Snowflake's Q4 performance exceeded expectations, with strong sales prospects driving a sharp increase in after-hours trading.

Data warehouse giant Snowflake (SNOW.US) announced better-than-expected fourth-quarter performance for the fiscal year 2025 after the market closed on Wednesday. The company's revenue growth outlook for the current fiscal year is better than expected, and it also signaled optimism for its recently launched artificial intelligence products, causing the stock to surge in after-hours trading. Data showed that the company's Q4 revenue grew 27.4% to $9.8677 billion, surpassing analysts' expectations of $9.5689 billion. Adjusted earnings per share were $0.30, exceeding analysts' consensus of $0.18 per share. Product revenue for the fourth quarter increased 28% to $9.433 billion, while analysts' average expectation was $9.158 billion. Snowflake currently has 580 customers who have spent over $1 million in the past 12 months, compared to 542 customers in the previous quarter. For the quarter ending January 31, the remaining performance obligations (another important growth metric) were $6.9 billion, exceeding the average expectation of about $6.67 billion. Additionally, the net revenue retention rate was 126%. In its earnings report, Snowflake stated that product revenue, expected to account for a majority of the company's business in the year ending January 2026, is projected to grow by about 24% to $4.28 billion, higher than analysts' expectation of $4.23 billion. On the other hand, Snowflake expects Q1 product revenue to be between $9.55 billion and $9.6 billion, slightly lower than analysts' expectation of $9.626 billion. Additionally, the company forecasts a full-year operating profit margin of 5%. Software made by Snowflake can ingest and analyze data from various sources. Over the past year, CEO Sridhar Ramaswamy has been pushing for more AI products and making it easier to use large language models on data stored on the Snowflake platform. The company announced an agreement on Wednesday that allows customers to access OpenAI's models directly through its system, similar to an agreement reached with the AI startup Anthropic in November. The stock surged by as much as 14% in after-hours trading, and as of writing, it was up over 10% at $183.39. The stock had declined by 22% in 2024 and 4.89% in the past 3 months, but investor optimism has been increasing due to the adoption of new tools like Cortex that enable generative AI. As of Wednesday's close, the stock had risen by 7.6%. In the last 90 days, Snowflake has had 4 positive earnings revisions and 0 negative revisions. CEO Sridhar Ramaswamy emphasized that the company's product revenue achieved strong year-over-year growth with a large customer base of over 11,000 enterprises. Ramaswamy also highlighted that Snowflake is a leading data and AI company focused on providing innovative solutions to support customers' data needs.