Snowflake Inc. gave a product sales outlook for the current quarter that beat expectations, fueling hope that revenue has stabilized after the software maker experienced a dramatic slowdown in growth during the past year.
Product revenue will increase about 30% to as much as $721 million in the period ending in January, the company said Wednesday in a statement. Analysts, on average, estimated $702.2 million, according to data compiled by Bloomberg. Product sales make up the majority of Snowflake’s total revenue and are watched closely by investors.
Snowflake’s revenue expansion has slowed from quarterly gains of more than 80% over the last year as many companies began to scrutinize their spending on software. The company is particularly sensitive to changes in economic sentiment because it charges customers based on how much they use Snowflake’s data optimization products, rather than requiring multiyear subscriptions common among other software vendors.
The shares rose about 9% in extended trading after closing at $175.32 in New York. The stock has increased 22% this year, lagging behind the overall software industry as investors were concerned about the slipping sales growth.
