Snowflake reports first earnings since IPO

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Revenue more than doubled to $159.6 million from $73 million a year ago.

This week Snowflake, the San Mateo, California based Data Cloud provider, announced financial results for its third quarter of fiscal 2021, ended October 31, 2020.

Total revenue for the quarter was $159.6 million, representing 119% year-over-year growth. Product revenue was $148.5 million, representing 115% year-over-year growth. Remaining performance obligations were $927.9 million, representing 240% year-over-year growth. Net revenue retention rate was 162% as of October 31, 2020.

The company now has 3,554 total customers and 65 customers with trailing 12-month product revenue greater than $1 million.

“We are pleased with our performance this first quarter as a public company,” Snowflake CEO, Frank Slootman said. “The period was marked by continued strong revenue growth coupled with improving unit economics, cash flow, and operating efficiencies. Our vision of the Snowflake Data Cloud mobilizing the world’s data is clearly resonating across our customer base.”

In the wake of the largest software IPO in history

Snowflake’s IPO, the largest on record for a software company, sold 28 million shares to raise $3.36 billion through its offering. The company’s current market value of $90 billion is more than seven times the private-market valuation of $12.4 billion that it fetched in February.

Chief Financial Officer Mike Scarpelli said in a call with analysts that Snowflake should be able to widen its profit margins to the mid-70% range over time. This is because it will become eligible for more favorable price discounts from AWS and Microsoft Azure. It will also become larger and cut back on its own discounts to achieve this, he said.

Continued growth projected for Q4

Meantime, the company continues to grow. Scarpelli said Snowflake has added to its sales organization throughout the COVID-19 pandemic, and that it will keep up this pace of hiring.

For the fourth quarter, Snowflake is projecting product revenue of $162 million to $167 million, which comes in below the average estimate of $166 million. The balance of its revenue comes from professional services.

Snowflake’s stock fell more than 3% in after-hours trading, but that’s still up 140% from its IPO price.