Snowflake Inc. beat analysts’ expectations on earnings and revenue in its third quarter and offered solid guidance too, but its stock plunged in extended trading after the results failed to meet the lofty bar of some investors.

The data management software giant reported earnings before certain costs such as stock compensation of 35 cents per share, while revenue jumped 29% from a year ago, to $1.21 billion. Wall Street had been looking for earnings of just 31 cents per share on sales of $1.18 billion.

Snowflake also reported product revenue of $1.16 billion in the quarter, surpassing the Street’s consensus estimate of $1.13 billion. It ended the quarter with a net loss of $291.6 million, improving from a year earlier, when it lost $327.9 million. Remaining performance obligations, which refers to contracted revenue that has not yet been realized, rose 37% from a year earlier to $7.88 billion, above the analyst forecast of $7.43 billion.

Chief Executive Sridhar Ramaswamy (pictured) said the company is increasingly becoming pivotal to its customers’ data and artificial intelligence strategies, and is also benefiting from its own AI offerings. “Snowflake Intelligence, our enterprise AI agent, saw the fastest adoption ramp in Snowflake history and is transforming how businesses interact with their data, delivering real-time, actionable intelligence,” he said.

Underscoring the health of its business, Snowflake gave out optimistic guidance for the current quarter. It said it’s aiming for fourth-quarter product revenue of between $1.195 billion and $1.2 billion, higher than the Street’s target of $1.18 billion. For the full year, it’s looking for $4.45 billion in product revenue. Analysts are forecasting just $4.41 billion in annual product revenue.

Snowflake’s numbers were seemingly encouraging, but Wall Street is getting harder to please amid the ongoing fears of an “AI bubble” and broader economic concerns. So it wasn’t all that surprising to see Snowflake’s stock plunge more than 8% in after-hours trading.

The problem for Snowflake is that some investors have set an exceptionally high bar for the company, and it didn’t quite meet those lofty expectations with its guidance, BNP Paribas analyst Stefan Slowinski told MarketWatch. He pointed out that the company’s product growth of 29% was slower than in the previous quarter, when it grew by 32%. Moreover, he said it only beat the Street’s consensus forecast by 2.7%, its smallest beat in over a year. “Investors might have been looking for more growth, especially following the strong results of consumption peers like MongoDB,” he said.

It’s also likely that some investors simply decided that, with growth slowing down a tad, now was the perfect time to take some profits. Even with today’s decline, Snowflake remains one of the best-performing technology stocks so far this year, up more than 71% so far, well ahead of the broader Nasdaq index, which has gained just 21%. The company has been growing fast because enterprises need somewhere to store, organize and secure their data for AI.

That suggests there are still plenty of investors willing to continue backing Snowflake, and many of those may have been encouraged to see the company’s latest announcement regarding AI. Alongside its results, the company said it’s expanding its partnership with Anthropic PBC with a new, multiyear agreement worth up to $200 million annually. As part of the deal, Anthropic will make its Claude family of large language models available in the Snowflake marketplace, expanding its potential reach to more than 12,600 enterprises globally.

Photo: Robert Hof/SiliconANGLE