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Key Takeaways
- Snowflake shares fell more than 20% in after-hours trading after the company named a new chief executive officer and issued revenue guidance that fell short of Wall Street expectations.
- The cloud data company appointed former Google executive Sridhar Ramaswamy to replace Frank Slootman as CEO.
- The company’s fiscal 2024 fourth-quarter product revenue rose 33% to $738.1 million, and its net loss narrowed to $169.9 million, beating analysts’ estimates.
- The forecast for 22% growth in product revenue in the current fiscal year, however, is well below what analysts are expecting.
Snowflake (SNOW) shares plunged more than 20% during after-hours trading on Wednesday after the company named Sridhar Ramaswamy as chief executive officer (CEO), replacing Frank Slootman, and issued earnings guidance that fell short of Wall Street expectations.
Ramaswamy was previously the cloud data company’s senior vice president of AI, joining the team in 2023 after Snowflake acquired Neeva, an AI-powered search engine that Ramsaswa co-founded. Prior to joining Snowflake, Ramaswamy led Alphabet’s (GOOGL) Google advertising products for 15 years.
Slootman retired from his position as CEO, but will remain chairman of the board, Snowflake said. “There is no better person than Sridhar to lead Snowflake into this next phase of growth and deliver on the opportunity ahead in AI and machine learning,” Slootman said.
“We have an enormous opportunity ahead to help all customers leverage AI to deliver massive business value,” Ramaswamy said, adding that his “focus will be on accelerating our ability to bring innovation to our customers and partners.”
The announcement of the CEO change coincided with the release of Snowflake’s fiscal 2024 fourth-quarter earnings report. The company said product revenue in the quarter ending Jan. 31 rose 33% to $738.1 million, which topped analysts’ consensus view. The company recorded a net loss of $169.9 million, which was narrower than the $207.5 million loss a year earlier and also better than Wall Street anticipated.
However, the company’s forecast of product revenue for the current fiscal year of $3.25 billion, which would represent a 22% increase over fiscal 2024, fell well short of expectations. Product revenue grew 38% in fiscal 2024.
“We are successfully campaigning the largest enterprises globally, as more companies and institutions make Snowflake’s Data Cloud the platform of their AI and data strategy,” Slootman said in the earnings press release.
Snowflake shares fell were down 21% at $181.00 at around 5:45 p.m. ET.