Yahoo Finance Snowflake (SNOW) Q1 Earnings Top Estimates, Revenues Rise Y/Y
Snowflake SNOW reported first-quarter fiscal 2024 non-GAAP earnings of 15 cents per share, beating the Zacks Consensus Estimate by 200%. The company reported earnings of 3 cents in the year-ago quarter.
Revenues of $623.6 million beat the consensus mark by 2.64% and jumped 47.6% year over year.
Top-Line Details
Snowflake’s product revenues accounted for 94.6% of total revenues. The figure was $590.1 million, up 49.6% year over year.
Professional Services and other revenues contributed 5.4% to total revenues. The figure was $33.5 million, up 20% year over year.
Snowflake Inc. Price, Consensus and EPS Surprise
Snowflake Inc. price-consensus-eps-surprise-chart | Snowflake Inc. Quote
In the fiscal first quarter, Snowflake witnessed a net revenue retention rate of 151% for existing customers, down from 158% reported in the previous quarter and 174% reported in the year-ago quarter.
The company reported 29% year-over-year growth in the number of customers, reaching 8,167 in the reported quarter. It now has 373 customers with trailing 12-month product revenues greater than $1 million (up 80% year over year) and 590 Forbes Global 2000 customers (up 15% year over year).
Strong revenues from customers in the health care, manufacturing and financial services vertical benefited top-line growth in the reported quarter.
Operating Details
The non-GAAP gross margin expanded by 130 basis points (bps) year over year to 78.2%.
The product gross margin continued to expand, driven by product improvements, favorable cloud agreement pricing, improving scale and a growing enterprise customer base.
Research & development expenses, as a percentage of revenues, increased 330 bps on a year-over-year basis to 20.7%.
General & administrative expenses, as a percentage of revenues, were 7.7%, down 210 bps year over year.
Sales and marketing expenses, as a percentage of revenues, declined 430 bps on a year-over-year basis to 39.2%.
Total operating expenses, as a percentage of revenues, were 67.6% compared with the 70.6% reported in the year-ago quarter.
Operating income was $32.6 million in the reported quarter compared with the year-ago quarter’s $1.7 million.
Balance Sheet & Cash Flow
As of Apr 30, 2023, Snowflake had cash, cash equivalents and short-term investments of $3.95 billion compared with $4 billion as of Jan 31, 2023.
The remaining performance obligations at the end of the fiscal first quarter of 2024 were $3.41 billion, up 31% year over year.
The adjusted free cash flow was $287 million in the reported quarter compared with the previous quarter’s $215.3 million.
Guidance
For the second quarter of fiscal 2024, Snowflake expects product revenues in the range of $620-$625 million. The projection range indicates year-over-year growth of 33-34%.
The operating margin is expected at 2% for the fiscal second quarter.
For fiscal 2024, the company now expects product revenues to increase 34% year over year to $2.6 billion.
The non-GAAP product gross margin is expected at 76% and the non-GAAP operating margin is expected at 5%.
The non-GAAP adjusted free cash flow margin is expected at 26% in fiscal 2024.
Zacks Rank & Stocks to Consider
Snowflake currently has a Zacks Rank #3 (Hold).
The company’s shares have declined 57.9% compared with the Zacks Computer & Technology sector’s loss of 33.7% year to date.
Some better-ranked stocks in the Computer & Technology sector are ServiceNow NOW, Meta Platforms META and MicroStrategy MSTR. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of ServiceNow, Meta and MicroStrategy have gained 29.4%, 107.1% and 100.9%, respectively, on a year-to-date basis.
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