Snowflake (SNOW) stock surged out of the gate Thursday, last seen more than 30% higher, after the data cloud company beat top- and bottom-line expectations for its fiscal 2025 third quarter and raised its full-year outlook.
In the three months ended October 31, Snowflake's revenue increased 28.3% year over year to $942.1 million, thanks to a 29% spike in product revenue to $900.3 million. Its earnings per share (EPS) declined 20% from the year-ago period to 20 cents.
"Snowflake delivered a strong third quarter," thanks to impressive product revenue growth "and remaining performance obligations of $5.7 billion, with year-over-year growth accelerating to 55%," said Snowflake CEO Sridhar Ramaswamy in a statement. "Our obsessive drive to produce product cohesion and ease of use has built Snowflake into the easiest and most cost-effective enterprise data platform. That is what's leading us to win new logo after new logo, expand within our customer base, and displace our competition over and over again."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results easily beat analysts' expectations. Wall Street was anticipating revenue of $897 million and earnings of 15 cents per share, according to CNBC.
As a result of its strong performance in the first nine months of the year, Snowflake raised its full-year outlook. The company now expects to achieve product revenue of approximately $3.43 billion, representing year over year growth of about 29%. This is up up from its previous forecast of $3.356 billion.
It also is guiding for a product gross profit margin of 76% vs the prior outlook of 75%, and an operating income margin of 5%, up from 3%. Its adjusted free cash flow margin forecast of 26% remain unchanged.
For its fiscal fourth quarter, Snowflake said it anticipates product revenue in the range of $906 million to $911 million and an operating income margin of approximately 4%.
Is Snowflake stock a buy, sell or hold?
Snowflake stock has struggled throughout most of 2024, but Thursday's post-earnings pop has the tech stock back in positive territory for the year to date. And Wall Street thinks there's more room to run.
According to S&P Global Market Intelligence, the average analyst target price for SNOW is $178.24, representing implied upside of nearly 40% to the large-cap stock's November 20 close. Meanwhile, the consensus recommendation is a Buy.
"We rate Snowflake shares a Buy. We believe that the company possesses a unique technology advantage that will give them a dominant competitive position in the data cloud in both the short and long term," says Truist Securities analyst Joel Fishbein Jr. "Though shares are not cheap at current levels, we believe that current valuation is fair on a growth-adjusted basis and that the tailwinds for growth are stronger than market expectations which offer further upside going forward."
Related Content
-
10 Best High-Yield Savings Accounts to Grow Your Tax RefundIf you're getting a tax refund this year and want to grow it, here are the best high-yield savings accounts to make it happen.
-
TurboTax: Features, Pricing and Filing OptionsIs TurboTax worth it in 2025? Explore the pros, cons, pricing tiers and standout features of this popular tax software to see if it fits your filing needs.
-
Stock Market Today: Markets Celebrate Trump's Tariff DétenteConsumer discretionary stocks led the 11 S&P 500 sector groups well into the green.
-
Social Security Fairness Act: Five Financial Planning Issues to RevisitMore money as a public-sector retiree is great, but there could be unintended consequences with taxes, Medicare and more if you're not careful.
-
Social Security Warning: Five Missteps Too Many Women MakeClaiming Social Security is complicated, and for women the stakes are high. What you don't know can cost you, so make sure you do know these five things.
-
To Buck the Third-Generation Curse, Focus on the Family StoryThe key is to motivate the next generations to contribute to the family business in a productive way. You can look to Lawrence Welk's family as a prime example.
-
Walmart's Transformative Ways Spark a 100,000% Stock ReturnWalmart's strategic store expansion and relentless cost-cutting have catapulted its share price over the years.
-
20 Ways to Clean Up Your Finances This SpringSpring cleaning is therapeutic and stops costly problems from building up around the home. Why not tackle the dusty corners of your finances at the same time?
-
How Roth Accounts Can Ease Your Tax Burden in RetirementStrategic Roth IRA conversions can set you up for tax-free income in retirement and a tax-free inheritance for the people you love.
-
Are You a High Earner But Still Broke? Five Fixes for ThatIf you're a HENRY (a higher earner, not rich yet) but feel like you still live paycheck to paycheck, there are steps you can take to get control of your financial future.
