Snowflake Slowdown?

I am preparing for the next earnings call for Snowflake (SNOW), and am reviewing historical data. Sales, QoQ, are slowing down, potentially significantly.

For the last two quarters, Snowflake has guided forward-looking full-year fiscal revenue at $1.02 and $1.035 billion on the upper range of guidance, or YoY full-year revenue increase of 84% and 87%. The most recent quarter was Q1, so assuming they continue to beat each YoY by 3% for the next 3 quarters, full-fiscal revenue increases to YoY of 96% - pretty good. However, extrapolating the data based on actual Q1 revenue of $228.9 million, Q3 and Q4 start to see a substantial slowdown in quarterly revenue to reach 1yr growth of 96% - see table below. The last 3 quarters for the fiscal year estimate sequential revenue gain in the 13-18% range - this seems like a real slowdown for a company that was growing annually at triple digits.

Note, I made approximations based on historical data and am seeking to understand directionally where the revenue is heading, not providing exact values (asterisks in the table are approximations).

During Snowflake’s 2021 Investor Day presentation, they highlighted a goal of $10B by FY29 at ~30% YoY growth. I realize it’s impossible to project that far out but is this an indicator things are about to quickly slow down?

 Q	Revenue 	Seq Rev Gain Total 	Full-Year Rev Growth Guidance       
 Q4	$190.4 		19.3%    		1.02B = 84%	
 Q1	$228.9 	 	20.2%	  		1.035B = 87%			
 Q2	$271.2* 	18.1%*	 		90%*				
 Q3	$309.2*		14%* 			93%*				
 Q4	$349.4*    	13%* 			96%*				



“…seeking to understand directionally where the revenue is heading…”

It is usage based and data is increasing exponentially along with the need to make some good use of it.

For shorter term, wouldn’t RPO be a better metric to try and determine reasonable expectations?

Excerpt from the free side of muji, who is the resident expert on the subject:

“They have claimed that net retention will remain above 160% for the remainder of this year, and that FY22 revenue will grow 84-87%. [For a usage-based pricing model that can fluctuate based on every individual customer, I find this astounding.] As of Q122 in May, their RPO grew +206% compared to platform revenue at +110%. Customers are pre-purchasing a massive amount of planned consumption. And most of those new customers flowing in (at +67% YoY) aren’t even contributing yet! Management has stated that it takes a good 6+ months for newly onboarded customers to fully grow into their planned usage of the platform. Customers gained today will likely not show up as revenue until 2 or more quarters later.”

So when you say that “this seems like a real slowdown” then my question is: do you think we “have arrived” when it comes to data and its usage or that we are starting? Do you think SNOW has a direct competitor for their core business?

In other words, there are trees and then there are forests.