(Bloomberg) -- Snowflake Inc. dropped in extended trading after projecting its product revenue growth will slow in the current quarter and fiscal year.
Product sales, which make up more than 90% of Snowflake’s revenue, will be $195 million to $200 million in the period ending in April, the San Mateo, California-based company said Wednesday in a statement. That would be a growth rate of as much as 96% over the period a year earlier, the company said, slowing from a pace of 116% in the fourth quarter. Analysts, on average, estimated $194.8 million, according to data compiled by Bloomberg.
Snowflake projected annual product sales of as much as $1.02 billion, a growth rate of 84%, in line with analysts’ estimates. Shares dropped about 3% in extended trading.
Investors have soured on the company that debuted in September with the biggest U.S. IPO of 2020, fearing the maker of data-warehouse software for the cloud is overvalued. The stock jumped 134% through the end of 2020, but has declined 12% so far this year.
Snowflake’s software pulls information from multiple systems so clients can analyze it together in one place. The company competes against the cloud-computing divisions of Amazon.com Inc., Microsoft Corp. and Alphabet Inc., as well as open-source vendor Cloudera Inc. and database stalwart Oracle Corp. Snowflake has secured major deals with banks, including Capital One Financial Corp. and Goldman Sachs Group Inc.
“While competition has so far had minimal impact on Snowflake’s growth, we believe that may change as smaller peers such as Databricks and hyperscale vendors launch new offerings,” Mandeep Singh, an analyst at Bloomberg Intelligence, said in a note before the results were released.
In the fiscal fourth quarter, total revenue increased 117% to $190.5 million, compared with analysts’ estimates of $178.6 million. The company reported its net loss widened to $199 million, or 70 cents a share, from $83.3 million, or $1.67, a year earlier. Analysts, on average, projected a loss of 40 cents a share.
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