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Snowflake Inc. (SNOW)·Q2 2026 Earnings Summary

Executive Summary

  • Q2 FY26 product revenue rose 32% YoY to $1.09B, and total revenue was $1.145B; non-GAAP diluted EPS was $0.35, beating S&P Global consensus, while GAAP EPS was -$0.89 .
  • Net revenue retention improved to 125% and RPO reached $6.9B (+33% YoY), with million-dollar customers increasing to 654 and Forbes Global 2000 customers at 751 .
  • Management raised FY26 product revenue guidance to $4.395B (from $4.325B) and lifted non-GAAP operating margin to 9% (from 8%); Q3 product revenue guidance is $1.125–$1.130B with 9% non-GAAP operating margin .
  • Upside drivers included new workload migrations at large customers, accelerating AI-related use cases, and strong Azure growth (+40% YoY off a lower base), while hiring ramp in sales/SE and continued SBC weighed on GAAP profitability .

What Went Well and What Went Wrong

What Went Well

  • Record acceleration: Product revenue grew 32% YoY to $1.0905B, with non-GAAP operating margin expanding to 11% and non-GAAP product gross margin at 76% .
  • AI adoption and innovation: “More than 6,100 accounts are using Snowflake’s AI every week,” and Snowflake Intelligence, Cortex AI SQL, Gen2 Warehouse, Postgres, and OpenFlow broadened platform value; “we launched approximately 250 capabilities” in H1 .
  • Enterprise momentum and cloud partner traction: Azure was fastest-growing cloud (+40% YoY), with improved field alignment and EMEA strength, supporting new logo wins and workload migrations .

What Went Wrong

  • GAAP losses persist: GAAP operating loss of $(340.3)M and GAAP net loss of $(297.9)M, driven largely by stock-based compensation and continued investment intensity .
  • Free cash flow seasonality: Non-GAAP adjusted FCF margin was 6% in Q2 (weighted to 2H), reflecting deal timing and renewals; CFO reiterated FCF strength is expected in 2H .
  • Professional services gross margin remains negative on GAAP (-28%), though a large milestone recognition boosted services revenue temporarily; management prefers partners to deliver most services .

Financial Results

MetricQ4 2025Q1 2026Q2 2026
Revenue ($USD)$986.77M $1.04207B $1.14497B
Product Revenue ($USD)$943.30M $996.81M $1,090.50M
GAAP Gross Profit ($USD)$653.59M $693.29M $773.15M
GAAP Gross Margin %66% 67% 68%
Non-GAAP Product Gross Margin %76% 76% 76%
GAAP Operating Income (Loss) ($USD)$(386.68)M $(447.26)M $(340.28)M
Non-GAAP Operating Income ($USD)$92.85M $91.66M $127.57M
GAAP Diluted EPS ($USD)$(0.99) $(1.29) $(0.89)
Non-GAAP Diluted EPS ($USD)$0.30 $0.24 $0.35
YoY Revenue Growth %27% 26% 32%

Actual vs S&P Global Consensus (Q2 2026):

MetricConsensusActual
Revenue ($USD)$1,087.48M*$1,144.97M
Primary EPS (Non-GAAP, $USD)$0.2665*$0.35
Values retrieved from S&P Global.*

Segment Breakdown:

MetricQ4 2025Q1 2026Q2 2026
Product Revenue ($USD)$943.30M $996.81M $1,090.50M
Professional Services & Other Revenue ($USD)$43.47M $45.26M $54.47M
PS & Other GAAP Gross Margin %(38%) (40%) (28%)

KPIs:

KPIQ4 2025Q1 2026Q2 2026
Net Revenue Retention (NRR)126% 124% 125%
RPO ($USD)$6.9B $6.7B $6.9B
Customers >$1M TTM Product Revenue580 606 654
Forbes Global 2000 Customers745 754 751

