By Angela Palumbo

Snowflake earnings are on deck, and while revenue is expected to increase, there are still broader risks ahead for the cloud-based data storage company.

Snowflake is scheduled to report fourth-quarter financials after the stock market closes on Wednesday. Analysts surveyed by FactSet expect the company to post earnings of 18 cents a share on revenue of $957 million.

Product revenue -- which is derived from Snowflake customers' consumption of compute, storage, and data transfer resources -- is expected to be $914 million.

In the same period last year, Snowflake posted earnings of 35 cents a share on revenue of $775 million. Product revenue was $738 million.

Shares of Snowflake have risen about 6% this year, but are down 30% over the last 12 months. A hefty valuation, CEO departure, and ongoing competition worried some investors.

The stock is still expensive, trading at 169 times earnings expected over the next 12 months. That could discourage investors from buying up shares. However Snowflake stock did see a major boost -- soaring 33% -- after the company posted better-than-expected third-quarter financials on Nov. 21 and raised its product-revenue expectations for the year.

Snowflake has benefited from enterprises that are willing to spend on artificial intelligence software to increase productivity. Chief Executive Sridhar Ramaswamy said on the last earnings call that "our AI feature family Snowflake Cortex is showing significant adoption."

Monness, Crespi, Hardt analyst Brian White wrote in a research note on Feb. 21 that Snowflake is "well positioned to benefit from recently introduced innovations and participate in long-term, secular tech trends."

White rates Snowflake as a Buy with a $188 price target. He added that even though the company could post strong results for the fourth quarter, "competition remains dynamic, software is in transition, the stock has enjoyed a sharp rally in recent months, and the macro environment is fragile."

Write to Angela Palumbo at angela.palumbo@dowjones.com

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February 26, 2025 01:30 ET (06:30 GMT)

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