Snowflake's Q3 2024 Revenue Surpasses Estimates, Driven by Strong Cloud Demand

TD Cowen's J. Derrick Wood raised their price target on Snowflake (NYSE: SNOW) by 7% from $215 to $230 on 2023/12/11. The analyst maintained their Buy rating on the stock.

Explaining their price target increase move, the analyst said they see compelling growth driven by stabilizing Cloud consumption conditions and enterprises starting to utilize their Cloud data estates to train AI using private data. Snowflake remains one of TD Cowen's Best Ideas, Wood added.

Snowflake, a cloud-based data warehousing solutions provider, reported impressive results for Q3 2024. The company posted EPS of $0.25, beating the Zacks Consensus Estimate by 66.67% and surpassing last year's Q3 earnings of $0.11 by 127.3%. Furthermore, Snowflake's revenue for the quarter stood at $734.2 million, surpassing the Zacks Consensus Estimate by 3.33% and showing a significant increase of 31.8% compared to Q3 2023's revenue of $557 million. The company's product revenue grew by 34% year-over-year, reaching $698.5 million, with a product gross profit of $518.5 million or 78%. Snowflake achieved an operating income margin of 10% during the quarter.

Looking ahead, Snowflake's management provided guidance for Q4 2024 and the full fiscal year. For Q4, the company expects product revenue in the range of $716 million to $721 million, representing a year-over-year growth of 29% to 30%. The current Zacks Consensus Estimate for Q4 product revenue is $710.54 million. Snowflake also anticipates a 4% operating income margin for the quarter. For the full fiscal year 2024, Snowflake projects product revenue of $2.65 billion, reflecting a robust 37% growth rate compared to the previous year. The company expects a product gross profit of 77%, an operating income margin of 7%, and an adjusted free cash flow margin of 27%.

Commenting on the Q3 results, Snowflake CEO Frank Slootman expressed satisfaction with the company's performance. He highlighted the 34% year-over-year growth in product revenue, which reached $698 million, and the substantial 70% growth in non-GAAP adjusted free cash flow, amounting to $111 million. Slootman attributed these results to strong execution in a broadly stabilizing macro environment.

Analysts have expressed confidence in Snowflake's future prospects, with 76.2% of top-rated analysts currently rating the stock as a Strong Buy or Buy. Meanwhile, 19% of analysts consider Snowflake a Hold, and 4.8% recommend or strongly recommend selling the stock.

Since Snowflake's latest quarterly report on November 29, 2023, the stock price has increased by 10.1%. Year-over-year, Snowflake's stock has surged by an impressive 27.9%, outpacing the S&P 500, which has grown by 15.8% during the same period.

TD Cowen analyst J. Derrick Wood, who raised Snowflake's price target, has an impressive track record. Wood is ranked in the top 2% out of 4,426 Wall Street analysts by WallStreetZen. With an average return of 18.7% and a win rate of 63.2%, Wood specializes in the Communication Services and Technology sectors.

Snowflake Incorporated, founded in 2012 and based in Bozeman, MT, provides cloud-based data warehousing solutions. The company's services include data warehouse modernization, analytics, data exchange and engineering, and data science. Snowflake's integrated cloud platform, known as the Data Cloud, enables organizations to build secure access to their data network and architecture to facilitate data workloads. The company serves various industries, including government, financial services, healthcare, media and entertainment, retail, education, and technology. Snowflake collaborates with industry giants such as Amazon, Google, Microsoft, and others.

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