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.
