Shares of Snowflake (SNOW +2.35%) charged out of the gate on Thursday, soaring as much as 20%. As of 11:16 a.m. ET, the stock was still up 18.6%.
The catalyst that sent the cloud-based storage company higher was results that surged past expectations.
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SNOW in the forecast
For its fiscal 2026 second quarter (ended July 31), Snowflake generated revenue of $1.1 billion, up 32% year over year, driven by product revenue that also grew 32%. This resulted in adjusted earnings per share (EPS) of $0.35, which surged 94%.
For context, analysts' consensus estimates were calling for revenue of $1.09 billion and EPS of $0.27, so Snowflake beat expectations with room to spare.
Other metrics helped highlight the company's solid growth. Remaining performance obligation (RPO) -- a leading indicator of future revenue -- grew to $6.9 billion, up 33%.
Snowflake's total customer count grew to 12,062, up 19% year over year. At the same time, its most lucrative customers, those spending more than $1 million in trailing-12-month revenue, grew 30%. Snowflake also continued to expand its business with existing customers, as evidenced by its net revenue retention rate of 125%.
NYSE: SNOW
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A long runway ahead
Investors were positively giddy as Snowflake raised its full-year outlook and provided a Q3 forecast higher than expectations. Snowflake is guiding for third-quarter product revenue in a range of $1.125 billion to $1.3 billion, or growth of about 26%. The company also increased its 2026 guidance to $4.4 billion, ahead of Wall Street's expectations of $4.34 billion. And investors cheered.
CEO Sridhar Ramaswamy said, "We have an enormous opportunity ahead as we continue to empower every enterprise to achieve its full potential through data and artificial intelligence (AI)."
There's still plenty of growth baked into Snowflake's valuation. The stock is currently trading at 14 times next year's expected sales, when a reasonable price-to-sales ratio is generally between 1 and 2. That said, investors often award a premium to high-growth stocks, and the opportunity represented by AI shows no signs of slowing.
