Snowflake lifts annual revenue forecast on cloud and AI demand, shares soar
The company logo for Snowflake Inc. is displayed on a banner to celebrate the company's IPO at the New York Stock Exchange (NYSE) in New York, U.S., September 16, 2020. REUTERS/Brendan McDermid
Sept 2 : Snowflake on Wednesday beat Wall Street estimates for quarterly results and raised its full-year product revenue forecast as demand rises for its cloud data platform and AI offerings, sending shares surging over 20 per cent in extended trading.
The company has benefited from demand for its core cloud data-warehousing products as businesses migrate legacy systems to the cloud and adopt AI.
Its AI products also contributed to "approximately half of the acceleration that we are seeing," CEO Sridhar Ramaswamy said on a post-earnings call.
Coding assistant Cortex Code surpassed 9,100 accounts after adding more than 2,000 during the quarter, and enterprise chatbot CoWork expanded to 5,800 accounts.
The company now expects fiscal 2027 product revenue of $6.07 billion, compared with its previous forecast of $5.84 billion.
Snowflake is riding a wave of customers that rely on it to enable AI capabilities, said Gil Luria, managing director at equity research firm D.A. Davidson.
"The company guided for this momentum to continue with customer growth and backlog expanding, especially around new AI tools. That accelerating growth is also supporting higher margins as the company leverages its existing cost base."
Snowflake's second-quarter product revenue rose 37 per cent to $1.49 billion. It posted overall revenue of $1.55 billion for the quarter, compared with analysts' average estimate of $1.48 billion, according to data compiled by LSEG.
The AI and data cloud company reported adjusted profit of 62 cents per share for the quarter, above analysts' estimate of 45 cents per share.
Last quarter, Snowflake signed a five-year, $6 billion deal with Amazon Web Services to use AWS's Graviton processors and AI infrastructure.
