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Snowflake stock surged more than 14% on Thursday morning after the cloud data company posted stronger-than-expected second-quarter results and raised its full-year outlook.
Revenue for the quarter came in at $1.14 billion, topping Wall Street’s estimate of $1.09 billion and marking a 32% jump from a year ago. Product revenue, which is the main driver of Snowflake’s business, rose 32% to $1.09 billion, also beating expectations of $1.04 billion.
Net new product revenue reached $94 million, more than doubling from last year and climbing 75% from the prior quarter. Adjusted earnings per share were $0.38, far ahead of the $0.27 analysts had expected and up from $0.18 a year earlier.
Following the strong performance, Snowflake raised its fiscal 2026 product revenue forecast to $4.40 billion, above both its prior target of $4.33 billion and analysts’ average estimate of $4.34 billion. The company also improved its adjusted operating margin outlook to 9%, compared with 8% previously.
Jefferies analysts noted the updated guidance reflects 27% growth for the year, though second-half growth is projected to slow slightly compared to the first half. Still, they kept Snowflake as their top pick, citing accelerating demand from artificial intelligence layered on top of its core data platform.
For the current quarter, the company expects product revenue of $1.13 billion, just ahead of the $1.12 billion consensus forecast.
Snowflake’s net revenue retention rate stood at 125%, a small dip from 127% a year ago but still better than analysts’ forecast of 124%. Future contracted revenue, measured by current remaining performance obligation, rose 33% to $6.9 billion, above the $6.78 billion estimate.
Professional services and other revenue climbed 38% to $54.5 million, also beating expectations.
AI adoption continues to play a bigger role in Snowflake’s growth story. Management said 6,100 customers are now using its AI and machine learning features, up from 5,200 last quarter. AI influenced about half of new customer wins in the period, and roughly a quarter of deployed use cases included an AI component.
KeyBanc analysts said Snowflake is benefiting from the pull of its data platform and rapid product innovation. They also raised their price target on the stock to $275 from $250, noting that enterprises are increasingly focused on combining data and AI strategies.