Snowflake Inc. rose to a market capitalization of US$106 billion after the company reported second-quarter results that marked its third straight quarter of revenue growth acceleration, driven by increasing migration of legacy data warehouses and stronger cloud data consumption.
Snowflake reported Q2 product revenue growth of 37%, including approximately 1% from acquisitions, beating Rosenblatt's estimate by 4.8%. Total revenue reached US$1.547 million, surpassing both Rosenblatt's US$1.487 million estimate and consensus expectations of US$1.483 million.
The company's net revenue retention rate came in at 126% for the quarter. Operating margins expanded to 15%, compared with Rosenblatt's forecast of 12.7% and 11% in the year-ago period. Product gross margins held at 75%.
Snowflake said that adoption of its CoCo, CoWork, and other AI features accounted for roughly half of the revenue beat. The growth was further supported by accelerating legacy data warehouse migrations enabled by artificial intelligence tools.
For the third quarter, Snowflake projected product revenue growth of 37% to 38%, well above Rosenblatt's prior estimate of 31%. The company also raised its full-year fiscal 2027 revenue projection to approximately 36% growth, up from its previous outlook and including about 1% from the acquisition of Observe. Estimated earnings per share for fiscal 2027 were projected at US$2.07.
Following the results, several firms lifted their price targets. Rosenblatt raised its target from US$345 to US$370, maintaining a buy rating. Mizuho raised its target to US$425, while Stifel and Canaccord Genuity each set targets of US$450. Cantor Fitzgerald increased its target to US$430, keeping an above-average rating.
InvestingPro analysis noted that Snowflake's stock remains overvalued relative to its fair-value estimate, though analysts broadly forecast the company will achieve profitability this year.
