Snowflake has announced it will acquire search specialist Neeva for an undisclosed amount.
“Search is fundamental to how businesses interact with data,” said Snowflake Co-founder Benoit Dageville in a blog post. “The ability for teams to discover precisely the right data point, data asset, or data insight is critical to maximizing the value of data. That’s why Snowflake is acquiring Neeva, a search company founded to make search even more intelligent at scale,” he wrote.
Dageville says Snowflake will infuse and leverage Neeva’s search capabilities across the Snowflake Data Cloud. “As part of the acquisition, we are joined by some of the brightest minds working in search today. Neeva’s leadership and team members have been instrumental in the creation of numerous successful products like Google’s search advertising and YouTube monetization,” said Dageville.
Neeva was founded in 2019 by Sridhar Ramaswamy and Vivek Raghunathan, former members of Google’s advertising technology team. The firm was founded with the intention to create a subscription-based search engine with privacy and results at the forefront, instead of ads, and the company previously raised $77.5 million to do so.
“We started Neeva with the mission to take search back to its users. Having worked on search and search ads for over a decade, we sincerely believed that there was space for a model of search that put user and not advertiser interests first—a private, ad-free experience,” the founders wrote in a blog post last week, adding that despite the company’s smaller size, it built a search stack from the ground up.
But in early 2022, the founders say the intensifying drumbeats of generative AI and LLMs led them to change course. They incorporated LLMs into the Neeva stack to create an answer engine that could provide cited, real-time answers to queries.
The company faced the strong headwind of low user adoption due to friction related to default search settings and search engine loyalty: “These headwinds, combined with the different economic environment, have made it clear that there is no longer a path towards creating a sustainable business in consumer search. As a result, over the next few weeks, we will be shutting down neeva.com and our consumer search product, and shifting to a new area of focus,” the founders wrote.
It appears this new area of focus has arrived for Neeva with Snowflake’s acquisition. Snowflake shares were down 12% yesterday after the company announced the acquisition and issued weak guidance on its earnings report. Though the company’s revenue grew 48% YoY in Q1 of fiscal year 2024, it was less than the 85% increase in the prior-year fiscal quarter. Additionally, Snowflake posted a net loss of $225.6 million, or 70 cents per share, compared with a loss of $165.8 million, or 53 cents per share, during the same period a year earlier.
Snowflake CEO Frank Slootman commented on the acquisition in a company earnings call: “Engaging with data through natural language is becoming popular with advancements in AI. This will enable Snowflake users and application developers to build rich search-enabled and conversational experiences, and we believe Neeva will increase our opportunity to allow non-technical users to extract value from their data, more broadly.”