Snowflake stock analysis. SNOW stock.
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At 22 times revenue, Snowflake is one of the most expensive stocks on the public markets. The reason for that is rapid growth. It was the fastest company in history to hit 1 billion in revenue. And last years revenue growth was close to 70%.
To understand Snowflake, imagine you are a multinational corporation that has thousands, even millions of different datasets covering all different aspects of your business.
Snowflake provides the software to organize all that data and then analyze it in the cloud. And it does this with artificial intelligence and machine learning. Snowflake also has a unique pricing method whereby companies only pay for the amount of storage and computing power that they use. This means there are no upfront costs or long-term commitments.
Based on the latest share price, Snowflake is valued at 55.1 billion dollars. With 5.1 billion of cash and investments, and zero debt, the enterprise value is 50 billion.
Revenue over the last 12 months climbed to 2.3 billion and free cash flow was 636 million. But because the company is still investing for the future and because of stock-based compensation of almost a billion dollars, net income was negative 858 million.
But it’s also worth mentioning that Snowflake has remaining performance obligations of 3.4 billion, the majority of this should be recognized as revenue within the next two years. That means the price to sales multiple is maybe not as high as the numbers suggest.
And aside from rapid revenue growth, Snowflake boasts a number of impressive metrics.
Net revenue retention in Q1 was 151%, gross margins were 77% and adjusted free cash flow hit 46% of revenue.
And Snowflake is also a benefficiary of the AI boom. Large language models are built on vast amounts of data and Snowflake can help organizations run such models on their own data and help to structure not text-forms of data.
Moreover Snowflake is integrated with all 3 of the fast growing cloud platforms, AWS, Google Cloud and Azure.
On the Q1 earnings call CEO Frank Slootman said that Data science, machine learning and AI use cases on Snowflake are growing every day. In Q1, more than 1,500 customers leveraged Snowflake for one of these workloads, up 91% year-over-year.
Interestingly, Snowflake dropped 11% after earnings due to a cut in guidance but it took investors less than 5 trading sessions to recoup those losses.
#snowflakestock #stocks #investing #stockstobuy
Find under-the-radar stocks: https://www.overlookedalpha.com
At 22 times revenue, Snowflake is one of the most expensive stocks on the public markets. The reason for that is rapid growth. It was the fastest company in history to hit 1 billion in revenue. And last years revenue growth was close to 70%.
To understand Snowflake, imagine you are a multinational corporation that has thousands, even millions of different datasets covering all different aspects of your business.
Snowflake provides the software to organize all that data and then analyze it in the cloud. And it does this with artificial intelligence and machine learning. Snowflake also has a unique pricing method whereby companies only pay for the amount of storage and computing power that they use. This means there are no upfront costs or long-term commitments.
Based on the latest share price, Snowflake is valued at 55.1 billion dollars. With 5.1 billion of cash and investments, and zero debt, the enterprise value is 50 billion.
Revenue over the last 12 months climbed to 2.3 billion and free cash flow was 636 million. But because the company is still investing for the future and because of stock-based compensation of almost a billion dollars, net income was negative 858 million.
But it’s also worth mentioning that Snowflake has remaining performance obligations of 3.4 billion, the majority of this should be recognized as revenue within the next two years. That means the price to sales multiple is maybe not as high as the numbers suggest.
And aside from rapid revenue growth, Snowflake boasts a number of impressive metrics.
Net revenue retention in Q1 was 151%, gross margins were 77% and adjusted free cash flow hit 46% of revenue.
And Snowflake is also a benefficiary of the AI boom. Large language models are built on vast amounts of data and Snowflake can help organizations run such models on their own data and help to structure not text-forms of data.
Moreover Snowflake is integrated with all 3 of the fast growing cloud platforms, AWS, Google Cloud and Azure.
On the Q1 earnings call CEO Frank Slootman said that Data science, machine learning and AI use cases on Snowflake are growing every day. In Q1, more than 1,500 customers leveraged Snowflake for one of these workloads, up 91% year-over-year.
Interestingly, Snowflake dropped 11% after earnings due to a cut in guidance but it took investors less than 5 trading sessions to recoup those losses.
#snowflakestock #stocks #investing #stockstobuy
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NewsTranscript
00:00 At 22 times revenue Snowflake is one of the most expensive stocks on the public markets.
00:06 The reason for that is rapid growth.
00:08 It was the fastest company in history to hit 1 billion in revenue and last years revenue
00:13 growth was close to 70%.
00:15 To understand Snowflake imagine you're a multinational corporation that has thousands,
00:20 even millions of different data sets covering all different aspects of your business.
00:26 Snowflake provides the software to organize all that data and then analyze it in the cloud
00:31 and it does this with artificial intelligence and machine learning.
00:34 Snowflake also has a unique pricing method whereby companies only pay for the amount
00:38 of storage and computing power that they use.
00:41 This means there's no upfront costs or long term commitments.
00:45 Based on the latest share price Snowflake is valued at $55.1 billion.
00:50 With $5.1 billion of cash and investments and zero debt the enterprise value is $50
00:56 billion.
00:57 Revenue over the last 12 months climbed to $2.3 billion and free cash flow was $636 million
01:03 but because the company is still investing for the future and because of stock based
01:07 compensation of almost a billion dollars net income was negative $858 million.
01:14 But it's also worth mentioning that Snowflake has remaining performance obligations of $3.4
01:19 billion.
01:20 The majority of this should be recognized as revenue within the next few years.
01:25 That means the price to sales multiple is maybe not as high as these numbers suggest.
01:30 And aside from rapid revenue growth Snowflake boasts a number of impressive metrics.
01:35 Net revenue retention in Q1 was 151%, gross margins were 77% and adjusted free cash flow
01:43 hit 46% of revenue.
01:47 And Snowflake is also a beneficiary of the AI boom.
01:50 Large language models are built on vast amounts of data and Snowflake can help organizations
01:55 run such models on their own data and help to structure non-text forms of data as well.
02:02 Also Snowflake is integrated with all three of the fast growing cloud platforms AWS, Google
02:07 Cloud and Azure.
02:09 On the Q1 earnings call CEO Frank Slootman said that "Data science, machine learning
02:14 and AI use cases on Snowflake are growing every day.
02:18 In Q1 more than 1,500 customers leveraged Snowflake for one of these workloads, up 91%
02:25 year over year."
02:26 Interestingly, Snowflake dropped 11% after earnings due to a cut in guidance.
02:31 But it took investors less than five trading sessions to recoup those losses.
02:36 Overall, Snowflake is a cash generating machine that is well positioned for the future of
02:41 artificial intelligence and cloud computing.
02:44 The main sticking point is the valuation and the significant amounts of stock based compensation.
02:49 Lets assume a scenario where Snowflake gets to $4 billion in revenue by 2025 and then
02:54 continues to compound at 20% per year.
02:57 If you assume a 30% conversion to bottom line free cash flow that puts free cash flow at
03:02 roughly $5.3 billion in 10 years time.
03:06 Apply a 35 times multiple to that gets the enterprise value to $182 billion which works
03:11 out to an investment return of 13.8% per year.
03:15 That is an aggressive and optimistic scenario but we are living in the age of data and Snowflake
03:22 is in the right position to deliver.
03:24 That's why I give the stock a bullish rating but these are my personal opinions and I do
03:29 own some shares in Snowflake stock.