How did SNOW's Q1 2025 earnings surprise the market?

Snowflake Inc. (SNOW) delivered a revenue beat but fell short on the earnings front in its Q1 2025 earnings report, surprising the market in different ways: 1. **Revenue Surprise**: - Snowflake reported a total revenue of $986.77 million for Q1 2025, surpassing market expectations. - This marked a 30.85 million revenue surprise, indicating the company's performance exceeded forecasts by a notable margin. - The revenue growth was driven by increased consumption of the platform by existing customers, reflecting strong demand for Snowflake's cloud-based data solutions. |code|Ticker|Name|Date|Revenue Surprise|Total Revenue|market_code| |---|---|---|---|---|---|---| |SNOW|SNOW.N|Snowflake|2025 Q1|4.2839E7|8.28709E8|169| |SNOW|SNOW.N|Snowflake|2025 Q2|1.724E7|8.68823E8|169| |SNOW|SNOW.N|Snowflake|2025 Q3|4.28E7|9.42094E8|169| |SNOW|SNOW.N|Snowflake|2025 Q4|3.0845E7|9.8677E8|169| 2. **Earnings Surprise**: - In contrast to the revenue, Snowflake reported a net loss of $325.72 million for the quarter, missing expectations. - The diluted EPS came in at -$0.99, with an EPS surprise of $0.13, suggesting the actual EPS was better than anticipated but still negative. - Analysts had anticipated a more favorable earnings picture, with expectations of a revenue growth of 23.6% year-over-year to $957.5 million and adjusted earnings of $0.18 per share. |code|Ticker|Name|Date|EPS Surprise|Diluted EPS|market_code| |---|---|---|---|---|---|---| |SNOW|SNOW.N|Snowflake|2025 Q1|-0.04|-0.95|169| |SNOW|SNOW.N|Snowflake|2025 Q2|0.03|-0.95|169| |SNOW|SNOW.N|Snowflake|2025 Q3|0.05|-0.98|169| |SNOW|SNOW.N|Snowflake|2025 Q4|0.13|-0.99|169| |code|Ticker|Name|Date|Net Income|market_code| |---|---|---|---|---|---| |SNOW|SNOW.N|Snowflake|2025 Q1|-3.17816E8|169| |SNOW|SNOW.N|Snowflake|2025 Q2|-3.1777E8|169| |SNOW|SNOW.N|Snowflake|2025 Q3|-3.27902E8|169| |SNOW|SNOW.N|Snowflake|2025 Q4|-3.25724E8|169| 3. **Market Reaction and Analysts' Views**: - Despite the revenue beat, the earnings shortfall likely led to mixed market reactions, with concerns over profitability and the sustainability of revenue growth. - Analysts are revising their estimates, reflecting the need for further improvements in profitability to sustain the stock's high valuation. - The company's expansion into new product capabilities and features is impacting gross margins, which fell slightly to 67%. In conclusion, Snowflake's Q1 2025 earnings report revealed a company that continues to grow rapidly but faces challenges in translating revenue growth into net income. While the revenue surprise was positive, the earnings shortfall may lead to a reevaluation of the company's financial performance and long-term strategy.