Sridhar Ramaswamy, CEO of Snowflake and former co-founder and CEO of startup Neeva, speaks at the Collision conference in Toronto on June 21, 2022.
Eoin Noonan | Sports Archives | Collision | Getty Images
shares snowflake Shares fell 13% on Thursday after the data cloud analytics company reported second-quarter fiscal 2025 earnings that beat Wall Street expectations but showed product revenue growth slowed compared with past quarters. %.
Snowflake reported revenue of $869 million, above the $851 million expected by analysts polled by LSEG. The company reported product revenue of $829.3 million, which accounted for the majority of Snowflake's sales and was up 30% year over year. But that marked a slowdown from 34% annual growth in the fiscal first quarter.
The company's net loss widened to $317 million, or 95 cents a share, from $227 million, or 69 cents a share, a year earlier.
Morgan Stanley analysts said Snowflake's results were good “but probably not enough.” They said the company's smaller product revenue growth and slower growth won't inspire weary investors.
Analysts believe Snowflake's nascent artificial intelligence product portfolio will ultimately help deliver top-line outperformance. In the meantime, it will have to rely on its core data warehousing business.
“Product revenue grew 2% in the second quarter, down from 5% in the first quarter, and the annual product revenue growth rate further fell to 29.5%,” may “sow enough doubts in investor conversations to make Share prices are under pressure in the short term”. analysts wrote in a note Thursday.
Barclays analysts said Snowflake's second-quarter results “will not be a major catalyst for the company's investment case in any way.” They maintain their equal weight rating on the stock.
Analysts said investors are watching closely to see whether the company's product revenue takes a significant hit from cyberattacks and the CrowdStrike outage that occurred this quarter. They believe these potentially huge headwinds haven't materialized, which is a positive for the company.
“It is true that 30% year-over-year product growth is lower than the 33-34% we have seen over the past two quarters. However, while these results are concerning, we believe the 30% level and upward guidance are very respectable. , especially given lower valuations,” analysts wrote in a note on Wednesday.
—CNBC’s Michael Bloom contributed to this report.