Snowflake (SNOW 0.45%) stock is losing ground in Thursday's trading. The company's share price was down 5.8% as of 3 p.m. ET, according to data from S&P Global Market Intelligence.
NYSE: SNOW
Key Data Points
After the market closed on Wednesday, Snowflake published the results for the first quarter of its 2025 fiscal year, which ended April 30. While the company's sales came in ahead of the market's expectations, earnings for the period were lower than Wall Street had anticipated.
Snowflake's sales beat is overshadowed by earnings miss
Snowflake posted non-GAAP (generally accepted accounting principles) adjusted earnings per share of $0.14 on revenue of $828.71 million in fiscal Q1. Meanwhile, the average analyst estimate had called for the business to post adjusted per-share earnings of $0.17 on revenue of roughly $828.75 million.
The data-warehousing specialist's product revenue increased 34% to hit $789.6 million. Overall revenue for the period was up 32.9% compared to the prior-year period. The company closed out the period with 485 customers with trailing-12-month product revenue greater than $1 million -- up from the 461 customers that it had in the cohort in Q4 last year. Snowflake's net revenue retention rate also slipped to 128% -- down from 131% in the fourth quarter of fiscal 2024 and 151% in the first quarter of that year.
When will AI-driven demand accelerate?
As a leading provider of services that help organizations combine, sort, and analyze data, Snowflake looks poised to see some demand tailwinds related to the rise of artificial intelligence (AI). On the other hand, the company's share price is now down roughly 14% over the last year.
For the second quarter of its current fiscal year, Snowflake expects product revenue to come in between $805 million and $810 million. At the midpoint of that guidance range, that would mean delivering year-over-year growth of approximately 26.5%. The company expects to post an operating income margin of roughly 3%. While the company's forward guidance isn't bad by any stretch of the imagination, it looks like investors were looking for the business to see a bigger performance boost from AI.
