Snowflake (SNOW) Stock: Third Quarter Earnings Beat Estimates But Shares Fall 8%

TLDR

• Snowflake reported third-quarter earnings of 35 cents per share on revenue of $1.21 billion, beating analyst estimates of 31 cents and $1.18 billion respectively.
• Remaining performance obligations rose 37% year-over-year to $7.88 billion, exceeding Wall Street expectations of $7.43 billion.
• The company announced a multiyear $200 million partnership with Anthropic to integrate Claude AI models into its platform for over 12,600 customers.
• Fourth-quarter product revenue guidance of $1.195 billion to $1.2 billion beat estimates but fell short of investor expectations for growth above 30%.
• Snowflake stock fell 8-9% in after-hours trading despite the earnings beat, with shares already up 72% year-to-date.

Snowflake posted better-than-expected third-quarter results late Wednesday. But the stock fell hard in after-hours trading anyway.

The cloud data analytics company reported adjusted earnings of 35 cents per share. That beat the 31 cents analysts were expecting.

Revenue hit $1.21 billion for the quarter. Wall Street was looking for $1.18 billion.  Product revenue specifically came in at $1.16 billion. Estimates were $1.13 billion.

Snowflake Inc., SNOW

The company’s remaining performance obligations jumped 37% from last year to $7.88 billion. This metric shows future contracted revenue that hasn’t been recognized yet. Analysts expected $7.43 billion.

CEO Sridhar Ramaswamy said the company serves as the cornerstone for customers’ data and AI strategies. He emphasized that Snowflake drives real business impact at scale.

Partnership Push with Anthropic

Along with the earnings report, Snowflake announced a major AI partnership. The company struck a multiyear $200 million deal with Anthropic.

The agreement brings Anthropic’s Claude AI models to Snowflake’s platform. More than 12,600 global customers will have access.

Anthropic just launched Claude Opus 4.5 on November 24. It’s the company’s latest and best performing AI model.

Snowflake also deepened ties with Accenture. The partnership aims to help businesses scale generative AI innovation.

The company surpassed $2 billion in sales on the AWS Marketplace this year. New integrations with Amazon Web Services were unveiled as part of the expansion.

Snowflake is working with Google’s Gemini AI too. The goal is to embed large language models directly into its tools. This lets customers build and run AI applications on Snowflake-managed data.

The Problem with Guidance

Despite the solid quarter, investors weren’t happy with what’s coming next. Snowflake expects fourth-quarter product revenue between $1.195 billion and $1.2 billion.

That’s above analyst estimates of $1.18 billion. But it represents only 27% growth.

The stock had already climbed 72% this year heading into the report. Investors were pricing in stronger growth numbers.

For the full year, Snowflake expects product revenue of $4.45 billion. That’s also above analyst estimates of $4.41 billion.

Shares closed up 2.1% on Wednesday at $171.81. After the earnings release, the stock dropped between 8% and 9.3% in extended trading.

The company’s Bozeman, Montana headquarters oversees operations as businesses accelerate their generative AI strategies. Companies are using large language models for analytics, automation and customer engagement. This creates demand for AI-enabled cloud services.

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