Snowflake (NYSE: SNOW) shares fell 14% on Thursday morning after reporting fourth-quarter earnings on Wednesday that highlighted the slowest revenue growth since 2019. The results come as industry leaders expect cloud spending to keep rising.
The cloud computing-based data warehousing company reported earnings of USD0.12 per share, compared to the expected USD0.03 a share. Revenue amounted to USD383.77 Million, higher than analysts anticipated USD372.87 Million.
“Snowflake finished fiscal 2022 with record-breaking consumption and bookings results, including triple-digit product revenue growth,” said Frank Slootman, Chairman and CEO, Snowflake. “Remaining performance obligations were $2.6 billion, representing year-on-year growth of 99%. Our net revenue retention rate reached 178% driven by continued growth from our largest customers.”
The company now expects 65% to 67% product revenue growth within the 2023 fiscal year. Meanwhile Wall Street was anticipating growth of 66%, according to analysts reviewed by FactSet.
The forecast showcases how the upcoming platform improvements will “reduce customer query costs in the short-term but aim to stimulate broader consumption longer-term,” Piper Sandler analysts wrote in a note to clients on Thursday.
According to Credit Suisse analysts, the platform improvements will be a headwind, nevertheless, other upgrades, such as improved workload scheduling, are on the brink and could be a positive stimulant for the company.
“Although the upside to FQ4 and forward guidance was less than investors have come to expect from Snowflake, we continue to view Snowflake as a true pioneer in cloud-native data analytics and believe the company will play an increasingly important role across the entire data value chain — with increased workload applicability due in part to the aforementioned platform enhancements,” the analysts wrote.