Snowflake (SNOW) on Wednesday reported first-quarter earnings that topped Wall Street targets, but the company’s product revenue outlook missed views amid slowing growth for cloud computing partners such as Amazon.com (AMZN). SNOW stock plunged on the news.
For the quarter ended April 30, Snowflake earnings came in at an adjusted 15 cents a share compared with no profits a year earlier. Analysts polled by FactSet expected Snowflake to report a 5-cent per share profit.
Further, revenue climbed 48% to $623.6 million, the software maker said. Analysts had predicted revenue of $609.7 million.
SNOW stock plunged 11.6% to 156.65 in extended trading on the stock market today.
SNOW Stock: Outlook Misses Estimates
For the current quarter ending in July, Snowflake expects product revenue in a range of $620 million to $625 million. Meanwhile, analysts had expected $647.1 million.
For full year fiscal 2024, Snowflake lowered its forecast for product revenue growth to 34% to $2.6 billion from its earlier projection for 44% to 45% growth.
SNOW stock had advanced 22% in 2023 heading into the Snowflake earnings report.
Snowflake sells data analytics and management tools that run on cloud-computing platforms such as Amazon Web Services, part of Amazon. Because Snowflake’s business model is consumption-based rather than subscription-based, bearish investors have raised concerns over a possible U.S. recession curbing demand.
Snowflake garners about 95% of total sales from product revenue. That’s revenue that comes from cloud-based data analytical and storage services. Snowflake also generates revenue from professional services, such as consulting and training.
Cloud computing growth has slowed for Amazon, a key Snowflake partner, along with Microsoft (MSFT) and Google-parent Alphabet (GOOGL). The cloud computing titans hope to get a boost from artificial intelligence workloads in the long-run.
SNOW stock holds a Relative Strength Rating of 92 out of a best-possible 99, according to IBD Stock Checkup.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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