The cloud data software company has set a target of $10 billion in annual product revenue by fiscal 2029, the cloud data software company said in its first meeting with analysts since going public in 2015. last The company had $554 million in product revenue in fiscal year 2021.
In a presentation that kicked off the virtual conference, Snowflake’s Chief Financial Officer Mike Scarpelli said the company now sets the total identifiable market size at $90 billion, up from 81,000. Millions of dollars spent during roadshows for IPOs
Investors don’t seem impressed with the long-term goals. Snowflake shares were down 4 percent in after-hours trading on Thursday.
In his talks, Scarpelli spoke about how the company expects to hit its $10 billion revenue target. He said Snowflake envisioned a business driven by a growing number of customers that generate more annual revenue. $1 million Scarpelli said the model is expected to have more than 1,400 customers of that size by fiscal 2029, up from 77 last year.
Snowflake forecasts average annual revenue for those large customers to increase to $5.5 million from $3.4 million in the most recent year. Scarpelli said the company expects revenue from these large customers to account for 77 percent of revenue. by the end of the forecast period, up from 47% last year.
Scarpelli added that Snowflake believes it will continue to increase product revenue by a rate of 30 percent by the end of the term. Snowflake expects non-GAAP product gross margins to be 75% by fiscal 2029, up from 69% when. Recently, he said that at the end of the target period, The company expects an operating margin of 10% and a free cash flow margin of 15% or higher.
Snowflake went public in September at $120 per share. It opened trading at $245 and hit $429 at one point last year. The stock then reversed, dropping as low as $184.71 last month. Before the recent surge pushed it back above the first day of trading in the $250 range, it was losing some gains late Thursday.
The stock remains the subject of a fierce tug-of-war between the company’s fast-growing-loving bulls and bears that find valuations to be extreme even after the latest slide.
For the fiscal first quarter ended April 30, Snowflake posted an operating loss of $35.8 million but revenue of $228.9 million, an increase of 110% from a year ago and ahead of Wall Street’s consensus forecast of $213 million. obtained from the product The company’s preferred measure of efficiency was $213.8 million, an increase of 110% as well.
Remaining performance obligations, an indicator of future growth, were $1.4 billion, an increase of 206% net customer retention. which tracks the tendency to renew the contract less than the loss of customers is 168%.
Shares have risen about 10% since earnings were announced on May 26.
In an interview with Barron’s After the earnings news, CFO Scarpelli said the company continued to report unprecedented growth. while increasing gross margin from product sales to more than 72% this quarter from a 60s low a few years ago. He said the company had positive cash flow for the second consecutive quarter. Snowflake expects to reach breakeven in terms of annual cash flow for the first time this year.
Asked about the company’s long-term growth prospects, Scarpelli predicted he would address the topic at an analyst meeting. There’s a “huge market opportunity … we’re in the right place and time to change. Digitally … everyone is migrating from on-premises to the cloud,” he said.
In a research note previewing the meeting, Mizuho analyst Gregg Moskowitz outlined his stance on the stock.
“Even though Snowflake is trading at a premium But we believe the stock has meaningful positive potential and is likely to outperform as the company continues to grow at higher rates,” he said, reiterating his buy recommendation and $300 target price. We still believe that Snowflake’s cloud-based platform is far ahead of the competition. And its technological capabilities are very difficult to replicate on a large scale.”
In a note to review the latest Evercore ISI earnings report, Kirk Materne said he thought of analyst days and user meetings. “It should help illustrate the huge opportunity that remains in front of the company. especially when it comes to data sharing ecosystems.” As he noted, the stock could hold off in a neutral state for a while. “Continuing to grow in valuation,” Materne remains a bull in the long run. He rates the stock at Outperform and has a target of $311 at this price.