Stock markets looked poised for a quiet open on Thursday, with investors taking a breath after a volatile week. Ongoing developments in Russia's invasion of Ukraine continued to keep market participants on their toes, especially as oil prices remained above $110 per barrel and signaled potential contributions to inflationary pressures. As of 8 a.m. ET, futures on the Dow Jones Industrial Average (^DJI 0.36%) were up just 2 points to 33,851. S&P 500 (^GSPC -0.04%) futures had eased lower by 2 points to 4,380, while Nasdaq Composite (^IXIC 0.04%) futures had fallen 34 points to 14,206.
However, there were still plenty of ups and downs among individual stocks, and high-growth tech companies continued to feel the brunt of steep share price declines even after announcing strong business results. Snowflake (SNOW -0.74%) and Okta (OKTA 0.80%) were the latest companies to suffer such declines, but they might well not be the last. Here's what the two cloud companies had to say about their latest results.
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Snowflake melts despite red-hot growth
Shares of Snowflake fell about 20% in premarket trading on Thursday morning. The cloud-based data specialist continued to see impressive growth from digital transformation efforts across the economy. However, investors focused on projected future growth rates that couldn't live up to extremely high expectations.
Snowflake's numbers for the fourth quarter of its 2022 fiscal year were stellar. Product revenue grew 102% year over year to $359.6 million for the quarter. That capped a year with 106% product revenue growth, with final numbers weighing in at $1.14 billion. Net revenue retention rates weighed in at an impressive 178%, and Snowflake boasted 184 customers bringing in at least $1 million in annual product revenue -- more than double the year-earlier figure.
Snowflake has captured the attention of the business world, with nearly half of Fortune 500 members and a quarter of the Forbes Global 2000 list using the product. The company now boasts almost 6,000 enterprise customers overall.
Nevertheless, Snowflake's stock decline stemmed from its fiscal 2023 guidance, which called for revenue growth in the first quarter to slow to between 79% and 81% and full-year sales growth of 65% to 67%. Many companies would be quite happy with growth rates that strong, but despite the vote of confidence those numbers show for Snowflake's future, there seem to be many investors who'd wanted even more future growth from the data specialist.
Okta eases lower
Shares of identity protection specialist Okta saw more modest declines after the company announced its fourth-quarter financial results. The stock was down about 6% in premarket trading.
Okta's numbers showed plenty of growth. Revenue was up 63% year over year to $383 million, led by a 64% rise in subscription revenue. Remaining performance obligations jumped 50% to $2.69 billion, working out to more than a year and a half of future sales in the pipeline. Okta's bottom line did see some pressure, though, with adjusted losses of $0.18 per share reversing a year-earlier profit of $0.06 per share.
Again, though, investors seemed to respond negatively to future guidance despite projections for ongoing expansion. Okta sees first-quarter revenue rising 55%, with full-year sales of $1.78 billion to $1.79 billion working out to a 37% to 38% growth rate.
The experience that Okta and Snowflake shareholders are going through isn't all that different from what investors in many other companies have dealt with this earnings season. As painful as the stock declines are, it's encouraging that the underlying businesses of these companies continue to perform well. As long as that remains the case, the stocks should follow suit in the long run.
