September 28, 2022

Robotic Notes

All technology News

Snowflake shares clobbered on weak sales guidance

3 min read

Shares of cloud data warehousing company Snowflake Inc. were hammered in after-hours trading after the company reported revenue and profit for the fourth quarter that beat analysts’ estimates but issued guidance that pointed to a slowdown in its torrid growth rate.

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.

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’ forecast of $ 382 million for the quarter and $ 1.87 billion for the year, but the fact that Snowflake didn’t beat forecasts by an even larger amount was taken as a negative.

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%.

Tony Baer, ​​founder and principal analyst at dbInsight, said competition and customer caution appear to be factors in Snowflake’s slowing growth. “For enterprises, there is obvious hesitancy with committing to new investments,” he said. “There’s 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. ”

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.

Vacation lull?

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.

Chief Executive Frank Slootman said the company is shifting its sales model to a vertical industry focus from its previous geographic orientation. “We didn’t think a geographical focus accurately reflected our business,” he said. “Our 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. ”

Executives also discussed up the importance of its pending acquisition of Streamlit Inc., a 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.

“This is part of the focus we’ve had since last to drive business from the data engineering / data warehousing side to the developer side,” Slootman said. “The 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. ” The company did not specify a price for the acquisition but executives said about $ 25 million in expenses will be associated with it.

Slootman also brushed aside analysts’ questions about the growth of its user base. “We don’t focus on the absolute number of customers,” he said. “It’s mostly the quality of customers and the Fortune 500 is not a great metric because it’s so US-centric. We’re going after quality large customers. ”

Photo: SiliconANGLE

Show your support for our mission by joining our Cube Club and Cube Event Community of experts. Join the community that includes Amazon Web Services and CEO Andy Jassy, ​​Dell Technologies founder and CEO Michael Dell, Intel CEO Pat Gelsinger and many more luminaries and experts.

Source link