Snowflake shares drop after earnings as the company says overall issues are affecting some customer activities
Snowflake Inc.’s shares fell. In after-hours trading on Wednesday after the software company provided a lower-than-expected mid-quarter forecast and acknowledged that some clients consumed less than expected due to macroeconomic factors.
The company reported a fiscal first-quarter net loss of $166 million, or 53 cents a share, while it posted a net loss of $203 million, or 70 cents a share, in the previous year’s first quarter. Analysts tracked by FactSet expected the company to lose 52 cents a share on a GAAP basis.
Revenue jumped to $422 million from $229 million a year earlier, while analysts had expected $414 million. The company reported $394 million in product revenue, while analysts were designing $389 million.
The company noted that while some customers showed greater consumption than expected in the last quarter, others, such as consumer-facing cloud companies, faced macroeconomic challenges that affected their consumption.
“Although these clients continue to grow, we believe that as long as they are affected by the macroeconomic headwind, their consumption will be affected,” Chief Financial Officer Michael Scarpelly said on the earnings call.
For the second quarter of the fiscal year, Snowflake SNOW,
It expects $435 million to $440 million in product revenue, which will account for growth of 71% to 73% year-over-year. The analysts tracked by FactSet were designing $440 million.
The company is also calling for an operating loss margin adjustment of 2% in the second quarter of the fiscal year.
Scarpelli said the company’s forecast mirrors trends observed among large customers who have seen macro-driven consumption effects, although other customers are “partially compensating for this.” He added that the first two weeks of May were “very strong” but said “given everything in the overall headwinds we’re hearing, we’re going to be a little more cautious going into the whole year.”
For the full fiscal year, Snowflake expects product revenue to be $1.885 billion to $1.900 billion.
Snowflake shares fell 14% in extended trading on Wednesday. They’re down 51% over the past three months as the S&P 500 SPX,
It lost 9%.