CrowdStrike and Snowflake: why guidance beats history

Key takeaways

• Two strong prints, opposite reactions: Crowdstrike fell on soft revenue outlook; Snowflake jumped on a raised guide
• Use history as a baseline to judge guidance credibility and execution, not as a forecast
• Focus on the key metrics that drive sensitivity to future outlook and price tomorrow’s cash flows, not yesterday’s beat

Why guidance beats history

Earnings tell you what just happened. Guidance tells you what management thinks will happen next. Markets move on guidance, not last quarter, because a stock is priced on expected future cash flows and the odds they will materialize. History is the baseline. It answers, “Is the engine working and is execution credible?”. Guidance is the steering wheel. It updates the path and speed. When guidance shifts even a little versus consensus, the whole trajectory of expected cash flows changes, and the market must reprice.

Three levers drive that repricing:

1. Magnitude vs consensus: A +1% raise or −1% trim to next-quarter revenue can imply a much larger multi-quarter knock-on once you compound it.

2. Quality of growth: The same revenue can be worth more if it comes from sticky cohorts, higher-margin modules, or durable consumption patterns.

3. Credibility: Repeatedly meeting or beating guidance lowers the discount investors apply to management’s forecasts; misses raise it.

That is why two “beats” can diverge. CrowdStrike delivered strong ARR and cash conversion, but a slightly softer near-term revenue outlook plus remediation credits pulled the forward curve down. Snowflake raised product-revenue guidance and showed healthy cohorts and remaining performance obligations, so the curve bent up. The market did not reward yesterday’s prints; it recalibrated tomorrow’s path.

Business models: ARR vs consumption

Both companies sell into the AI wave. CrowdStrike sells subscriptions measured by annual recurring revenue (ARR). Net new ARR of USD 221 million set a quarterly record and ending ARR rose 20% year over year to USD 4.66 billion—evidence the platform continues to land and expand. The model converts growth into cash today: second quarter free cash flow was USD 284 million (24% of revenue), with operating income at USD 255 million. Cash helps the floor, but top-line confidence sets the ceiling.

Snowflake sells consumption. Customers pay for what they use—compute, storage, and services—so revenue tracks query volumes and AI workloads, not seats. In the second quarter, product revenue grew 32% year over year to USD 1.09 billion, net revenue retention held at 125%, and remaining performance obligations rose 33% to USD 6.9 billion—forward demand signals for usage at scale. Operating margin reached 11% and free-cash-flow margin 6%, marking the second consecutive quarter of adjusted operating profits and positive cash flows.

Print vs. expectations: why guidance drove the tape