Scrutiny of Snowflake's (SNOW 3.69%) financial results on Wednesday afternoon was likely greater than usual. Many stocks of profitless tech companies, like Snowflake, have fallen sharply over the last two weeks. Rising interest rates and an uncertain macroeconomic environment could make life difficult for many of these growth tech stocks.
But Snowflake has always stood out as one of the fastest-growing companies from this group. Even more, even though it's not turning a profit yet, it does stand out from the pack with positive free cash flow and a cash-rich balance sheet, free of debt. Can the company keep living up to its premium valuation and investors' high expectations?
While the tech company did beat expectations for fourth-quarter revenue growth, the results shed some light on some not-so-impressive areas, too. Namely, Snowflake's net loss worsened and management's first-quarter top-line guidance came in below expectations.
Here's a look at five must-see metrics from the report.
1. Product revenue soared 54%
Snowflake's product revenue, which accounts for 94% of its total revenue, soared 54% year over year. This put the company's total fiscal fourth-quarter revenue at $589 million, up 53% year over year. This was ahead of analysts' average forecast for fiscal fourth-quarter revenue of about $576 million.
2. Expect slower growth in fiscal Q1
The company guided for fiscal first-quarter product revenue to increase 44% to 45% year over year to somewhere between $568 million and $573 million. This was below analysts' consensus forecast for fiscal first-quarter product revenue of $582 million.
This would extend a trend of slowing growth for the company.
3. Net loss worsened
Snowflake's bottom line, meanwhile, is moving in the wrong direction. The company's net loss for the period was $207 million -- worse than the $132 million loss it reported in the same quarter last year. Its full-year loss was almost $800 million, down from the $680 million loss it reported in the prior year.
4. A $2 billion repurchase program
Putting its cash-rich, debt-free balance sheet to work, the company announced a $2 billion share repurchase program. This authorized sum is equal to about 4% of the company's current market capitalization.
5. Still aiming for $10 billion
Management was as upbeat as ever in the fourth-quarter earnings release, noting that the data-cloud platform company operates "in a vast and growing market ..." More importantly, Snowflake said it is "staying on track for our $10 billion product revenue goal in fiscal 2029." With fiscal 2023 now complete, this means that Snowflake expects to grow its trailing-12-month product revenue of $1.9 billion more than fivefold in just six years. It's likely this ambitious target that keeps Snowflake bulls around.
While it's always possible that patient shareholders will eventually be rewarded as Snowflake works toward achieving its $10 billion revenue target, its mounting losses likely aren't helping provide investors any incremental confidence in the growth story.
