Snowflake’s margin and sales outlook in the spotlight

By: Miguel A. Rodriguez

12:06, 14 June 2021

After stronger-than-expected quarterly results, Snowflake is under scrutiny regarding its outlook

The cloud computing-based data warehousing company revealed that it is expecting mixed figures. Snowflake’s estimate showed strong conviction about continuing revenue growth, but the margin forecast was less robust. The company forecasts a 10% increase in operating margin and 30% product-sales growth in the long term.

According to Bloomberg, the revenue forecast “represents a scaling function well ahead of prior generations of growth software” and could be underestimated. Analysts from Morgan Stanley and Citi are concerned whether the data-analytics-software company could live up to expectations. The worries about its valuation caused the stock to slump 34% in the past six months. Both investment banks touted a $270 price target. 

The comments came after last month the company had reported a first-quarter 2022 adjusted net loss of 12 per share on revenues of $228.9 million. Both figures had surpassed the analysts’ expectations of 15 cents loss-per-share and $212.6 million in revenue.

At the moment of writing, Snowflake stock price is $240.60 apiece.


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