Vacation lull?<\/h3>\n

Nevertheless, executives said January sales were unexpectedly slow, a phenomenon it chalked up to extended holiday vacations. It also said its net revenue retention rate was unrealistically high in the most recent quarter and will likely dip down into the 150% range before stabilizing at about 170%. Both items no doubt contributed to the selloff.<\/p>\n

Chief Executive Frank Slootman said the company is\u00a0shifting its sales model to a vertical industry focus from its previous geographic orientation. \u201cWe didn\u2019t think a geographical focus accurately reflected our business,\u201d he said. \u201cOur selling motion is shifting from workloads-oriented thinking to use cases that the customer needs to address. Today, nine of every 10 conversations are very very industry-specific and often not with IT types but with businesspeople and data science types.\u201d<\/p>\n

Executives also talked up the importance of its pending acquisition<\/a> of Streamlit Inc., maker of a framework for creating data-focused applications, which was announced earlier today. Although Streamlit has no revenue, its platform is used by data scientists to build applications without the need for full-stack engineering teams.<\/p>\n

\u201cThis is part of the focus we\u2019ve had since last to drive business from the data engineering\/data warehousing side to the developer side,\u201d Slootman said. \u201cThe option is for us to really address the Python developer community. We have to address workloads across the spectrum and this is going to help us do that.\u201d\u00a0The company didn\u2019t specify a price for the acquisition but executives said about $25 million in expenses will be associated with it.<\/p>\n

Slootman also brushed aside analysts\u2019 questions about the growth of its user base. \u201cWe don\u2019t focus on the absolute number of customers,\u201d he said. \u201cIt\u2019s mostly the quality of customers and Fortune 500 is not a great metric because it\u2019s so U.S.-centric. We\u2019re going after quality large customers. \u201d<\/p>\n

Photo: SiliconANGLE<\/h5>\n
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