Snowflake Inc. (SNOW) saw its stock fall 11% despite reporting robust third-quarter results, as investor disappointment emerged over conservative revenue guidance for the upcoming quarter. The tech giant's Q3 performance underscored its continued momentum in cloud data warehousing, yet the market reacted sharply to forward-looking signals.
- Snowflake reported Q3 revenue of $1.02 billion, up 19% year-over-year.
- Annual Recurring Revenue (ARR) reached $4.8 billion in Q3 2025.
- Q4 revenue guidance: $1.01 billion to $1.02 billion, below analyst consensus of $1.05 billion.
- Stock declined 11% in after-hours trading following earnings release.
- Management cited macroeconomic pressures and reduced enterprise discretionary spending.
- Market reaction reflects growing concern over sustained growth in cloud infrastructure spending.
Snowflake (SNOW) reported fiscal Q3 2025 results that exceeded expectations, with revenue reaching $1.02 billion, a 19% year-over-year increase. Annual Recurring Revenue (ARR) climbed to $4.8 billion, reflecting strong customer retention and expansion. Despite these solid metrics, the company’s stock dropped 11% in after-hours trading, signaling a shift in market sentiment. The deceleration in investor confidence stemmed from Snowflake’s forward guidance, which projected Q4 revenue of $1.01 billion to $1.02 billion—below the consensus estimate of $1.05 billion. Management cited macroeconomic pressures, particularly in discretionary spending among enterprise clients, as a key factor affecting short-term growth. This cautious outlook contrasted with the strong execution seen in the current quarter, creating a disconnect that weighed on valuation. The market reaction highlights a broader trend in the tech sector, where strong execution is no longer sufficient without optimistic forward guidance. Analysts noted that the 11% sell-off reflects growing concern over slowing enterprise IT spend, particularly in non-essential cloud infrastructure projects. The decline also impacted related tech stocks, with Cloudflare (NET) and Datadog (DD) posting modest losses. Snowflake’s guidance implies a moderation in growth rate from the 20%+ pace seen in prior quarters, suggesting that the company may be entering a phase of stabilization after rapid expansion. Investors are now pricing in a more moderate growth trajectory, which may influence future capital allocation and M&A activity in the cloud data space.