Snowflake's shares jumped 24% in after-hours trading on Wednesday after the cloud data platform reported quarterly results that exceeded analysts' expectations. Investors welcomed the rapid adoption of the company's AI-based services and a substantial upward revision to its full-year outlook.
Key financials
- Quarterly revenue: $1.55 billion, up 35% year-over-year and above the analyst consensus of $1.48 billion.
- Adjusted earnings per share (excluding one-time items): $0.62 versus the $0.45 expected by the market.
- Net loss: $191.7 million (loss per share $0.55), improved from $297.9 million and $0.89 per share a year earlier — the company remains unprofitable but showed significant improvement.
- Product revenue: $1.49 billion, a 37% increase.
For the next quarter, management expects product revenue between $1.588 billion and $1.593 billion, above the $1.50 billion analysts had forecast.
AI products and customer metrics
Snowflake said its new AI-enabled offerings are increasingly contributing to growth:
- The CoCo programming-assist service is used by more than 9,100 accounts, an increase of over 2,000 accounts in a single quarter.
- The CoWork solution is now present in 5,800 accounts.
- In the first half of the year the company made more than 330 new features generally available, a 35% increase year-over-year.
Customer additions were robust: the company added 692 new customers during the quarter, a 32% increase versus a year earlier. There are 828 customers that spent more than $1 million on Snowflake products in the past 12 months. Among the Forbes Global 2000 companies, 829 use the Snowflake platform.
Contract backlog and revenue visibility
Signed but unfulfilled contractual obligations increased 30% to $9 billion, an important indicator of future revenue potential. Net revenue retention was 126%, indicating existing customers on aggregate increased their spending.
Upgraded full-year guidance and profitability
Following the strong quarter, Snowflake raised its full-year product revenue guidance from $5.84 billion to $6.07 billion, implying 36% year-over-year growth versus the previously expected 31%. The company also raised its adjusted operating margin outlook from 13.5% to 14.5%, suggesting the faster growth is accompanying improving profitability.
Market reaction and summary
Before the earnings release, Snowflake shares were already up about 39% year-to-date, compared with roughly a 12% rise in the S&P 500. If the after-hours rally carries into regular trading, it would rank among the stock's largest single-day gains since its 2020 IPO.
Snowflake's results show that adoption of its AI offerings is translating into higher revenue, expanding customer relationships and a growing contract backlog, supporting the company's upgraded guidance.
This article does not constitute investment advice or a recommendation.
