Snowflake (SNOW  ) shares were trading lower following its Q3 earnings report which showed a beat on the top and bottom lines, but investors were in a selling mood as guidance came in lighter than expected.

It may be difficult to remember now, but Snowflake was one of the hottest IPOs, when it IPO'd in late 2020. Investors were enchanted by its accelerating growth, high margins, and favorable business model. And, it didn't hurt that it made its debut during a rollicking bull market for tech and growth stocks with zero percent interest rates.

Of course, most of these tailwinds have turned into headwinds. As a result, Snowflake's stock is down 59% YTD and 68% from it's all-time high. Even with this crash, the stock remains quite expensive with a price to sales ratio of 23 and a forward P/E ratio in the triple-digits. But from a contrarian perspective, it's worth noting that the stock has been range-bound since May, while the bulk of its peers have been trending lower.

Inside the Numbers

In Q3, Snowflake reported $0.11 per share in earnings which exceeded analysts' expectations of $0.04 per share. Revenue also topped expectations at $557 million vs expectations of $539 million. This was a 67% increase from last year's Q3, although this was a deceleration from last quarter's 83% increase. In total, the company had 7,292 active customers as of the end of Q3.

Most of Snowflake's revenue is comprised of product revenue which is derived from its customers' use of its data analytics platform. For next quarter, the company sees revenue between $535 million and $540 million which is below expectations of $553 million. For the full year, it sees revenue between $1.92 billion and $1.93 billion which was also below analysts' estimates of $2.02 billion. The company also forecasted gross margins of 75%.

The major factor in Snowflake's decline following its earnings was the sharp deceleration in growth, cautious forecast, and commentary from management which seems to indicate that the slowdown in tech spending and uncertain macro environment is beginning to affect Snowflake's growth and ability to close deals.