Snowflake (SNOW) Earnings Date & Reports

Key Takeaways

• Product revenue climbed 37% year over year to $1.49 billion, marking Snowflake's third consecutive quarter of accelerating growth.
• Total revenue of $1.55 billion (up 35%) beat the consensus estimate of $1.48 billion, while non-GAAP (non-GAAP = excluding certain non-cash or one-time items) earnings per share of $0.62 topped the $0.45 estimate.
• Snowflake raised its full-year fiscal 2027 product revenue guidance to $6.07 billion, implying 36% growth, up from a prior forecast of $5.84 billion.
• Non-GAAP operating margin expanded more than 400 basis points year over year to 15.3%, prompting an upward revision of full-year operating margin guidance to 14.5%.
• AI products remained the standout driver, with the CoCo AI coding agent surpassing 9,100 accounts and CoWork reaching 5,800 accounts.
• GAAP (Generally Accepted Accounting Principles) net loss narrowed to $191.7 million, or $0.55 per share, from $297.9 million, or $0.89 per share, a year earlier.
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Earnings Context and Why It Matters

Snowflake's fiscal 2027 second quarter, ended July 31, 2026, is a pivotal checkpoint for the AI Data Cloud company. After a period in which investors questioned whether AI spending would translate into durable consumption growth, this report offered evidence that Snowflake's core data platform and newer AI products are compounding one another. The company entered the quarter having already posted accelerating product revenue growth in the two prior periods, and management has framed its strategy around a "flywheel" in which AI workloads drive greater platform consumption. For investors, the report tests whether Snowflake can sustain growth while simultaneously expanding margins and narrowing its GAAP losses.

Reported Results

Snowflake reported total revenue of $1.55 billion for the second quarter of fiscal 2027, up 35.1% year over year and ahead of the $1.48 billion consensus. Product revenue, the company's most closely watched metric, rose 37% to $1.49 billion. Non-GAAP diluted earnings per share came in at $0.62, comfortably above the $0.45 analysts expected. On a GAAP basis, the company recorded a net loss of $191.7 million, or $0.55 per share, an improvement from a loss of $297.9 million, or $0.89 per share, in the year-ago quarter.

Profitability showed clear progress. Non-GAAP operating income reached $237.0 million, producing a 15.3% operating margin versus 11.1% a year earlier. Non-GAAP product gross margin was 74.7%, down from 75.8%, reflecting a higher mix of AI workloads. Remaining performance obligations (RPO), a measure of contracted future revenue, grew 30% to $9.00 billion. Snowflake ended the quarter with 828 customers generating more than $1 million in trailing 12-month product revenue, up 27%, and a net revenue retention rate of 126%.

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Market Reaction and Investor Sentiment

Shares of Snowflake surged roughly 20% to 23% in after-hours trading following the release, rising toward the $368 to $377 range, as investors reacted positively to both the earnings beat and the upwardly revised full-year guidance. The combination of faster product revenue growth, an expanding operating margin, and stronger-than-expected third-quarter guidance signaled to the market that AI-driven consumption remains robust. Sentiment was further supported by management's commentary that AI products contributed roughly half of the growth acceleration. The after-hours rally also lifted peers, reflecting a broader read-through that enterprise AI and cloud demand is strengthening.

Forward Outlook and Key Factors to Monitor

Snowflake guided third-quarter fiscal 2027 product revenue to between $1.588 billion and $1.593 billion, representing 37% to 38% year-over-year growth, with a non-GAAP operating margin of 15.5%. For the full year, the company now expects product revenue of $6.07 billion (36% growth) and a non-GAAP operating margin of 14.5%, both raised from prior targets.

Investors should monitor whether the AI-driven consumption momentum persists, particularly the adoption trajectory of CoCo and CoWork and their effect on core platform usage. Margin dynamics remain a key watch item, given the lower contribution margin of AI workloads and a non-GAAP product gross margin that has drifted slightly lower year over year.

Cash flow is another area of focus: net cash from operating activities was $91.4 million, and free cash flow was $83.8 million, figures that lagged the pace of revenue growth in the quarter. Finally, the gap between GAAP losses and non-GAAP profitability, driven largely by stock-based compensation, will be closely watched as management works toward its stated goal of GAAP profitability.

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