Snowflake (NYSE: SNOW) is getting crushed in early trading Thursday. The data warehousing specialist’s shares were down 19.9% as of 10:45 a.m. ET, according to data from S&P Global Market Intelligence.
Snowflake published results for the fourth quarter of its fiscal 2024 after the market closed Wednesday, and both sales and earnings crushed the market’s expectations. But the sales and earnings beats were overshadowed by other news. Snowflake also announced that Frank Slootman had retired from his role of CEO. Making matters worse, management issued underwhelming forward guidance.
Good surprises and bad surprises
For its fiscal Q4, which ended Jan. 31, the company posted non-GAAP (adjusted) earnings per share of $0.35 on sales of $774.6 million. The average analyst estimate had called for earnings per share of $0.18 on sales of roughly $460.2 million.
But in conjunction with its earnings release, the company announced that Slootman had retired from his position as CEO. Slootman had been CEO since 2019 and led Snowflake through its successful initial public offering and continued business expansion. He has been succeeded by Sridhar Ramaswamy, who was previously the company’s senior vice president of AI.
The management transition came as a shock to investors. Sudden changes at the CEO position are sometimes a bad omen, and can signal internal problems at a company or major strategic shakeups on the horizon. That may or may not be the case with Snowflake, but Wall Street clearly isn’t happy with the unexpected leadership shakeup.
Guiding for a growth deceleration
Management’s guidance was also troubling to investors. For its fiscal 2025 first quarter, Snowflake forecast product revenue would be between $745 million and $750 million. If the business hits the midpoint of that range, it will deliver growth of 26.5% year over year.
For comparison, the business grew its product revenue by 33% year over year in fiscal Q4 and 38% in fiscal 2024. The data-software specialist still expects to expand at a solid double-digit percentage clip, but its growth rate is slowing.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Snowflake. The Motley Fool has a disclosure policy.
Why Snowflake Stock Is Plummeting Today was originally published by The Motley Fool