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Investing.com -- Snowflake stock soared about 14% following the market open on Thursday after the cloud data platform company reported better-than-expected second-quarter results and raised its full-year product revenue guidance.
The company posted revenue of $1.14 billion for the quarter, surpassing the analyst consensus estimate of $1.09 billion and representing a 32% increase YoY. Product revenue, which forms the core of Snowflake’s business, came in at $1.09 billion, also up 32% from the same period last year and ahead of the $1.04 billion estimate.
Net new product revenue came in at $94M, up more than 130% year-over-year and 75% quarter-over-quarter.
Snowflake reported adjusted earnings per share of $0.38, significantly beating the analyst estimate of $0.27 and more than doubling from $0.18 in the year-ago quarter.
Following the strong results, the company raised its fiscal 2026 (FY26) product revenue forecast to $4.40 billion from its previous guidance of $4.33 billion, exceeding the average analyst estimate of $4.34 billion. Snowflake also improved its adjusted operating margin outlook to 9% from 8% previously.
"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 broker maintained Snowflake as its top pick "given accelerating AI adoption layered on a robust core data platform."
For the third quarter, Snowflake expects product revenue of $1.13 billion, slightly above the $1.12 billion analyst consensus.
The company’s net revenue retention rate stood at 125%, down slightly from 127% in the same quarter last year but ahead of the 124% estimate. Current remaining performance obligation, a measure of future contracted revenue, reached $6.9 billion, increasing 33% YoY and surpassing the $6.78 billion estimate.
Professional services and other revenue grew 38% YoY to $54.5 million, also exceeding analyst expectations of $46 million.
While AI revenue is still modest, adoption is accelerating, KeyBanc Capital Markets analysts said.
Management highlighted 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 about half of new customer wins in the second quarter, and roughly a quarter of deployed use cases during the period 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’s team said, raising its price target on the stock to $275 from $250.
(Senad Karaahmetovic contributed to this report.)