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Snowflake (SNOW) Q2 Loss Narrows Y/Y, Product Revenues Surge

Snowflake's (SNOW) second-quarter fiscal 2022 results reflect robust demand for its cloud-native solutions from financial services and health care cus...

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Snowflake Inc. SNOW reported second-quarter fiscal 2022 loss of 64 cents per share, which was much narrower than a loss of $1.31 per share in the year-ago quarter. The Zacks Consensus Estimate for the fiscal second quarter was pegged at a loss of 15 cents per share.



Revenues of $272.2 million beat the consensus mark by 6.6% and surged 104.4% year over year. This solid outperformance was led by robust adoption of Snowflake’s cloud-native software architecture.

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Snowflake Inc. Price, Consensus and EPS Surprise

Snowflake Inc. Price, Consensus and EPS Surprise

Snowflake Inc. price-consensus-eps-surprise-chart | Snowflake Inc. Quote

Quarter Details

Product Revenues (93.45% of total revenues) soared 103.3% year over year to $254.6 million driven by growth in financial services and health care customers.



As of Jul 31, 2021 the company had 4,990 total customers and 116 customers with trailing 12-month product revenues greater than $1 million, an increase from 104 in the previous quarter.



The company experienced significant geographical expansion outside of the United States in the fiscal second quarter. EMEA product revenues grew over 135% and Asia Pacific product revenues grew around 170% year over year.



Financial services customer product revenues grew more than 100% year on year, representing the largest contribution, while healthcare customer product revenues grew nearly 200%.



The company continued to add customers at a robust pace, adding 458 net new customers in the reported quarter, up from 397 added in the year ago period.



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Remaining performance obligations were $1.52 billion, up 122.2% year over year, driven by more multimillion-dollar relationships with particular strength in the telecom and technology sectors.



Professional Services Revenues (6.5% of total revenues) surged 121.7% year over year to $17.6 million.



Net revenue retention rate was 169% as of Jul 31, 2021 compared with 168% as of Apr 30, 2021.



Non-GAAP gross margin expanded 650 bps year over year to 69.7%. Favorable cloud service agreements, growing sales across regions and enterprise customer success contributed to steady gross margin improvements.



Research & development expenses, as a percentage of revenues, decreased 470 bps on a year-over-year basis to 18.8%. Moreover, general & administrative (G&A) expenses, as a percentage of revenues, were 12.9%, down 500 bps year over year.



Sales & marketing expenses, as a percentage of revenues, contracted to 46% on a year-over- basis from 65.6% in the year ago quarter.



Total operating expenses, as a percentage of revenues, were 77.8%, which contracted from 107% in the year-ago quarter.

Balance Sheet & Cash Flow

As of Jul 31, 2021, Snowflake had cash, cash equivalents and short-term investments of $4.13 billion compared with $3.93 million as of Apr 30, 2021.  



Free cash flow was $2.8 million compared with $23.3 million in the previous quarter and free cash outflow of $44 million in the year-ago period.

Guidance

For the third quarter of fiscal 2022, Snowflake expects Product revenues in the range of $280-$285 million, indicating growth of 89-92% year over year.



Non-GAAP loss from operations margin is expected to be 7%.



For fiscal 2022, the company expects Product revenues in the range of $1.06-$1.07 billion, indicating growth of 91-93% year over year.



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