NEW YORK, April 05, 2024 (GLOBE NEWSWIRE) -- The following Litigation Report is being issued by Levi & Korsinsky, LLP:
Snowflake Inc. Litigation Report
Case Introduction
Flannery v. Snowflake Inc., et al 5:24-cv-01234-PCP
On February 29, 2024, investors sued Snowflake Inc. (“Snowflake” or the “Company”) in United States District Court, Northern District of California.
Plaintiffs in the federal securities class action allege that they acquired Snowflake stock at artificially inflated prices between September 16, 2020 and March 2, 2022 (the “Class Period”). They are now seeking compensation for financial losses incurred upon public revelation of the Company’s alleged misconduct during that time.
Summary of the Allegations
Company Background
Snowflake (NYSE:SNOW) engages in the provision of a data cloud platform.
According to the Company, its platform serves as “a global network where thousands of organizations mobilize data with near-unlimited scale, concurrency, and performance.” The Company also says its platform facilitates “collaboration, cybersecurity, data engineering, data lake, data science, data warehousing, and unistore.”
Snowflake purportedly boasts more than 9,400 customers all over the world. The Company says these customers amass more than 4 billion daily data queries on its platform. The Company also says its customers can “find, try and buy ready-to-use data and applications” on the Snowflake Marketplace, which has more than 2,400 listings.
Summary of Facts
The Company and two of its senior officers (the “Individual Defendants”) are now accused of deceiving investors by lying and withholding important information about Snowflake’s business practices and prospects during the Class Period.
Specifically, they are accused of omitting truthful information about the Company’s growth and revenue from SEC filings and related material. By knowingly or recklessly doing so, they allegedly caused Snowflake stock to trade at artificially inflated prices during the time in question.
The truth came out after market hours on March 2, 2022. That’s when the Company “reported results for its fourth fiscal quarter ended January 31, 2022 and disappointing fiscal 2023 guidance.” Specifically, Snowflake revealed that product revenue growth rate for fiscal 2023 was projected to be slashed to a range of 65 to 67 percent.
On an ensuing earnings call held that same day, the Company’s CFO (an Individual Defendant) revealed that Snowflake customers were “consuming at a reduced rate,” which he blamed on “platform enhancements . . . which lowered credit consumption.” He also claimed that while “these efforts negatively impact our revenue in the near term, over time, they lead customers to deploy more workloads to Snowflake due to the improved economics.”
A closer look…
As alleged, the Company and/or Individual Defendants repeatedly made false and misleading public statements throughout the Class Period.
In a Prospectus filed with the SEC at the beginning of the Class Period, for instance, the Company stated in relevant part: “[p]roduct revenue increased primarily due to increased consumption of our platform by existing customers . . . as well as capacity sales price increases of approximately 12% year over year associated with better discipline over discounting.”
Then, in a December 2, 2020 press release, the Company’s CEO (an Individual Defendant) stated in relevant part: “[the quarter was] marked by continued strong revenue growth coupled with improving unit economics, cash flow, and operating efficiencies.”
During an earnings call held that same day, Snowflake’s CEO also stated in relevant part: “[c]oupled with this rapid growth, we continue to see improving unit economics, cash flow and operating efficiency.”
Next, in an August 25, 2021 press release, the Company’s CEO stated in pertinent part: “Snowflake saw continued momentum in Q2 with triple-digit growth in product revenue, reflecting strength in customer consumption.”
Lastly, on an earnings call held December 1, 2021, Snowflake’s CFO stated in relevant part: “Q3 was a breakout consumption and bookings quarter for us.”
Actions You May Take
If you have purchased the Company’s stock during the Class Period, you may join the class action as a lead plaintiff, remain a passive class member, or opt out of this litigation and pursue individual claims that may not be available to the class as a whole.
NOTE: The deadline to file for lead plaintiff in this class action is April 29, 2024. You must file an application to be appointed lead plaintiff prior to this deadline in order to be considered by the Court. Typically, the plaintiff or plaintiffs with the largest losses are appointed lead plaintiff.
In order to identify your potential exposure to the alleged fraud during the time in question, you may wish to perform an analysis of your transactions in Snowflake stock using court approved loss calculation methods.
CONTACT:
Levi & Korsinsky, LLP
Joseph E. Levi, Esq.
Ed Korsinsky, Esq.
33 Whitehall Street, 17th Floor
New York, NY 10004
jlevi@levikorsinsky.com
Tel: (212) 363-7500
Fax: (212) 363-7171
www.zlk.com
