Snowflake Jumps on Revenue Outlook, Uptake of AI Assistant

Snowflake Inc. gained in extended trading after the company raised its outlook for annual sales, topping analysts’ estimates, and touted rapid adoption of its AI-assisted coding tool.

Product revenue in the year ending in January will be about $6.07 billion, the company said Wednesday in a statement. That was an increase from its May forecast and beat the analysts’ average projection of $5.86 billion. Product sales make up about 95% of the company’s total revenue.

A maker of software that helps organize and analyze corporate data in the cloud, Snowflake is weaving artificial intelligence through its platform. Investors have grown enthusiastic about the company’s ability to boost their business with these additional AI products, such as a coding assistant called CoCo.

More than 2,000 customer accounts starting using CoCo during the quarter, bringing the total to 9,100, the company said.

The shares jumped more than 20% in extended trading after closing at $305.84. The stock had climbed 39% this year through the close.

Wall Street’s expectations for Snowflake “have increased materially and investors are likely to focus on the durability of AI-driven consumption trends,” wrote Yi Fu Lee, an analyst at Benchmark Co. in a note ahead of earnings.

For the quarter ending in July, product revenue increased 37% to $1.49 billion. Analysts, on average, estimated $1.42 billion, according to data compiled by Bloomberg. Remaining performance obligations, a measure of bookings were $9 billion, compared with the average estimate of $9.37 billion.

Databricks, generally seen as Snowflake’s biggest rival, closed a new funding round at a valuation of $190 billion last month. The San Francisco-based startup also said that it has crossed $7 billion in revenue run-rate, representing growth of more than 80% in the second quarter from the year-earlier period.