Snowflake Inc Ordinary Shares - Class A SNOW

Snowflake Earnings: Revenue Moving in Right Direction, but Investment Needs Weigh on Margins

No-moat-rated Snowflake reported a mixed bag for fiscal first-quarter earnings. Revenue growth was ahead of expectations, but updated full-year guidance showed expected margins moving in the wrong direction yet again. It was encouraging that management is now looking for 24% year-over-year growth in product revenue, slightly higher than the previous outlook of 22%. However, non-GAAP operating margins are now expected to be 3% for full-year results, compared with the previous outlook of 6% and actual results of 8% last year. With slightly higher growth but lower margins for the year roughly offsetting, we do not plan to change our long-term forecasts, and we maintain our fair value estimate of $187 per share.