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Why Snowflake Stock Surged Today

By Joe Tenebruso – Aug 26, 2021 at 6:41PM

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The company's big data services are in high demand.

What happened 

Shares of Snowflake (SNOW 0.81%) surged 7.7% on Thursday, following the release of the cloud data specialist's fiscal 2022 second-quarter financial report. 

So what

Snowflake's revenue soared 104% year over year to $272.2 million. This impressive growth was fueled by a 60% increase in total customers, to 4,990. Higher sales to existing clients, as can be seen by Snowflake's sterling net revenue retention rate of 169%, also contributed to the gains.

"Snowflake saw continued momentum in Q2 with triple-digit growth in product revenue, reflecting strength in customer consumption," CEO Frank Slootman said in a press release.

A rising bar chart.

Snowflake's sales are surging. Image source: Getty Images.

Moreover, Snowflake's adjusted gross margin rose to 70% from 63% in the second quarter of fiscal 2021. The company's adjusted operating margin, meanwhile, improved to negative 8% from negative 44% in the year-ago period.

Still, Snowflake remains unprofitable on a generally accepted accounting principles (GAAP) basis. It generated a net loss of $189.7 million, or $0.64 per share. However, Snowflake's adjusted loss per share of $0.04 was notably better than the $0.15 loss analysts had expected.  

Now what 

Snowflake is a leader in the rapidly expanding market for data warehousing. It excels at helping businesses collect and analyze data from multiple sources -- tools that are becoming only more vital as the shift to the cloud accelerates.

Snowflake, in turn, expects its product revenue to grow as much as 93%, to roughly 1.07 billion, in fiscal 2022.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Snowflake Inc. The Motley Fool has a disclosure policy.

Stocks Mentioned

Snowflake Stock Quote
$136.73 (0.81%) $1.10

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