Despite a fiercely competitive enterprise software market, and a massive pivot to artificial intelligence (AI)-powered work, Snowflake's (NYSE: SNOW) reputation as a high-growth business has been durable. The data platform exceeded expectations for the first quarter of fiscal 2025 (the three months ended in April 2024), with product revenue increasing 34% year over year (guidance was for just 26% to 27% growth). Management also raised guidance for the full fiscal year, with product revenue now expected to be up 24% (from 22%).
Nevertheless, there were reasons for caution in this last report. The cost of software business growth is rising during this new AI arms race, with most of the financial benefits flowing to Nvidia right now. I was cautiously optimistic about finally nibbling on Snowflake three months ago. But I'm quickly changing my mind.
Snowflake's most recent quarterly revenue beat and raise to its full-year guidance were good indicators that the software market has indeed stabilized from a big slowdown in 2023. Granted, Snowflake's expected product growth rate of 24% for this current year is still a slowdown from 38% last year. But that's to be expected for a company now hauling in well over $3 billion in annualized sales.
Source Fool.com