(Bloomberg) — Snowflake Inc. stock had its worst day ever after the company reported a quarterly sales outlook that fell short of expectations, suggesting customers continued to cut back on cloud software spending amid economic conditions. uncertain.
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The shares fell 17% to $147.91 at the close on Thursday in New York, the biggest one-day drop since Snowflake began trading on September 16, 2020. The stock had rebounded 24% in the last month before Wednesday’s earnings report as positive results. by cloud infrastructure providers Microsoft Corp. and Alphabet Inc. made investors expect positive trends.
Snowflake’s software helps companies organize data in the cloud. The company is known for its pay-as-you-go pricing model, which charges customers based on how much they use its products. Analysts were concerned that a slowdown in demand for cloud services could affect Snowflake’s pay-as-you-go model.
Product revenue will increase about 34% to $625 million in the period ending July, the company said in a statement Wednesday. Analysts estimated an average of $646.3 million, according to data compiled by Bloomberg. Product sales account for the majority of Snowflake’s total revenue and are closely watched by investors.
Snowflake also cut its outlook for the fiscal year, saying product revenue will be around $2.6 billion. In March, the company forecast annual product sales of $2.7 billion.
The expected reduction is tied to the broader slowdown in information technology spending seen across the economy, said Bloomberg Intelligence analyst Mandeep Singh.
On Thursday, several analysts downgraded the stock and reduced their price targets.
“Despite a strong first quarter uptick, overall results were again marred by a materially reduced full-year outlook as Snow customers continue to experience optimization trends,” Tyler Radke wrote. , an analyst at Citigroup.
Fiscal first quarter product revenue increased 50% to $590.1 million. Analysts on average expected $571.9 million. Earnings, excluding certain items, were 15 cents per share in the period ended April 30, versus an average estimate of 5 cents.
The company said in a presentation that it had 8,167 customers at the end of the quarter. Of these, 373 were large customers who generated 12-month product revenue of more than $1 million, an increase of 80% over the prior year period.
(Updates with closing actions in second paragraph.)
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