Snowflake jumps 23% as AI-fueled guidance raise tops estimates

Snowflake reported fiscal Q2 revenue of $1.55 billion, up 35 percent and above the $1.48 billion consensus, sending shares up 23 percent to $377.11.

"AI continues to compound our advantages, creating a flywheel effect across the business," Chief Executive Officer Sridhar Ramaswamy said. "CoWork and CoCo are driving transformational outcomes for our customers, while fueling rapid adoption, user growth, new workloads, and overall platform consumption."

Product revenue rose 37 percent year-over-year to $1.49 billion, while non-GAAP operating income reached $237 million, ahead of the $187 million estimate. Non-GAAP product gross margin was 75 percent. Free cash flow totaled $83.8 million, below the $104 million analysts had forecast.

Snowflake raised its fiscal 2027 product revenue forecast to $6.07 billion from $5.84 billion, implying 36 percent growth, and lifted its non-GAAP operating margin outlook to 14.5 percent from 13.5 percent. The 23 percent jump to $377.11 lifted Oracle 3 percent and pushed Cloudflare higher, as investors read the beat as evidence AI-cloud demand is broadening.

Adjusted EPS of $0.62 topped the $0.45 estimate. On a GAAP basis, net loss narrowed to $192 million from $298 million a year earlier, with loss per share dropping to $0.55 from $0.89.

Net revenue retention held at 126 percent, while remaining performance obligations reached $9.0 billion, up 30 percent year-over-year. Customers generating more than $1 million in trailing 12-month product revenue rose 27 percent to 828.

The AI coding agent Cortex Code, or CoCo, now counts more than 9,100 accounts after adding over 2,000 in the quarter, while CoWork, built for enterprise data analytics, reached 5,800 accounts. A five-year, $6 billion agreement with Amazon Web Services helps Snowflake lock in compute pricing, though higher AI usage still pressed adjusted product gross margin to 74.7 percent from 75.8 percent a year earlier.

For the third quarter, Snowflake guided to product revenue of $1.588 billion to $1.593 billion, growth of 37 percent to 38 percent, with a non-GAAP operating margin of 15.5 percent.

The guidance raise signals management expects AI workloads to keep driving platform consumption through the second half. Investors will watch whether Snowflake can close above $383.46 on volume, a level that would open a path toward $400.

This article is for informational purposes only and does not constitute investment advice.