Snowflake raises annual product revenue forecast, shares rise

Cloud Analytics Firm Surpasses Expectations and Expands Outlook

Snowflake has raised its annual product revenue forecast for fiscal 2026, now projecting $4.40 billion, up from its previous estimate of $4.33 billion and ahead of market predictions[1][2][3]. This announcement comes as enterprises continue to prioritize investments in data analytics and artificial intelligence platforms.

Key Business Highlights

• Second-quarter product revenue: $1.09 billion, a 32% year-over-year increase, exceeding the estimated $1.04 billion[2].
• Total revenue for Q2: $1.14 billion, surpassing analyst expectations[2].
• Remaining performance obligations (booked revenue): $6.9 billion, up 33% year-over-year[1][2].
• Professional services and other revenue: $54.5 million, a 38% increase compared to last year[2].
• Net revenue retention rate: 125%, slightly lower than the previous year's 127% but still above estimates[2].

AI Momentum Drives Growth

Snowflake’s cloud-agnostic platform positions it as a preferred solution for organizations seeking to modernize their data infrastructure and build GenAI-powered apps[1]. The company enables centralized hosting and management of AI models, including those from multiple cloud providers, streamlining deployment for enterprise clients.

As more companies explore their artificial intelligence strategies, industry analysts expect Snowflake to serve as a key enabler for simplifying AI stacks and analytics capabilities[1][3].

Profitability and Financial Metrics

• Adjusted operating margin: Raised to 9% from 8% previously[2].
• Adjusted gross margin: 73%, higher than the expected 72.3%[2].
• Loss per share: Improved to 89 cents, compared to 95 cents year-over-year[2].
• Adjusted diluted earnings per share (Q2): 35 cents, up from 18 cents last year and exceeding the 27-cent estimate[2].

Market Response

Following the earnings report and raised outlook, Snowflake’s shares rose by 11 percent in extended trading[1]. Analyst sentiment remains strongly positive, with 46 “buy” ratings, 7 “hold,” and 2 “sell” as of the latest consensus[2].

Looking Ahead

Snowflake expects third-quarter product revenue to reach $1.13 billion, above consensus predictions. With the acceleration in AI software adoption and enterprise demand for robust data analytics solutions, industry expectations for Snowflake’s ongoing growth remain high[2].