Snowflake Acquires Neeva, Brings Generative AI Search Capabilities To Its Data Cloud
Snowflake reports 48 percent year-over-year Q1 revenue growth, but company sees signs of spending pullback amid economic uncertainty.
Data cloud giant Snowflake has acquired Neeva, a developer of AI-driven search technology that the company plans to infuse across Snowflake’s data cloud services.
Snowflake disclosed the acquisition in a blog post by Benoit Dageville, Snowflake co-founder and president of products, on Wednesday shortly before Snowflake announced its fiscal 2024 first quarter financial results.
News of the acquisition comes after Neeva, which offered an advertising-free and tracking-free search engine, said on May 20 that it would shut down as of June 2. The company was co-founded in 2019 by Sridhar Ramaswamy – who worked at Google for 16 years – and Vivek Raghunathan. The company had raised $77.5 million in funding, according to the Crunchbase website.
“Engaging with data through natural language is becoming popular with advancements in AI,” Snowflake CEO Frank Slootman said on the earnings call. The Neeva acquisition “will enable Snowflake users and application developers to build rich search-enabled and conversational experiences. We believe Neeva will increase our opportunity to allow non-technical users to extract value from their data.”
AI and machine learning models require huge volumes of data for training and operations – including the kind of proprietary data that businesses and organizations rely on the Snowflake platform to manage, Slootman noted.
“With AI right now, this is going to drive a whole other vector in terms of workload development,” the CEO said later during the call about the impact of generative AI on demand for Snowflake’s services.
“Snowflake is on a mission to extend its capabilities [to] bring computation to happen close to the data [and] it has evolved into an application platform,” Christian Kleinerman, senior vice president of product, said on the earnings call. “And a core use-case for applications is not only search and search-enabled experiences, but with the advent of generative AI is the notion of conversational experiences.”
The Neeva acquisition and its technology “helps us accelerate the efforts around Snowflake as a platform for search and conversational experiences” within Snowflake’s security perimeter to protect customers’ data, Kleinerman added.
Terms of the acquisition were not disclosed. About 40 Neeva employees will be joining Snowflake, CFO Mike Scarpelli said during the earnings call.
“Neeva created a unique and transformative search experience that leverages generative AI and other innovations to allow users to query and discover data in new ways,” Dageville said in his blog post. “We plan to infuse and leverage these innovations across the [Snowflake] Data Cloud to the benefit of our customers, partners and developers. Neeva allows us to tap into some of the most cutting-edge search technologies available to bring search and conversation in Snowflake to a new level.”
Signs Of Customer Spending Pullback
For the fiscal 2024 first quarter (ended April 30, 2023) Snowflake reported revenue of $623.6 million, up nearly 48 percent from $422.4 million in the first quarter of fiscal 2023. The company reported a net loss of $225.6 million compared to a $165.8 million loss one year before.
Slootman and Scarpelli said that Snowflake saw signs of pullback in customer spending in the quarter – especially in the last few weeks of April.
“We are…operating in an unsettled demand environment and we see this reflected in consumption patterns across the board,” Slootman said. “While enthusiasm for Snowflake is high, enterprises are preoccupied with costs in response to their own uncertainties.”
Scarpelli said some large customers are scrutinizing their data retention policies and deleting data they deem to be less valuable – in the process reducing their data storage and compute spending with Snowflake. He also said some customers “remain hesitant to sign large, multi-year deals.”
The CFO, nevertheless, said Snowflake expects to hire about 1,000 new employees during fiscal 2024, mainly in engineering and product development.