SNOW - Embedded Expectations Analysis - 2021 07 27
Snowflake Inc. (SNOW:USA) currently trades at a significant premium to UAFRS-based (Uniform) assets, with a 33.9x Uniform P/B. At these levels, the market is pricing in expectations for profitability to inflect positively, but management appears concernedabout strengthening their partnership alliances, maintaining their revenue retention
rate, and the potential of Data Cloud.
Specifically, management may lack confidence in their ability to maintain their current net revenue retention rate, deploy core infrastructure for the digital economy, and further strengthen their partnership alliances, especially with Deloitte. Furthermore, they may be exaggerating the potential of their Data Cloud's capabilities and their media channel solutions. Moreover, management may lack confidence in their ability to attain their mid 70s gross margin target and continue improving all of their products' performance. Finally, they may have concerns about the benefits of their cloud-native software architecture and the impact of the Fortune 500 customers' long cycle sales on their business.
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