Snowflake (SNOW) stock soared after the enterprise software maker reported third quarter earnings and revenue that topped consensus estimates. The company raised full-year product revenue guidance and announced a new artificial intelligence partnership.
Meanwhile, Snowflake earnings for the October quarter came in after the market close on Wednesday.
“We think this quarter represents a turning point in the Snowflake story,” said TD Cowen analyst Derrick Wood in a report. “Go-to-market  changes are helping drive stabilizing consumption growth, Iceberg is proving to drive net benefits, and artificial intelligence is off to a good early start.”
Also, Snowflake announced a partnership with AI model maker Anthropic.
“We view Snowflake as an on-ramp for enterprise adoption of AI, and the new multi-year partnership with Anthropic, a leading private AI player, bolsters this thesis,” said Raymond James analyst Simon Leopold in a report. “Anthropic’s newest Claude 3.5 models will be available within Snowflake Cortex AI.”
In Q3, Snowflake said it earned 20 cents per share on an adjusted basis. Analysts polled by FactSet expected Snowflake to earn 15 cents per share.
October-quarter revenue climbed 28% to $942.1 million, the software maker said. Analysts had predicted revenue of $900.3 million.
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“RPO grew 55% to $5.7 billion which accelerated from 48% growth and $5.2 billion last quarter,” said RBC Capital analyst Matthew Hedberg in a report.
Remaining performance obligations, or RPO, is the total value of contracted revenue that a company has not yet recognized as revenue on its financial statements.
SNOW Stock: Updated Guidance
“Management highlighted that their product cohesion and ease of use has positioned them well for new logos wins, expansion in the customer base, and displacing competition,” Hedberg added.
For the current quarter ending in January, Snowflake said it expects product revenue in a range of $906 million to $911 million. Meanwhile, analysts had expected product revenue of $893.5 million.
For the full fiscal year, Snowflake forecast product revenue of $3.43 billion, up 29%, topping estimates of $3.37 billion, or 26% growth.
“Not only did Snowflake record its biggest absolute product revenue beat this quarter, but it also signaled strength with its biggest full-year product revenue raise ever,” said Jefferies analyst Brent Thill in a report. “The updated fiscal 2025 guide now includes contributions from newer product features as well as product efficiency headwinds.”
On the stock market today, Snowflake stock soared 21% to 156.70 in early trading.
Snowflake sells data analytics and management tools that run on cloud-computing platforms such as Amazon Web Services, part of Amazon.com (AMZN).
Snowflake Stock Technical Ratings
Amid investor concern over stiff competition with privately held Databricks and others, SNOW stock has retreated 34% in 2024. Also, analysts with a bearish view say Snowflake lags rivals in developing artificial intelligence-related products.
Further, Snowflake brought in a new chief executive earlier this year.
Meanwhile, Snowflake earlier this year announced a $2.5 billion share repurchase plan through March 2027.
Also, SNOW stock holds an IBD Relative Strength Rating of 15 out of a best-possible 99, according to IBD Stock Checkup.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
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