Episode Details

Snowflake, Inc. (SNOW) Q2 FY2027 — Shares rose 16.6% to $356.47, a new 12-month high, after Snowflake beat on revenue and raised its FY2027 product-revenue and operating-margin guidance for a second consecutive quarter, while leaving the adjusted free-cash-flow-margin guide unchanged at 23.0% for the third straight update. Snowflake has now guided its fiscal 2027 adjusted free cash flow margin at 23.0% three times this year without moving a single basis point, while raising its product-revenue guide twice and its operating-margin guide twice over the same three filings. The stock is up 16.6% since the print and sitting at a new 12-month high; our fair value is about $120, roughly a third of where it closed. THE CALL: AVOID (3/5, MODERATE) — base-case value ~$120 vs ~$356.47 today. KEY METRICS: - FY27 adjusted FCF margin guided 23.0% three times running - product revenue guide raised $5,660M to $5,840M to $6,070M - H1 non-GAAP operating margin 10% to 14%, but H1 adjusted FCF margin went DOWN, 12.5% to 12.2% - Deferred revenue -$778M (-23%) since January; calculated billings growth 16.1% vs revenue growth 35.1% - a 19-point gap - Owner earnings (adjusted FCF less stock comp), TTM -$479M; base-case fair value ~$120 charges stock comp in full - Ignore stock comp entirely and the same operating case gives $203 - one accounting choice is worth about $83 a share - Reverse DCF at the $356.47 close demands 28.6% a year of revenue growth to FY2036, up from 26.3% at the $305.84 pre-print close - Stock up 16.6% since the print to a new 12-month high, 5.7% clear of the prior high of $337.38 - Street: 42 buy / 9 hold / 1 sell across 52 analysts, median target $440 (+23% from the close), 21 raises and zero cuts post-print What to watch: A January deferred-revenue build over $900M, two straight quarters of billings growth within 5 points of revenue growth, and stock compensation falling under 25% of sales would move the call toward a buy; a full-year adjusted free cash flow margin finishing under 23.0% would not. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.