Snowflake's Earnings Report Shows Slowing Growth
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 4d ago
0mins
Should l Buy SNOW?
Source: Fool
- Revenue Growth Slowdown: Snowflake reported product revenue of $1.16 billion in fiscal Q3 2026, reflecting a 29% year-over-year increase, but this deceleration from 32% in Q2 raises concerns about sustained growth momentum among investors.
- Customer Base Expansion: The company ended Q3 with 688 customers generating over $1 million in trailing-12-month product revenue, marking a 29% increase year-over-year, indicating strong market demand for Snowflake's offerings despite growth concerns.
- Strong Demand Signals: Snowflake's remaining performance obligations (RPO) reached $7.88 billion at the end of Q3, up 37% year-over-year, suggesting rapidly growing customer demand for its data cloud platform, although revenue recognition is based on usage rather than contracts.
- Profitability Concerns: Despite reporting an adjusted operating income of $131.3 million and a gross margin of 76%, Snowflake's net loss exceeded $1 billion over the trailing nine months, highlighting ongoing profitability challenges that could deter investors.
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Analyst Views on SNOW
Wall Street analysts forecast SNOW stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for SNOW is 285.29 USD with a low forecast of 237.00 USD and a high forecast of 325.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
34 Analyst Rating
32 Buy
2 Hold
0 Sell
Strong Buy
Current: 168.430
Low
237.00
Averages
285.29
High
325.00
Current: 168.430
Low
237.00
Averages
285.29
High
325.00
About SNOW
Snowflake Inc. is a data cloud and artificial intelligence company. Its platform is the technology that powers the AI Data Cloud, enabling customers to consolidate data into a single source of truth to drive meaningful insights, apply artificial intelligence (AI) to solve business problems, build data applications, and share data and data products. It provides its platform through a customer-centric, and consumption-based business model. Its cloud-native architecture consists of three independently scalable but logically integrated layers across compute, storage, and cloud services. The compute layer provides dedicated resources to enable users to simultaneously access common data sets for many use cases with minimal latency. The storage layer ingests massive amounts and varieties of structured, semi-structured, and unstructured data to create a unified data record. Its ClearQuery platform allows users to rapidly search, explore, and analyze their data using natural language queries.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Accelerating AI Innovation: United Rentals is leveraging Snowflake Cortex Code to expedite the testing and development of additional AI agents, indicating Snowflake's crucial role in driving customer AI innovation and further solidifying its market position.
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See More
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- Earnings Report Impact: On February 28, 2024, Snowflake announced its fourth-quarter and full fiscal year 2024 results, with management noting changes in customer behavior and product-related developments adversely affecting the company's outlook, potentially leading to future performance declines.
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