Snowflake can prove to be a long-term winner, despite several near-term revenue headwinds.
Cloud-native data storage and analysis specialist Snowflake‘s (SNOW -1.18%) shares tanked 33% since the company released its fourth-quarter fiscal 2024 earnings report (for the period ending Jan. 31, 2024) on Feb. 28. While the company’s fourth-quarter revenue and earnings surpassed consensus estimates, investors are disappointed with underwhelming guidance for fiscal 2025.
Snowflake expects technology advancements and product efficiency gains (which are being passed on to customers) to make the platform even more cost-effective for customers. This implies less spending by customers, which in turn, will affect the company’s fiscal 2025 revenue. Plus, the rollout of tiered storage pricing (the company will give discounts to its customers for storing higher volumes of data) is also expected to negatively affect future revenue. Snowflake is further gearing up to make its support for the open-source Iceberg Table format generally available around June 2024. Subsequently, some large customers are expected to shift out a portion of their data from Snowflake’s platform to Iceberg Tables. Besides losing some storage revenue, the company also expects to lose some compute revenue since a few workloads can run directly on Iceberg Tables.
While the near-term impact of these challenges cannot be ignored, these initiatives are expected to bring more customers and workloads to Snowflake’s platform in the long run. Even if these strategies do not succeed, there is still much to like in this stock.
Consumption patterns seem to be stabilizing
The consumption of Snowflake’s cloud data services was adversely affected by the IT budget cuts of 2023. However, the trend of customers optimizing their IT spending seems to be normalizing. Subsequently, Snowflake saw improvement in consumption patterns as compared to those at the beginning of 2023, although they are still not in line with pre-2023 levels. The strength in consumption was mainly driven by customers from financial services, retail, and technology verticals.
Snowflake changed the compensation structure of the sales team to further drive consumption. While 35% of the sales team is compensated to acquire new clients, 55% is compensated to drive consumption within existing clients and 10% are incentivized for both new customers and consumption.
Snowflake is acquiring new customers at a healthy clip. The company reported a 21.8% year-over-year jump in total customer count to 9,437 at the end of fourth quarter. The company catered to 461 customers who contributed over $1 million in product revenue annually at the end of the fourth quarter, up 39% on a year-over-year basis. Snowflake also saw eight out of its top 10 accounts increase consumption sequentially in the fourth quarter.
Remaining performance obligations (RPOs) were up 41% year over year to $5.2 billion. Since RPO is indicative of the strength in bookings, it also highlights the improving macro environment for the company.
Against this backdrop, the chances of Snowflake surpassing its fiscal 2025 guidance remain quite high.
Multiple competitive advantages
Snowflake’s cloud-native data platform helps organizations consolidate structured and unstructured data across multiple sources and then analyze it to derive intelligent insights. Although it’s not exactly an artificial intelligence (AI) company, Snowflake’s scalable, optimized, and secure data platform is playing a pivotal role in handling the data part of the clients’ AI strategies.
Snowflake also allows customers to share data through the Snowflake Data Marketplace. Access to a large amount of diversified data across use cases plays a vital role in refining the clients’ AI models. Hence, data sharing capability is proving to be a major competitive advantage for Snowflake and helped attract new customers.
Snowflake’s developer framework, Snowpark, enables developers to process and analyze data within the Snowflake data cloud. Snowflake expects Snowpark to account for 3% of fiscal 2025 revenue (nearly $95 million to $100 million), implying year-over-year growth of roughly 170%. Snowpark can continue to be a major growth catalyst, since customers are increasingly preferring it for its simplicity, better economics and higher performance without having to move data out of the Snowflake data cloud.
Snowflake is also gearing to make Snowflake Cortex, a fully managed service that enables organizations to analyze data and build AI applications using advanced AI models directly within the Snowflake data cloud, available for public preview. Cortex is expected to enable non-technical users to use AI capabilities on the data in the Snowflake cloud.
These competitive advantages enabled the company to build a sticky customer base, making its financial performance quite resilient even in difficult times.
Reasonable valuation
Despite the many pros, Snowflake is currently trading at 18.6 times trailing-12-month sales, lower than its 12-month average price-to-sales (P/S) multiple of 22.5x and three-year average P/S multiple of 41.7x. While the low valuation is a result of near-term headwinds, the long-term growth story still seems quite intact.
