Snowflake Inc. (SNOW: NYE) released its Q3 earnings on November 29th, surpassing analysts’ revenue and earnings expectations. The company’s earnings per share were $0.25, which surpassed the analysts’ consensus estimate of $0.16 per share.
Strong Revenue Growth and Positive Performance:
Snowflake’s Q3 revenue reached $557 million, a 34% year-over-year increase, exceeding consensus estimates by 3%. Product revenue, which makes up 94% of total revenue, amounted to $523 million, a 67% year-over-year rise and 4% above expectations.
The company’s remaining performance obligations, which represent future contracted revenue, stood at $3 billion, a 66% increase from last year, though slightly below the consensus estimate by 2%.
CEO Optimistic About Growth Potential:
CEO Frank Slootman highlighted Snowflake’s successful execution of its growth strategy and expansion of content offerings in Q3. He emphasized the company’s unique value proposition in providing an immersive and interactive community for users, differentiating it from other online platforms. Slootman expressed confidence in Snowflake’s long-term growth potential and its ability to leverage opportunities in the online entertainment market.
Investor Reaction and Business Challenges:
Despite the positive results, investors expressed disappointment with the growth rate and guidance. Snowflake’s revenue growth rate decelerated from 110% in Q2 to 67% in Q3, and the company’s forecast for Q4 indicated a further slowdown to 49-50%. Additionally, macroeconomic headwinds such as supply chain disruptions, labor shortages, and inflation pressures impacted some customers and segments.
Conclusion:
Snowflake exceeded expectations in Q3 but concerns about growth and external challenges still here. However, the CEO remains optimistic about Snowflake’s long-term prospects and its ability to navigate the evolving market.
Muzzammil is a content writer at Stock Target Advisor. He has been writing stock news and analysis at Stock Target Advisor since 2023 and has worked in the financial domain in various roles since 2020. He has previously worked on an equity research firm that analyzed companies listed on the stock markets in the U.S. and Canada and performed fundamental and qualitative analyses of management strength, business strategy, and product/services forecast as indicated by major brokers covering the stock.
