Snowflake Has a Hot New Product
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What are the highlights of Snowflake's latest financial results?
Snowflake has a hot new product. This is Motley Fool Hidden Gems Investing. Welcome to Motley Fool Hidden Gems Investing. I'm Jon Kloss filling in today for Tyler Crowe. That means that Travis Hoyum is filling in for me along with the Fool contributor, Matt Frankel.
Musical chairs over here.
That's all right. Listen, we have some news here for real estate and some acquisition news we're going to get to. But first, let's talk about Snowflake because this is an $80 billion company and it's up a whopping 37% today. This, of course, the data management and analytics software company.
How does Snowflake's new AI product, Cortex Code, enhance its offerings?
And this was the hot thing when it first went public. And it is down about 50% from its all-time high way back in 2021. This company was known for incredible growth rates, but the growth rate was just steadily declining. But here in this quarter, revenue all of a sudden jumped to 33% growth and management raised its guidance for the year. So all of a sudden we see a little bit of, wow, growth is maybe picking back up again for Snowflake. And what is interesting here is that the analysts were really curious, what is driving this surprise growth? And Snowflake's management crediting a new product that it launched during the quarter called Cortex Code or COCO. And that is what is really interesting. accelerating things here.
So Travis, I just want to throw it to you. What is Coco and why do Snowflakes customers like it so much?
Well, this is their native coding agent. And in artificial intelligence today, coding and using AI for coding is kind of all the rage right now. So it's operating in plain language, gets a request, and then does work for the user. I think what kind of differentiates it for Snowflake is it lives inside Snowflake, so it can access all of the data that a business has on Snowflake. And in theory, that should make life a lot easier for developers, building agents, which is another one of those hot words in the market and other tools. I'll note that this is the kind of thing that almost every cloud company, you know, the big hyperscalers are starting to launch. So I don't know that this is necessarily a long term differentiator, but at least short term, this is the kind of thing they got to put out.
Well, it's interesting that you say that. I do want to double down here a little bit with this Cocoa product.
What factors are contributing to the decline in mortgage refinancing?
You know, these AI tools from Snowflake, these are what are driving the growth, but these are actually a little bit lower gross margin. Snowflake is known for an incredible gross margin, but these tools a little bit lower on the gross margin side. And what is also interesting is Snowflake doesn't own all of its compute. It relies on this from third parties, the cloud computing providers. And so when you're scaling with these AI tooling that are living in these cloud computing giants where maybe you don't control the cost, that is kind of an interesting thing. So I know you, Travis, are always talking about business models. And so when you think about the business models here, where do you want to be?
Snowflake is such an interesting company to look at because there's the story of the company and then you start to look at the financials and that's where the business model has to show up in the numbers. And I think you look at their income statement is one of the strangest that I've ever looked at because it's...
How do rising mortgage rates impact the housing market?
incredibly long because they break out all these non-gap numbers and then gap numbers. If you're not familiar with gap, gap is generally accepted accounting principles. If you're saying that your numbers are, you're profitable non-gap, God, that's great. But the generally accepted accounting principles say that you're very, very unprofitable. And the reason is they're spending a lot of money on compute. They just signed a $6 billion deal with AWS. They're using Amazon's custom chips. So who has the power in that relationship? It certainly seems like Amazon to me because Snowflake is not profitable, whereas AWS is.
It's not only the compute cost, right?
What companies are affected by the slowdown in refinancing?
It's also the stock-based compensation that's coming in here at 400 million in the most recent quarter, 29% of revenue.
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Chapters
8 chapters
1
What are the highlights of Snowflake's latest financial results?
0:02–0:40
2
How does Snowflake's new AI product, Cortex Code, enhance its offerings?
0:40–2:25
3
What factors are contributing to the decline in mortgage refinancing?
2:25–3:20
4
How do rising mortgage rates impact the housing market?
3:20–3:57
5
What companies are affected by the slowdown in refinancing?
3:57–4:32
6
What is the significance of Fertitta Entertainment's acquisition of Caesars Entertainment?
4:32–5:29
7
How does the Caesars deal affect VICI Properties?
5:29–6:20
8
What hidden opportunities exist in the current market landscape?
6:20–18:05