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The Zacks Consensus Estimate for revenues is pegged at $898.77 million, indicating an increase of 22.42% from the year-ago quarter’s reported figure.
The consensus mark for earnings has been stable in the past 30 days at 15 cents per share. The figure suggests a decrease of 40% from the year-ago quarter’s reported figure.
SNOW’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, missing once, with the average surprise being 43.73%.
See the Zacks Earnings Calendar to stay ahead of market-making news.
Let’s see how things have shaped up for SNOW prior to this announcement.
Key Factors to Note for SNOW’s Q3
SNOW has been suffering from challenging macroeconomic conditions, including persistent inflation, which have hurt customer spending patterns.
Increased GPU-related costs as Snowflake aggressively invests in AI initiatives are expected to have kept margins under pressure. Moreover, stiff competition from the likes of Databricks is increasing pricing pressure.
However, SNOW’s top-line growth is expected to have benefited from a strong portfolio with new capabilities, including Marketplace Listing Auto-Fulfillment & Monetization, account replication & failover, Query Acceleration Service, geospatial analytics, Snowpark and Snowpipe Streaming.
Exiting second-quarter fiscal 2025, SNOW had more than 400 accounts using Iceberg, and more than 2500 accounts leveraging Snowflake AI weekly. This strong momentum is expected to have carried into the to-be-reported quarter.
SNOW Shares Underperform Sector, S&P 500
Snowflake shares have declined 36.6%, underperforming the Zacks Computer & Technology sector’s return of 25.7% and the S&P 500’s 23.5%.
Year-to-Date Performance Chart
Image Source: Zacks Investment Research
SNOW stock is not so cheap, as the Value Score of F suggests a stretched valuation at this moment.
The stock is trading at a premium with a forward 12-month P/S of 10.16X compared with the Zacks Computer & Technology sector’s 6.13X.
P/S Ratio (F12M)
Image Source: Zacks Investment Research
SNOW’s Expanding Portfolio Aids Long-term Prospects
SNOW is benefiting from a strong portfolio. It has introduced features like Marketplace Listing Auto-Fulfillment & Monetization, account replication & failover, Query Acceleration Service, geospatial analytics, and Snowpipe Streaming.
SNOW’s innovations, such as Iceberg and Hybrid tables and Cortex LLM (Large Language Model)-powered functions, enhance its product offerings. These advancements are expected to boost SNOW’s long-term prospects via increased demand and competitive differentiation.
In the fiscal second quarter, Snowflake made a total of nine new product announcements and brought over 15 product capabilities to general availability to the market.
Snowflake’s Polaris Catalog is a vendor-neutral, open catalog implementation for Apache Iceberg, which is the open standard of choice for implementing data lakehouses, data lakes and other modern architectures.
The Polaris Catalog offers enterprises and the entire Iceberg community new levels of choice, flexibility and control over their data, with full enterprise security. It offers Apache Iceberg interoperability with Amazon’s (AMZN - Free Report) cloud division Amazon Web Services (“AWS”), Confluent, Dremio, Google Cloud, Microsoft (MSFT - Free Report) Azure, Salesforce and more.
SNOW is hosting META’s Llama 3.1 collection of multilingual open-source LLMs in Snowflake Cortex AI for enterprises to easily harness and build powerful AI applications at scale. It has added new innovations and enhancements to Snowflake Cortex AI that unlock the next wave of enterprise AI for customers with easy, efficient and trusted ways to create AI-powered applications.
SNOW’s Strong Partner Base: A Key Catalyst
SNOW is benefiting from an expanding partner base that includes Amazon, Microsoft, META, NVIDIA (NVDA - Free Report) , Fiserv, EY, Deloitte, LTIMindtree, Next Pathway and S&P Global, among others.
Its collaboration with NVIDIA will help customers and partners build customized AI data applications in its platform powered by NVIDIA AI.
Snowflake has adopted NVIDIA AI Enterprise software to integrate NeMo Retriever microservices into Snowflake Cortex AI, which is a fully managed LLM and vector search service. The integration will help enterprises to smoothly connect custom models to diverse business data and deliver highly accurate responses.
Snowflake and Microsoft recently announced an expanded partnership that plans to offer an interoperability experience between Snowflake and Microsoft Fabric OneLake. The interoperability is possible due to their support for the industry’s leading open standards for analytical storage formats, Apache Iceberg and Apache Parquet.
Snowflake also announced Snowflake Data Clean Rooms to customers in AWS East, AWS West and Azure West. SNOW leveraged its acquisition of data clean room technology provider Samooha to launch the solution.
Snowflake’s growing client base includes industry leaders like Disney, Capital One, NBCUniversal, Petco, Pfizer, Snapchat and Western Union. Disney utilizes SNOW’s platform for in-park optimization.
Penske Logistics uses Cortex AI for innovative transportation solutions. Twilio Segments Reverse ETL integrates Cortex AI to transform unstructured data into actionable customer insights. This highlights Snowflake’s increasing adoption across sectors.
SNOW Shares: Better to Stay Away?
Snowflake is a risky bet in the near term, given its modest growth prospect and a stretched valuation.
SNOW’s margins are expected to suffer from higher costs, a challenging macroeconomic environment and stiff competition.
Snowflake currently has a Zacks Rank #4 (Sell), suggesting that investors should consider staying away from the stock for the time being.
Image: Bigstock
Snowflake Set to Report Q3 Earnings: Buy, Hold or Sell SNOW Stock?
Snowflake (SNOW - Free Report) is set to report its third-quarter fiscal 2025 results on Nov. 20.
