The below-than-expected revenue guidance has stirred a massive plunge in Snowflake shares.
Shares of American cloud computing firm Snowflake Inc (NYSE: SNOW) are seeing a major plunge in the pre-market today as the company released its first-quarter fiscal 2024 revenue report. Despite its impressive performance, the company shared a lower-than-expected revenue guidance for the second quarter.
The company said its revenue for the first quarter came in at $624 million as against the $608 million that was projected by analysts polled by Refinitiv analysts. In a bid to complement the revenue that surpassed expectations, Snowflake also reported adjusted earnings per share of 15 cents as against the 5 cents that were projected by analysts.
Snowflake is a Bozeman Montana-based company whose product offering is gradually becoming well embraced. By its current performance revelations, it saw a 48% growth in the year-over-year period. The major part of the company’s revenue came from product sales which surged as much as 50% year over year.
“During Q1, Snowflake’s product revenue grew 50%, totaling $590 million. Non-GAAP adjusted free cash flow was $287 million for the quarter, up 58% year-over-year,” said Frank Slootman, Chairman and CEO, Snowflake. “Data has gravitational pull, and given the vast universe of data Snowflake manages, it is no surprise that interest in data science, AI and machine learning is escalating while its uses are rapidly evolving.”
According to Snowflake, it recorded 373 customers who had as much as $1 million in trailing 12-month product revenue. The company also reported a net revenue retention rate of 151%. The firm said its product has started gaining massive acceptance and said “thousands of customers across many industries, including 590 of the 2022 Forbes Global 2000 (G2K) as of April 30, 2023, use Snowflake Data Cloud to power their businesses.”
Snowflake Revenue Guidance Miss
As a business that is looking to compete with the likes of Amazon Web Services (AWS) and Google Cloud, expanding its operations is key. One of the ways it hopes to achieve this is by acquiring Neeva, the privacy-focused search company co-founded by former Google executive Sridhar Ramaswamy.
The company plans to leverage the AI capabilities of the Neeva search engine in all of its cloud service products. By offering diversity to its global brand, Snowflake, and Neeva will be placed on a renewed profitability path that the company said it expects to help push its revenue to $620 million and $625 million in the fiscal second quarter. This projection is below the $649 million that was profiled by analysts from StreetAccount.
The full 2024 fiscal year revenue projection came in at $2.6 billion, a figure that pales when compared to the $2.7 billion that analysts are expecting for the year.
The below-than-expected revenue guidance has stirred a massive plunge in Snowflake shares by as much as 14.19% as investors appear to be expressing negative optimism with respect to the future of the company.
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