Snowflake expects product revenue for the fourth quarter to be in the $716 million to $721 million range due to a surge in AI demand.
Snowflake (SNOW.N) forecasted higher quarterly product sales on Wednesday, citing increased adoption of AI (artificial intelligence) as a driver of demand for its data cloud products.
In after-hours trading, shares of the Bozeman, Montana-based company rose about 7%.
Spending on cloud-related software has increased as more businesses seek to capitalize on the recent AI-related surge in the technology sector.
According to LSEG statistics, Snowflake expects product revenue for the fourth quarter to be in the $716 million to $721 million range, which is higher than analysts’ average forecast of $700.3 million.
According to research firm Gartner, worldwide end-user spending on public cloud services is expected to rise by 20.4% by 2024.
“Generative AI is at the forefront of customer conversations, which in turn drives renewed emphasis on data strategy in preparation for these new technologies,” CEO Frank Slootman said during a conference call.
Earlier this month, the company introduced the Snowflake Cortex service, which allows businesses to create huge language models that serve as the foundation for generative AI.
Slootman also attributed the third-quarter success to execution amid a “broadly stabilizing macro environment” in a statement.
Revenue increased 32% to $734.2 million in the third quarter, exceeding projections of $713.1 million.
Product revenue, which is derived from the utilization of compute, storage, and data transfer resources, was $698.5 million for the quarter ended Oct. 31, exceeding expectations.
In addition, the company increased its product revenue expectation for 2024 from $2.60 billion to $2.65 billion.
Excluding items, profit per share in the third quarter was 25 cents, compared to analysts’ average forecast of 16 cents.
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