Snowflake Earnings (SNOW) Q1 2023

Snowflake CEO Frank Slootman arrives at the Allen & Company Sun Valley Conference on July 6, 2021, in Sun Valley, Idaho.

Kevin Dietsch | Getty Images

Snowflake shares fell as much as 16% in extended trading on Wednesday after the data analytics software maker disappointed analysts by saying it did not expect a positive adjusted operating margin for the current quarter.

See how the company did it:

  • Earnings: Loss of 53 cents per share
  • Recipe: $422.4 million, up from $412.8 million as expected by analysts, according to Refinitiv.

The company’s revenue grew about 85% year-over-year in the quarter ended April 30, according to a statement. In the previous quarter, revenue grew 101%. Almost all of Snowflake’s revenue comes from product revenue, which jumped 84% compared to 102% in the previous quarter. The number represents Snowflake’s software usage for storing and executing queries on data stored on your system.

Snowflake said it had no adjusted operating margin, while analysts polled by StreetAccount predicted a margin of -1.2%. Snowflake’s net loss was $165.8 million, compared to $203.2 million in the same quarter last year.

In the quarter, Snowflake took steps to become more relevant in specific industries. It announced a retail data cloud that builds on an expanded partnership with Amazon, as well as a healthcare and life sciences data cloud. One of Snowflake’s rivals, privately held Databricks, has begun to focus on industries as well.

Snowflake had 6,322 customers at the end of the quarter, up from 5,944 at the end of January.

Regarding guidance, management called for fiscal second-quarter product revenue growth of 71% to 73% and an adjusted operating margin of -2%. Analysts polled by StreetAccount had expected growth of 72% and an adjusted margin of 0.3%.

For the full fiscal year, Snowflake continues to deliver 65% to 67% growth in product revenue and an adjusted operating margin of 1%. StreetAccount’s consensus was around 66% product revenue growth and an adjusted operating margin of 1%.

Snowflake’s software was expanding rapidly, with revenue growth of 120%, when it debuted on the New York Stock Exchange in September 2020, and growth hasn’t slowed much. But investors have become less supportive of equities. Without the after-hours move, Snowflake shares are down about 61% since the start of the year, compared with a 16% decline for the US S&P 500 stock index over the same period.

Salesforce, through its corporate ventures arm, sold the remainder of the Snowflake stake acquired through the initial public offering during the first quarter.

Given the decline in Snowflake’s share price, Rosenblatt Securities upgraded it to a hold-equivalent buy rating on Monday.

Snowflake executives will discuss the results with analysts on a conference call starting at 5 pm ET.

This is breaking news. Please check back here for updates.

TO SEE: Why Citi’s Tyler Radke Says It’s Time to Be Selective with Software Stocks

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