Key Takeaways:
Snowflake reported Q2 product revenue of $1.49 billion, up 37 percent year over year, marking a third consecutive quarter of accelerating growth and beating the $1.42 billion consensus.
"Q2 marks our third consecutive quarter of product revenue growth acceleration, driven by strength in both our core data platform and a meaningful step-up in AI revenue," Brian Robins, CFO of Snowflake, said. "Importantly, we delivered this accelerating growth while expanding operating margin."
The company raised its full-year fiscal 2027 product revenue guidance to $6.07 billion, representing 36 percent year-over-year growth, up from a prior outlook of $5.84 billion. Non-GAAP operating income reached $237 million, a 15.3 percent margin versus 11 percent a year earlier, and the company lifted its full-year margin forecast to 14.5 percent from 13.5 percent. Adjusted diluted EPS came in at $0.62, beating the $0.45 consensus estimate.
Shares surged more than 20 percent in after-hours trading after closing down 4.4 percent in the regular session. Management cited a "significant jump" in AI revenue, with CoCo accounts surpassing 9,100 — adding more than 2,000 in the quarter — and CoWork expanding to 5,800 accounts. CEO Sridhar Ramaswamy said AI is "creating a flywheel effect across the business," driving new workloads and platform consumption. Customers including 1Password and Indeed chose Snowflake as their data and AI foundation, while Sayari cut costs by more than half using CoCo to migrate 12 billion records.
Total revenue reached $1.55 billion, up 35 percent year over year, above the roughly $1.49 billion analysts expected. Net revenue retention stood at 126 percent, and remaining performance obligations grew 30 percent to $9.0 billion. The company added 692 net new customers, up 32 percent year over year, including 14 Forbes Global 2000 accounts. Customers generating more than $1 million in trailing 12-month product revenue reached 828, up 27 percent.
The one soft spot: free cash flow of $83.8 million missed the roughly $104 million consensus, a 5.4 percent margin. The company maintained its full-year adjusted free cash flow margin guidance of 23 percent, suggesting management views the shortfall as timing-related.
For the third quarter, Snowflake guided product revenue of $1.588 billion to $1.593 billion, representing 37 percent to 38 percent year-over-year growth, also above the $1.51 billion consensus.
The guidance raise suggests management expects AI-driven consumption demand to persist through the second half of the fiscal year. Investors will watch peer cloud software earnings in coming weeks for confirmation that the demand recovery extends beyond Snowflake.
This article is for informational purposes only and does not constitute investment advice.
