Snowflake shares plunge 12% on guidance miss, acquisition of search startup Neeva

Shares of cloud data platform provider Snowflake slid more than 12% in extended trading on Wednesday after the company issued weak guidance in its earnings report and said it will acquire search startup Neeva for an undisclosed amount.

Here’s how the company did:

• Earnings per share: 15 cents, adjusted, vs. 5 cents expected by analysts, according to Refinitiv
• Revenue: $624 million vs. $608 million expected by analysts, according to Refinitiv

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The company’s revenue grew 48% year over year in the first quarter of fiscal 2024, but that growth was lower than the 85% increase in the prior-year fiscal quarter. The bulk of Snowflake sales come from product revenue, which expanded 50% year over year. Product revenue accounts for use of Snowflake’s software for storing and running queries on data stored in its system.

Snowflake said it anticipates product revenue will be between $620 million and $625 million in the fiscal second quarter. That would represent year-over-year growth between 33% and 34%.That projection came in well below the StreetAccount estimate of $649 million.

For the 2024 fiscal year, Snowflake called for product revenue of $2.6 billion. The StreetAccount consensus was $2.7 billion.

Snowflake posted a net loss of $225.6 million, or 70 cents per share, compared with a loss of $165.8 million, or 53 cents per share, during the year-earlier period.

Snowflake also announced it plans to acquire Neeva, the privacy-focused search company co-founded by former Google executive Sridhar Ramaswamy.

Benoit Dageville, Snowflake’s co-founder and president of products, wrote in a blog post that the company intends to “infuse and leverage” Neeva’s AI-equipped search products across its cloud services. Terms of the deal were not disclosed.

“Neeva allows us to tap into some of the most cutting-edge search technologies available to bring search and conversation in Snowflake to a new level,” Dageville wrote.

The acquisition comes days after Neeva, which was founded in 2019, said it would shut down its consumer search engine to focus on developing use cases for AI and large language models.

The company will hold its quarterly call with investors Wednesday at 5 p.m. ET.

Clarification: The year-over-year sales increase of 85% occurred in the first quarter of fiscal 2023. An earlier version misstated the time frame.

— CNBC’s Ashley Capoot contributed reporting to this article.