Snowflake Inc (NYSE:SNOW) reported third quarter earnings that beat Wall Street expectations, but shares fell about 9% in early trade as the company forecast slower product revenue growth for the fourth quarter, partly due to discounts on large, long-term deals.
The cloud data analytics expects product revenue growth of 27% in Q4, down from 29% growth in the October quarter, reaching $1.16 billion.
For Q3, the company posted adjusted earnings of $0.39 per share, above the consensus estimate of $0.31.
Revenue rose 29% year over year to $1.21 billion, topping analyst expectations of $1.18 billion.
The company reported a net revenue retention rate of 125% and said it now has 688 customers generating more than $1 million in trailing 12-month product revenue, up 29% year over year.
Remaining performance obligations, a measure of future revenue, were $7.88 billion, a 37% increase, and Snowflake also noted that it serves 766 Forbes Global 2000 customers.
"Snowflake delivered another strong quarter, with product revenue of $1.16 billion, up 29% year-over-year, and remaining performance obligations totaling $7.88 billion, up 37% year-over-year,” Snowflake CEO Sridhar Ramaswamy said in a statement. “Snowflake is the cornerstone for our customers’ data and AI strategies, driving real business impact at scale."
Analysts at Wedbush described the quarter as “another robust performance,” noting that the company beat estimates on both the top and bottom lines while continuing to see strength in product revenue and remaining performance obligations.
They highlighted Snowflake’s AI adoption, including roughly 7,300 accounts now leveraging Snowflake AI and 1,200 customers using the new Agentic AI Snowflake Intelligence product, which they said is the fastest product ramp in company history.
Wedbush also noted the $200 million multi-year partnership extension with Anthropic and Snowflake’s progress across AWS Marketplace and Google/Gemini integrations.
The analysts wrote that although fourth-quarter product revenue guidance of $1.195 billion to $1.2 billion is above the Street’s estimate of $1.18 billion, it may be overshadowed by elevated expectations heading into the print.
They wrote that they “would be buyers on any weakness in shares,” repeating their ‘Outperform’ rating and $270 price target.
“Overall, we continue to believe that SNOW is well-positioned to be a key 2nd derivative in the AI Revolution as it will continue to benefit from the significant acceleration of use cases and a rapidly growing pipeline,” Wedbush concluded.
Shares of Snowflake traded hands at about $240 at Thursday’s market open.