After what had been a difficult second quarter for many young tech companies, investors came into Snowflake (SNOW -0.91%) results unsure what to expect. The company delivered stronger-than-expected revenue and boosted its guidance for the full fiscal year, helping to fuel a 20.7% gain in August, according to data provided by S&P Global Market Intelligence.
This has been a tough year for most of the tech universe. Rising inflation and fear of a recession have caused corporate clients to scale back on expansion, and investors who in previous years had tended to see the glass as half-full are now suddenly more in tune to the risks that come with high-flying tech stocks.
Snowflake shares have lost nearly half of their value year to date and were down nearly 60% for the year coming into August.
But the company exceeded expectations when it released its second-quarter results late in the month, delivering product revenue that was up 83% year over year. Snowflake also said it now expects to generate revenue of $1.905 billion to $1.915 billion in its full fiscal 2023, up from previous guidance for $1.885 billion to $1.9 billion in sales.
The results led to a flurry of price target boosts and positive commentary from Wall Street analysts and helped reassure investors that Snowflake was still on course to grow from here.
Snowflake reported a net revenue retention rate of 171% in the most recent quarter, a clear indication that even in uncertain times, existing customers continue to increase their business with the database company.
For all of its growth in recent years, Snowflake is still in the very early stages of attacking a total addressable market that the company estimates at about $248 billion. It is a competitive market, and Snowflake is unlikely to ever capture anything close to all of it, but there is a clear trajectory for the company to grow bigger from here.
The latest results showed no signs that momentum was slowing, a welcome relief to beaten-down tech investors.