Overview
Snowflake
SNOW · NYSEQ2 FY2027Software · Data Cloud & AI
Since the Report + 10.3%
Revenue grew 37.0% year over year, EPS beat the estimate by 38.7%; the stock rose 23.1% in its first reaction.
- Product Revenue
- $1.49B
- ▲ 37% YoY · Third-Quarter Acceleration
- Total Revenue
- $1.55B
- Estimate $1.48B · Beat by 4.4%
Verdict
BUYSnowflake beat second-quarter expectations with $1.49 billion in product revenue, growth accelerated for a third straight quarter to 37%, and the full-year product revenue target rose to $6.07 billion. This beat-and-raise quarter, driven by AI consumption, was met with enthusiasm and the stock jumped roughly 23% after hours. The question from here is how much of this growth converts into profit and cash while the non-GAAP operating margin is still at 15%.
Close on Report DaySep 2
$305.84▲ 23.1%Report-Day Move
- Market Cap(Today)
- ≈ $119 B
- 1Y Return(At Report)
- + 46%
- P/E(At Today's Price · $1.68 · Trailing 12M)
- 200.8
- Net Margin(Trailing 12M)
- − 20.1%
Earnings Summary
In 30 Seconds- Product revenue grew 37% year over year to $1.49B; total revenue beat estimates by 4.4% and adjusted EPS by 38.7%.
- The company raised its full-year product revenue target from $5.84B to $6.07B.
- The stock jumped about 23% after hours on the raised guidance.
The Numbers
Adjusted EPS
$0.62
Estimate $0.45 · Beat by 38.7%
Net Revenue Retention
126%
Existing Customer Expansion
Remaining Perf. Obligations
$9.00B
▲ 30% YoY · Demand Visibility
Stock Reaction
▲23%
After Hours · Guidance Raised
Quarterly Revenue ($ Billion)
1.09
Q2 26 · $1.09 B
1.16
Q3 26 · $1.16 B · QoQ + 6.4%
1.23
Q4 26 · $1.23 B · QoQ + 5.9%
1.33
Q1 27 · $1.33 B · QoQ + 8.8%
1.49
Q2 27 · $1.49 B · QoQ + 11.8% · YoY + 37.0%
1.588 – 1.593
Q3 27E · 1.588 – 1.593 · QoQ + 6.6% · YoY + 37.3%
- Q2 26
- Q3 26
- Q4 26
- Q1 27
- Q2 27
- Q3 27E
Q3 FY2027 Company Guidance
- Product Revenue (Q3)1.588 – 1.593 billion1.588 billion1.593 billion
+37.5% YoY · Acceleration ContinuesStrong Growth · 37.5% YoY ▲
- Product Revenue (Full Year)6.07 billion
Prior $5.84B · +36% YoYRaised 3.9% ▲
- Operating Margin (Non-GAAP, FY)14.5%
Prior Target 13.5%Raised 1.0 pt ▲
How to Read the Chart
The blue band is the company's low-high range; its length shows how much room the company left itself. The black triangle and the line beneath it mark where the market expected, and the notch in the band is the range's midpoint. The triangle appears only where a market expectation is known. When the company gave a single number rather than a range and no market expectation is known, that row gets no band at all: there is no length to measure and no position to compare. Axis is ±0.2% around the midpoint.
Segment and KPI Data
Revenue by Segment
- Product Revenue$1.49 BShare 96.4%▲ 36.8% YoY
- Professional Services and Other$54.9 MShare 3.6%▲ 0.8% YoY
Key Metrics
$1M+ Customers
828 customers
▲ 27.0% YoYPress Release
Forbes Global 2000 Customers
829 customers
Press Release
Free Cash Flow
$83.8 M
Press Release
Operating Cash Flow
$91.4 M
Press Release
Shares are computed over the segment total: $1.55 B. The segment total differs from consolidated revenue ($1.49 B); the company's eliminations and other lines are not in this table. Source: Press Release.
Metrics come only from the company's own filings; each one names the document it was taken from.
“AI continues to compound our advantages, creating a flywheel effect across the business. CoWork and CoCo are driving transformational outcomes for our customers, while fueling rapid adoption, user growth, new workloads, and overall platform consumption.”
- AI Flywheel Effect
- CoWork and CoCo Adoption
- Consumption Accelerating
Summary and Review
Summary
Snowflake's product revenue rose 37% year-over-year to $1.49 billion. Growth accelerated for a third straight quarter, after 34% and 30% in the prior two. Total revenue of $1.55 billion beat the roughly $1.48 billion consensus by 4.4%. Adjusted earnings per share came in at $0.62, 38.7% above the $0.45 estimate. Remaining performance obligations (RPO) grew 30% to $9 billion, and net revenue retention held at 126%. The company pointed to AI consumption as the engine.
The stock jumped about 23% in after-hours trading to around $376, having closed the regular session down about 4.4% at $305.84. The trigger was not just the quarter but the raised outlook. The company lifted its full-year product revenue target to $6.07 billion (up 36% year-over-year) from $5.84 billion. The adjusted operating margin target rose to 14.5% from 13.5%. One analyst called the results a thing of beauty. The after-hours price already exceeded the average analyst target of $331.66.
