Founded in July 2012, Snowflake is a cloud computing company focused on data cloud services. Its headquarters are located in Bozeman, Montana. It spent the first two years of its existence in stealth mode and finally publicly launched in October 2014.
Growth potential
Despite a recent gyration, Snowflake stock has a solid base. Its cloud data warehousing solutions have seen strong top-line growth and a high net revenue retention rate. This makes the company’s valuation attractive.
Snowflake is a cloud computing company aggregating fragmented data into a cloud-based warehouse. This data is used for third-party analytics and visualization services. The company charges customers usage-based fees for the computing power they need.
Analysts expect Snowflake to grow its top line by at least 36% CAGR over the next three years. In addition, the company plans to generate $10 billion in product revenue by the end of fiscal 2029. This is an ambitious goal, but one that analysts believe is achievable.
The company is expected to achieve this growth by shifting its business model to one centered on cloud computing. In this new model, customers pay only for the computing power they need rather than committing to a particular cloud service provider. This helps ensure. Snowflake customers have more flexibility.
Relative strength rating
The Relative Strength Rating is a standard financial indicator to measure a stock’s performance. It is a calculation of the price trend of one or more instruments over some time.
The Zacks Value Style Score compares stocks based on traditional and unconventional valuation metrics. It is a valuable tool for investors who identify overvalued and undervalued stocks.
Snowflake’s business model is a subscription-based service for collecting and sharing data. The company is aimed at enabling data collaboration and sharing among businesses. The company is expected to generate over $2 billion in revenues this fiscal year.
Analysts see the company’s revenue growth increasing by 40 percent to 50 percent in the years to come. In addition, the company has been rapidly expanding into the data cloud, a growing sector. The firm also has a solid externally audited track record.
The company’s CEO has said that customer demand remains strong. In the latest quarterly report, the firm reported 83% sales growth. The company also reiterated its fiscal 2029 target of $10 billion in product revenue.
IBD Composite Rating
Despite its strong externally audited track record, Snowflake has faced bearish investor concerns. In addition, its business model has been criticized for being expensive, and analysts warn that there’s less transparency when a company uses a consumption-based model.
Cloud computing is gaining popularity, and many companies are turning to data analytics. Snowflake aims to provide tools that allow corporate users to analyze and share data. In addition to its cloud-based data warehouse-as-a-service, the company also offers a subscription-based revenue model. It has 206 customers with more than $1 million in revenue. It derives about 85% of its revenue from data analytics tasks run on Amazon Web Services.
Its customers use Snowflake tools to understand their sales. Pfizer, for example, uses the company’s tools to forecast sales of its Covid-19 vaccine. In addition, two-fifths of Fortune 500 companies use Snowflake software in the cloud.
The company also holds patents in database architecture and data warehousing. In May, the company announced that it had hired former Oracle chief executive Frank Slootman as its CEO.
Business model
Despite the recent tech sell-off, Snowflake stock is still trading at a significant premium to peers. The company’s IPO raised $3.4 billion, making it one of the largest software IPOs. However, its stock has fallen more than half its value in the past year.
Snowflake aims to help customers gain access to their data. The firm’s business model involves charging users based on the storage space they use and the amount of data they crunch. The company also offers a ready-to-use platform that helps customers integrate their Snowflake data throughout their business.
Snowflake’s management expects its revenue to grow at a rate of 67% to 68% for the year. The company also sees a 75% product gross profit margin for the year. In addition, Snowflake expects an adjusted free cash flow margin of 17% for the year.
According to the firm’s guidance, it expects to generate between $1.88 billion and $1.9 billion in revenue for the full fiscal year. For the quarter, the company reported a sales growth of 83%. However, analysts say this revenue growth may slow as Snowflake implements new systems.
