Snowflake Inc. (NYSE:SNOW) shares jumped roughly 14% in early trading Thursday after the cloud data platform provider reported second-quarter results that surpassed analyst expectations and increased its full-year product revenue outlook.
The company posted $1.14 billion in quarterly revenue, beating the consensus estimate of $1.09 billion and reflecting a 32% year-over-year increase. Product revenue, which makes up the bulk of Snowflake’s business, reached $1.09 billion—also a 32% rise from the same period last year and ahead of the $1.04 billion forecast.
Net new product revenue hit $94 million, climbing more than 130% from the prior year and 75% compared to the first quarter. Adjusted earnings per share came in at $0.38, surpassing the analyst estimate of $0.27 and more than doubling from $0.18 in Q2 2024.
Following the strong performance, Snowflake raised its fiscal 2026 product revenue forecast to $4.40 billion, up from its prior guidance of $4.33 billion and exceeding the analyst consensus of $4.34 billion. The company also revised its adjusted operating margin outlook upward to 9% from 8%.
“FY26 guidance was raised to 27% growth, though implied second-half (2H) growth (25%) remains below 1H’s 29% suggesting conservatism despite expected AI tailwinds,” Jefferies analysts said in a note.
The brokerage reiterated Snowflake as its top pick “given accelerating AI adoption layered on a robust core data platform.”
For the third quarter, the company expects product revenue of $1.13 billion, slightly above the $1.12 billion analyst consensus. Snowflake’s net revenue retention was 125%, a slight dip from 127% a year earlier but still above the 124% estimate. Remaining performance obligations, a measure of future contracted revenue, reached $6.9 billion, a 33% increase from the prior year and above the $6.78 billion consensus.
Professional services and other revenue grew 38% year-over-year to $54.5 million, exceeding analyst expectations of $46 million.
While AI revenue remains modest, adoption is accelerating, KeyBanc Capital Markets analysts noted. Management reported that 6,100 customers are now using AI and machine learning features, up from 5,200 in the prior quarter. They added that AI influenced roughly half of new customer wins in Q2, and about a quarter of deployed use cases included an AI component.
“We continue to see Snowflake benefiting its data gravity, a strong pace of product innovation – expanding beyond core data warehouse, and enterprise’s focus on a combined data and AI strategy,” KeyBanc analysts said, raising their price target on the stock to $275 from $250.
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