Snowflake Stock – Snowflake stock drops in after-hours trading as losses, revenue continue to grow

The cloud-based database-software company executed the largest initial public offering for a software company on record in 2020, raising nearly $4 billion even without taking into account substantial secondary investments from Berkshire Hathaway Inc.
BRK.A,
-3.41%

BRK.B,
-3.26%
and Salesforce.com Inc.
CRM,
-2.04%.
Shares sold for $120 apiece in the IPO, then more than doubled in their first day of trading; the stock fell 8.8% to $246.78 on Wednesday, then dropped more than 5% in the extended session immediately following the release of the results.

For more: 5 things to know about Snowflake

For the full fiscal year, which ended Jan. 31, Snowflake recorded a loss of $539.1 million, or $3.81 a share, on sales of $592 million. In the previous fiscal year, the company reported a loss of $348.5 million on sales of $264.7 million.

Snowflake executives tend to focus less on overall losses and revenue in explaining the company’s financial results, citing the company’s youth and unique business model of charging customers based on their usage of the software. For instance, executives and analysts tend to rely on product revenue, which removes services and other revenue sources, as well as net customer retention rate, which measures how much existing customers are spending on the service.

In the fourth quarter, Snowflake reported product revenue of $178.3 million, while analysts on average expected $166.8 million, according to FactSet. The company reported a net revenue retention rate of 162%, 4,139 total customers, and 177 customers spending more than $1 million in the past 12 months.

Snowflake projected product revenue of $1 billion to $1.02 billion for the new fiscal year and $195 million to $200 million for the first quarter. Analysts on average were projecting annual product revenue of $1.01 billion and first-quarter product revenue of $196.3 million, according to FactSet.