Snowflake (NYSE:SNOW) might have had to concede the spotlight to Nvidia in Thursday’s trading with the Street focused on the chip giant’s FQ2 results, but that would have mattered little to investors of the data warehousing company; shares popped to the tune of 20% after the company delivered the goods in its own fiscal second quarter (July quarter) readout.
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Snowflake outperformed across the board, driven by strength in its core analytics and data warehouse business, additional lift from newer product offerings, and several large-scale workload migrations. Product revenue reached $1.09 billion, up 32% year-over-year, beating expectations by about $53 million (+5%) and marking the strongest sequential gain in nearly three years. Net revenue retention stood at 125%, while the company now counts 654 customers generating more than $1 million in trailing 12-month product revenue and 751 Forbes Global 2000 clients, reflecting 30% and 5% YoY growth, respectively. Remaining performance obligations (RPO) climbed to $6.9 billion, up 33% YoY. Meanwhile, at the bottom-line, adj. EPS of $0.35 beat the forecast by $0.08.
The outlook was strong too; Snowflake lifted its FY2026 product revenue forecast by 2 percentage points to $4.395 billion (27% YoY), roughly $53 million above prior expectations. Adj. operating margins were increased by 1 point to 9%, while adjusted free cash flow margins were kept at 25%. Management said the stronger outlook is supported by higher-than-expected consumption trends, and emphasized the company’s ability to expand margins despite ongoing investments – particularly significant additions to sales and marketing headcount – and noted that free cash flow is largely weighted toward the second half of the year.
Rather than a Snowflake, Canaccord analyst Kingsley Crane says the display is more akin to an “avalanche,” with the company sending out a “loud message.”
“If Q1 helped to ease lingering concerns about product momentum and execution,” Crane went on to say, “Q2 extinguished those concerns out like an Olympic swimmer blowing out candles on a birthday cake.”
As for the full-year guide raise, while it was only “slightly more than the in-quarter beat,” and the size of the upward revision may appear “inconsequential,” Crane thinks it reflects a notable shift in the company’s guidance approach over the past two years, which the analyst views as corresponding with the broad-based strength in workload growth. “With NRR ticking back up to 125%, total customer count accelerating yoy, and >$1M customers markedly improving by 50 in the quarter, it’s difficult to find a metric to pick on,” Crane further said.
As such, Crane is amongst a host of analysts who have boosted their SNOW price targets. Crane’s objective goes from $220 to $260, suggesting the stock will gain 8% in the months ahead. Crane’s rating stays a Buy. (To watch Crane’s track record, click here)
Elsewhere on the Street, 32 other analysts join Crane in the bull camp, while 3 Holds can’t detract from a Strong Buy consensus rating. Going by the $264.56 average target, a year from now, shares will be changing hands for a 10% premium. (See Snowflake stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.