Snowflake stock slides after earnings as company says macro issues are impacting some customer activity

Shares of Snowflake Inc. Negotiations fell out of schedule on Wednesday after the software company released a forecast for the current quarter that fell short of expectations by half and acknowledged that some customers have consumed less than expected. expected due to macroeconomic factors.

The company posted a net first-quarter tax loss of $ 166 million, or 53 cents a share, while a net loss of $ 203 million, or 70 cents a share, was recorded in the previous quarter. Analysts tracked by FactSet expected the company to lose 52 cents a share according to GAAP.

Revenue rose to $ 422 million from $ 229 million a year earlier, while analysts expected $ 414 million. The company reported $ 394 million in product revenue, while analysts were modeling $ 389 million.

The company noted that while some customers showed higher-than-expected consumption in the last quarter, others, such as consumer-oriented cloud companies, faced macroeconomic challenges that affected their consumption. .

“While these customers continue to grow, we believe that as long as they are affected by headwinds, their consumption will be affected,” Chief Financial Officer Michael Scarpelli said in the results call.

For the second fiscal quarter, Snowflake SNOW,
+ 2.42%
It expects $ 435 million to $ 440 million in product revenue, which is expected to grow year-on-year from 71% to 73%. Analysts tracked by FactSet were modeling $ 440 million.

The company also claims an adjusted operating margin of 2% during the second fiscal quarter.

Scarpelli said the company’s forecast reflects trends observed among large customers who have seen macro-driven consumer impacts, although other customers are “offsetting some of that”. He added that the first two weeks of May were “very strong”, but said that “given all the headwinds we are hearing, we will be a little more cautious throughout the year”.

For the entire fiscal year, Snowflake expects revenue of $ 1.885 billion to $ 1.9 billion.

Shares of Snowflake were down 13% in extended trading on Wednesday. They’ve fallen 51% in the last three months as the S&P 500 SPX,
+ 0.95%
has lost 9%.

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