On Thursday, Snowflake Inc . (NYSE: NYSE:SNOW) stock received a continued Neutral rating from BTIG following the company's release of its second fiscal quarter results and an updated outlook for fiscal year 2025.
Snowflake reported product revenue of $829 million, marking a 29.5% increase year over year, which surpassed both BTIG's estimate of $810 million and the broader market's expectation of $814 million. The company's gross profit also exceeded street estimates by 3.0%, and its operating income was significantly higher than anticipated.
Snowflake raised its fiscal year 2025 product revenue guidance to $3.356 billion, a 26% increase year over year, from the previous forecast of $3.3 billion. This upward revision includes a $22 million outperformance relative to the midpoint of the second-quarter guidance and an additional $34 million for the second half of fiscal year 2025.
Management underscored that cloud optimization trends are stabilizing and emphasized that recent breach headlines had no discernible effect on the company's bookings or consumption.
The company's commentary on new product initiatives, such as Cortex AI and Iceberg Tables, was positive. However, it is important to note that the revenue associated with these new products is not factored into the second-half fiscal year 2025 guidance due to their early stages of development.
BTIG acknowledges the strength of the quarterly report but points out that the upside might not be sufficient to alleviate competitive concerns, as customers increasingly turn to open data lakes on platforms like Amazon (NASDAQ:AMZN) AWS and Microsoft (NASDAQ:MSFT) Azure, and adopt Iceberg or Delta Lake table formats for data processing and querying.
Despite the solid quarterly performance, BTIG has only made minor adjustments to its forward growth estimates for Snowflake, maintaining the Neutral stance on the stock. This decision reflects a cautious approach to the company's position amid a competitive landscape in the cloud data platform sector.
InvestingPro Insights
As Snowflake Inc. (NYSE: SNOW) continues to navigate the competitive cloud data platform sector, real-time data and insights from InvestingPro offer a deeper look into the company's financial health and market position. Snowflake's market capitalization stands at $45.22 billion, highlighting its significant presence in the industry. Despite not being profitable over the last twelve months, the company's revenue growth remains robust at 32.85% for the same period, demonstrating its ability to expand its top line amidst market challenges.
InvestingPro Tips suggest that Snowflake holds more cash than debt on its balance sheet, providing it with financial flexibility, and that its liquid assets exceed short-term obligations, indicating a strong short-term financial position. Moreover, analysts predict the company will turn profitable this year, which could be a pivotal point for investor sentiment. However, the stock has taken a significant hit over the last six months, with a price total return of -40.14%, signaling potential concerns among investors about its valuation and future growth prospects.
For readers interested in a more comprehensive analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/SNOW, which delve into the company's trading multiples and other key financial metrics.
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