Snowflake (NYSE: SNOW) The stock is losing ground in Thursday’s trading. The company’s stock price was down 5.8% as of 3:00 PM ET, according to data from S&P Global Market Intelligence.
After the market closed on Wednesday, Snowflake released results for the first quarter of its fiscal year 2025, which ended April 30. Although the company’s revenue exceeded market expectations, profits for the period were lower than Wall Street expected.
Snowflake’s revenue increase is overshadowed by missed profit figures
Snowflake posted non-GAAP (generally accepted accounting principles) adjusted earnings per share of $0.14 on revenue of $828.71 million in its first fiscal quarter. Meanwhile, the average analyst estimate should have seen the company post adjusted earnings per share of $0.17 on revenue of about $828.75 million.
The data warehousing specialist’s product revenue rose 34% to $789.6 million. Total sales for the period increased by 32.9% compared to the same period last year. The company ended the period with 485 customers with trailing-twelve-month product sales of more than $1 million – up from the 461 customers it had in last year’s fourth-quarter cohort. Snowflake’s net revenue retention also fell to 128% – down from 131% in the fourth quarter of fiscal 2024 and 151% in the first quarter of that year.
When will AI-driven demand accelerate?
As a leading provider of services that help organizations combine, sort, and analyze data, Snowflake appears poised to see some tailwinds in demand related to the rise of artificial intelligence (AI). On the other hand, the company’s stock price is now down about 14% over the past year.
For the second quarter of the current fiscal year, Snowflake expects product revenue to be between $805 million and $810 million. At the midpoint of this guidance range, that would mean year-on-year growth of around 26.5%. The company expects to achieve an operating profit margin of approximately 3%. While the company’s prospects aren’t bad by any means, it seems like investors were banking on the company seeing a bigger performance boost from AI.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool holds and recommends positions in Snowflake. The Motley Fool has a disclosure policy.
Why Snowflake Stock Is Falling Today was originally published by The Motley Fool
