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Snowflake (NYSE:SNOW) Soars Despite Mixed Q2 Results

Story Highlights

Snowflake reported mixed results for the third quarter. The strong guidance for the third quarter as well as 2023 impressed investors. However, the widening of losses remains a concern.

Cloud computing company Snowflake Inc. (NYSE: SNOW) posted mixed results for the second quarter ended July 31, 2022. The mixed results were marked by earnings missing expectations but revenues surpassing the same. However, despite the mixed results, shares of the company jumped significantly in the after-market trade on upbeat guidance.

Q2 Results Snapshot

Snowflake reported quarterly revenues of $497.2 million, up an impressive 82.7% from the previous year. Further, the figure topped the consensus estimate of $467.4 million. The growth in revenues was primarily driven by the 83% year-over-year growth witnessed in product revenues.

However, the company’s losses widened to $0.70 per share from $0.64 per share in the prior year. Further, the figure came in worse than the consensus estimate of a loss of $0.01 per share.

Strong Key Operating Metrics

Snowflake’s remaining performance obligations of $2.7 billion reflect year-over-year growth of 78%. Notably, the company has 6,808 total customers with 246 customers with a trailing 12-month product revenue greater than $1 million.

For the third quarter, the company projected product revenues of $500 – $505 million, representing a growth of 60-62%. For 2023, the company expects product revenues of $1.91 – $1.92 billion, reflecting an increase of 67-68%.

Is SNOW a Buy or Sell?

Overall, the Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 19 Buys, eight Holds, and two Sells. The average SNOW stock price prediction of $183.64 implies the stock has an upside potential of 15.1% from current levels. Shares have declined 43.8% over the past year.

Key Takeaways

The company provided optimistic guidance, which excited investors and caused the stock to rise. Moreover, the impressive increase in revenues and growth in some key operating metrics gives the company a strong footing. However, profitability concerns remain an issue.

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