Our view is positive. The quarter was nearly flawless: revenue and earnings beat, growth accelerated, guidance was raised. Operating margin expanded more than 4 points year-over-year. The company is still unprofitable on a GAAP basis, at −$0.55 per share. The adjusted operating margin remains low at 15%. Free cash flow was just 6% of revenue. Growth is exceptional, but conversion to profit is still early. Watch whether AI consumption sustains the momentum and how fast growth converts into margin.
Full Review
Product revenue growth has accelerated for three quarters.
Snowflake's most important operating metric is product revenue. It reached $1.49 billion this quarter, up 37% year-over-year. What matters is the direction more than the level: growth was 30% and 34% in the prior quarters and is now 37%. That is an acceleration for a third straight quarter. In a consumption-based model this is a very valuable signal; customers are using the platform more intensively. Net revenue retention of 126% shows existing customers are expanding their spend. The number of customers generating $1 million or more in trailing product revenue rose to 828 (up 27% year-over-year). Remaining performance obligations (RPO) grew 30% year-over-year to $9 billion. The company emphasized that AI workloads are the main force behind this momentum.
Beat on the quarter, and a raise on the outlook.
The strongest message of the quarter came from guidance. The company lifted its full-year (FY2027) product revenue target to $6.07 billion from the prior $5.84 billion. The old target implied 31% growth, the new one 36% — a strong mid-year upward revision. The adjusted operating margin target was also raised to 14.5% from 13.5%. The third-quarter product revenue range is $1.588–1.593 billion, implying roughly 37.5% year-over-year growth. The acceleration is expected to continue. In a consumption-model company, this kind of beat-and-raise combination is the most concrete evidence that demand visibility is strengthening. It is the main reason the stock jumped about 23% after hours.
AI consumption is creating a flywheel effect.
CEO Sridhar Ramaswamy said AI continues to compound the company's advantages and is creating a flywheel effect across the business. He noted that its CoWork and CoCo products are driving transformational outcomes for customers, which in turn fuels rapid adoption, user growth, new workloads and overall platform consumption. The core of Snowflake's thesis is this: as AI applications run, more data is processed; as more data is processed, platform consumption rises; and as consumption rises, revenue grows. This quarter's three-quarter acceleration is a sign the loop is genuinely starting to spin. As investor Brad Gerstner noted, the company has gone from $1 billion of revenue in 2021 to $6 billion today, with growth still accelerating.
Margins are expanding, but profit conversion is early.
Adjusted operating margin rose to 15.3%, up from 11.0% a year ago, an expansion of more than 4 points. Improving profitability as scale grows is a positive trend. But the other half of the picture warrants caution. On a GAAP basis the company is still losing money, at −$0.55 per share in the quarter. Most of that gap comes from high stock-based compensation. Adjusted free cash flow was $92.3 million, just 6% of revenue — a relatively low cash conversion for a high-growth software company. So while the growth story is exceptional, how quickly that growth converts into sustainable profit and free cash flow is the key balance for investors to watch.
The stock already cleared the average target.
The roughly 23% after-hours jump carried the stock to around $376. That level sits 13.4% above the average analyst target of $331.66. In other words, existing analyst targets lagged the quarter. New and higher targets began arriving right after the report. That confirms the strength of the story. It also carries a warning: the stock is pricing in a near-perfect growth scenario. The valuation multiple on adjusted earnings stays high. Next quarter, watch a single line: product revenue growth. If the rate holds above 37%, the acceleration story is intact; the company's own Q3 guidance implies 37.5%. If it slips below, this quarter was the peak and the high multiple is exposed.
Looking Ahead
Strengths and Risks
6 Strengths · 5 RisksStrengths
6- Product revenue rose 37% year-over-year to $1.49 billion, with growth accelerating for three quarters
- Full-year product revenue target raised to $6.07 billion from $5.84 billionMargin target to 14.5% from 13.5%
- Net revenue retention of 126%RPO up 30% year-over-year to $9 billion
- Adjusted operating margin expanded more than 4 points year-over-year to 15.3%
- Adjusted EPS of $0.62 beat the $0.45 estimate by 38.7%
- AI consumption (CoWork, CoCo) is fueling new workloads and platform usage
Risks
5- Still unprofitable on a GAAP basis−$0.55 per share in the quarter, mostly from high stock-based comp
- Adjusted free cash flow just 6% of revenueProfit conversion is still early
- Stock cleared the average analyst target after hoursThe valuation multiple is very high
- Near-perfect growth is priced inA small slowdown ahead could trigger a sharp reaction
- The consumption-based model is directly sensitive to any tightening in enterprise budgets
What to Watch
4- Third-quarter results ~November 2026; product revenue target $1.588–1.593 billion (up 37.5% YoY)
- Clarity on the adoption and consumption contribution of AI products (CoWork, CoCo)
- Progress toward the full-year $6.07 billion product revenue target
- Post-earnings upward revisions to analyst price targets
Upcoming Earnings
To Understand This