The Zacks Consensus Estimate for revenues is pegged at $898.77 million, indicating an increase of 22.42% from the year-ago quarter’s reported figure.
The consensus mark for earnings has been stable in the past 30 days at 15 cents per share. The figure suggests a decrease of 40% from the year-ago quarter’s reported figure.
SNOW’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, missing once, with the average surprise being 43.73%.
Snowflake Inc. Price and EPS Surprise
Snowflake Inc. price-eps-surprise | Snowflake Inc. Quote
See the Zacks Earnings Calendar to stay ahead of market-making news.
Let’s see how things have shaped up for SNOW prior to this announcement.
Key Factors to Note for SNOW’s Q3
SNOW has been suffering from challenging macroeconomic conditions, including persistent inflation, which have hurt customer spending patterns.
Increased GPU-related costs as Snowflake aggressively invests in AI initiatives are expected to have kept margins under pressure. Moreover, stiff competition from the likes of Databricks is increasing pricing pressure.
However, SNOW’s top-line growth is expected to have benefited from a strong portfolio with new capabilities, including Marketplace Listing Auto-Fulfillment & Monetization, account replication & failover, Query Acceleration Service, geospatial analytics, Snowpark and Snowpipe Streaming.
Exiting second-quarter fiscal 2025, SNOW had more than 400 accounts using Iceberg, and more than 2500 accounts leveraging Snowflake AI weekly. This strong momentum is expected to have carried into the to-be-reported quarter.
SNOW Shares Underperform Sector, S&P 500
Snowflake shares have declined 36.6%, underperforming the Zacks Computer & Technology sector’s return of 25.7% and the S&P 500’s 23.5%.
Year-to-Date Performance Chart
Image Source: Zacks Investment Research
SNOW stock is not so cheap, as the Value Score of F suggests a stretched valuation at this moment.
The stock is trading at a premium with a forward 12-month P/S of 10.16X compared with the Zacks Computer & Technology sector’s 6.13X.
P/S Ratio (F12M)
Image Source: Zacks Investment Research
SNOW’s Expanding Portfolio Aids Long-term Prospects
SNOW is benefiting from a strong portfolio. It has introduced features like Marketplace Listing Auto-Fulfillment & Monetization, account replication & failover, Query Acceleration Service, geospatial analytics, and Snowpipe Streaming.
SNOW’s innovations, such as Iceberg and Hybrid tables and Cortex LLM (Large Language Model)-powered functions, enhance its product offerings. These advancements are expected to boost SNOW’s long-term prospects via increased demand and competitive differentiation.
In the fiscal second quarter, Snowflake made a total of nine new product announcements and brought over 15 product capabilities to general availability to the market.
Snowflake’s Polaris Catalog is a vendor-neutral, open catalog implementation for Apache Iceberg, which is the open standard of choice for implementing data lakehouses, data lakes and other modern architectures.
The Polaris Catalog offers enterprises and the entire Iceberg community new levels of choice, flexibility and control over their data, with full enterprise security. It offers Apache Iceberg interoperability with Amazon’s (AMZN - Free Report) cloud division Amazon Web Services (“AWS”), Confluent, Dremio, Google Cloud, Microsoft (MSFT - Free Report) Azure, Salesforce and more.
SNOW is hosting META’s Llama 3.1 collection of multilingual open-source LLMs in Snowflake Cortex AI for enterprises to easily harness and build powerful AI applications at scale. It has added new innovations and enhancements to Snowflake Cortex AI that unlock the next wave of enterprise AI for customers with easy, efficient and trusted ways to create AI-powered applications.
SNOW’s Strong Partner Base: A Key Catalyst
SNOW is benefiting from an expanding partner base that includes Amazon, Microsoft, META, NVIDIA (NVDA - Free Report) , Fiserv, EY, Deloitte, LTIMindtree, Next Pathway and S&P Global, among others.
Its collaboration with NVIDIA will help customers and partners build customized AI data applications in its platform powered by NVIDIA AI.
Snowflake has adopted NVIDIA AI Enterprise software to integrate NeMo Retriever microservices into Snowflake Cortex AI, which is a fully managed LLM and vector search service. The integration will help enterprises to smoothly connect custom models to diverse business data and deliver highly accurate responses.
Snowflake and Microsoft recently announced an expanded partnership that plans to offer an interoperability experience between Snowflake and Microsoft Fabric OneLake. The interoperability is possible due to their support for the industry’s leading open standards for analytical storage formats, Apache Iceberg and Apache Parquet.
Snowflake also announced Snowflake Data Clean Rooms to customers in AWS East, AWS West and Azure West. SNOW leveraged its acquisition of data clean room technology provider Samooha to launch the solution.
Snowflake’s growing client base includes industry leaders like Disney, Capital One, NBCUniversal, Petco, Pfizer, Snapchat and Western Union. Disney utilizes SNOW’s platform for in-park optimization.
Penske Logistics uses Cortex AI for innovative transportation solutions. Twilio Segments Reverse ETL integrates Cortex AI to transform unstructured data into actionable customer insights. This highlights Snowflake’s increasing adoption across sectors.
SNOW Shares: Better to Stay Away?
Snowflake is a risky bet in the near term, given its modest growth prospect and a stretched valuation.
SNOW’s margins are expected to suffer from higher costs, a challenging macroeconomic environment and stiff competition.
Snowflake currently has a Zacks Rank #4 (Sell), suggesting that investors should consider staying away from the stock for the time being.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.