Snowflake lifts annual product revenue forecast, shares soar

Snowflake, a leading cloud-based data storage provider, reported a 35% year-over-year revenue increase to $1.55 billion in Q2, surpassing analysts' expectations of $1.48 billion. CEO Sridhar Ramaswamy attributed the strong performance to the growing adoption of Snowflake's AI products, which are expanding their user base to new lines of businesses.

The company forecasted product revenue for the current quarter to be between $1.588 billion and $1.593 billion, above the $1.504 billion consensus estimate, and expects full-year product revenue to grow by 36% to $6.07 billion. Snowflake's AI coding agent CoCo and AI agent CoWork have gained traction, with CoCo adopted by over 9,100 accounts and CoWork expanded to 5,800 accounts.

The company's growth is further bolstered by a $6 billion, five-year agreement with Amazon Web Services for access to Amazon's Graviton chips, which will enable customers to build and deploy AI applications more efficiently. Despite a slight dip in adjusted product gross margin to 74.7%, Snowflake reported a strong adjusted operating margin of 15.3% for the quarter, a 410-basis-point improvement from the previous year.