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Snowflake (SNOW) Q3 Earnings Top Estimates, Revenues Up Y/Y
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Snowflake (SNOW - Free Report) reported third-quarter fiscal 2024 non-GAAP earnings of 25 cents per share, crushing the Zacks Consensus Estimate by 66.67%. The company reported earnings of 11 cents per share in the year-ago quarter.
Revenues of $734.2 million beat the consensus mark by 3.33% and jumped 31.8% year over year. Americas, EMEA and APJ accounted for 80%, 15% and 5% of revenues, respectively.
In the reported quarter, Snowpark consumption grew 47% on a sequential basis. Snowflake added four customers with more than $5 million and two customers with more than $10 million in trailing 12-month product revenues in the reported quarter.
Snowflake shares were up 7.6% in after-hours trading. The company’s shares have returned 22.1% compared with the Zacks Computer & Technology sector’s growth of 46%.
Top-Line Details
Snowflake’s product revenues accounted for 95.1% of total revenues. The figure was $698.5 million, up 33.6% year over year.
Professional Services and other revenues contributed 4.9% to total revenues. The figure was $35.7 million, up 4.1% year over year.
In the fiscal third quarter, Snowflake witnessed a net revenue retention rate of 135% for existing customers, down from 142% reported in the previous quarter and 166% reported in the year-ago quarter.
The company reported 23.5% year-over-year growth in the number of customers, reaching 8,907 in the reported quarter. It now has 436 customers with trailing 12-month product revenues greater than $1 million (up 52% year over year) and 647 Forbes Global 2000 customers (up 10.4% year over year). Of the Global 2000 customers, 63% are using Snowpark on a weekly basis.
Snowflake provided an update on its upcoming solutions, which include Document AI and Snowflake Container Services. Document AI is currently in private preview and through Container Services, it is bringing large language models like Reka and NVIDIA’s NeMo into the company.
Operating Details
The non-GAAP gross margin expanded 360 basis points (bps) year over year to 74.9%.
The product gross margin continued to expand, driven by product improvements, favorable cloud agreement pricing, improving scale and a growing enterprise customer base.
Research & development expenses, as a percentage of revenues, increased 400 bps on a year-over-year basis to 21.6%.
General & administrative expenses, as a percentage of revenues, were 6.8%, down 150 bps year over year.
Sales and marketing expenses, as a percentage of revenues, declined 100 bps on a year-over-year basis to 36.7%.
Total operating expenses, as a percentage of revenues, were 65.1% compared with 63.5% reported in the year-ago quarter.
Operating income was $71.9 million in the reported quarter, up 65.9% year over year.
Balance Sheet & Cash Flow
As of Oct 31, 2023, Snowflake had cash, cash equivalents and short-term investments of $3.55 billion compared with $3.95 billion as of Jul 31, 2023.
The remaining performance obligations at the end of the third quarter of fiscal 2024 were $3.699 billion, up 23% year over year. Snowflake expects nearly 57% to be recognized as revenues over the next 12 months.
The adjusted free cash flow was $110.8 million in the reported quarter compared with the previous quarter’s $88.2 million.
Snowflake spent $400 million to repurchase 2.6 million shares.
Guidance
For the fourth quarter of fiscal 2024, Snowflake expects product revenues in the range of $716-$721 million. The projection range indicates year-over-year growth of 29-30%.
The operating margin is expected to be 4% for the fiscal fourth quarter.
The Zacks Consensus Estimate for fiscal fourth-quarter revenues is currently pegged at $710.54 million, indicating 27.56% year-over-year growth. The consensus mark for earnings has been steady at 16 cents per share over the past 30 days, suggesting 45.45% year-over-year growth.
For fiscal 2024, the company expects product revenues to increase 37% year over year to $2.65 billion.
The non-GAAP product gross margin is expected to be 77% and the non-GAAP operating margin is expected to be 7%.
The non-GAAP adjusted free cash flow margin is expected to be 27% in fiscal 2024.
Snowflake plans to hit $10 billion in product revenues by fiscal 2029. Non-GAAP gross margin is expected to reach roughly 78%, while operating margin is estimated to be approximately 25%.
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Snowflake (SNOW) Q3 Earnings Top Estimates, Revenues Up Y/Y
Snowflake (SNOW - Free Report) reported third-quarter fiscal 2024 non-GAAP earnings of 25 cents per share, crushing the Zacks Consensus Estimate by 66.67%. The company reported earnings of 11 cents per share in the year-ago quarter.
