Snowflake shares surged 16.6 percent in the session following its fiscal second-quarter earnings report, driven by accelerated revenue growth and strong AI adoption. The stock is now up nearly 70 percent on the year.
The cloud data warehousing and analytics company reported revenue of $1.55 billion for the quarter ending July 31, exceeding the $1.48 billion analyst consensus. Product revenue, a core metric, jumped 37 percent year over year to $1.49 billion, marking its third consecutive quarter of acceleration.
Adjusted earnings per share reached $0.62, surpassing the $0.45 consensus estimate and rising from $0.35 a year ago. The company’s architecture separates data storage from computing resources, allowing customers to process data across various cloud computing providers.
Snowflake said artificial intelligence is a major growth catalyst. It positions its platform as a trusted foundation for enterprise agentic AI initiatives. The company is seeing rapid uptake of its AI coding agent CoCo and the agentic app CoWork.
The flexible model approach, which lets customers switch models and optimize costs, is a competitive advantage. The company said agentic AI remains in its early stages of development.
Snowflake showed strong expansion within its existing client base, maintaining a net revenue retention rate of 126 percent over the past 12 months. This rate, consistent with the prior quarter, indicates increased usage from existing customers after accounting for churn.
The company added 692 new customers during the quarter, including 14 companies from the Global 2000 list. This represents a 32 percent increase in net additions compared to the same period last year.
The firm now serves 828 customers who each spend more than $1 million annually on its services. This indicates expanding enterprise adoption of Snowflake's solutions.
Following the strong Q2 performance, Snowflake raised its full-year product revenue forecast to about $6.07 billion, an increase from its previous guidance of $5.84 billion. The revised outlook projects year-over-year growth of 36 percent.
The company also raised its full-year adjusted operating margin guidance to 14.5 percent from an earlier projection of 13.5 percent. For the fiscal third quarter, Snowflake anticipates product revenue to fall between $1.588 billion and $1.593 billion, translating to growth of 37 percent to 38 percent.
The company expects an adjusted operating margin of 15.5 percent for Q3. Snowflake holds a $9 billion backlog, reflecting future revenue commitments. Analysts at Zacks currently rate SNOW stock with a Rank #2 (Buy), citing accelerating AI adoption and enterprise momentum.
