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Snowflake (NYSE:SNOW) Delivers Strong Q3 Numbers, Stock Jumps 13.6%


Radek Strnad /
2021/12/01 4:21 pm EST
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Data warehouse-as-a-service Snowflake (NYSE:SNOW) reported Q3 FY2022 results beating Wall St's expectations, with revenue up 109% year on year to $334.4 million. Snowflake made a GAAP loss of $154.8 million, improving on its loss of $168.8 million, in the same quarter last year.

Is now the time to buy Snowflake? Access our full analysis of the earnings results here, it's free.

Snowflake (SNOW) Q3 FY2022 Highlights:

  • Revenue: $334.4 million vs analyst estimates of $306.1 million (9.24% beat)
  • EPS (GAAP): -$0.51
  • Product revenue guidance for Q4 2022 is $347.5 million at the midpoint
  • Free cash flow of $9.46 million, up from negative free cash flow of $11.9 million in previous quarter
  • Net Revenue Retention Rate: 173%, up from 169% previous quarter
  • Customers: 5,416, up from 4,990 in previous quarter
  • Gross Margin (GAAP): 63.8%, up from 58.2% same quarter last year

“Snowflake saw momentum accelerate in Q3, with product revenue growing 110% year-on-year to $312.5 million. Continued international expansion during the quarter resulted in product revenue from the EMEA and APJ regions up 174% and 219% year-on-year, respectively,” said Frank Slootman, Chairman and CEO, Snowflake.

Founded in 2013 by three French engineers who spent decades working for Oracle, Snowflake (NYSE:SNOW) provides a data warehouse-as-a-service in the cloud that allows companies to store large amounts of data and analyze it in real time.

The amount of data created in the world is growing at an accelerating pace and hand and hand is growing the importance of understanding it, as the pressures on business efficiency and understanding customer preferences mount. Businesses world wide are moving away from on-premise, fixed cost systems to cloud based solutions that offer them flexibility, and that in effect drives the demand for cloud based data warehouse solutions.

Sales Growth

As you can see below, Snowflake's revenue growth has been incredible over the last year, growing from quarterly revenue of $159.6 million, to $334.4 million.

Snowflake Total Revenue

This was another standout quarter with the revenue up a splendid 109% year on year. On top of that, revenue increased $62.2 million quarter on quarter, a very strong improvement on the $43.2 million increase in Q2 2022, and a sign of re-acceleration of growth, which is very nice to see indeed.

Analysts covering the company are expecting the revenues to grow 63.5% over the next twelve months, although estimates are likely to change post earnings.

There are others doing even better than Snowflake. Founded by ex-Google engineers, a small company making software for banks has been growing revenue 90% year on year and is already up more than 400% since the IPO in December. You can find it on our platform for free.

Customer Growth

You can see below that Snowflake reported 5,416 customers at the end of the quarter, an increase of 426 on last quarter. That's in line with the customer growth we have seen over the last couple of quarters, suggesting that the company can maintain its current sales momentum.

Snowflake Customers

Key Takeaways from Snowflake's Q3 Results

With a market capitalization of $102 billion, more than $3.89 billion in cash and with free cash flow over the last twelve months being positive, the company is in a very strong position to invest in growth.

We were impressed by the exceptional revenue growth Snowflake delivered this quarter. And we were also excited to see that it outperformed Wall St’s revenue expectations. Zooming out, we think this impressive quarter should have shareholders feeling very positive. The company is up 13.6% on the results and currently trades at $353.08 per share.

Snowflake may have had a good quarter, so should you invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.