Snowflake, monday.com in focus after Loop Capital investor conference

Snowflake (NYSE:SNOW) and monday.com were among the companies in focus on Wednesday after giving updates at Loop Capital's investor conference.

Snowflake

The data warehousing giant, which worried investors last month when it said former Chief Executive Frank Slootman was retiring effectively immediately and provided weak guidance, emphasized its "more conservative forecasting methodology" where the focus is now on customer consumption behavior compared to historical patterns, analyst Mark Schappel said.

"On that score, the firm is seeing large customers adopting slower consumption patterns as they run more efficiently on the platform (i.e., optimizations) and as new customers land at a lower consumption rate," Schappel wrote in an investor note. "These factors caused management to pull back from its long-term revenue target of $10B."

Shares rose 2.1% in early trading.

The company also highlighted new CEO Sridhar Ramaswamy top two priorities, including bringing new products to general availability by lowering the company's “perfection hurdle” and making changes on the go-to-market for new products and giving sales teams the appropriate resources.

The company also discussed go-to-market changes where it is moving its compensation plans to incentive new bookings growth and selling new use cases and migrations as opposed to new upsell bookings.

"In particular, sales reps are being comped on signing new logos (~35% of reps) and driving consumption with existing customers (~55% of reps)," Schappel wrote.

Regarding competition in data warehousing, Snowflake sees Databricks in expansion deals, as opposed to new logo engagements.

"Databricks remains strong in tech-savvy organizations/IT shops that employ large armies of data scientists and engineers that heavily customize analytical solutions, while Snowflake excels more with large G2K companies that are more focused on business users that are more concerned with ease-of-use, data governance, and the firm's managed service," Schappel said.

Snowflake also competes with Amazon (AMZN) Redshift, Microsoft (MSFT) Synapse Fabric and Google (GOOG) (GOOGL) Big Data in data warehousing. It displaces Teradata (TDC), Hadoop and Exadata.

Loop Capital has a Buy rating and $235 price target on Snowflake.

monday.com

Tel Aviv-based monday.com (NASDAQ:MNDY) also presented at the conference and it appears the company's move upmarket is going well.

"Monday's push upmarket continues with the key to its upmarket success being its ability to handle larger and more complex use cases through mondayDB and enhanced capabilities (e.g, governance, access control, security, multi-layering permissioning, features)," Schappel wrote. "During the next few years, the firm expects partners and SIs to become a more important factor in helping monday further penetrate enterprise accounts."

The company also said that 2024 is likely to be an investment year, with adjusted operating margins likely to be in the "mid to high single digits from 2024 to 2026," Schappel said.

Shares fell 1.3% in early trading.