Snowflake Shares Surge on Strong Earnings and AI Momentum
The cloud data company beat Q2 revenue and profit estimates and raised its full-year forecast, signaling strong demand for its AI-powered services.
Shares of Snowflake (SNOW) jumped more than 12% in after-hours trading Wednesday after the cloud data giant reported fiscal second-quarter earnings and revenue that surpassed analyst expectations, fueled by what the company described as significant momentum in artificial intelligence.
The company posted non-GAAP earnings of $0.38 per share on revenue of $1.14 billion for the quarter ending July 31. Analysts had forecast earnings of $0.27 per share on $1.11 billion in revenue. The results represented a 31.8% year-over-year increase in revenue, a sign of robust demand for its data warehousing and analytics platform.
Product revenue, a closely watched metric, rose 32% from the prior year to $1.09 billion. Buoyed by the strong performance, Snowflake raised its full-year product revenue guidance to $4.395 billion, up from a previous forecast of $4.33 billion. For the upcoming third quarter, it projects product revenue between $1.125 billion and $1.13 billion.
"Thousands of customers are betting their business on Snowflake and more than 6,100 accounts are using Snowflake’s AI every week,” said CEO Sridhar Ramaswamy in a statement, highlighting the company's strategic focus. "We have an enormous opportunity ahead as we continue to empower every enterprise to achieve its full potential through data and AI.”
The strong results were welcomed by analysts, who noted the company's ability to maintain high growth while improving profitability. The firm's remaining performance obligations (RPO), a measure of future revenue under contract, increased 33% year-over-year to $6.9 billion, underscoring a solid pipeline.
Snowflake also reported a net revenue retention rate of 125%, indicating that existing customers are expanding their spending on the platform. The company ended the quarter with 654 customers generating more than $1 million in trailing 12-month product revenue, demonstrating its growing traction within large enterprises.