What To Expect From Snowflake’s (SNOW) Q2 Earnings

Adam Hejl /
2023/08/22 8:03 am EDT

Data warehouse-as-a-service Snowflake (NYSE:SNOW) will be reporting results tomorrow after market close. Here's what to look for.

Last quarter Snowflake reported revenues of $623.6 million, up 47.6% year on year, beating analyst revenue expectations by 2.4%. It was a mixed quarter for the company, with a meaningful improvement in its gross margin but its net revenue retention rate in jeopardy. The company added 43 enterprise customers paying more than $1m annually to a total of 373.

Is Snowflake buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting Snowflake's revenue to grow 33.2% year on year to $662.3 million, slowing down from the 82.7% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.10 per share.

Snowflake Total Revenue

Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. The company has a history of exceeding Wall St's expectations, beating revenue estimates every single time over the past two years on average by 4.38%.

Looking at Snowflake's peers in the data and analytics software segment, some of them have already reported Q2 earnings results, giving us a hint of what we can expect. Commvault Systems delivered top-line growth of 0.09% year on year, beating analyst estimates by 0.49%, and DigitalOcean reported revenues up 26.8% year on year, missing analyst estimates by 0.06%. Commvault Systems traded down 2.54%, and DigitalOcean was flat on the results.

Read our full analysis of Commvault Systems's results here and DigitalOcean's results here.

Technology stocks have been hit hard by fears of higher interest rates and while some of software stocks have fared somewhat better, they have not been spared, with share price declining 6.42% over the last month. Snowflake is down 11.7% during the same time, and is heading into the earnings with analysts' average price target of $200.0, compared to share price of $154.3.

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.