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TMN - Snowflake Inc.

Snowflake Inc. stocks sink on slowing growth

Share of Snowflakes Inc. significantly plunged on Wednesday’s after-hours after the company projected the slowest revenue growth since 2019.

The cloud computing-based company slashed 22.27% or 58.94 points to $205.75 per share. It slightly rose 0.57% or 1.50 points to $264.69 per share in regular trading.

Notably, this movement caused a drop of $17.88 billion in its market capitalization.

In a statement, Snowflake Inc. forecasted a product revenue of $1.90 billion for the current fiscal year.

This figure is in line with the market estimates, and it represents a 67.00% increase from a year earlier.

However, the projection, which makes up 95.00% of total sales,  mirrored an extensive decline in the company’s revenue growth.

The software company has doubled its year-over-year performance in the past six quarters.

Accordingly, it explained that the company exerted efforts to improve data storage and analysis products.

This move will let customers get the same result by spending less but will hurt the short-term revenue. Still, this decision will attract more clients in the long run.

Snowflake Inc. obtains revenue when customers store data and run queries on its platform. It differs from other software vendors that charge a monthly subscription fee.

This consumption model causes early users to have more enormous bills than anticipated.

In line with this, the business worked to improve the efficiency of its service by decreasing costs for customers.

Consequently, the product enhancement will result in a $97.00 million hit in the year ahead.

For the fiscal first quarter, Snowflake Inc. expected 79.00% to 81.00% product revenue growth.

The projection outpaced the analysts’ expectation of 78.00%, but slower from the 116% growth last quarter.

The company’s slower outlook also reflected the rising competition in the data storage and analytics sector.

Snowflake Inc. reports upbeat fourth quarter

Meanwhile, Snowflake Inc.’s fiscal fourth-quarter revenue significantly rose 101.00% year-over-year to $383.80 million.

Subsequently, the figure surpassed the market consensus of $372.60 million.

The firm’s net loss narrowed to $132.10 million or $0.43 per share. The data came in lower than the previous $198.90 million or $0.70 a year earlier.

Moreover, its adjusted gross margin posted at 70.00%, below the anticipated 70.90%. Still, the metric edged up 62.00% compared to the last two years.

Then, Snowflake Inc. also announced its acquisition of data start-up Streamlit in a stock-and-cash deal for $800.00 million.

Company executives said that the agreement would push to add features on its platform, attracting more data scientists.

Before the post-trading move, Snowflake Inc. has skidded 21.00% since the start of 2022. It underperformed the S&P 500 with an 8.00% decline over the same period.

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