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Snowflake’s stock plunges after earnings, with CEO switch a ‘massive surprise’

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Snowflake Inc.’s stock was tumbling more than 20% in Wednesday’s extended session as the company disappointed with its latest outlook and stunned Wall Street with the news that its chief executive had left that post.

Frank Slootman has retired from the CEO role “effective immediately,” though he will stay on Snowflake’s
SNOW,
-1.72%

board of directiors. Sridhar Ramaswamy, previously the company’s senior vice president of AI who joined Snowflake last May, is taking over the position.

The transition was a “massive surprise” that Wall Street “will need some time to digest,” Evercore ISI analyst Kirk Materne said in a note to clients.

Still, he said the “bigger fundamental question” for Snowflake concerned its projection for $3.25 billion in product revenue during fiscal 2025, up 22% from a year before. Analysts tracked by FactSet had been modeling $3.43 billion, and Snowflake grew 38% on the metric during its just-completed fiscal year.

Chief Financial Officer Mike Scarpelli said the outlook was conservative as it assumed similar consumption patterns to what was seen last fiscal year and didn’t factor in new products that are currently in public previews.

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Snowflake also underwhelmed with its forecast for the fiscal first quarter, modeling $745 million to $750 million in product revenue, whereas analysts tracked by FactSet had been calling for $759 million.

The company generated a fiscal fourth-quarter net loss of $169.9 million, or 51 cents a share, compared with a loss of $207.2 million, or 64 cents a share, in the year-before period.

On an adjusted basis, Snowflake earned 35 cents a share, whereas it earned 14 cents a share a year before. Analysts surveyed by FactSet were modeling 18 cents in adjusted earnings per share.

Snowflake’s revenue rose to $774 million from $589 million a year prior, while analysts had been looking for $760 million. The company generated $738 million in product revenue, whereas the FactSet consensus was for $716 million.

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“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 a release.

The company had $5.2 billion in remaining performance obligations, up 41% from a year before. Snowflake also called out that 461 customers were doing more than $1 million of trailing-12-month product revenue.

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