A banner for Snowflake is displayed on the day of its IPO on the New York Stock Exchange on September 16, 2020. It was the largest software IPO in history and was one of eight CNBC companies 2020 Disruptor 50 to go public, and more Disruptor offerings coming soon.
Brendan McDermid | Reuters
Shares of Snowflake plunged as much as 17% on Thursday after the company announced results on Wednesday that showed the slowest revenue growth since at least 2019.
Fourth-quarter sales rose 101% year-over-year to $383.8 million, a slowdown from the prior quarter, when revenue growth hit 110%, according to the Wednesday’s report. Still, it beat analysts’ earnings expectations of $372.6 million.
Snowflake guided product revenue growth of between 79% and 81% in the fiscal first quarter, slightly above consensus estimates of product revenue growth of 78%. In the fourth fiscal quarter, product sales increased 102%.
Product revenue represents a significant portion of Snowflake’s overall revenue. This reflects the use of its service to store and perform queries on a variety of data.
For fiscal year 2023, Snowflake forecast product revenue growth of 65% to 67%. Wall Street was expecting 66% growth, according to analysts polled by FactSet.
The forecast reflects headwinds from upcoming platform enhancements that “reduce customer query costs in the near term but aim to drive broader consumption in the longer term,” Piper Sandler analysts wrote in a statement. note to customers on Thursday.
Credit Suisse analysts said the platform improvements would be a near-term headwind, but pointed to other upgrades on the horizon, such as better workload planning, that could be positive catalysts for the company.
“Although the fourth quarter and forecast benefit was lower than investors expected 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 thanks in part to the aforementioned platform enhancements,” the analysts wrote.
— CNBC’s Jordan Novet contributed to this report.
LOOK: Snowflake down sharply after fourth quarter earnings report