Snowflake’s second quarter saw market enthusiasm driven by stronger-than-anticipated revenue growth and profitability, with management attributing these results to robust customer adoption and accelerated use of AI-driven features. CEO Sridhar Ramaswamy highlighted that the company’s focus on simplifying data management and embedding artificial intelligence capabilities throughout its platform resonated with both new and existing customers. Management emphasized the impact of expanding partnerships, particularly with major cloud providers, and cited a significant uptick in large customer migrations and new workload deployments as key contributors to the quarter’s outperformance.
Is now the time to buy SNOW? Find out in our full research report (it’s free).
Snowflake (SNOW) Q2 CY2025 Highlights:
- Revenue: $1.14 billion vs analyst estimates of $1.09 billion (31.8% year-on-year growth, 5.1% beat)
- Adjusted EPS: $0.35 vs analyst estimates of $0.27 (31.4% beat)
- Adjusted Operating Income: $127.6 million vs analyst estimates of $88.39 million (11.1% margin, 44.3% beat)
- Product Revenue Guidance for Q3 CY2025 is $1.13 billion at the midpoint
- Operating Margin: -29.7%, up from -40.9% in the same quarter last year
- Customers: 654 customers paying more than $1 million annually
- Net Revenue Retention Rate: 125%, up from 124% in the previous quarter
- Billings: $1.10 billion at quarter end, up 41.4% year on year
- Market Capitalization: $77.94 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Snowflake’s Q2 Earnings Call
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Sanjit Singh (Morgan Stanley) asked about the durability of growth post-data modernization. CEO Sridhar Ramaswamy replied that modernization is only the first step, with ongoing AI transformation expected to drive continued demand for Snowflake’s platform.
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Karl Keirstead (UBS) questioned the impact of Azure growth. CFO Mike Scarpelli confirmed Azure was the fastest-growing cloud for Snowflake, attributing this to improved alignment with Microsoft and strong performance in Europe.
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Alex Zukin (Wolfe Research) inquired whether growth was due to normalized demand or AI-driven projects. Ramaswamy responded that while core analytics remain strong, increasing enterprise AI budgets are leading to more Snowflake adoption for AI workloads.
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Mark Murphy (JPMorgan) asked about the rationale behind the significant sales and marketing hiring. Scarpelli explained it reflected a larger pipeline and a focus on increasing productive sales capacity, especially for large accounts.
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Mike Cikos (Needham) probed the monetization strategy for AI product adoption. Ramaswamy emphasized that broad adoption is being achieved without a massive sales push, and that monetization will follow as usage expands and enterprise-wide rollouts accelerate.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will be monitoring (1) the pace of adoption and monetization for Snowflake’s new AI capabilities, (2) continued momentum in migrating large enterprise workloads from legacy systems and first-generation cloud environments, and (3) the effectiveness of expanded sales and marketing efforts in driving both new customer wins and upsell opportunities. Progress with international expansion and deepening cloud partnerships will also be key areas of focus.
Snowflake currently trades at $233.99, up from $200.51 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).
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