Snowflake (SNOW) shares rebounded sharply after the company reported faster product revenue growth and stronger fiscal 2027 guidance. SNOW rose 21.63% to $372.00 in after-hours trading, reversing a 4.37% decline during the regular session. The rally followed stronger revenue, earnings, customer growth, and improved operating forecasts. The report arrives as investor attention across the software sector has centered on how cloud data platforms convert artificial intelligence demand into measurable consumption growth, making Snowflake's acceleration a closely watched data point.

Snowflake Product Revenue Growth Reaches 37%

Snowflake reported second-quarter revenue of $1.55 billion, up 35% from the same period last year. Product revenue reached $1.49 billion, increasing 37% and marking another quarter of accelerating growth. Because Snowflake bills customers based on compute and storage consumption rather than fixed seat licenses, product revenue is the company's primary gauge of underlying platform usage. Adjusted earnings came in at 62 cents per share, topping the expected 45 cents.

The company also posted a smaller quarterly net loss than a year earlier: $191.7 million, versus $297.9 million in the prior-year period. Management continued expanding margins while sustaining stronger revenue growth across the business.

Remaining performance obligations reached $9.00 billion, representing 30% annual growth and supporting future contracted demand. Net revenue retention stood at 126%, indicating continued spending growth among existing customers. Snowflake also counted 828 customers generating more than $1 million in trailing product revenue.

AI Growth Supports Customer Expansion

Snowflake continued expanding its artificial intelligence business as more customers added new workloads to its platform. The company reported stronger usage from coding, data processing, and automation tools during the quarter. That growth lifted platform consumption while supporting new customer additions. The results come amid intensifying competition in the data platform market, where rivals such as Databricks and hyperscaler-native offerings from AWS, Microsoft Azure, and Google Cloud are also racing to capture AI-driven workloads.

Snowflake added 692 net new customers during the quarter, a 32% increase from the prior year. The company also reached 829 Forbes Global 2000 customers after adding 14 during the period. Large-customer growth remained strong as enterprises increased spending on data and artificial intelligence projects.

Management launched more than 330 generally available product capabilities during the first half of fiscal 2027, a total up 35% from the same period last year, expanding Snowflake's broader product offering. The faster release cycle supported adoption across existing accounts and helped generate additional workloads.

Snowflake Raises Full-Year Product Revenue Guidance

Snowflake expects third-quarter product revenue between $1.588 billion and $1.593 billion, representing annual growth between 37% and 38% and extending the recent acceleration. The forecast also exceeded the $1.50 billion analyst consensus cited before the earnings release.

For fiscal 2027, Snowflake raised its expected product revenue to $6.07 billion from $5.84 billion. The new outlook implies 36% annual growth, compared with the previous forecast of 31% growth. Management also lifted its adjusted operating margin forecast to 14.5% from 13.5%.

Snowflake expects a 74% adjusted product gross margin and a 23% adjusted free cash flow margin. These targets indicate management's aim to balance faster growth with stronger operating discipline. The improved outlook helped drive SNOW stock higher after the earnings announcement. Investors watching the company's trajectory will be looking to future quarterly reports to see whether the AI-driven consumption strength persists and whether the raised guidance continues to be met or exceeded.

Source: Blockonomi