Snowflake drops 18% after disappointing guidance

Snowflake (SNOW.US), US cloud-based data company, trades around 18% lower on the day. Drop in the company's share price was triggered by the fiscal-Q1 2024 earnings report that was released yesterday after the close of the Wall Street session.

Company reported slightly better-than-expected results for fiscal-Q1 2024 (February - April 2024) with revenue beating expectations, thanks to solid product revenue, and loss per share turning out to be smaller than expected. Margins also improved compared to a year ago period. However, forecasts for fiscal-Q2 as well as full fiscal-2024 were not as rosy. Snowflake expects product revenue to reach $620-625 million in fiscal-Q2. This is below $646 million expected by the market and, if confirmed, would mark the slowest growth in Snowflake's product revenue on the record. Company also decided to cut its full-year guidance issued in March from $2.71 billion to $2.60 billion while market expected it to stay unchanged.

Fiscal-Q1 2024 results

• Revenue: $623.6 million vs $609.5 million expected (+48% YoY)
  - Product revenue: $590.1 million vs $571.9 million expected (+50% YoY)
  - Professional services: $33.5 million vs $37.0 million expected (+20% YoY)

• Net revenue retention rate: 151% vs 139.1% expected (174% in fiscal-Q1 2023)

• EPS: -$0.70 vs -$0.68 expected (-$0.53 in fiscal-Q1 2023)

• Adjusted gross margin: 73.0% vs 71.5% expected (71% in fiscal-Q1 2023)

Fiscal-Q2 2024 forecast

• Product revenue: $620-625 million vs $646.3 million expected (+34% YoY)

• Adjusted operating margin: 2%

Full fiscal-2024 forecast

• Product revenue: $2.60 billion, down from previous forecast of $2.71 billion

• Adjusted operating margin: 5%, down from previous forecast of 6%

Snowflake (SNOW.US) launched today's cash trading with a big bearish price gap and continued to move lower during the session. Stock broke below 50- and 200-session moving average and is slowly moving towards the lower limit of the ongoing trading range in the $135 area. Source: xStation5