Snowflake (Nasdaq: SNOW) was heralded in 2020 as it was one of the biggest IPOs in history less due to the company's financial performance and more due to its potential as one of the leading companies in the rapidly growing, cloud-based data warehousing and analytics segment.
The bulls case was that Snowflake would become the next monopoly-like leader in a trillion-dollar category like Google (NASDAQ: GOOGL), Apple (NASDAQ: AAPL), or Facebook (NASDAQ: FB) had done. Thus, they didn't balk at its $70 billion valuation at its IPO. In contrast, the bears felt this was egregious as the company wasn't close to $1 billion in revenue and years from being profitable.
While the stock did initially rally and was higher by as much as 75%, it's now back to its IPO price. Its earnings reports will play a big role in determining which camp is correct about the stock. Based on its initial reaction, investors didn't like its Q4 results despite better than expected revenue as the stock is lower by 18% in pre-market trading.
Inside the Numbers
In Q4, Snowflake reported a loss of $0.43 per share which was an improvement from last year's loss of $1.40 per share. Revenue came in at $383.8 million, beating expectations of $372.6 million.
This was a 101% increase in the quarter, slower than last quarter's 110% increase. However, shares were lower by as much as 30% following the earnings report due to its slowdown in revenue growth. The company's gross margin also missed at 70% vs 70.9%.
The company reported nearly 6,000 customers, an increase of 60% in the past year. The company is focused on growth, building its sales team, and improving the product experience and efficiency even if it means customers buy fewer credits, because it will lead to more customers and customer workload in the long-term.
In Q1, the company expects product revenue growth between 79% and 81%. For the full year, analysts forecast product revenue growth between 65% and 67%.
Snowflake also announced the acquisition of a data start-up Streamlit for $800 million. Streamlit is an open-source app framework for Machine Learning teams.