Data cloud giant Snowflake (SNOW: NYE) is reportedly in discussions to acquire artificial intelligence (AI) startup Reka AI for more than $1 billion, according to Bloomberg. This move could significantly bolster Snowflake’s generative AI capabilities and broaden its product portfolio.
Expected Snowflake’s Q1 Earnings:
Investors will get a closer look at Snowflake’s financial performance when the company releases its Q1 Fiscal 2025 results on Wednesday, May 22nd. Analysts on Wall Street anticipate revenue of $786.82 million, reflecting a 26.2% year-over-year increase. However, this figure indicates a moderation in top-line growth compared to previous quarters due to a slowdown in product revenue.
Product Revenue Growth Slows Amid Macro Concerns:
Snowflake’s product revenue growth has witnessed a steady decline over the past few quarters. This trend is attributed to ongoing pressure on enterprise spending due to broader macroeconomic anxieties. For instance, product revenue growth reached 50% in Q1 of Fiscal 2024 but fell to 37% in Q2, 34% in Q3, and 33% in Q4. This slowdown has impacted Snowflake’s overall revenue growth.
Earnings Expected to Rise Despite Moderation:
Analysts also project earnings of $0.18 per share, representing a 20% year-over-year increase for Snowflake. While this signifies growth, it reflects a moderation in its earnings growth rate compared to previous quarters.
Muzzammil is a content writer at Stock Target Advisor. He has been writing stock news and analysis at Stock Target Advisor since 2023 and has worked in the financial domain in various roles since 2020. He has previously worked on an equity research firm that analyzed companies listed on the stock markets in the U.S. and Canada and performed fundamental and qualitative analyses of management strength, business strategy, and product/services forecast as indicated by major brokers covering the stock.
