Snowflake Q2 Earnings Preview: What to expect?

[Abstract cloud computing technology concept]
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Cloud based data storage company Snowflake (NYSE:SNOW [https://seekingalpha.com/symbol/SNOW]) is scheduled to announce its second quarter earnings results on Wednesday, after the closing bell. Focus will be on customer acquisition, updates to Snowflake’s go-to-market strategy, and margin improvement and cost control.

Analysts on consensus expect the company to report a 50% increase in earnings per share to $0.27 [https://seekingalpha.com/article/4816546-snowflake-aiming-for-incremental-margin-improvements-earnings-preview]on a revenue of $1.09B, a 25% increase from last year.

According to Seeking Alpha analyst Michael Del Monte [https://seekingalpha.com/article/4816546-snowflake-aiming-for-incremental-margin-improvements-earnings-preview],looking to second quarter earnings, investors should consider Snowflake’s declining adjusted gross margin.

Del Monte believes this is the result of higher infrastructure costs associated with transitioning to AI infrastructure to support AI workloads on the platform.

“If this is the case, gross margins may continue to face incremental decline as hardware becomes more expensive, particularly if trade tariffs impact costs going forward,” the analyst added.

Despite margin concerns, analysts point out that Snowflake’s customer adoption remains strong as enterprises seek to leverage the company’s AI/BI tools.

Over the last two years, the company has beaten EPS estimates [https://seekingalpha.com/symbol/SNOW/earnings/eps-surprise-summary]88% of the time and revenue estimates 100% of the time.

Analysts have been relatively optimistic going into earnings, with EPS estimates seeing six upward revisions [https://seekingalpha.com/symbol/SNOW/earnings/revisions] and one downward in the past three months, while revenue estimates have seen eight upward revisions and one downward.

Snowflake (SNOW [https://seekingalpha.com/symbol/SNOW]) shares have gained more than 27% in market value so far this year, compared to a 9% growth in the broader benchmark index.

MORE ON SNOWFLAKE

* Snowflake: Aiming For Incremental Margin Improvements (Earnings Preview) [https://seekingalpha.com/article/4816546-snowflake-aiming-for-incremental-margin-improvements-earnings-preview]
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* Trim Snowflake: Growth Is Slowing, Margins Lagging, Valuation Demanding [https://seekingalpha.com/article/4806839-trim-snowflake-growth-is-slowing-margins-lagging-valuation-demanding]
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