06:50 AM EDT, 05/23/2024 (MT Newswires) -- Snowflake's (SNOW) shares inclined early Thursday after recording fiscal first-quarter product revenue above its own expectations, prompting the cloud-based data platform company to nudge higher its full-year outlook for the key metric.

Product revenue is now set to be at $3.3 billion for fiscal 2025, reflecting annual growth of 24% the firm said late Wednesday. Snowflake previously projected product revenue, which comprises the majority of its overall revenue, of $3.25 billion or a year over year increase of 22%. The current consensus on Visible Alpha is for $3.33 billion for the fiscal year.

Shares of the company have fallen roughly 18% so far this year, but rebounded 4.3% in premarket activity.

"We continue to model revenue headwinds associated with the movement of data out of Snowflake and into Iceberg storage," Chief Financial Officer Michael Scarpelli said during a conference call, according to a Capital IQ transcript. "The negative impact is weighted to the back half of the year."

The company lowered its fiscal 2025 adjusted product gross profit margin guidance to 75% from the prior forecast of 76%, due to increased investments related to its artificial intelligence initiatives, according to Scarpelli. "We are operating in a rapidly evolving market, and we view these investments as key to unlocking additional revenue opportunities in the future," the CFO told analysts.

"We see the investment as appropriate given the commentary that we have heard from competitors making similar investments in the space to go after budgets earmarked for AI," Truist Securities said in an emailed client note. The brokerage has a buy rating on Snowflake's stock with a price target of $210.

For the three months through April, the firm's adjusted earnings ticked down to $0.14 from $0.15, missing the Capital IQ-polled consensus of $0.17. Overall revenue climbed 33% to $828.7 million, beating the Street's view for $785.9 million. Product revenue advanced 34% to $789.6 million, surpassing its own February issued-guidance of $745 million to $750 million.

The company saw robust growth in February and March, while gains moderated in April, Scarpelli said on the call. The net revenue retention rate was 128%, while remaining performance obligations, or RPO, jumped 46% on a yearly basis to $5 billion, according to the firm.

Snowflake anticipates product revenue to come in between $805 million and $810 million for the ongoing quarter, while Visible Alpha analysts are projecting $812 million. "Working through the second quarter and beyond, our priorities remain the same," Chief Executive Sridhar Ramaswamy said on the call.

Price: 170.31, Change: +6.97, Percent Change: +4.27