Considering the improving consumption environment, several yet-to-be monetized features, and focus on expanding its customer base, Snowflake’s recent share price correction may present an attractive entry point for the patient long-term investor. It may also make sense for investors to opt for a dollar-cost-averaging strategy to gradually build a position in Snowflake stock, while controlling risks.
TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.
The S&P/TSX composite index was up 254.62 points at 23,847.22.
In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.
The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.
The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.
The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.
This report by The Canadian Press was first published Sept. 19, 2024.
Losing a loved one is never easy, and the legal steps that follow can add even more stress to an already difficult time.
For years, families in Vancouver (and Canada in general) have struggled with a complex probate process—filled with paperwork and legal challenges.
Thankfully, recent changes to Canada’s probate laws aim to make this process simpler and easier to navigate.
Let’s unearth how these updates can simplify the process for you and your family.
What is probate?
Probate might sound complicated, but it’s simply the legal process of settling someone’s estate after death.
Here’s how it works.
Validating the will. The court checks if the will is legal and valid.
Appointing an executor. If named in the will, the executor manages the estate. If not, the court appoints someone.
Settling debts and taxes. The executor (and you) pays debts and taxes before anything can be given.
Distributing the estate. Once everything is settled, the executor distributes the remaining assets according to the will or legal rules.
Probate ensures everything is done by the book, giving you peace of mind during a difficult time.
Recent Changes in Canadian Probate Laws
Several updates to probate law in the country are making the process smoother for you and your family.
Here’s a closer look at the fundamental changes that are making a real difference.
1) Virtual witnessing of wills
Now permanent in many provinces, including British Columbia, wills can be signed and witnessed remotely through video calls.
Such a change makes estate planning more accessible, especially for those in remote areas or with limited mobility.
2) Simplified process for small estates
Smaller estates, like those under 25,000 CAD in BC, now have a faster, simplified probate process.
Fewer forms and legal steps mean less hassle for families handling modest estates.
3) Substantial compliance for wills
Courts can now approve wills with minor errors if they reflect the person’s true intentions.
This update prevents unnecessary legal challenges and ensures the deceased’s wishes are respected.
These changes help make probate less stressful and more efficient for you and other families across Canada.
The Probate Process and You: The Role of a Probate Lawyer
(Image: Freepik.com)
Working with a probate lawyer in Vancouver can significantly simplify the probate process, especially given the city’s complex legal landscape.
Here’s how they can help.
Navigating the legal process
Probate lawyers ensure all legal steps are followed, preventing costly mistakes and ensuring the estate is managed properly.
Handling paperwork and deadlines
They manage all the paperwork and court deadlines, taking the burden off of you during this difficult time.
Resolving disputes
If conflicts arise, probate lawyers resolve them, avoiding legal battles.
Providing you peace of mind
With a probate lawyer’s expertise, you can trust that the estate is being handled efficiently and according to the law.
With a skilled probate lawyer, you can ensure the entire process is smooth and stress-free.
Why These Changes Matter
The updates to probate law make a big difference for Canadian families. Here’s why.
Less stress for you. Simplified processes mean you can focus on grieving, not paperwork.
Faster estate settlements. Estates are settled more quickly, so beneficiaries don’t face long delays.
Fewer disputes. Courts can now honor will with minor errors, reducing family conflicts.
Accessible for everyone. Virtual witnessing and easier rules for small estates make probate more accessible for everyone, no matter where you live.
With these changes, probate becomes smoother and more manageable for you and your family.
How to Prepare for the Probate Process
Even with the recent changes, being prepared makes probate smoother. Here are a few steps to help you prepare.
Create a will. Ensure a valid will is in place to avoid complications.
Choose an executor. Pick someone responsible for managing the estate and discuss their role with them.
Organize documents. Keep key financial and legal documents in one place for easy access.
Talk to your family. Have open conversations with your family to prevent future misunderstandings.
Get legal advice. Consult with a probate lawyer to ensure everything is legally sound and up-to-date.
These simple steps make the probate process easier for everyone involved.
Wrapping Up: Making Probate Easier in Vancouver
Recent updates in probate law are simplifying the process for families, from virtual witnessing to easier estate rules. These reforms are designed to ease the burden, helping you focus on what matters—grieving and respecting your dead loved ones’ final wishes.
Despite these changes, it’s best to consult a probate lawyer to ensure you can manage everything properly. Remember, they’re here to help you during this difficult time.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
