Snowflake Inc. (SNOW) just gave investors a lot to be happy about. The AI data cloud company reported its fiscal second-quarter results Wednesday after the bell, and the numbers were strong enough to send shares flying nearly 23% higher in after-hours trading.
Here's the rundown: Revenue came in at $1.55 billion, comfortably above the $1.48 billion analysts were looking for. Adjusted earnings were 62 cents per share, blowing past the 45-cent consensus. That's a classic double beat, and the market responded accordingly.
But the headline numbers only tell part of the story. Dig a little deeper and you see why investors are so excited. Total revenue grew 35% year-over-year, with product revenue up 37% to $1.49 billion. The net revenue retention rate held steady at 126%, meaning existing customers are spending more, not less. And remaining performance obligations, a key forward-looking metric, hit $9 billion, up 30% from a year ago.
Snowflake also said it ended the quarter with 828 customers generating more than $1 million in trailing 12-month product revenue, a 27% increase year-over-year. The company's balance sheet looks solid too, with about $1.71 billion in cash and cash equivalents plus $637.51 million in short-term investments.
CEO Sridhar Ramaswamy was quick to credit artificial intelligence for the momentum. "AI continues to compound our advantages, creating a flywheel effect across the business," he said in a statement. "CoWork and CoCo are driving transformational outcomes for our customers, while fueling rapid adoption, user growth, new workloads, and overall platform consumption."
Looking ahead, Snowflake expects third-quarter product revenue between $1.588 billion and $1.593 billion, which would represent roughly 37.5% growth year-over-year. The company also raised its full-year adjusted operating margin guidance to 14.5%, up from the previous 13.5%, and sees a 15.5% margin for the third quarter.
That margin expansion is a big deal. It suggests Snowflake isn't just growing fast; it's growing profitably, which is exactly what investors want to see from a high-flying tech name in this environment.
Management was scheduled to discuss the quarter in more detail on an earnings call at 5 p.m. ET, and you can bet analysts will be digging into the AI story and what it means for the rest of the year.
As for the stock, Snowflake shares were up 22.78% in after-hours trading Wednesday, changing hands at $375.50 at publication time. That's a massive move for a company of this size, and it reflects just how much optimism there is around the AI-driven growth story.
Of course, with great expectations come great risks. Snowflake's valuation is already rich, and any stumble in execution could lead to a sharp pullback. But for now, the market is betting that the AI flywheel keeps spinning.
