Dawsdaws will do a far better job than I with his expectations; but I thought it might be
helpful to get the discussion started early with the hopes he joins in because earnings are
due Wednesday.
**NOTE:** Following Snowflake's preferred way of reporting, I use
Product Revenue rather than gross revenue.
As you can see, last quarter was very good and I for one am not
looking for a repeat. That's not to say that Mr. Market doesn't
expect it. It seems recently a miss in even one metric can cause
our stocks to tumble 20 to 30%.
Q3 Q2 Q12022 Q4 Q3 Q2 Q12021
Product Revenue 312.5 254.6 213.8 178.3 148.5 125.2 101.8
seq chg 23% 19% 20% 20% 19% 23%
yoy chg 110.4% 103% 110%
RPO 1.8 1.50 1.43 1.33 0.93 0.69 0.47
seq chg 20% 4.9% 7.5% 43% 35% 47%
yoy chg 94% 118% 206%
Customers 5,416 4,990 4,532 3,554
seq chg 8.5% 10.1% 27.5%
Cust>$1M 148 116 104 77 65 56 48
seq chg 27.6% 11.5% 35.1% 18.5% 16.1% 16.7%
DBNRR 173% 169% 168% 168% 162%
seq chg 2.4% 0.6% 0.0% 3.7%
annual proj. Quart. proj. Beat
for 4th 1131 350
for 3rd 1070 285 9.6%
for 2nd 1035 240 6.1%
for 1st 1020 200 6.9%
for 4th 543 167 6.8%
My Expectations:
Below <378 <21%
Meets 378-384 21-23%
Exceeds >384 >23%
Guidance Expectations:
NextQ FY
Below <375 <1169
Meets 376-384 1170-1195
Exceeds >385 >1195
RPO percentage increases have been all over the place; but in terms of whole numbers it should exceed 193 which is 7.5% greater than Q3. The 7.5% is the increase in Q1, but really it's anyone's guess what the percentage increase should be. The important thing is that there should be a noticeable increase. The same can be said for customer increase. Last quarter total customers equaled 5416. A 10% increase might suffice.
DBNRR has averaged 168% over the last 5 quarters, but was 173% so if it's less than that amount, it my cause problems for perfection seekers.
14 Likes
FWIW, my expectations are slightly lower. The CFO is on record as saying they model with 5-7% room. He actually apologized for being so far off on the last call. That’s well in line with SNOW’s 6.8%, 6.9%, and 6.1% beats in its first three public quarters (as you have listed). A 6% beat of the $350M top-end product revenue guide would be $371M. That’s the give or take number I’m personally looking for. My spit ball guide is something $415-$416M for Q1. I’m not saying SNOW can’t give us an 8% beat to get to your $378M. I’m just saying modeling in 8% as the minimum isn’t strongly backed by the limited history we do have.
The other issue of course is SNOW will be issuing the initial FY guide. That might have an even bigger effect on the market’s response. DDOG’s, UPST’s and NET’s were received fine. MNDY’s clearly was not. I don’t try to model FY guides but would expect something strong given SNOW’s crazy-high NRR’s and the excellent leverage it’s created this year. Not to mention the fact Slootman and gang certainly know how to play the game.
24 Likes
Snowflake is reporting after closing on March 2nd, with the earnings call scheduled for 5pm. I’ve found it good practice to document my expectations in advance, so I know how to quickly react to earnings. Price action is often swift, so I want to take advantage of after hours trading. Posting it here in case anyone finds it helpful or has meaningful disagreement and rationale around why my expectations may be off base. I like to track and predict the metrics that the company include in the press release as “important” numbers. For Snowflake this is Product Revenue, adjusted Product Gross Profit (aPGP), adjusted Product Gross Profit Margin (aPGPM), Remaining Performance Obligations (RPO), adjusted Free Cash Flow (aFCF), Net Revenue Retention Rate (NRRR), Total Customers and Customers with >1 million TTM revenue (Cust>1M).
