Going into Snowflake's (SNOW 1.44%) fiscal second-quarter earnings report on Wednesday afternoon, some investors may have been concerned that the data cloud provider wouldn't be able to post top-line growth high enough to impress investors. Even more, there was a risk that the company's guidance would be softer than expected.

But any concerns about a sudden meaningful slowdown in Snowflake's business were soothed when the company reported strong second-quarter results and even lifted its outlook for fiscal 2023.

Impressive top-line momentum

Snowflake's fiscal second-quarter revenue grew 83% year over year to about $497 million, crushing a consensus analyst forecast for revenue of approximately $467 million. This revenue was driven by an 83% year-over-year jump in the company's product revenue, which accounts for most of Snowflake's consolidated revenue. Existing customers spent more on the platform, evident by Snowflake's sky-high net revenue retention rate of 171%, and total customers climbed from 6,322 in the first quarter of fiscal 2023 to 6,808.

"Snowflake's next frontier of innovation is aimed at transforming how cloud applications are built, deployed, sold, and transacted," said Snowflake CEO Frank Slootman in the tech company's fiscal second-quarter earnings call. "We look forward to executing against this growth opportunity."

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One area Snowflake didn't shine

Notably, however, the company didn't perform as well when it comes to profitability. Snowflake's fiscal second-quarter net loss worsened, growing from about $190 million in the year-ago period to nearly $219 million. On a per-share basis, that translates to a loss of $0.64 in the year-ago quarter and a loss of $0.70 in the just-reported period.

Growth in expenses was driven primarily by a substantial uptick in research and development costs as well as sales and marketing spend. But it's worth noting that the company's 50% growth in sales and marketing spend was much slower than its 83% revenue growth rate, implying that sales and marketing spend could come down as a percentage of revenue over time. Further, general and administrative expenses increased only 12% year over year, again highlighting the potential for operating leverage as the company grows.

Of course, management is always quick to point out the company's clear operating leverage in its adjusted financials. Non-GAAP operating expenses have declined significantly as a percentage of revenue in recent years, declining from 17% of revenue in fiscal 2021 to 12% in fiscal 2022 and 9% year to date in fiscal 2023. But investors should be just as interested in identifying demonstrated leverage in GAAP numbers. Soaring revenue hasn't been enough to offset GAAP operating losses yet. Indeed, Snowflake's GAAP operating loss widened from about $200 million in Q2 of fiscal 2022 to approximately $208 million in Q2 of fiscal 2023.

An impressive outlook

Looking ahead, Snowflake said it now expects total fiscal 2023 product revenue to grow at a rate of 67% to 68% year over year to between $1.905 billion and $1.915 billion. This is an improvement from the company's previous view for full-year revenue between $1.885 billion and $1.900 billion.

With strong top-line momentum and an optimistic forecast for product revenue, Snowflake's data cloud is clearly resonating with customers. But investors should hope for more bottom-line improvement in the coming quarters in order to justify the stock's high valuation.