ii view: Snowflake's $1bn sales drive stock rally to year high

First-quarter results to 30 April  

• Revenue up 26% $1.04 billion
• Adjusted earnings per share (EPS) of $0.24, up from $0.14

Chief executive Sridhar Ramaswamy said:

“Snowflake’s mission is to empower every enterprise to achieve its full potential through data and AI. Our focus on making the Snowflake platform easy to use, to enable fluid access to data wherever it sits, and trusted for enterprise-grade performance, is what makes us differentiated and beloved.”

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ii round-up:

Tech company Snowflake Inc Ordinary Shares - Class A (NYSE:SNOW) reported quarterly revenue above $1 billion for the  first time, with the analyser of data for companies and organisations raising its annual sales growth estimate.

Revenue for the first quarter to late April rose 26% year-over-year to $1.04 billion, pushing adjusted earnings up to $0.24 per share from $0.14 a year ago. Analysts had been expecting outcomes of $1.01 billion and $0.21 per share. Customers numbers of 11,578 is up from 9,822 a year ago, with the Montana headquartered company now expecting full-year sales growth of 25% to $4.33 billion compared with 24% previously. 

Shares in the New York listed company rose 13% in post results trading to leave them up by almost a third so far in 2025. The tech heavy Nasdaq Composite index is down 2% year-to-date. Cloud data server providers Amazon.com Inc (NASDAQ:AMZN) and Alphabet Inc Class A (NASDAQ:GOOGL) are each down around 8%. 

Snowflake unites and analyses data from servers across the globe on behalf of customers that include Citigroup Inc (NYSE:C), NatWest Group (LSE:NWG), Exxon Mobil Corp (NYSE:XOM) and AT&T Inc (NYSE:T). 

The number of Snowflake customers with trailing 12-month product revenues in excess of $1 million climbed by just over a quarter to 606. 

Progress for services such as data engineering and AI expansion continue to be made, with customers using at least one of Snowflake’s AI and machine learning (ML) services on a weekly basis growing to more than 5,200. 

An unadjusted, or fully reported loss of $430 million for the quarter, or $1.29 per share, widened from a loss of $317 million or $0.95 per share in Q1 last year.

ii view:

Founded by Benoit Dageville, Thierry Cruanes and Marcin Żukowski in 2012, Snowflake came to the stock market in 2020. Today it employs over 7,500 people, with 754 of the Forbes Global 2,000 company list now active Snowflake customers. Product revenues totalled close to 96% over the group’s last financial year to late January, with professional services largely making up the 4% balance. 

For investors, revenue growth of 26% this latest quarter is down from growth of 33% in Q1 2024. Increased costs such as swallowing imposed US trade tariffs to keep prices competitive for customers could see corporations curtail IT spending. A share price-to-net asset value at almost twice the three-year average may suggest the shares are not obviously cheap, while the group’s activities are sure to have been noticed by rival tech companies.  

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More favourably, customer numbers and revenues are still growing, likely aided by additional AI and ML services. Geographical and product diversity exist. CEO from early 2024, Sridhar Ramaswamy, has looked to reinvigorate group strategy including a new focus on product innovation, while net revenue retention (NRR) is summarised by management as ‘world-class’ at a current rate of 124%. 

For now, and while a share price currently equal to Wall Street fair value estimates of $203 per share may be reason for caution, specialists in a data driven world are likely to remain of interest to many investors.  

Positives: 

• Growing customer numbers
• Increasing use of data

Negatives:

• Uncertain economic outlook
• No dividend payment

The average rating of stock market analysts:

Buy