Snowflake reports strong Q1 revenue but stock tumbles

Snowflake has announced its results for Q1 2023 ended April 30, 2022, revealing total revenue of $422.4m, representing year-on-year growth of 85 percent and beating analysts’ expectations of $414m.

However, shares of Snowflake tumbled in after-hours trading on Wednesday after the company reported having no adjusted operating margin, whilst analysts had predicted a margin of -1.2 percent.

Snowflake has lost two-thirds of its market cap in less than six months – from a high of $118bn in November 2021 to less than $40bn currently.

The company’s Q1 product revenue grew by 84 percent year-on-year to $394.4m. Its remaining performance obligations were $2.6bn, representing 82 percent growth.

At the end of the quarter, Snowflake’s net revenue retention rate was 174 percent.

The company now has 6,322 total customers and 206 customers with trailing 12-month product revenue greater than $1m.

Frank Slootman, chairman and CEO of Snowflake said: “During Q1, product revenue grew 84 percent year-on-year to $394m. We closed the quarter with a record $181m of non-GAAP adjusted free cash flow, pairing high growth with improving unit economics and operational efficiency. Snowflake’s strategic focus is to enable every single workload type that needs access to data.”

For Q2 2023, Snowflake anticipates product revenue of between $435m and $440m, which would equate to year-on-year growth of 71 to 73 percent. For the full fiscal year 2023, it expects product revenue of between $1.885bn and $1.9bn, representing 65 to 67 percent growth.

Snowflake isn’t the only tech stock to tank in recent months, with the market now favouring a strong mix of growth and profitability underpinned by a clearly articulated business model. Amidst growing global uncertainty, expect to see other further market corrections in the coming months. Read our ‘cloud fever’ article in the June issue of ERP Today to get our take on why Snowflake won’t be the only cloud tech vendor to come unstuck in 2022.