Snowflake, a data cloud analytics company, recently released its fiscal second-quarter 2025 earnings report. While the company’s revenue of $869 million exceeded analysts’ expectations, the stock price still fell by 13%. This drop was primarily due to the decelerating product revenue growth compared to previous quarters. Snowflake reported a 30% year-over-year increase in product revenue, which was a slowdown from the 34% growth in the fiscal first quarter.
In addition to the slower revenue growth, Snowflake also reported a widened net loss of $317 million, or a loss of 95 cents per share. This was a significant increase from the $227 million loss, or a loss of 69 cents per share, in the same period the previous year. The company’s increased losses could be a cause for concern for investors.
Analysts’ Perspectives
Although the earnings report exceeded expectations, analysts from Morgan Stanley expressed concerns about Snowflake’s performance. They believed that the smaller product revenue beat and deceleration in growth may not be enough to inspire investors. The analysts mentioned that Snowflake might need to rely on its core data warehousing business while waiting for its new generative artificial intelligence portfolio to contribute to overall performance.
Barclays analysts, on the other hand, maintained an equal weight rating on Snowflake’s stock following the earnings report. They considered the results to be neither a major positive nor negative catalyst for the company’s investment case. Investors were relieved that potential large headwinds from a cyberattack and the CrowdStrike outage did not have a significant impact on Snowflake’s product revenue. Despite the slower growth rate compared to previous quarters, the analysts still viewed the 30% year-over-year growth as respectable, especially given the company’s valuation.
Overall, Snowflake’s fiscal second-quarter 2025 earnings report presented a mixed picture. While the revenue beat was a positive sign, the deceleration in product revenue growth and widened net loss raised concerns among analysts and investors. Snowflake will need to address these challenges in order to regain investor confidence and sustain long-term growth.
Leave a Reply