CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure. CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure.

Snowflake Q1 2021 earnings: what to expect?

What can we expect from Snowflake’s (SNOW) Q1 earnings on Wednesday 26 May.

When does Snowflake announce its Q1 2021 results?

Snowflake (SNOW US) is scheduled to release its first quarter (Q1) earnings after the markets on Wall Street close Wednesday 26 May.

Snowflake shares: what’s expected?

A loss, is the consensus, for the three months ended 31 March 2021. Earnings per share (EPS) forecasts are for a loss of 19 cents, with the company forecasting its own revenue of between $195 million to $200 million. The Zacks consensus revenue estimate, though, is for an upside surprise which it has pegged at $210.7 million.

In quarter four (Q4), Snowflake produced an adjusted loss per share of 70 cents on a 117% rise in year-on-year (YoY) revenues of $190.5 million. The projected revenue numbers for the full year (FY) are between $1 billion to $1.02 billion, so there will have to be an acceleration in revenues at some point this year if that target is to be realistically achieved.

How is the company getting there?

In terms of the motor driving the improvement, it is clients using the services of Snowflake to undergo the transition from on-premises data centres to the Data Cloud.

At the conclusion of FY 2020 Snowflake chief executive officer (CEO) Frank Slootman said: ‘Remaining performance obligations showed a robust increase year-on-year, reflecting strength in sales across the board. Coupled with this rapid growth, we saw improving operating efficiency while expanding our footprint globally. These results indicate that customers across multiple industries rely on the Snowflake Data Cloud to mobilize their data and enable breakthrough data strategies.’

The outlook could be key

Can the company rely on the continuation of this shift on data into the cloud? There would appear to be no reason why not, certainly if this trend has the capacity to be maintained.

This is a view held by at least one analyst – Kash Rangan at Goldman Sachs. He upgraded Snowflake to ‘buy’ from ‘neutral’. In his note, he said: ‘The company expects to host its first analyst day alongside its annual user conference, Snowflake Summit, in early June, and we see the potential for the company to introduce a long-term outlook alongside additional details on new capabilities like support for unstructured data.’

When the upgrade was published, 14 May, the stock rose 11% and it has since it’s been on an upward trend. Significantly it remains well above its initial public offering (IPO) on 16 September 2020. At its IPO, Snowflake raised $3.4 billion and set a record as the largest ever US software IPO.

With the recent uptrend, questions will have to be asked as to whether the share price is now representing an upside surprise on the numbers that the market is expecting. In other words, both EPS and revenue will have to beat and there also to be an improved revenue outlook for the FY for there to a realistic chance of price action rising above and staying above the April highs of $243.

Any long position, going into the numbers would have a stop loss below recent price action at around the $210 level. If you believe a downside risk is prevalent, a short trade would have a stop loss above $243.

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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