Key Takeaways:
Snowflake posted $1.49 billion in Q2 fiscal 2027 product revenue, up 37 percent year over year, as AI demand drove an earnings beat.
"AI is compounding Snowflake's advantage by bringing new workloads to the platform, increasing adoption of first-party AI products and lifting broader platform consumption," Chief Executive Officer Sridhar Ramaswamy said.
Adjusted earnings reached 62 cents per share, topping the 45-cent consensus, while total revenue rose 35 percent to $1.55 billion against the $1.48 billion analyst estimate. The company raised its full-year product revenue forecast to $6.07 billion from $5.84 billion, implying 36 percent growth, and lifted its non-GAAP operating margin outlook to 14.5 percent from 13.5 percent.
Shares jumped 21.63 percent to $372 in extended trading. Third-quarter product revenue is projected between $1.588 billion and $1.593 billion, representing 37 to 38 percent growth.
Management attributed roughly half of the growth acceleration to AI workloads. CoCo surpassed 9,100 accounts after adding more than 2,000 during the quarter, while CoWork reached 5,800 accounts. Customers adopting AI products are also increasing consumption of Snowflake's core platform, Ramaswamy said, noting that the time for new customers to reach 80 percent of purchased consumption has "very visibly improved" for newer cohorts.
Remaining performance obligations rose 30 percent to $9.00 billion, with about 54 percent expected to be recognized as revenue over the next 12 months. Net revenue retention stood at 126 percent. Snowflake added 692 net new customers during the quarter, bringing the total to 14,554, and added 14 Forbes Global 2000 companies for a total of 829.
Non-GAAP operating margin expanded more than 400 basis points year over year to 15 percent, supported by revenue growth and disciplined headcount management. The company added 334 employees year to date, including 173 from its Observe acquisition, compared with 935 during the same period last year. Snowflake ended the quarter with $4.3 billion in cash and investments.
The company still reported a GAAP operating loss of $263 million, though that narrowed from $297.9 million a year earlier. Management reiterated its target of reaching GAAP profitability in the fourth quarter of fiscal 2028. The company's Cortex AI Gateway, which routes tasks across frontier and open-weight models based on customer-defined policies, is central to its model-choice strategy as enterprises seek flexibility among AI providers.
The guidance raise points to sustained AI-driven consumption growth, and the stock's after-hours jump reflects investor confidence in that trajectory. The next earnings report will test whether consumption momentum holds and whether the GAAP-to-non-GAAP profitability gap narrows.
This article is for informational purposes only and does not constitute investment advice.
