Cloud data platform provider Snowflake (NYSE: SNOW) reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 31.8% year on year to $1.14 billion. Its non-GAAP profit of $0.38 per share was 42.6% above analysts’ consensus estimates.

Is now the time to buy SNOW? Find out in our full research report (it’s free).

StockStory’s Take

Snowflake’s second quarter saw market enthusiasm driven by stronger-than-anticipated revenue growth and profitability, with management attributing these results to robust customer adoption and accelerated use of AI-driven features. CEO Sridhar Ramaswamy highlighted that the company’s focus on simplifying data management and embedding artificial intelligence capabilities throughout its platform resonated with both new and existing customers. Management emphasized the impact of expanding partnerships, particularly with major cloud providers, and cited a significant uptick in large customer migrations and new workload deployments as key contributors to the quarter’s outperformance.

Looking ahead, Snowflake’s guidance reflects management’s confidence in sustained growth, underpinned by ongoing investment in AI product expansion and enhanced sales capacity. CFO Mike Scarpelli outlined expectations for continued margin improvement, while Ramaswamy stressed that AI remains central to customers’ digital transformation plans. Management believes that broader adoption of products like Snowflake Intelligence and Cortex AI, coupled with the expansion of enterprise relationships and developer-centric tools, will support both revenue growth and operational efficiency.

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to a combination of strong core analytics demand, rapid AI feature adoption, and enhanced sales execution, with notable progress in both product innovation and strategic partnerships.

• AI use cases drive adoption: Management noted that nearly half of new customer wins in the quarter were influenced by Snowflake’s AI capabilities, with 25% of all deployed use cases now involving AI. Ramaswamy cited customer examples where Snowflake Intelligence enabled users to derive actionable insights from both structured and unstructured data, demonstrating the platform’s growing role in enterprise AI strategies.

• Core analytics and migration momentum: While AI is attracting attention, the foundation of growth remained strong demand for core data analytics and migration from legacy systems. Large customers accelerated their migration of on-premise and first-generation cloud workloads, boosting overall consumption and contributing to the uptick in net revenue retention.

• Cloud partner alignment: The company highlighted Microsoft Azure as its fastest-growing cloud environment, due in part to deeper alignment between Snowflake’s field teams and Microsoft’s sales organization. This partnership, along with continued strength in AWS, supported broader international growth, particularly in Europe.

• Expanded sales and marketing capacity: Snowflake significantly increased its sales and marketing headcount, more than in the prior two years combined. Management explained that this reflects a larger pipeline and a deliberate strategy to capitalize on demand, especially among Global 2000 accounts.

• Product innovation and ecosystem expansion: The launch of over 250 new platform capabilities, including Cortex AI SQL and Snowflake Postgres, broadened the platform’s appeal. OpenFlow and support for Spark workloads were cited as opening new addressable markets, while Snowflake’s ecosystem of 12,000+ partners continues to drive network effects and customer value.

Drivers of Future Performance

Management expects ongoing AI adoption, greater cloud integration, and continued investment in go-to-market execution to drive growth and margin expansion for the remainder of the year.

• AI-centric product expansion: Management believes the rollout of Snowflake Intelligence and Cortex AI will remain a primary growth driver, as enterprise customers increasingly integrate AI into business workflows. Ramaswamy stated that AI use cases are becoming mainstream, with broader workforce adoption supporting incremental platform consumption.

• Cloud migration and workload onboarding: The ongoing shift from on-premise and legacy cloud environments to Snowflake’s platform is expected to continue fueling growth. Management emphasized that successful migrations of large-scale workloads, particularly among Global 2000 customers, will underpin both revenue and retention improvements.

• Operational investment and sales productivity: The expanded sales and marketing organization is anticipated to boost customer acquisition and upsell opportunities. Management cautioned that realizing the full benefit will depend on ramping new hires to productivity, but expects this to contribute to margin leverage as scale increases.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will be monitoring (1) the pace of adoption and monetization for Snowflake’s new AI capabilities, (2) continued momentum in migrating large enterprise workloads from legacy systems and first-generation cloud environments, and (3) the effectiveness of expanded sales and marketing efforts in driving both new customer wins and upsell opportunities. Progress with international expansion and deepening cloud partnerships will also be key areas of focus.

Snowflake currently trades at $231.25, up from $200.51 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).

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