Snowflake Earnings: What to Expect

Snowflake will release fourth-quarter results after Wednesday’s closing bell. Here’s what to look out for when the numbers roll in.

What to look out for

Merits: Analysts expect Snowflake to report 4 cents a share in adjusted earnings in the fiscal fourth quarter, up from 12 cents a share last year. On Estimize, which collects forecasts from hedge funds, academics and others, the average estimate is 7 cents a share.

Revenue: FactSet consensus calls for quarterly revenue of $576 million, up from $384 million a year ago. At Estimize, the median forecast is $582 million.

Stock movement: Snowflake shares are up on seven of the company’s nine earnings reports as a public company, including the last two. The stock is down 41% over the past 12 months as the S&P 500 SPX,
-0.49%
has lost about 8%.

Of the 45 analysts tracked by FactSet covering Snowflake stock, 29 have a buy rating, 13 have a hold rating and three have a sell rating, with an average target price of $183.05.

What else to watch out for

Some analysts are taking a cautious approach to the report, especially since Snowflake’s management provided initial guidance for fiscal 2024 product sales growth of 47% on its previous earnings call.

There is “potential risk to existing fiscal 2024 revenue prospects,” Wells Fargo’s Michael Turrin wrote in a note to customers, citing “mitigated [near-term] Optimism from discussions with partners and a series of more rigorous readthroughs from other cloud providers that a [deceleration] Leaving the 4Q calendar.”

While Evercore ISI’s Kirk Materne saw some room for Snowflake to capture upside potential on its quarterly product sales for the most recent quarter, he added that “the bigger question is whether the company is changing its initial FY24 guidance based on the macro.” shortens”.

“While the SNOW partners note that they see some similar issues faced by the hyper-scalers, SNOW is to some extent better isolated from the ‘consumption’ issues, and all partners we spoke to remain very optimistic about the long-term opportunity,” he wrote.

Guggenheim’s John DiFucci chimed in that Snowflake “should easily exceed consensus expectations for F4Q’s product sales by at least 3-5%, which we believe management is trying to achieve. He expects the company to maintain its 47% growth forecast for product sales in fiscal 2024 — for now.

“However, channel partner feedback supports that FY24 could be a difficult business environment for existing customers given smaller store sizes, longer sales cycles and slower expansion ramps,” he noted. “The magnitude of the hit is likely important to stock reaction as SNOW remains the most expensive of all software products,” trading at 17.4 times enterprise value versus next 12 months’ recurring earnings.