Snowflake Reports Q4 with Strong Revenue and EPS Beat

Snowflake's Q4 report surpasses expectations. Revenue growth of 27% and solid free cash flow indicate promising future performance. Adjusted EPS decline, however, raises some caution.

Date: 27-02-2025

AI Rating: 7

Key Metrics Overview
Snowflake's fiscal 2025 fourth-quarter report highlighted several important metrics affecting investor sentiment.

Revenue Growth
The company reported revenue of $986.8 million, showcasing a 27% increase compared to the previous year and beating analysts' expectations. This solid performance can positively influence stock price as investors often react favorably to strong revenue figures.

Earnings Per Share (EPS)
Although adjusted EPS decreased by 14% to $0.30, it still beat expectations, which could be seen as a positive sign in light of forecasts that anticipated a steeper decline. Investors may view this result favorably, reflecting resilience despite a drop.

Adjusted Free Cash Flow
Adjusted free cash flow climbed to $423.1 million, marking a 30% increase. This improvement signifies efficient cash management and can bolster investor confidence regarding the company’s financial health.

Net Revenue Retention Rate
The net revenue retention rate declined slightly to 126%, down by 5 percentage points from the previous year. Despite this drop, a retention rate above 100% indicates that existing customers are still expanding their spending, which is a positive growth indicator for long-term revenue.

Future Outlook
Looking ahead, Snowflake forecasts product revenue growth rates between 21% to 22% for Q1 fiscal 2026, and 24% for the entire fiscal year. The expected increase in profit margins to 8% from 5% also suggests improving efficiency. The confidence in growth, especially driven by AI, can help boost stock prices further.

In summary, while the adjusted EPS decline raises some caution, the robust revenue growth, increasing free cash flow, and positive outlook for the upcoming quarters present a balanced perspective that could lead to favorable market reactions.

Stocks: SNOW