Snowflake Inc (NYSE:SNOW) stock rose 5.68% (As on May 25, 11:57:11 AM UTC-4, Source: Google Finance) after the company issued weak guidance in its earnings report and said it will acquire search startup Neeva for an undisclosed amount. Snowflake posted a net loss of $225.6 million, or 70 cents per share, compared with a loss of $165.8 million, or 53 cents per share, during the year-earlier period. Separately, Snowflake also announced it plans to acquire Neeva, the privacy-focused search company co-founded by former Google executive Sridhar Ramaswamy. Benoit Dageville, Snowflake’s co-founder and president of products, wrote in a blog post that the company intends to “infuse and leverage” Neeva’s AI-equipped search products across its cloud services. Terms of the deal were not disclosed. The company now has 373 customers with trailing 12-month product revenue greater than $1 million and 590 Forbes Global 2000 customers. Net revenue retention rate was 151% as of April 30, 2023. Remaining performance obligations were $3.4 billion, representing 31% year-over-year growth. Non-GAAP adjusted free cash flow was $287 million for the quarter, up 58% year-over-year.
SNOW in the first quarter of FY 24 has reported the adjusted earnings per share of 15 cents, beating the analysts’ estimates for the adjusted earnings per share of 5 cents, according to Refinitiv. The company had reported the adjusted revenue growth of 48 percent to $624 million in the first quarter of FY 24, beating the analysts’ estimates for revenue of $608 million. However, the growth was lower than the 85% increase in the prior-year fiscal quarter. The bulk of Snowflake sales come from product revenue, which expanded 50% year over year to $590.1 million.
Meanwhile, the company is experiencing “tremendous gravitational pull” when it comes to generative AI, as the models train well on Snowflake’s “highly curated, highly optimized” data. The company CEO went so far as to say Snowflake is rapidly becoming an AI company as well as a data company.
Snowflake said it anticipates product revenue will be between $620 million and $625 million in the fiscal second quarter. That would represent year-over-year growth between 33% and 34%.That projection came in well below the StreetAccount estimate of $649 million.
For the 2024 fiscal year, Snowflake called for product revenue of $2.6 billion. The StreetAccount consensus was $2.7 billion.
Furthermore, the company announced Steve Burke’s appointment to its Board of Directors, effective immediately. Following the company’s annual meeting on July 5, John McMahon will step down from the Snowflake board after 10 years of service.