Home Finance News Snowflake’s Earnings Outperform with 36% Revenue Growth

Snowflake’s Earnings Outperform with 36% Revenue Growth

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Snowflake’s Earnings Outperform with 36% Revenue Growth

Snowflake’s stock initially rose in aftermarket trading following the announcement of its second-quarter earnings, which exceeded analyst expectations. However, the stock gave back those gains in early trading the next day. The company reported adjusted earnings of 22 cents per share and revenue of $674 million for the quarter, a 36% increase compared to the same period last year. While Snowflake reiterated its sales outlook for the rest of fiscal 2024, which fell short of analyst expectations, the company remains optimistic about benefiting from the growing interest in AI and machine learning.

Snowflake has partnered with Nvidia to develop custom large language models for AI, allowing businesses to use their data in the Snowflake Data Cloud. Despite signs of improvement in the cloud computing market, Snowflake’s management noted that customers are monitoring software costs, and larger customers could present a growth headwind. The company derives most of its revenue from charging based on overall consumption rather than a subscription basis. While Snowflake’s stock experienced a 2% increase in the regular trading session and an overall 8% gain for the year, it has declined by 12.5% this quarter.

In conclusion, Snowflake’s second-quarter earnings exceeded expectations, leading to an initial rise in its stock, but the gains were subsequently lost in early trading. The company remains optimistic about its potential to benefit from the AI boom and its partnership with Nvidia. However, Snowflake’s largest customers may continue to impact its growth, and the company is closely monitoring software costs. Despite the recent decline in its stock, Snowflake has experienced overall gains for the year.

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