Snowflake Is Meeting With Analysts Today. Expect News About Growth.
has had a wild ride in the public markets.
The cloud-data software company went public in September at $120 a share, opened for trading at $245, and touched $429 at one point last year. The stock then reversed course, falling as low as $184.71 a month ago, before a recent surge pushed the price back over the level of the first day’s opening trade into the $250 range.
The stock remains the subject of a vigorous tug of war between bulls who love the company’s rapid growth, and bears who find the valuation extreme, even after the slide.
On Thursday, investors should get some fresh data on the outlook, when Snowflake (ticker: SNOW) holds a three-hour meeting with analysts and investors after the close of trading. The event will come at the conclusion of the company’s Data Cloud Summit, a four-day virtual customer event that began on Monday.
Investors will be looking for hints that Snowflake can continue the torrid growth it has achieved.
For its fiscal first quarter, ended April 30, Snowflake had an operating loss of $35.8 million, but posted revenue of $228.9 million, up 110% from a year ago and ahead of the Wall Street consensus forecast of $213 million. Product revenue, the company’s preferred performance measure, was $213.8 million, also up 110%.
Remaining performance obligations, an indicator of future growth, came in at $1.4 billion, up 206%. The net retention rate, which tracks trends in contract renewals less customers lost, was 168%.
The stock has rallied about 10% since the earnings announcement on May 26.
In an interview with Barron’s after the earnings news, CFO
said the company continues to report unprecedented growth, while increasing its gross margin on product sales to more than 72% in the quarter, from the low 60s a few years ago. He said the company was cash flow positive for the second straight quarter. Snowflake expects to break even in terms of free cash flow on an annual basis for the first time this year.
Asked about the company’s long-term growth expectations, Scarpelli said he would address the topic at the analyst meeting. There is “a massive market opportunity … we’re at the right place and right time with the digital transformation … everyone is moving data from on-premise to the cloud,” he said.
Mizuho analyst Gregg Moskowitz said in a research note previewing the meeting that he expects the company to provide clearer guidance than in the past on the long-term outlook.
“Although Snowflake trades at a substantial premium, we believe the shares have meaningful upside potential and are likely to outperform as the company continues to grow at elevated rates,” he said, repeating his Buy rating and $300 target price. “We continue to believe Snowflake’s cloud-based platform is substantially ahead of the competition at this time, and that its technological proficiencies are very difficult to replicate at scale.”
In a note reviewing the recent earnings report, Evercore ISI Kirk Materne said he thinks the analyst day and user conference “should help illustrate the large opportunity still in front of the company, especially as it relates to the data sharing ecosystem.” While he noted that the stock could be stuck in neutral for a while while it “continues to grow into its valuation,” Materne remains a long-term bull. He rates the stock at Outperform and has a target of $311 for the price.