Shares of the cloud data warehouse company Snowflake Inc. jumped more than 30% in trading Thursday, with the bullish sentiment driven by a crushing earnings and revenue beat and increased guidance for the fiscal year.

The company also announced a key partnership with the artificial intelligence firm Anthropic PBC and said it’s going to acquire the data integration startup Datavolo Inc., further boosting investor optimism.

Snowflake reported third-quarter earnings before certain costs such as stock compensation of 20 cents per share in the quarter, easily beating Wall Street’s consensus estimate of 15 cents. Revenue for the period rose 28% from a year ago, to $942 million, cruising past the Street’s target of $897 million.

However, the strong numbers didn’t prevent Snowflake’s loss from widening. It reported a net loss of $324.3 million in the quarter, up from a loss of $214.3 million one year earlier.

The company said product revenue accounted for 96% of its total sales. The company uses product revenue as its main guidance indicator, and it said it sees a total of $3.43 billion in fiscal 2025, which would imply growth of 29%. That’s up quite a bit from its previous product revenue forecast of $3.36 billion, issued three months ago.

In addition, Snowflake said it’s now anticipating an adjusted operating margin of 5%, up from 3% earlier.

In a conference call with analysts, Snowflake Chief Executive Sridhar Ramaswamy (pictured) said the company intends to focus now on saving money with a view to increasing its profitability in the quarters ahead. “We’ve been creating centralized, more efficient teams for some areas and removing redundant management layers, which enables us to make decisions faster,” Ramaswamy said.

However, the company’s chief financial officer Mike Scarpelli butted in to say that the company is not planning any layoffs in the foreseeable future, despite that reorganization.

The company reported 10,618 paying customers at the end of October, up 369 from three months ago and above the Street’s target of 10,601 customers.

One of those customers is the U.S. government, which generates only a very small fraction of its revenue at present. But Scarpelli told analysts that he sees significant room for growth. “We feel good about what we’re doing, and we think there’s a lot of upside in the federal space over the next couple of years,” he said.

No doubt part of that potential stems from Snowflake’s recent acquisition of a company called Night Shift Development Inc., a data analytics startup focused on the U.S. public sector. That acquisition was announced in September, when Snowflake said it will complement its ongoing investment in enabling more informed decision-making across government agencies.

Snowflake’s cloud data warehouse offerings have become more relevant to enterprises thanks to the ongoing shift from traditional on-premises servers to the cloud. In recent months they have been further boosted by the growing demand for data to power artificial intelligence workloads. For years, the company has been viewed as a rival to public cloud computing providers like Amazon Web Services Inc. and Microsoft Corp., but at the same time, those companies are also key partners, providing it with its underlying infrastructure.

Ramaswamy indicated that those partnerships are now taking on even more significance. “Through our collaboration with AWS, we have booked over $3.9 billion over the past four quarters,” he told analysts on the call.

Third Bridge analyst Jordan Berger said the company’s strong revenue growth signals a return of strength and a subsidence of cost optimization headwinds that had held it back in recent quarters. “As an additional positive indication, after a period of sequential deceleration, its net revenue retention remained stable quarter-over-quarter at 127%,” the analyst said.

Holger Mueller of Constellation Research Inc. praised Snowflake for its strong revenue growth, driven by enterprise’s hunger for data-driven insights, but said investors may be worried at its worsening profitability.

“Snowflake’s growth is coming at an increased cost, with the company loosing $1 for every $3 it grabs in revenue,” the analyst pointed out. “On the plus side, its research and development costs have overtaken sales and marketing expenses, which suggests the company is accelerating innovation for AI-powered analytics and insights. But in the long run, investors will want to see Ramaswamy and his team find a way to put costs and revenue growth in sync, so they can work on boosting that bottom line.”

The acquisition of Datavolo also looks to be an important move. Snowflake didn’t reveal how much it paid to acquire the startup, which had raised $25 million in funding and sells tools for building multimodal data pipelines for AI models.

Ramaswamy said the acquisition will enable Snowflake to create more versatile data pipelines for its own customers. For instance, using Datavolo’s tools, a customer might be able to replace single-use data connectors with more flexible pipelines that facilitate the movement of information from the cloud, to on-premises servers, and then to Snowflake’s data warehouse.

“By bringing Datavolo into the Snowflake fold, we are expanding how much of the data lifecycle Snowflake captures — unlocking both simplicity and cost savings for our customers, without any sacrifice to data extensibility,” Ramaswamy explained.

As for the multiyear partnership with Anthropic, which is a rival to OpenAI, this is all about strengthening Snowflake’s hand in generative AI. The alliance means Anthropic’s most powerful Claude 3.5 models will be made accessible via Snowflake Cortex AI, which is a fully managed service for AI development that runs on AWS.

Also, Snowflake’s AI agents, such as Snowflake Intelligence and Cortex Analyst, will be able to leverage Claude. According to Snowflake’s executive vice president of product, Christian Kleinerman, Anthropic’s Claude models will help improve the ability of Snowflake’s AI agents to analyze data, run ad-hoc data analytics, create visualizations based on that information, and perform other multistep tasks.

In addition, another benefit of the partnership is that Claude users will be able to leverage Snowflake’s Horizon Catalog service, which provides enterprise-grade compliance, security and privacy for Cortex AI. In other words, it means Claude can be secured with granular access controls and safety guardrails, ensuring more secure and trustworthy AI, Snowflake said.

“Our partnership with Anthropic represents a massive leap forward in expanding on our promise to provide thousands of global customers with easy, efficient and trusted AI for a holistic set of enterprise use cases,” Kleinerman insisted.

Despite the impressive after-hours gains, Snowflake’s stock is still down 35% in the year to date, compared with a gain of 24% in the broader S&P 500 index.

Photo: SiliconANGLE