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Snowflake Drops on Wider-Than-Expected Net Loss

Snowflake topped analysts revenue estimates, but reported a much wider loss than expected.
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Shares of Snowflake Inc.  (SNOW) - Get SNOWFLAKE, INC. Report were falling Wednesday after the data-analytics software company reported mixed second quarter results.

The company reported a net loss of 64 cents per share on revenue of $272.2 million. Analysts polled by FactSet were expecting a net loss of 15 cents per share on revenue of $256.1 million. 

"While increasing net revenue retention rate to 169%, we also boosted gross margin and operating margin efficiency while our adjusted free cash flow was positive for the third quarter in a row," said CEO Frank Slootman in a statement.

The company said it expects third-quarter product revenue between $280 million and $285 million. For the full year, the company expects product revenue between $1.06 billion and $1.07 billion. 

For the third quarter, analysts are expecting product revenue of $272 million, according to ZDNet.

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The company expects a 7% operating loss margin for the third quarter and a 9% loss margin for the full year. 

Last week, analysts at Cleveland Research issued a cautious report, saying that Snowflake's signings growth slowed from the first quarter, while consumption growth was likely similar, at best, to first-quarter levels

The report also said that the company’s partners were seeing sales cycles elongate on increased competition from the hyperscalers, particularly Google’s  (GOOGL) - Get Alphabet Inc. Class A Report BigQuery cloud data warehouses.

Snowflake's shares took a hit in June when analysts reacted to the company’s long-term forecast of 10% operating margin and 30% product-sales growth.

Snowflake shares were down 2.8% to $275.84 in afterhours trading Wednesday following its earnings release.