On Wednesday, Jefferies maintained a bullish stance on Snowflake Inc . (NYSE: NYSE:SNOW), reiterating a Buy rating with a $210.00 price target. The endorsement follows an analysis of Snowflake's recent 10-K filing, which highlighted several growth indicators and strategic plans for the data warehousing company.
The report noted a significant increase in usage of Snowflake's platform, with the average number of daily queries processed in January 2024 reaching approximately 4.2 billion, marking a 62% year-over-year growth from January 2023. Although daily queries don't directly translate to revenue, the firm believes there is a directional correlation, as more queries suggest increased compute resource needs.
Snowflake's Sales and Marketing (S&M) headcount growth for FY24 was less than half of the projected product revenue growth for FY25. The S&M team expanded by 10% year-over-year in FY24, accounting for 43% of the total headcount.
This is a decrease compared to the 45% growth in FY23. The company anticipates hiring over 1,000 employees in FY25, with an expected S&M headcount growth of about 8% year-over-year, aligning with the updated FY25 product revenue growth outlook of 22%.
Price increases have also contributed to Snowflake's revenue growth, with a 38% year-over-year increase in FY24 attributed to approximately 3% rise in capacity consumption prices. This growth was partially driven by the adoption of higher-priced editions and improved discounting discipline.
Furthermore, Snowflake is expanding its operational footprint, preparing to offer its platform to Chinese affiliates of multinational customers. This move requires a new operating model to comply with Chinese law, involving significant investment and uncertain returns.
Lastly, the firm highlighted Snowflake's ongoing stock repurchase program, with $1.4 billion remaining out of the $2 billion authorized by the board in February 2023. The program is set to expire in March 2025, offering a potential return of capital to shareholders.
InvestingPro Insights
As Snowflake Inc. (NYSE: SNOW) continues to grow and adapt to the dynamic tech landscape, investors and analysts closely monitor its financial health and market performance. According to InvestingPro, Snowflake holds more cash than debt on its balance sheet, which is a positive sign of financial stability. Furthermore, it's worth noting that the company's liquid assets exceed its short-term obligations, indicating a strong liquidity position. However, it is important to consider that the company has not been profitable over the last twelve months and is trading at high revenue and Price/Book valuation multiples, which could suggest a premium market pricing.
InvestingPro Data shows that Snowflake's market cap stands at 52.04 billion USD, with a revenue growth of 35.86% over the last twelve months as of Q4 2024. Despite lacking profitability, analysts predict the company will be profitable this year, which could be a key factor for future valuation. The company's significant revenue growth is a testament to its expanding market presence and adoption of its cloud-based services.
For those considering an investment in Snowflake, there are additional InvestingPro Tips available that provide deeper insights into the company's performance and potential. For instance, Snowflake's stock has fared poorly over the last month, shedding 32.48% in value, which may influence investor sentiment. To explore these tips and more, visit Investing.com/pro/SNOW. And remember, using the coupon code PRONEWS24 will give you an additional 10% off a yearly or biyearly Pro and Pro+ subscription, enabling access to a total of 24 InvestingPro Tips for Snowflake.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.