Snowflake signs largest deal in its history of over $400 million
Company's Q1 product revenue forecast exceeds estimates
Snowflake Intelligence is now adopted by over 2,500 customers
Snowflake forecast fiscal 2027 product revenue above Wall Street estimates on Wednesday, as booming enterprise demand for artificial intelligence tools drives clients to its cloud-based data analytics platform.
Enterprise clients are increasingly shifting their workloads to the cloud while making investments as they look to develop AI applications, driving up demand for companies like Snowflake.
Shares dropped about 2% in extended trading after Snowflake's results and forecasts failed to meet investor expectations, amid market fears that the growing use of AI tools would erode demand for traditional software.
"Investors are skeptical about all software companies right now... As Snowflake continues to accelerate throughout the rest of the year we would expect investors to realize Snowflake is benefiting significantly from the growth of AI," said D.A. Davidson analyst Gil Luria.
Snowflake offers a platform where clients store and integrate their data in one place to generate business insights, build AI tools and solve crucial operational problems.
The company made its Snowflake Intelligence agentic platform available in November. It is now adopted by more than 2,500 customers, CEO Sridhar Ramaswamy told Reuters.
"We also signed the largest deal in our history of over $400 million," Ramaswamy said, without disclosing the client name.
Snowflake expects product revenue of $5.66 billion for the fiscal year ending January 31, 2027, above analysts' average estimate of $5.50 billion, according to data compiled by LSEG.
First-quarter product revenue forecast of $1.26 billion to $1.27 billion came in above estimates of $1.23 billion.
The company, which competes with AI startup Databricks, has struck two separate multi-year $200 million deals with both OpenAI and Anthropic to integrate their advanced models into its platform for boosting enterprise AI adoption.
Snowflake bought app-monitoring platform Observe for $600 million, seeking to enhance its ability to troubleshoot software, system and data performance issues.
The company, which has more than 13,000 clients including names such as Figma FIG.N and BlackRock BLK.N, said its fourth-quarter product revenue rose about 30% to $1.23 billion, beating estimates of $1.18 billion.
Adjusted earnings per share of 32 cents beat estimates of 27 cents.