Just looking at these numbers again in more detail, Snowflake’s performance has been utterly unbelievable. Last quarter Snowflake was almost apologetic about their large beat. I don’t expect this magnitude of beat again. What I do expect, is continued phenominal product growth driven by the otherworldly net revenue retention rate. I’m expecting sequential product revenue growth to beat by ~6%, that equates to ~18% sequential quarter over quarter product revenue growth. Adjusted Product Gross Profit Margin should remain at 75% and I’m expecting to see a big jump in RPO. The company tells us to focus on RPO, so anything less than 2.2B would be mildly concerning. Net Revenue Retention Rates should remain best in class, above 170%. They’ve actually guided full year adjust free cash flow margin to 8%, so doing the math, I think we can expect a very nice uptick in adjusted Free Cash Flow this quarter, potentially getting to 45M.
I’m expecting conservative Outlook guidance at crosses just above the 400M mark and full year guidance that gets to 2B or slightly above. I’ll reiterate what I’ve said in prior posts that I don’t put much weight on the Outlook numbers given the games that are played.
Given what I’ve witnessed this earnings season, I’m keeping my position size going into earnings modest at ~7% and will potentially take advantage of any irrational market reactions to the report.
Snowflake Earnings Expectations:
SNOW ProdRev YoY SQoQ TTM YoY TotRev aPGP aPGPM RPO aFCF NRRR TotCust Cust>1M YoY SQoQ
F20 Q3 69 73 45 65% 189% 1934 31
F20 Q4 82 19% 88 54 66% 169% 2392 41 32%
F21 Q1 102 24% 109 67 66% 171% 2720 48 17%
F21 Q2 125 23% 379 133 83 67% 158% 3117 56 17%
F21 Q3 148 115% 19% 458 160 105 70% 928 -37.1 162% 3554 65 110% 16%
F21 Q4 178 116% 20% 554 190 125 70% 1333 17.3 168% 4139 77 88% 18%
F22 Q1 214 110% 20% 666 229 154 72% 1432 23.4 168% 4532 104 117% 35%
F22 Q2 255 103% 19% 795 110% 272 187 74% 1529 2.8 170% 4990 116 107% 12%
F22 Q3 312 110% 23% 959 109% 334 233 75% 1804 21.5 173% 5416 148 128% 28%
**Mid-point Company Guidance:**
F22 Q4 348 11% 260 75% 42
F22 1129 835 74% 90
**My Expectations:**
Below <368 <18%
Meets 368-376 18-20% ~276 75% >2200 ~45 ~170% ~5800 ~170
Exceeds >376 >20%
**Guidance Expectations:**
NextQ FY
Below <400 <2B
Meets 400-410 2-2.07B
Exceeds >410 >2.07B
Keeping score, here’s how we’re doing this quarter, IMHO:
DataDog: Exceeded expectations :)
Cloudflare: Met expectations.
ZoomInfo: Met expectations.
Upstart: Exceeded expectations :)
Amplitude: Below expectations :(
[Monday.com](http://Monday.com): Slightly lower rev, met expectations overall.
ZScaler: Met expectations.
Snowflake: TBD
I hope you find this helpful and I appreciate the feedback these posts have generated.
Cheers,
Daws (Long SNOW ~7%)
95 Likes
I couldn’t get on it either, seems that SNOW is down 30% in after hours though. Painful, but perhaps an opportunity is presenting itself.
Al the short term traders and technical savants and Momentum investors will get punished.
Now we get three days of pontificating as if this was the end of the world.
The expectations of those here posting how double digit % beats are their “meets expectations” is a joke… rank amateurs with no real world finance experience or haven’t been around long enough to view the market through several cycles.
SNOW did fine. They’re well positioned for a decade of outstanding growth. This is a short term nothing burger 5 years down the road but a buying opportunity for those who are savvy.
6 Likes
Guidance was light, street was expecting $1.96-$2.0bn, versus the $1.88-1.9bn they offered. Growth shrinking from 102% to 79-81% next Q, and FY growth forecast at 65-67%.
No position. Stock just broke below 52-week low.
7 Likes
Growth slowing from 102% to 67% YoY is a very big deal I think.
Mr Market will obviously overreact, both in AH as well as tomorrow. As a 10% investor there is no reasonable option but to sit it out. I don’t think panic selling will achieve much of anything, but I’m not sure I am going to load up the cart either. Listening to this earnings call will be informative.
