Snowflake posts strong Q2 results with 30% revenue growth

Snowflake has announced its financial results for the second quarter of fiscal 2025, ending 31 July 2024. For the quarter, the company reported revenue of USD $868.8 million, showing a 29% growth year-over-year.

Product revenue amounted to USD $829.3 million, which represents a 30% increase from the same quarter last year.

The company noted a net revenue retention rate of 127% as of the end of July. Snowflake now has 510 customers with trailing 12-month product revenue greater than USD $1 million, and 736 Forbes Global 2000 customers. These figures mark a year-over-year growth of 28% and 5%, respectively. Remaining performance obligations were reported at USD $5.2 billion, experiencing a 48% growth year-over-year.

Sridhar Ramaswamy, CEO of Snowflake, commented on the quarterly performance. "Snowflake delivered another strong quarter, surpassing the high end of our Q2 product revenue guidance and, as a result, we are raising our product revenue guidance for the year. Product revenue was up 30% year-over-year at USD $829 million, while remaining performance obligations were USD $5.2 billion, up 48% year-over-year. The quarter was hallmarked by innovation and product delivery, and great traction in the early stages of our new AI products. With the combination of our platform, the network effect of collaboration and our AI innovations, we have a huge opportunity ahead to deliver even greater value to our customers," Ramaswamy stated.

Snowflake reported both GAAP and non-GAAP financial metrics for the quarter. Under GAAP, the company registered a product gross profit of USD $593.7 million, translating to a 72% margin. The non-GAAP product gross profit was reported at USD $633.8 million, with a 76% margin. Operating losses under GAAP were USD $355.3 million, while non-GAAP operating income was reported at USD $43.7 million, translating to a 5% margin. Net cash provided by operating activities amounted to USD $69.9 million, at 8%, and free cash flow stood at USD $58.8 million, at 7%. Adjusted free cash flow was reported as USD $66.0 million, making up 8% of revenue.

For the third quarter of fiscal 2025, Snowflake provided product revenue guidance within the range of USD $850 million to USD $855 million, reflecting a 22% year-over-year growth. The company also shared its guidance for the full fiscal year 2025, projecting product revenue of USD $3.356 billion, which indicates a 26% increase year-over-year. The expected product gross profit margin for the year is projected at 75%, while the adjusted free cash flow margin is expected to be 26%.

In terms of stock repurchase, Snowflake indicated that its board of directors authorised the repurchase of an additional USD $2.5 billion in stock through March 2027, adding to the existing repurchase programme. As of the end of July, USD $491.9 million was still available for repurchases under the initial programme.

Snowflake's conference call to discuss the quarterly results was scheduled on 21 August 2024. The call was made available for live webcast and an audio replay was to be accessible for a month subsequently.