Piper Sandler analyst Brent A. Bracelin attended Virtual Iceberg Summit 2024 sessions over the last two days with data architects and engineers from Apple Inc (NASDAQ:AAPL), ByteDance, CrowdStrike Holdings, Inc (NASDAQ:CRWD), EBay Inc (NASDAQ:EBAY), Alphabet Inc (NASDAQ:GOOGL) Google, International Business Machines Corp (NYSE:IBM), Microsoft Corp (NASDAQ:MSFT) LinkedIn, Netflix Inc (NASDAQ:NFLX), Pinterest Inc (NYSE:PINS), Tencent, and Uber Technologies, Inc (NYSE:UBER).
Bracelin reiterated an Overweight rating on Snowflake Inc (NYSE:SNOW) with a price target of $240.
From his standpoint, the industry takeaways were that Iceberg adoption is still nascent, less than 200 attendees per session suggests Iceberg is still in the hands of early adopters, and broader enterprise adoption of Iceberg across the Global 2000 could still be much further out, with most use cases in the hands of the biggest open-source users and advocates.
Bracelin said Snowflake flagged Iceberg tables as one of the potential drags on the 2024 growth trajectory, which was lowered to a mid-point of 22% earlier this year.
The analyst noted that this was understandable, given that storage represents about 10% of revenue and a handful of large Internet customers plan to migrate more storage to an Iceberg open-source data lakehouse.
Iceberg table format has evolved from a niche engineering project that originated at Netflix in 2017 into a full-blown Apache Iceberg open-source project that has quickly become one of the de facto table format standards for large-scale data operations adopted by Amazon.Com Inc (NASDAQ:AMZN), Apple, Confluent, Inc (NASDAQ:CFLT), Snowflake, and Salesforce Inc (NYSE:CRM), among others, he noted.
Iceberg tables continue the trend of disaggregating computing from storage over the last decade, which has enabled the shift to cloud architectures.
The analyst said that until Iceberg table formats become more broadly adopted within Global 2000 enterprises, the existential threat to SNOW from Icebergs might be overstated in the near future. Today, about 10% of SNOW’s revenue is attributed to storage, with an increasing portion tied to the compute engine, which remains highly differentiated. Bracelin projected first-quarter revenue and EPS of $785.3 million and $0.19.
KeyBanc analyst Eric Heath reiterated an Overweight rating on Snowflake. The analyst expects a solid upside to fiscal first-quarter product revenue following positive usage trends and commentary from consumption peers Confluent and Datadog, Inc (NASDAQ:DDOG) and public cloud acceleration in the first quarter.
Also, fiscal 2025 guidance appears more conservative, with management assuming similar usage trends to fiscal 2024. He expects management to remain prudent with fiscal 2025 guidance, with less visibility into the impact of Iceberg on storage and the potential fiscal second-half contribution from new products likely to GA around Snowflake Summit in June.
Investor sentiment has improved slightly since his launch in early April, and he expects further improvement heading into Snowflake Summit in June, with several new products scheduled to GA. The cadence of AI-related announcements has notably accelerated since Sridhar Ramaswamy’s appointment as CEO, a positive change, with products like Cortex and Snowpark Container Services expected to become GA soon.
Heath projected first-quarter revenue and EPS of $786.6 million and $0.17.
Price Action: SNOW shares are trading lower by 0.09% to $164.22 at the last check Thursday.
Also Read: AI Revolution ‘On the Doorstep:’ The ‘Tidal Wave’ Is Well Underway, Analyst Says
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