Snowflake Q2 Earnings: What to Expect

Snowflake (NYSE: SNOW) took the public markets by storm back in September when it had the largest IPO for a software company in history. It really was a day of mania on Wall Street. Snowflake priced their IPO at $120 per share, yet institutional investors went crazy for the Buffett-backed data warehouse company and it reached the public markets at a price of $245, eventually closing at $253. The company raised nearly $4 billion.

From mid-November to early December, the stock gained over 60% to the amazement of shareholders. However, since then, it has come back down to earth and is actually down 3% year-to-date. It's clear that investors were buying into the growth story and the company Snowflake will, hopefully, be in the future. Now, Snowflake has a lot to prove if it wants to get back to the share price it had last year. 

Wall Street has high expectations for the company, ones only satiated by consistent blockbuster earnings reports. Let's see what Snowflake has in store for us this week. 

When is Snowflake's earnings date?

Snowflake reports earnings for the second quarter on Wednesday, 25 August after market close, 5:00 pm Eastern Time. 

How can I listen to Snowflake's earnings call?

To listen to the call and to access the transcript, as well as the shareholder's letter and the financial statements for the quarter, all you need to do is go to Snowflakes's investor relations page.

What to expect from Snowflakes earnings call 

Consensus estimates for Snowflake's earnings are a loss per share of $0.15 on revenues of $256.42 million. However, there's a feeling that, in order to keep investors happy, it will have to beat these figures significantly. To justify its $80 billion market cap, the company will need to keep posting incredible growth figures. Otherwise, sentiment could change very quickly amongst investors.

In Q1, Snowflake reported triple-digit growth in its product revenue while total revenues jumped 110% to $228.9 million, smashing estimates of $213 million. However, Snowflake continued its theme of posting net losses too, widening to $203.2 million,from the loss of $93.6 million in the year-ago quarter.

Snowflake has also signed some pretty big deals, especially with clients who spend over $1 million per year. At the end of the last quarter, Snowflake boasted that it had 4,532 overall customers and 104 of them brought in over $1 million in annual sales.

Another reason for the mania surrounding Snowflake's is its sky-high net revenue retention rate of 168% in Q1. In that report, Snowflake said that its net revenue retention will stay above 160% for 2021. Shareholders will want to see the company make good on this promise. This number represents the recurring revenue from Snowflake's existing customer base. If the number is greater than 100%, then growth from its existing customer base more than offsets any losses from them. A rate of 168% is one of the best of any public SaaS company and shows the power of Snowflake's products and services, as well as its ability to retain and upsell customers. Investors will be keen to see if the company can maintain it this quarter.

The global cloud computing market is estimated to experience CAGR of 17.5% from 2020 to 2025 so Snowflake has a big opportunity to grow significantly. However, the company has rivals that are hot on its tail. Cloud computing providers competitors, like Google's BigQuery software, might prove challenging for Snowflake. An impressive earnings beat should settle any nerves from investors whilst proving that Snowflake is a formidable competitor in the cloud computing space.

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