3 Likes
Hello Daws,
Well, they reported revenue of $383.8M, exceeding your expectations by a long shot. But the guide is lower than you expected: Q1 $383 - 388 FY $1,880 - 1,900.
Mr. Market is very unhappy down 29%.
2 Likes
As an FYI…
FY22 guidance was initially for product revenue growth of 81-84% and the actual growth was 106%.
If you are taking their initial FY23 of 65-67% at face value I am not sure what to tell you…
Yes growth is slowing. But it won’t be in the 60 (or probably even 70%s this year).
Another case of apparently insane expectations and the market having a hissy fit immediately after slightly disappointing guidance.
Bnh
12 Likes
Where are you reading that revenue number?
It clearly says 359.6 in the summary and in the table.
Btw, to reference the post above, I am using Chrome on mobile thanks to someone who emailed me privately.
1 Like
359 is product revenue
383.8 is Total Revenue, including services.
Guide is for 388 Product Revenue, not total revenue for next quarter, for an 8% sQoQ
3 Likes
I was able to refresh the investor relations page continuously, but I couldn’t find any mention of Q4 earnings under Quarterly Reports, News, or Events and Presentations, even while I saw the stock was tanking 30%.
My expectations vs. actual:
Product Revenue of $371.9, actual was $359.60 (miss)
Customers increase to 5958, actual was 5944 (more or less met)
$1M TTM customers increase to 178, actual was 184 (slightly exceeded)
RPO grows to $1926, actual was $2,600 (exceeded)
A bit disappointing on the product revenue as QoQ was only 15.1%, but the revenue is lumpy so this doesn’t necessarily mean the start of a steep decline. With a FY guide of 66% growth, with beat and raise this could become 90% which shouldn’t be surprising.
164% → 120% → 106% → 90% (66% guide)
RPO growth of 44% was phenomenal.
NRR continues to grow beyond expectations; now at 178% (vs. 173% last Q).
30 Likes
Yes, I’m also seeing 359.6. But if you download the pdf under “Latest Presentation”, page 11 states $384M for Q4 revenue. It’s a bit confusing. I’m not sure if those numbers represent something different or if one of them is a typo.
Either way, being down 30% in AH trading is disconcerting. I’m probably going to have to weather the storm on this one.
"Now we get three days of pontificating as if this was the end of the world. "
I absolutely love the pontificators here. Allowed me to triple my small SNOW stake at $188.
I look forward to doubling that again tomorrow.
2 Likes
If any of you are still having issues with the investor relations website loading, the press release is also available on the SEC’s website here
https://www.sec.gov/Archives/edgar/data/0001640147/000164014…
-mekong
6 Likes
Yes, I’m also seeing 359.6. But if you download the pdf under “Latest Presentation”, page 11 states $384M for Q4 revenue. It’s a bit confusing. I’m not sure if those numbers represent something different or if one of them is a typo.
No typos. If you actually look at the slide you refer to it says $360 (rounding up from $359.6) is product revenue and $24 is professional services and other revenue for $384 total revenue.
Interesting that Snowflake is baking in 100M less guidance for their next years product revenue due to their efficiency improvements in the snowflake platform. Expectations are that customers will ramp up workloads to take advantage of these efficiencies, so long term this should not be such a headwind.
8 Likes
“Added more after hours to my already big position at $187. This is insane 
”
Sometimes I like the generosity of Mr.Market
Cheers!
ronjonb
19 Likes
Interesting that Snowflake is baking in 100M less guidance for their next years product revenue due to their efficiency improvements in the snowflake platform. Expectations are that customers will ramp up workloads to take advantage of these efficiencies, so long term this should not be such a headwind.
This is an exceptionally important point Nick. Was this for 2021 or 2022 you are quoting?
Basically Snowflake is betting on elasticity of demand volumes with a lowered cost of compute in the same way as flash memory is betting on higher elasticity of demand volumes as cost of flash decreases and falls to equivalency of hard drives.
Ant
2 Likes
Hey Ant - This is forward looking into 2022, from the earnings call. They mentioned the immediate (negative) impact that their new optimizations released in January had on revenue when they went live. I thought their argument is good for why it makes sense to take this hit.
2 Likes