Revenues of $734.2 million beat the consensus mark by 3.33% and jumped 31.8% year over year. Americas, EMEA and APJ accounted for 80%, 15% and 5% of revenues, respectively.
In the reported quarter, Snowpark consumption grew 47% on a sequential basis. Snowflake added four customers with more than $5 million and two customers with more than $10 million in trailing 12-month product revenues in the reported quarter.
Snowflake shares were up 7.6% in after-hours trading. The company’s shares have returned 22.1% compared with the Zacks Computer & Technology sector’s growth of 46%.
Top-Line Details
Snowflake’s product revenues accounted for 95.1% of total revenues. The figure was $698.5 million, up 33.6% year over year.
Snowflake Inc. Price, Consensus and EPS Surprise
Snowflake Inc. price-consensus-eps-surprise-chart | Snowflake Inc. Quote
Professional Services and other revenues contributed 4.9% to total revenues. The figure was $35.7 million, up 4.1% year over year.
In the fiscal third quarter, Snowflake witnessed a net revenue retention rate of 135% for existing customers, down from 142% reported in the previous quarter and 166% reported in the year-ago quarter.
The company reported 23.5% year-over-year growth in the number of customers, reaching 8,907 in the reported quarter. It now has 436 customers with trailing 12-month product revenues greater than $1 million (up 52% year over year) and 647 Forbes Global 2000 customers (up 10.4% year over year). Of the Global 2000 customers, 63% are using Snowpark on a weekly basis.
Snowflake provided an update on its upcoming solutions, which include Document AI and Snowflake Container Services. Document AI is currently in private preview and through Container Services, it is bringing large language models like Reka and NVIDIA’s NeMo into the company.
Operating Details
The non-GAAP gross margin expanded 360 basis points (bps) year over year to 74.9%.
The product gross margin continued to expand, driven by product improvements, favorable cloud agreement pricing, improving scale and a growing enterprise customer base.
Research & development expenses, as a percentage of revenues, increased 400 bps on a year-over-year basis to 21.6%.
General & administrative expenses, as a percentage of revenues, were 6.8%, down 150 bps year over year.
Sales and marketing expenses, as a percentage of revenues, declined 100 bps on a year-over-year basis to 36.7%.
Total operating expenses, as a percentage of revenues, were 65.1% compared with 63.5% reported in the year-ago quarter.
Operating income was $71.9 million in the reported quarter, up 65.9% year over year.
Balance Sheet & Cash Flow
As of Oct 31, 2023, Snowflake had cash, cash equivalents and short-term investments of $3.55 billion compared with $3.95 billion as of Jul 31, 2023.
The remaining performance obligations at the end of the third quarter of fiscal 2024 were $3.699 billion, up 23% year over year. Snowflake expects nearly 57% to be recognized as revenues over the next 12 months.
The adjusted free cash flow was $110.8 million in the reported quarter compared with the previous quarter’s $88.2 million.
Snowflake spent $400 million to repurchase 2.6 million shares.
Guidance
For the fourth quarter of fiscal 2024, Snowflake expects product revenues in the range of $716-$721 million. The projection range indicates year-over-year growth of 29-30%.
The operating margin is expected to be 4% for the fiscal fourth quarter.
The Zacks Consensus Estimate for fiscal fourth-quarter revenues is currently pegged at $710.54 million, indicating 27.56% year-over-year growth. The consensus mark for earnings has been steady at 16 cents per share over the past 30 days, suggesting 45.45% year-over-year growth.
For fiscal 2024, the company expects product revenues to increase 37% year over year to $2.65 billion.
The non-GAAP product gross margin is expected to be 77% and the non-GAAP operating margin is expected to be 7%.
The non-GAAP adjusted free cash flow margin is expected to be 27% in fiscal 2024.
Snowflake plans to hit $10 billion in product revenues by fiscal 2029. Non-GAAP gross margin is expected to reach roughly 78%, while operating margin is estimated to be approximately 25%.
Zacks Rank & Stocks to Consider
Snowflake currently has a Zacks Rank #3 (Hold).
BlackLine (BL - Free Report) , Ceridian HCM , and Everbridge (EVBG - Free Report) are some better-ranked stocks that investors can consider in the broader sector, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
BlackLine shares have lost 13.2% year to date. The long-term earnings growth rate is pegged at 50.56%.
Ceridian HCM shares have gained 7.8% year to date. The long-term earnings growth rate is pegged at 44.15%.
Everbridge shares have declined 30.2% year to date. The long-term earnings growth rate is pegged at 47.04%.