By Jaspreet Singh
Feb 24 (Reuters) – Snowflake has forecast fiscal 2027 product revenue above Wall Street estimates, highlighting a surge in demand for its cloud-based data analytics platform amid the accelerating adoption of artificial intelligence (AI) tools. The company anticipates product revenue of $5.66 billion for the fiscal year ending January 31, 2027, surpassing analysts’ average estimate of $5.50 billion, according to data compiled by LSEG.
As enterprise clients increasingly shift their workloads to the cloud and invest in AI applications, companies like Snowflake are witnessing heightened demand. Founded in 2012, Snowflake provides a platform that enables clients to store and integrate their data in one location, facilitating business insights, AI tool development, and the resolution of critical operational challenges. CEO Sridhar Ramaswamy noted that the firm’s Snowflake Intelligence agentic platform, launched last November, is already being adopted by more than 2,500 customers.
Ramaswamy also disclosed that Snowflake secured its largest deal to date, worth over $400 million, though the identity of the client was not revealed. The company’s first-quarter product revenue forecast of $1.26 billion to $1.27 billion also exceeded estimates of $1.23 billion, reinforcing its strong market position.
Snowflake’s business model, which relies on the number of customers utilizing its storage and compute services through a consumption-based pricing structure, faces intense competition from rivals such as Databricks. Databricks recently raised $5 billion, further intensifying the competitive landscape in the data analytics sector. Following the earnings report, Snowflake’s shares declined approximately 3% in extended trading.
The company has entered into two significant multi-year agreements, each valued at $200 million, with AI firms OpenAI and Anthropic. These partnerships aim to integrate advanced AI models into Snowflake’s platform, enhancing its appeal to enterprise clients looking to adopt AI technologies more effectively.
In a strategic move to bolster its capabilities, Snowflake recently acquired Observe, an app-monitoring platform, although the financial details of the transaction were not disclosed. This acquisition is expected to enhance Snowflake’s ability to troubleshoot software, system, and data performance issues, further improving its service offering.
Snowflake has established a robust client base of over 13,000, including notable firms like Figma and BlackRock. The company reported a fourth-quarter product revenue increase of approximately 30%, reaching $1.23 billion and surpassing analyst estimates of $1.18 billion. In terms of earnings, adjusted earnings per share stood at 32 cents, exceeding projected earnings of 27 cents per share.
The ongoing evolution of data analytics in the context of AI adoption signals a promising future for Snowflake, as it positions itself to meet the growing demands of enterprises navigating a complex technological landscape. As businesses increasingly integrate AI into their operations, Snowflake’s innovative solutions may play a pivotal role in shaping the future of data-driven decision-making.
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