Snowflake shares are sharply lower in late trading Wednesday, after company provided guidance for the January 2024 fiscal year that fell short of Wall Street's expectations.
The softer outlook is consistent with the moderating growth posted by the cloud computing businesses at the industry leaders -- Amazon Web Services, Microsoft Azure and Google Cloud. While Snowflake (ticker: SNOW), the cloud-based data warehousing software provider, remains one of the software sector's fastest growers, the growth rate is decelerating, perhaps faster than some investors had hoped.
Snowflake shares are 7.44% lower late Wednesday, at $143.
For the January quarter, Snowflake posted overall revenue of $589 million, up 53% from a year ago, and ahead of the Wall Street consensus of $576 million. Product revenue was $555.3 million, up 54%, and above the company's target range of $535 million to $540 million.
Adjusted free cash flow was $215.3 million. Operating income was $32.8 million, for an operating margin of 6%, above the company's target of 1%. Remaining performance obligations were $3.7 billion, up 38% from a year ago.
For the full year, Snowflake posted revenue of $2.1 billion, up 69%. Product growth was $1.9 billion, up 70%.
For the April quarter, Snowflake sees product revenue of $568 million to $573 million, up between 44% and 45%, falling short of the consensus Wall Street estimate of $581 million.
For the January 2024 fiscal year, Snowflake sees product revenue of $2.7 billion, up 40%, falling shy of the Wall Street consensus of $2.83 billion, with 6% operating margins and 25% adjusted free cash flow margins.
The company also announced a $2 billion stock repurchase program.
"We are operating in a vast and growing market, prioritizing capabilities that support the core mission of the enterprise, and staying on track for our $10 billion product revenue goal in fiscal 2029," CEO Frank Slootman said in a statement.