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Cloud data warehouse phenom Snowflake Inc. put in a strong showing in its first-ever quarterly results as a public company today, beating expectations on earnings and revenue.

But it offered a forecast for product revenue in the current quarter that fell short of expectations, and that sent its stock down after-hours. Update: Investors quickly changed their minds by Thursday morning, when its stock rose more than 15% after 10 analysts raised their estimates. They may have been cheered by a 240% rise in remaining performance obligations or credits to be spent later by customers, to nearly $1 billion.

Snowflake reported a third-quarter loss before certain costs such as stock compensation of $1.01 per share on revenue of $159.6 million, up 119% from the same period a year ago. Wall Street was expecting Snowflake to report revenue of $147.7 million.

Snowflake Chief Executive Frank Slootman (pictured) said he was pleased with the company’s performance.

“The period was marked by continued strong revenue growth coupled with improving unit economics, cash flow and operating efficiencies,” he said. “Our vision of the Snowflake Data Cloud mobilizing the world’s data is clearly resonating across our customer base.”

Snowflake sells software that enables companies to run a data warehouse on any public cloud platform. It pays public cloud infrastructure firms such as Amazon Web Services Inc., Microsoft Corp. and Google LLC to run workloads in their data centers, and also competes with their similar offerings.

Snowflake is primarily seen as an alternative to data warehouses that unify data and execute queries using on-premises hardware and software. Customers pay for Snowflake’s software according to how much they use it, instead of a flat subscription fee.

The company launched its initial public offering in September and saw its stock price jump 104% on its first day of trading, raising almost $4 billion in the process to become the largest U.S. software IPO in history.

Investors were no doubt pleased to see that Snowflake’s remaining performance obligation, which is a measure of its future revenue potential, rose 240% in the quarter, to $927.9 million. Snowflake also said it now has 65 customers that contributed more than $1 million in product revenue over the previous 12 months.

“Rarely does one see a public company doubling its revenue year over year, but Snowflake just did it, thanks to the demand for insights in a pandemic world and the attractiveness of its offerings,” said Constellation Research Inc. analyst Holger Mueller. “On the downside, Snowflake actually doubled almost every single key performance indicator, which includes doubling its total losses.”

Dave Vellante, chief analyst at SiliconANGLE sister market research firm Wikibon, said Snowflake delivered as expected on its first earnings call with great customer acquisition and solid growth relative to its previous quarter.

“What matters most is Snowflake’s execution on the data cloud vision that it put forth earlier this year,” Vellante said. “The company is trying to create a new category that transcends conventional data warehouses and data lakes. It’s trying to completely reshape how organizations leverage data.”

The key question now, Vellante said, is how Snowflake’s competitors will respond. He said Amazon’s new AWS Glue Elastic Views service announced at re:Invent this week is interesting as it allows customers to combine data across multiple databases, similar to what Snowflake does, but not quite the same.

“AWS is solving a problem that in part was created by their many database options,” Vellante said. “With AWS there’s a lot of copying and moving and change data management going on; whereas Snowflake is largely eliminating that data movement and copying by enabling users of its cloud to share data across any physical public cloud. What Snowflake is doing is much more transformative in my opinion, but the proof will be in how customers respond.”

In any case it will likely take some time to see if Snowflake’s vision pays off, said another analyst, Charles King of Pund-IT Inc. “Snowflake is a young company whose competitors have just as much brainpower and considerably greater resources,” he told SiliconANGLE. “Personally, I believe Snowflake’s future looks bright but success won’t happen overnight.”

One promising sign investors will have taken note of is that Snowflake has shown it’s willing to invest in building out its products.

Last month, the company announced several new capabilities for its cloud data warehouse, including a new developer tool called Snowpark that makes it possible to deploy custom code on the platform.

“Snowflake almost tripled its spending on research and development in the quarter,” Mueller said. “That’s important because its competitors aren’t sleeping or standing still.”

Chief Financial Officer Mike Scarpelli said in a call with analysts that Snowflake should be able to widen its profit margins to the mid-70% range over time, as it becomes eligible for more favorable price discounts from AWS and Microsoft Azure. It will also become larger and cut back on its own discounts to achieve this, he said.

Meantime, the company continues to grow. Scarpelli said Snowflake has added to its sales organization throughout the COVID-19 pandemic, and that it will keep up this pace of hiring.

For the fourth quarter, Snowflake is projecting product revenue of $162 million to $167 million, which comes in below the average estimate of $166 million. The balance of its revenue comes from professional services.

Snowflake’s stock fell more than 3% in after-hours trading, but that’s still up 140% from its IPO price.

King said investors may have been expecting more following Snowflake’s record-breaking IPO. “What they got instead was more than respectable growth, along with an appropriately cautious view of the road ahead,” he said.

Photo: SiliconANGLE