Snowflake Inc. provided a ray of sunshine in what has otherwise been an awful, horrible, very bad week on Wall Street with an earnings report today that showed revenue more than doubling in the most recent quarter and strong guidance.

The cloud data warehousing company posted revenue of $334.4 million in its fiscal third quarter, up 110% from a year ago and far ahead of analysts’ consensus estimates of $305.6 million. Although Snowflake still isn’t profitable, its adjusted free cash flow of $21.5 million indicates a healthy and growing business.

The company said it expects product sales in the current quarter to be at least $345 million, topping analysts’ forecasts, and that sales for the year should more than double, to about $1.13 billion. That represents about 95% growth.

Investors cheered a little bit of good news in what has been an otherwise dismal week for Wall Street in the wake of Omicron coronavirus outbreak. After dropping 8.6% for the day, Snowflake stock surged nearly 16% after-hours, nearly recovering all the losses of the week.

Existing customers buy more

The company said it has benefited from accelerated digital transformation initiatives driven by the pandemic as businesses look to become more data-driven. After staging the most successful software initial public offering in history a year ago, Snowflake earlier this year said it expects annual revenues to top $10 billion by 2029, a more than eightfold increase.

“Data is the beating hard of the modern enterprise,” said Chief Executive Frank Slootman (pictured). “The race is on to lay the foundation for a data-driven infrastructure. Snowflake will be a critical enabler of this journey.”

On an otherwise ebullient call with analysts, executives tried to moderate expectations. “Growth was driven by some of our largest customers that surprised us on the upside,” Slootman said. “I don’t think you’re going to see a repeat of that beat in this quarter. I’m actually disappointed we outperformed so much.”

Nevertheless, executives couldn’t resist crowing about their success. Snowflake said it finished the quarter with 5,416 customers, up from 4,990 the previous quarter. It signed a three-year, $100 million deal with one customer and five other eight-figure multiyear deals, said Chief Financial Officer Michael Scarpelli.

Snowflake said 148 customers spent more than $1 million over the past 12 months, up from 116 the previous quarter. Eight customers spent more than $10 million. Its remaining performance obligations grew to $1.8 billion, 55% of which the company expects to recognize as revenue over the next eight months. Five of Snowflake’s top 10 customers grew at or above the company’s product revenue growth rate for the year, Scarpelli said.

Even as the business is growing, it’s also becoming more profitable. Product gross margin was 74.6% and operating margin was 2.5%, both up from the previous quarter.

Despite the impressive results, Snowflake has only scratched the surface of its opportunity, Slootman said. “We have footprint but we’re marginally penetrated,” he said.

Photo: Snowflake