Snowflake Beats Expectations but Gives Dim Revenue Guidance

Snowflake beats the consensus estimate but releases weak revenue guidance for the fourth quarter on its earnings call on November 30.

On Wednesday’s closing bell, its shares rose by 4.64% to $142.90 apiece. However, it is forecasted to decline by 5.39% to $135.20 per share on Thursday.

The Bozeman-based company’s earnings per share rose to $0.11, beating the analysts’ estimate of $0.04. Likewise, its revenue came at $557.00 million, surpassing the market forecast of $539.07 million and exceeding the previous record of $497.25 million. Additionally, the company’s year-over-year earnings were up to 67.00% but were lower than its previous record of 83.00%.

For its third-quarter free-cash flow, Snowflake recorded $65.00 million against market expectations of $2.00 million. Moreover, Snowflake reported product revenue of $523.00 million in the same period.

For the fiscal Q4 2023, executives anticipate a $535.00 million to $540.00 million revenue, short of the $553.00 million analysts’ expectations. For the full fiscal year, it expects a 75.00% profit margin, 3.00% operating income margins, and 21.00% adjusted free cash flow.

Besides, Snowflake recorded a higher Q3 net loss at $0.63 apiece from the $0.51 per share a year prior. Consequently, the cloud data firm’s share dropped by 58.00% during the past 12 months.

Separately, Snowflake recorded 7,292 total customers in the third quarter.

AWS and Snowflake’s Flourishing Partnership

The partnership between Snowflake and AWS, Amazon’s subsidiary, has become a huge win as both companies deliver material value to one another. This collaboration allows the Bozeman-based company to reevaluate its database architecture and exploit the native advantages of the cloud.

During the early days, the data cloud firm used AWS to remove the hassle of managing its infrastructure.

As the two companies became increasingly competitive, Snowflake continued innovating instead of being complacent. Due to its persistent innovation, SNOW extended its platform, allowing developers to form applications on top of it.

Not long after, sellers in the field noticed the partnership’s success and realized the relationship’s profitability.

Currently, 80.00% of Snowflake’s businesses run on AWS. This fiscal year, the partnership produced almost $2.00 billion in revenue.