Snowflake, a data cloud analytics company, managed to exceed Wall Street’s revenue estimates for the fiscal second quarter of 2025. However, the market reacted negatively to the news as shares dropped by 13%. While the $869 million revenue figure was higher than the expected $851 million, there was concern over decelerating product revenue growth. Product revenue, which drives most of Snowflake’s sales, increased by 30% year over year. This represents a slowdown from the 34% growth reported in the previous quarter.
In addition to the slower revenue growth, Snowflake’s net loss widened in the second quarter. The company reported a net loss of $317 million, or a loss of 95 cents per share, compared to $227 million, or a loss of 69 cents per share, in the same period the year before. The increase in net loss coupled with decelerating revenue growth raised concerns among investors.
Analysts from Morgan Stanley acknowledged that Snowflake’s results were good but might not have been sufficient to impress investors. They highlighted the company’s weaker-than-expected product revenue beat and the overall deceleration in growth. The analysts pointed out that Snowflake’s new generative artificial intelligence portfolio could help drive future growth. However, for the time being, Snowflake will have to rely on its core data warehousing business to maintain performance.
Market Response
Barclays analysts also weighed in on Snowflake’s second-quarter results, indicating that it would not be a significant catalyst for the company’s investment case. Despite concerns over potential headwinds from a cyberattack and a CrowdStrike outage during the quarter, Snowflake managed to weather these challenges. The 30% year-over-year product growth, although slower than in previous quarters, was viewed as respectable given the circumstances.
Snowflake’s second-quarter earnings report was a mixed bag. While the company exceeded revenue expectations, the deceleration in product revenue growth and widening net loss raised red flags for investors. Analysts are divided on the impact of these results, with some seeing potential for future growth through new product offerings, while others remain cautious. It remains to be seen how Snowflake will navigate these challenges and whether it can regain investor confidence in the future.
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