Product revenue, which makes up the bulk of Snowflake’s business, will be US$850mil to US$855mil in the period ending in October, the company said. — Reuters
NEW YORK: Snowflake Inc gave a sales outlook that failed to reassure investors that the company will gain ground in the market for artificial intelligence (AI) software tools.
The shares fell in extended trading.
Product revenue, which makes up the bulk of Snowflake’s business, will be US$850mil to US$855mil in the period ending in October, the company said Wednesday in a statement.
Analysts, on average, predicted US$848mil, although some estimates exceeded US$900mil, according to data compiled by Bloomberg. The company also raised its financial-year product sales forecast to US$3.36bil from US$3.3bil.
Under chief executive officer Sridhar Ramaswamy, Snowflake has launched products focused on generative AI and other new ways to analyse large sets of data.
The strategy is fuelled in part by increased pressure from rivals including Databricks Inc and cloud infrastructure providers like Microsoft Corp. Snowflake offers software that helps customers find, organise and use huge amounts of information from a variety of sources.
Ramaswamy touted “product delivery, and great traction in the early stages of our new AI products”.
Still, Snowflake is navigating a challenging environment between a recent chief executive change, security breaches of its customers and some market shift to products outside its traditional wheelhouse, wrote Derrick Wood, an analyst at TD Cowen, ahead of the results.
In its financial second quarter, total revenue rose 29% to US$868.8mil – coming in under 30% for the first time in Snowflake’s history as a publicly traded company.
The shares declined about 7% in extended trading after closing at US$135.06 in New York.
The stock has dropped 32% this year, as investors have been concerned about Snowflake’s ability to catch up in AI-oriented tools.
Clients including AT&T Inc, Live Nation Entertainment Inc’s Ticketmaster and LendingTree Inc had their Snowflake accounts breached as part of a hacking campaign beginning in May.
Snowflake has said its own systems weren’t infiltrated and has added features for customers to implement better security settings.
“We obviously had some rough headlines in the quarter,” Ramaswamy said of the customer breaches during a conference call after the results were released. “The issue wasn’t on the Snowflake side.”
Product revenue increased 30% to US$829mil in the quarter, compared with the US$813mil expected by analysts. Adjusted profit, excluding some items, was 18 US cents a share, just ahead of the average estimate of 16 US cents a share. — Bloomberg
