Snowflake shares jumped 19% in after-hours trading on Wednesday after the data analytics software company reported fiscal third-quarter earnings that exceeded analysts’ expectations.
Earnings and Revenue Performance
For the quarter ending October 31, Snowflake Shares reported adjusted earnings per share of 20 cents, surpassing analysts’ expectations of 15 cents. Revenue for the quarter came in at $942 million, well above the $897 million anticipated by analysts. This represented a 28% year-over-year growth in revenue.
Despite the revenue increase, the company reported a widened net loss of $324.3 million, or 98 cents per share, compared to a loss of $214.3 million, or 65 cents per share, in the same period last year. Product revenue accounted for approximately 96% of total sales.
Upgraded Guidance for Fiscal 2025
Snowflake updated its fiscal 2025 guidance, projecting $3.43 billion in product revenue, which implies a 29% growth rate. This marks an increase from the $3.36 billion forecast provided three months ago. Additionally, the company revised its adjusted operating margin forecast to 5%, up from the previous guidance of 3% issued in August.
Focus on Efficiency
Snowflake’s CEO, Sridhar Ramaswamy, emphasized the company’s efforts to improve operational efficiency. He highlighted initiatives such as creating centralized teams and reducing redundant management layers to streamline decision-making processes.
The company is not planning significant layoffs, according to Chief Financial Officer Mike Scarpelli, but continues to focus on cost-saving measures to enhance overall efficiency.
Customer Growth and Federal Opportunities
Snowflake Shares added 369 customers during the quarter, bringing its total customer count to 10,618 as of the end of October. Analysts had projected 10,601 customers for the quarter.
Scarpelli also pointed to potential growth in the federal sector, noting opportunities for expansion in this space over the next few years. In September, Snowflake acquired Night Shift Development, a company focused on the public sector in the United States, to bolster its presence in government markets.
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Key Partnerships and Acquisitions
Snowflake announced a multiyear partnership with Anthropic, an artificial intelligence startup backed by Amazon and a competitor to OpenAI. The collaboration highlights Snowflake’s growing focus on integrating AI capabilities.
The company also revealed its acquisition of Datavolo, a startup, for an undisclosed amount. This acquisition aims to further enhance Snowflake’s offerings in data analytics and cloud technology.
Cloud Partnerships Drive Growth
Snowflake shares continues to compete with cloud providers like Amazon and Microsoft, which also serve as key partners by supplying the company with essential computing resources.
Ramaswamy stated that Snowflake’s collaboration with Amazon Web Services (AWS) has generated over $3.9 billion in bookings over the past four quarters, underscoring the importance of strategic partnerships in driving growth.
Stock Performance
Snowflake’s stock has struggled throughout 2024, down 35% year-to-date as of Wednesday’s close. In comparison, the S&P 500 index has risen by 24% during the same period. However, the strong third-quarter performance and improved guidance have provided a much-needed boost to investor confidence, as reflected in the after-hours trading surge.
Snowflake’s robust results and strategic initiatives position it for continued growth, with a renewed focus on efficiency and expansion into new markets such as the federal sector and AI partnerships.
