Snowflake Shocks Market with Next Quarter Guidance, AI Strategy in Focus

Despite surpassing expectations with its quarterly results, Snowflake’s (SNOW) stock price plummeted in after-hours trading on the day of the earnings announcement due to its next quarter guidance falling short of the consensus.

Snowflake’s revenue for the fourth quarter of fiscal year 2024 was $775 million, a 31.5% increase from the previous year, exceeding the consensus.

Product sales were $738 million, a 32.9% increase, outperforming both the consensus and the upper range of guidance, indicating positive results.

However, the product sales guidance for the first quarter of 2025 was set at $745-750 million, falling 1.5% short of the consensus of $759 million.

The non-GAAP operating margin was also disappointing at 3% compared to the consensus of 7.2%.

The initial guidance for 2025 was also weak, with product sales of $3.25 billion falling 5.2% short of the consensus of $3.43 billion.

Researcher Lee Young Jin from Samsung Securities analyzed, “The reason for the conservative guidance is based on the usage patterns of FY24 and not considering new product sales.”

The change in CEO also had a complex effect.

The new CEO is a former Google employee and founder of the AI-based search engine Neeva, which was acquired last year. He currently oversees Snowflake’s AI strategy.

While the company is focusing on AI, the changes within the company are not entirely welcoming events amidst the disappointing guidance.

Researcher Lee Young Jin advised, “Although the conservative guidance is disappointing, we need to wait for the visibility of the momentum of new products that can take advantage of the generative AI momentum.”

Snowflake offers optimized data curating and data quality control based on customer data.

Moreover, the increasing importance of external data can be addressed through data sharing, according to the analysis.

Researcher Lee added, “27% of customers are using data sharing,” and “As the momentum of various new products that can take advantage of the AI momentum becomes visible, we can expect additional growth in sales.”