On May 22, 2024, Snowflake Inc (SNOW, Financial) released its 8-K filing for the first quarter of fiscal 2025, showcasing significant growth in key financial metrics.
Founded in 2012, Snowflake is a data lake, warehousing, and sharing company that came public in 2020. To date, the company has over 3,000 customers, including nearly 30% of the Fortune 500 as its customers. Snowflake's data lake stores unstructured and semistructured data that can then be used in analytics to create insights stored in its data warehouse. Snowflake's data sharing capability allows enterprises to easily buy and ingest data almost instantaneously compared with a traditionally months-long process. Overall, the company is known for the fact that all of its data solutions that can be hosted on various public clouds.
Performance Highlights
Snowflake Inc (SNOW, Financial) reported revenue of $828.7 million for the quarter, representing a 33% year-over-year growth, surpassing the analyst estimate of $785.87 million. Product revenue was $789.6 million, reflecting a 34% year-over-year increase. The company's net revenue retention rate stood at 128%, indicating strong customer loyalty and expansion.
Snowflake now boasts 485 customers with trailing 12-month product revenue greater than $1 million, and 709 Forbes Global 2000 customers, marking year-over-year growth of 30% and 8%, respectively. Remaining performance obligations were $5.0 billion, up 46% year-over-year.
Financial Achievements
Snowflake's financial achievements are crucial for its positioning in the software industry. The company reported a product gross profit of $569.9 million with a 72% margin on a GAAP basis, and $607.3 million with a 77% margin on a non-GAAP basis. Operating income on a non-GAAP basis was $36.2 million, reflecting a 4% margin.
| Metric | Amount (millions) | Year/Year Growth |
|---|---|---|
| Product revenue | $789.6 | 34% |
| Product gross profit (GAAP) | $569.9 | 72% margin |
| Product gross profit (Non-GAAP) | $607.3 | 77% margin |
| Operating income (loss) (GAAP) | ($348.6) | (42%) margin |
| Operating income (Non-GAAP) | $36.2 | 4% margin |
| Net cash provided by operating activities | $355.5 | 43% |
| Free cash flow | $331.5 | 40% |
| Adjusted free cash flow | $365.7 | 44% |
Income Statement and Balance Sheet Insights
Snowflake reported a net loss of $317.8 million for the quarter, compared to a net loss of $226.1 million in the same period last year. The company's operating expenses increased to $904.8 million from $687.4 million, driven by higher sales and marketing, research and development, and general and administrative costs.
On the balance sheet, Snowflake's total assets were $7.3 billion, with cash and cash equivalents of $1.3 billion. The company's total liabilities stood at $2.4 billion, with stockholders' equity of $4.6 billion.
Cash Flow Statement
Net cash provided by operating activities was $355.5 million, a 43% increase year-over-year. Free cash flow was $331.5 million, and adjusted free cash flow was $365.7 million, reflecting a 44% year-over-year growth.
Commentary and Analysis
“We finished our first quarter with strong performance across many of our key metrics,” said Sridhar Ramaswamy, CEO, Snowflake. “Product revenue was up 34% year-over-year at nearly $790 million, while remaining performance obligations were $5.0 billion, up 46% year-over-year. Our core business is very strong. Our AI products, now generally available, are generating strong customer interest. They will help our customers deliver effective and efficient AI-powered experiences faster than ever.”
Snowflake's robust performance in Q1 fiscal 2025 underscores its strong market position and the growing demand for its data solutions. The company's ability to exceed revenue estimates and maintain high customer retention rates highlights its competitive edge in the software industry. However, the increasing net loss and operating expenses indicate challenges that Snowflake needs to address to achieve sustainable profitability.
For more detailed insights and analysis, visit GuruFocus.com.
Explore the complete 8-K earnings release (here) from Snowflake Inc for further details.
