Snowflake Beats Q2 Product Revenue Above Wall Street Estimates

23 May

Snowflake (SNOW) expects strong Q2 as AI push boosts demand for cloud services. The company forecasted second-quarter product revenue above Wall Street estimates and raised its expectations for the year, on strong demand for its cloud-based services amid a surge in use of generative artificial intelligence. Shares rose 4% after the bell as the data cloud analytics company also said it plans to acquire technology assets and hire 35 employees from TruEra, an AI observability platform.

The company had in April launched Snowflake Arctic, a large language model that draws from massive amounts of text to generate responses to queries and is optimized for complex enterprise workloads. Companies are increasingly moving from traditional to cloud-based solutions, looking to integrate digital and more cost-effective processes since the pandemic, benefiting cloud-related services firms such as Snowflake (SNOW).

Snowflake (SNOW) forecast product revenue in the range of $805 million to $810 million for the second quarter, above analysts' average estimate of $785 million, according to LSEG data. For 2025, Snowflake (SNOW) expects product revenue at $3.30 billion, up from a prior forecast of $3.25 billion. For the first quarter ended April 30, Snowflake (SNOW) posted a 34% rise in product revenue to $789.6 million, beating expectations of $747.9 million. Total revenue came in at $828.7 million.

Product revenue, which makes up the bulk of Snowflake's business, will be $805 million to $810 million in the period ending in July, the company said Wednesday in a statement. Analysts, on average, predicted $787.5 million, according to data compiled by Bloomberg. The company also raised its fiscal year product sales forecast to $3.3 billion from $3.25 billion.

This is the first full quarter that Sridhar Ramaswamy, a former Google executive and co-founder of search startup Neeva, has been Snowflake's chief executive officer. He needs to reaccelerate growth at the maker of cloud-based analytics software while fending off competition from rivals including Databricks Inc. While the outlook was stronger than expected, it still represents slowing revenue growth and may not appease investors who are bearish on the stock.

Snowflake (SNOW) CEO Sridhar Ramaswamy has hinted at collaboration with AI giant Nvidia in a recent interview with CNBC's Jim Cramer. Ramaswamy teased new product announcements at the company's Data Cloud Summit conference in June, which will feature a talk with Nvidia CEO Jensen Huang. He said that Snowflake is "super excited by the promise of accelerated computing" and that the company's enterprise customer base is growing. He also mentioned that Snowflake's AI offerings can analyze customer feedback data to help determine automated responses to questions.

Technical Outlook
Snowflake (SNOW) stock closed Wednesday's trading session on a clean slate with a Relative Strength Index (RSI) of 55.34 which was quite moderate. The stock is up 7.20% in Thursday's Pre-market trading.