Snowflake shares fall after earnings as the company says macro issues affect some customer activity
Shares in Snowflake Inc. overturned in trading after opening hours on Wednesday after the software company delivered a forecast for the current quarter that came below expectations at the midpoint and acknowledged that some customers have consumed less than expected due to macroeconomic factors.
The company had a net tax loss of $ 166 million in the first quarter, or 53 cents per share. share, while recording a net loss of $ 203 million or 70 cents per share. share in the previous quarter. Analysts followed by FactSet had expected the company to lose 52 cents per share on a GAAP basis.
Revenue rose to $ 422 million from $ 229 million the year before, while analysts had expected $ 414 million. The company reported $ 394 million in product revenue, while analysts modeled $ 389 million.
The company noted that while some customers showed higher-than-expected consumption in the most recent quarter, others, such as consumer-oriented cloud companies, faced macroeconomic challenges affecting their consumption.
“While these customers are still growing, we believe that as long as they are affected by macroeconomic headwinds, their spending will be affected,” CFO Michael Scarpelli said at the earnings call.
For the second quarter of the financial year, Snowflake SNOW,
expects $ 435 million to $ 440 million in product revenue, which would represent a growth of 71% to 73% year-on-year. Analysts tracked by FactSet modeled $ 440 million.
The company also requires an adjusted operating loss margin of 2% in the second quarter of the financial year.
Scarpelli said the company’s forecast reflects trends among large customers who have seen macro-driven consumption impacts, though other customers “partially offset some of that.” He added that the first two weeks of May were “very strong”, but said “given everything in the macro headwind we hear, we will be a little more cautious throughout the year.”
For the full fiscal year, Snowflake expects product revenue of $ 1.885 billion to $ 1.900 billion.
Snowflake shares fell 14% in extended trading on Wednesday. They have fallen 51% over the past three months as the S&P 500 SPX,
has lost 9 per cent.