Snowflake (NYSE:SNOW)
The stock price of data warehousing business Snowflake (NYSE:SNOW) jumped more than 23% on Thursday after the firm reported stronger-than-expected product sales in the second quarter. This allowed it to beat projections and increase its full-year guidance.
For the three months ending July 31, Snowflake (SNOW), headquartered in Bozeman, Montana, lost 70 cents per share on revenue of $497.25M, up 82.7 percent year over year. The amount of money still owed to be performed on projects is $2.7 billion, an increase of 78% from the previous year.
Snowflake (NYSE:SNOW) forecasts product sales of $500 million to $505 million for the third quarter, representing an increase of 60% to 62% from last year. Additionally, it anticipates third-quarter adjusted operating margins of 2%.
For the full year, Snowflake (NYSE:SNOW) anticipates product sales of between $1.905B and $1.915B, an increase of between 67% and 68% from prior projections. It also predicted a 2% adjusted operating margin for the entire year, up from the earlier projection of 1%.
Stifel analyst Brad Reback, who rates Snowflake (NYSE:SNOW) as neutral, increased his price objective for the stock from $120 to $180 due to the company’s performance. He said the company’s consumption model is successful because of the upward consumption trends and the 171 percent net revenue retention.
Snowflake’s “revolutionary consumption-based data platform and pricing strategy,” combined with “workload-secular growth,” “could yield sizeable revenue growth and [free cash flow] creation,” Reback said in a note to customers.
Analyst Keith Weiss of Morgan Stanley, who has an overweight rating on Snowflake (NYSE:SNOW), recently stated that the company’s platform has become increasingly important because it has allowed the company to sustain product revenue growth of over 80% despite the continued weakness in the software sector.
Weiss noted to clients that SNOW’s cloud data platform is considered a strategic (and enduring) area of investment by enterprise customers because it saw product revenue growth of 80%+ in a quarter when the overall demand climate for software slowed.
Weiss also noted that Snowflake (NYSE:SNOW) remains “one of the most appealing growth plus [free cash flow] margin stories in software” because of the company’s consistently increasing estimates of operating income and free cash flow.
Recently, the hedge fund 3G Capital said it had sold its holdings in SNOW and made other modifications to its portfolio during the second quarter.
Featured Image: Megapixl @Michaelvi
Author Shariq Khan 
