Shares of the cloud data warehouse firm Snowflake Inc. moved higher in extended trading today after the company beat expectations for its second-quarter earnings and kept its full-year revenue forecast steady.

On the other hand, Snowflake’s guidance for the current quarter came up just short of Wall Street’s targets. Perhaps as a result, its stock gained a relatively modest 4% in after-hours trading, adding to a gain of 2% during the regular trading session.

The company reported earnings before certain costs such as stock compensation of 22 cents per share, well ahead of Wall Street’s forecast of just 10 cents per share. Revenue rose 36% to $674 million, beating the consensus estimate of $662 million. Product revenue also surpassed expectations, coming to $640.2 million, ahead of the $626 million target.

Snowflake sells cloud data warehouse services that are popular with enterprises. Its platform is used by customers to store, process and consolidate data that can be used to derive business insights and train artificial intelligence models.

According to Snowflake Chief Executive Frank Slootman (pictured), the company is poised to benefit from the technology industry’s recent AI boom. The incredible popularity of generative AI chatbots such as ChatGPT has driven huge interest in the technology, and these days many companies are scrambling to see how they can use it to improve various business processes.

Slootman said Snowflake is a useful partner for AI initiatives because it enables models to be trained on highly curated and optimized data. “Snowflake as the global epicenter of trusted enterprise data is well positioned to enable the growing interest in AI/ML,” Slootman said. “Enterprises and institutions alike are increasingly aware they cannot have an AI strategy without a data strategy.”

During the quarter just gone, Snowflake held its annual Snowflake Summit user conference. At the show Slootman stopped by SiliconANGLE Media’s mobile livestreaming studio theCUBE, where he laid out the company’s strategy for AI using the vast amounts of data it manages and hosts for its customers. Those plans include a close collaboration with Nvidia Corp., whose graphics processing units are the most widely used chip technology for training AI models.

“They felt that it was a very convincing strategy, very compelling strategy,” Slootman said, talking about Snowflake’s investor’s reaction to the company’s AI plans. “The conference content helps them understand the vastness of the strategy and how far we’ve come.”

In a conference call with analysts, Snowflake Chief Financial Officer Mike Scarpelli was asked when software companies might expect to see revenue increase as a result of this focus on AI. They noted that Nvidia has already seen enormous growth.

However, Scarpelli said investors will have to be a bit more patient. Most likely, the real impact will be felt next year, he said. One problem is that many enterprises face a long wait to get their hands on Nvidia’s GPUs, since they’re in such high demand.

Analysts told SiliconANGLE there were a number of positives to take from Snowflake’s report. Holger Mueller of Constellation Research Inc. said Snowflake’s disciplined cost management was one of the main reasons it was able to meet expectations. “The net loss remained constant while revenue grew 30%, and that is down to good cost control,” he pointed out. “Even better, Snowflake did this while increasing its R&D spending. Spending on sales and marketing and other costs slowed. Investors were pleased to see this, they want to see delivery to guidance as it builds trust in the executive management team.”

Mueller’s colleague Dough Henschen added that Snowflake also managed to grow its base of large enterprise customers, with many of those enterprises actually expanding their deployments during the quarter. “Snowflake now has more than 400 customers spending $1 million or more annually, and it has a 142% net retention rate, which indicates people are sticking with the company and expanding their deployments.”

Although Snowflake predicted a slight drop in revenue growth for the third quarter, it maintained its full-year sales forecast. Three months prior, it dropped its fiscal revenue forecast, spooking investors and sending its stock down more than 16%.

Snowflake said it sees product revenue of between $670 million and $675 million for the third quarter, the midpoint of which is below analysts’ consensus target of $675 million. For the full year, though, it maintained a forecast of $2.6 billion in product revenue. That’s still below Wall Street’s fiscal 2024 target of $2.76 billion, but investors were clearly relieved it hasn’t gotten any worse.

Scarpelli said the company is maintaining its full-year forecast because it isn’t seeing customers reduce consumption any further. “We are seeing encouraging signs of stabilization, but not a recovery,” he said.

Here’s Slootman’s full interview on theCUBE, where he also discusses Snowflake’s expansion into new markets and its efforts to grow its developer ecosystem through its native apps framework:

Photo: SiliconANGLE