SNOW STOCK: Snowflake shares decline on weak sales outlook amid CEO change

Shares in Snowflake (snow) after the software maker reported fourth-quarter earnings that beat Wall Street targets but SNOW stock's revenue guidance for fiscal 2025 fell well short of expectations. The company announced that its CEO, Frank Slootman, will retire.

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The enterprise software maker released Snowflake's earnings report after the market closed on Wednesday. said Snowflake, a former senior executive at… the alphabet's (Google) Google, Sridhar Ramaswamy, it would be New CEO. Snowflake will acquire AI startup Neeva, where Ramaswamy was CEO, in 2023.

Ramaswamy was senior vice president of artificial intelligence at Snowflake. Slootman will continue to serve as Chairman of the Board of Directors at Snowflake.

SNOW STOCK: 2029 fiscal target withdrawn

Snowflake has withdrawn its 2029 financial target of $10 billion in revenue.

“On reflection, we believe this model reset should be constructive for the stock over the long term,” Derek Wood, an analyst at TD Coin, said in a report. “We believe the CEO change was an opportunity to reset the bar, provide further upside levers to the model and adjust the long-term target given that consumption trends have not returned to pre-macroeconomic levels when first identified.”

On an adjusted basis, Snowflake's earnings were 35 cents, up 150% from the previous year. Analysts expect Snowflake to report adjusted earnings of 18 cents per share.

The enterprise software maker said revenue rose 32% to $774.7 million. Analysts expected fourth-quarter revenues to reach $760.9 million.

Snowflake Stock: 2025 Steering Light

For fiscal 2025, Snowflake expects product revenue to grow approximately 22% to $3.25 billion versus consensus estimates of 30% growth to $3.43 billion.

“For fiscal 2025, management expects growth of 22% (less than 30% of the consensus growth forecast), while the 6% margin was below the expected 9.5%,” Jason Adair, an analyst at William Blair, said in a report. “While a more conservative approach to forecasting consumption is partly responsible for this lower guidance, management has also indicated that it expects material growth headwinds from performance improvements to its platform (customers can make more inquiries for the same or lower price).”

On the stock market today, Snowflake stock fell 22.5% to 178.30 in early trading.

SNOW stock is up 15% in 2024 ahead of Snowflake's earnings report. Snowflake stock is up 54% over the past year.

Snowflake sells data analysis software that runs on cloud computing platforms. The company has also evolved into a cloud data management software provider.

Snowflake Stocks: Technical Evaluations

Since Snowflake's business model is consumption-based rather than subscription-based, investors have raised concerns about a slowing U.S. economy suppressing demand.

Furthermore, Snowflake gets about 95% of total sales from product revenue. This revenue comes from cloud data storage and analysis services. Snowflake also generates revenue from professional services, such as consulting and training.

SNOW stock carries a Relative Strength Rating of 94 out of a best possible 99, according to IBD inventory check.

Follow Reinhart Krauss on X, formerly known as Twitter, @reinhardtk_tech For updates on artificial intelligence, cybersecurity, and cloud computing.

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Futures decline as software giant declines