Snowflake says Frank Slootman is retiring as CEO; stock plunges 20%

Snowflake said Wednesday that billionaire CEO Frank Slootman, who joined the cloud software company in 2019 and took it public the following year, is retiring and will be replaced by former Google ad chief Sridhar Ramaswamy. Shares of Snowflake plunged 24% in extended trading.

Slootman, 65, previously led software vendor ServiceNow into the public markets and before that led Data Domain. But Snowflake was his biggest endeavor and became the largest software IPO ever when it hit the New York Stock Exchange in 2020 and more than doubled in its debut. Slootman will remain chairman of the board.

Ramaswamy, 57, spent 15 years at Google, most recently leading the ads and commerce business until 2018. He then left to co-found Neeva in 2019, a consumer search engine he hoped to rival Google until last year, when he announced the company was shutting down its product. 

Snowflake acquired Neeva in June for $185 million, according to a filing.

“There is no better person than Sridhar to lead Snowflake into this next phase of growth and deliver on the opportunity ahead in AI and machine learning,” Slootman said in a statement. “He is a visionary technologist with a proven track record of running and scaling successful businesses.”

Snowflake also released fourth-quarter financial results. Sales increased 32% year-over-year to $774.7 million in the period. Product revenue for the fourth quarter was $738.1 million, a 33% increase from the previous year.

Operating losses for the fourth quarter were $275.5 million, up from $239.8 million during the fourth quarter of the previous year.

The company said product revenue in the first quarter will be between $745 million and $750 million, lower than the $759 million that analysts were expecting, according to StreetAccount. Additionally, Snowflake said its first-quarter adjusted operating margin would be 3%, topping analyst estimates of 7.2%.

Slootman’s total compensation in 2023 amounted to $23.7 million, almost entirely from stock and option awards. As of Feb. 9, Slootman owned 10.6 million Snowflake shares, according to a regulatory filing. At Wednesday’s close that stake would be worth about $2.4 billion.

Prior to Slootman’s arrival at Snowflake, the company was led by former Microsoft executive Bob Muglia, who built it up to a $4 billion valuation. Muglia was ousted suddenly in April 2019 and replaced by Slootman. The company had a market cap of $75 billion on Wednesday prior to the after-hours plunge.

This is breaking news. Please check back for updates.

— CNBC’s Jennifer Elias and Jordan Novet contributed to this report.