Snowflake stock skyrockets after software sales more than doubled

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Snowflake Inc.’s sales more than doubled in the fall, and executives on Wednesday raised their expectations for the full year on Wednesday while forecasting product revenues could further double in the last quarter of the year. , causing stocks to skyrocket at the end of the session.

Snowflake SNOW,
-8.57%
Wednesday reported third-quarter losses of $ 154.86 million, or 51 cents per share, after reporting losses of 28 cents per share a year ago, according to FactSet. Revenue rose to $ 334.4 million from $ 160 million a year ago, with revenues amounting to $ 312.5 million with the remainder attributed to professional services.

Analysts on average expected losses of 6 cents per share on sales of $ 306 million, including $ 284 million in product sales, according to FactSet. Shares jumped more than 13% in after-hours trading immediately after the results were released, after closing 8.6% lower to $ 311.

Since Snowflake is a young software company, investors tend to focus on other metrics besides profitability, including net revenue retention rate, which measures how much existing customers spend on the offering at the volume price, and remaining performance obligations, which measure the amount of expenses that have been agreed to under contracts but not yet recognized.

Snowflake announced a net income retention rate of 173% at the end of the quarter on Oct. 31 and a remaining performance bond of $ 1.8 billion, up 94% from last year and to little near in line with analysts’ average estimate of $ 1.82 billion. . Snowflake also reported that the number of customers has increased to 5,416 from 3,554 a year ago, and 148 of those customers have spent more than $ 1 million with the company in the past 12 months.

For the fourth quarter, Snowflake executives are forecasting product revenues of $ 345 million to $ 350 million, while analysts have averaged $ 316 million. For the full year, Snowflake management is now forecasting revenue of around $ 1.13 billion, having previously reported $ 1.06 billion to $ 1.07 billion.

Snowflake has emerged as one of the top-rated public tech companies after its initial public offering in 2020 due to its potential to fight Oracle Corp. ORCL,
-1.09%
with cloud native database software. The company – previously based in San Francisco but now claiming to have no headquarters because employees work remotely – has attracted large investors, including Warren Buffett’s Berkshire Hathaway Inc. BRK.A,
-0.29%

BRK.B,
-0.61%,
and financial analysts continue to praise the company’s opportunity.

See also: Five things to know about Snowflake and its record-breaking IPO

“As data plays an increasingly essential role for businesses in all industries and geographies, we believe Snowflake will experience sustainable growth with increased visibility due to its irreplaceable role in the IT stack.” , wrote analysts at Truist Securities in November, while maintaining a buy rating and price target of $ 350 but mentioning the likelihood of updating their model after Wednesday’s report.

Snowflake stock climbed higher than realized prices in the first heady days after its IPO in mid-November, closing at over $ 400 for the first and, so far, the only time on November 16. . Shares have since collapsed, however, including a 14.7% drop in the past two sessions amid a market rout that leaves the stock up 10.5% so far this year, while the ‘S&P 500 SPX index,
-1.18%
gained 21.6%.


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