Snowflake Misses Earnings and Operating Margin Guidance; Shares Drop

Snowflake (SNOW) shares declined Thursday after the cloud data storage provider missed profit estimates and lowered its operating margin guidance, even as sales jumped amid continued surging demand for artificial intelligence (AI) products.

The company reported fiscal 2025 first-quarter adjusted earnings per share (EPS) of 14 cents, less than analysts had been looking for. But revenue rose 33% year-over-year to $828.7 million, better than forecasts. Product revenue jumped 34% to $789.6 million, also more than expected.  

Snowflake’s net revenue retention rate—the percentage of revenue earned from existing customers at the beginning of a period after accounting for added revenue and churn—was 128%, down from 151% in the year-ago period.

Benefitting From Strong Interest in AI Products

Snowflake CEO Sridhar Ramaswamy, who took over the position in February, said Snowflake’s core business is strong, and that its AI offerings, which are now generally available, “are generating strong customer interest. They will help our customers deliver effective and efficient AI-powered experiences faster than ever.”

However, the company slashed its full-year operating income outlook in half, to 3% from 6%. It raised its estimate for product revenue to $3.3 billion from $3.25 billion previously.

More Collaboration With AI Chipmaker Nvidia Ahead

Ramaswamy said Wednesday that Snowflake would be collaborating further with AI chip giant Nvidia (NVDA), noting in an interview on CNBC that the two companies have worked together on a number of fronts, and “there’s a lot to come.” He added that Snowflake would be discussing AI and new products at its Data Cloud Summit conference next month.

Snowflake also said Wednesday that it had acquired the AI observability platform of TruEra, a technology company that tests AI large language model (LLM) applications. It said the deal “will help organizations drive AI quality and trustworthiness by evaluating, monitoring, and debugging models and apps across the full lifecycle, in both development and production.” Financial terms of the purchase weren’t disclosed.

Shares of Snowflake closed 5.4% lower at $154.58 Thursday, and have lost about 22% since the start of the year.