Shares in Snowflake plunged after the software maker reported fourth quarter earnings that beat Wall Street targets but revenue guidance for SNOW stock for fiscal 2025 came in well below expectations. The company announced its chief executive, Frank Slootman, will retire.
The enterprise software maker released its Snowflake earnings report after the market close on Wednesday. Snowflake said a former top executive at Alphabet's Google, Sridhar Ramaswamy, will be its new CEO. Snowflake acquired artificial intelligence startup Neeva, where Ramaswamy was CEO, in 2023.
Further, Ramaswamy had been senior vice president of artificial intelligence at Snowflake.
"Ramaswamy is likely to focus on accelerating Snowflake's AI offerings currently being built into the Snowpark development offering, which is likely to improve Snowflake's position in the emerging market over time," said Bank of America analyst Brad Sills in a report. "The good news is that Ramaswamy will focus on accelerating these capabilities in existing offerings such as the Snowpark, rather than starting over. Ramaswamy has an impressive background leading engineering-oriented cultures at Neeva and Google. We believe he will bring needed engineering rigor to an already strong sales culture at Snowflake."
Meanwhile, Slootman will continue to serve as chairman of the board at Snowflake.
SNOW Stock: Fiscal 2029 Target Withdrawn
In addition, Snowflake withdrew its fiscal 2029 target of $10 billion in revenue.
"Upon reflection, we think this model reset should be constructive for the stock in the longer run," said TD Cowen analyst Derrick Wood in a report. "We think the CEO change was a chance to reset the bar, provide more upside levers to the model and adjust the long-term target given consumption trends haven't returned to pre-macro levels when it was first established."
On an adjusted basis, Snowflake earnings were 35 cents, up 150% from a year earlier. Analysts expected Snowflake to report adjusted profit of 18 cents per share.
Revenue climbed 32% to $774.7 million, the enterprise software maker said. Analysts projected Q4 revenue of $760.9 million.
Snowflake Stock: 2025 Guidance Light
For fiscal 2025, Snowflake forecast product revenue growth of roughly 22% to $3.25 billion versus consensus estimates for 30% growth to $3.43 billion.
"For fiscal 2025, management is forecasting 22% growth (below 30% consensus growth expectations), while 6% margin was below the 9.5% consensus," said William Blair analyst Jason Ader in a report. "While a more conservative approach to forecasting consumption is partly responsible for this lower guidance, management also noted that it expects material growth headwinds from performance improvements to its platform (customers can perform more queries for the same or lower price)."
On the stock market today, Snowflake stock plunged 18.1% to close at 188.28.
SNOW stock had advanced 15% in 2024 heading into the Snowflake earnings report. Snowflake stock had gained 54% over the past year.
Snowflake sells data analytics software that runs on cloud-computing platforms. Also, the company has evolved into a cloud data-management software provider.
Snowflake Stock: Technical Ratings
Because Snowflake's business model is consumption-based rather than subscription-based, investors have raised concerns over a slowing U.S. economy curbing demand.
Further, Snowflake garners about 95% of total sales from product revenue. That's revenue that comes from cloud-based data analytical and storage services. Snowflake also generates revenue from professional services, such as consulting and training.
SNOW stock holds a Relative Strength Rating of 94 out of a best-possible 99, according to IBD Stock Checkup.
Follow Reinhardt Krause on X, formerly called Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