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Product Revenue ($USD)Q3 FY26N/A$1,125–$1,130M New
Non-GAAP Operating MarginQ3 FY26N/A9% New
Weighted-average diluted sharesQ3 FY26N/A374M New
Product Revenue ($USD)FY26$4,325M $4,395M Raised
Non-GAAP Product Gross MarginFY2675% 75% Maintained
Non-GAAP Operating MarginFY268% 9% Raised
Non-GAAP Adjusted FCF MarginFY2625% 25% Maintained
Weighted-average diluted sharesFY26372M 372M Maintained

Earnings Call Themes & Trends

TopicQ4 FY25 (Prior-2)Q1 FY26 (Prior-1)Q2 FY26 (Current)Trend
AI/Technology InitiativesAI Data Cloud positioning; strong customer base AI Data Cloud narrative maintained Broad AI adoption (6,100 accounts weekly); Snowflake Intelligence, Cortex AI SQL, Gen2 Warehouse, Postgres, OpenFlow; ~250 capabilities launched H1 Strong acceleration
Cloud PartnershipsGeneral platform interoperability Continued ecosystem build Azure fastest-growing cloud +40% YoY; field alignment; EMEA strength Improving cross-cloud traction
Product PerformanceHigh non-GAAP product GM (76–78%) Non-GAAP product GM 76% Non-GAAP product GM 76%; GAAP GM 68% Stable high margins
Regional TrendsGlobal customer base Global partners EMEA contributing alongside Azure alignment Positive
Consumption/MigrationsLarge RPO; migrations ongoing Core analytics strong Upside from large customer workload migrations; normalized after go-live Upside events driving near-term
Sales ExecutionInvesting in GTM Sales org performance management in prior year Largest 6-month sales/SE hiring ramp; productivity focus Capacity expansion

Management Commentary

  • CEO: “Snowflake delivered yet another strong quarter, with product revenue of $1.09 billion… and remaining performance obligations totaling $6.9 billion… more than 6,100 accounts are using Snowflake’s AI every week.”
  • CEO: “AI is a core reason why customers are choosing Snowflake, influencing nearly 50% of new logos won in Q2.”
  • CFO: “Q2 non-GAAP product gross margin was 76.4%. Non-GAAP operating margin was 11%... We ended the quarter with $4.6B in cash, cash equivalents, short-term and long-term investments.”
  • CFO: “For Q3, we expect product revenue between $1,125M and $1,130M… We now expect product revenue of $4,395M for FY 2026… non-GAAP operating margin of 9% and adjusted FCF margin of 25%.”

Q&A Highlights

  • Azure momentum: “Azure was our fastest growing cloud. It actually grew 40% year over year… attributable to better alignment between our field and Microsoft… EMEA strength.”
  • Upside drivers: Combination of strong core analytics consumption, AI budgets/use cases, and large workload migrations at existing customers; new features outperformed expectations .
  • NRR dynamics: Improvement driven by major workload migrations causing temporary consumption upticks; optimizations remain normal and managed proactively .
  • Sales capacity: Largest 6-month hiring ramp in sales/SE; focus on productivity and specialty roles to support pipeline and migrations .
  • Postgres/Crunchy integration: “Snowflake Postgres” in preview soon, with enterprise readiness (customer-managed keys, replication, continuity); strong interest .

Estimates Context

  • Q2 FY26 actuals beat consensus: Revenue $1.145B vs $1.087B*; non-GAAP diluted EPS $0.35 vs $0.2665* . Values retrieved from S&P Global.*
  • Forward estimates context: Q3 FY26 consensus revenue $1.183B* and EPS $0.3113*, while management guided product revenue $1.125–$1.130B and 9% non-GAAP operating margin . Values retrieved from S&P Global.*
  • FY26 consensus revenue $4.607B* vs company guidance $4.395B; the company raised FY product revenue guidance and operating margin, which may prompt estimate recalibration toward management’s view . Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Consumption-led upside: Q2 beat driven by large customer workload migrations and strong core analytics consumption; expect normalization of consumption post go-live .
  • AI adoption is scaling: 6,100 accounts using AI weekly; Snowflake Intelligence and Cortex are becoming revenue drivers, with Gen2 Warehouse and OpenFlow improving performance and data connectivity .
  • Cloud partner traction: Azure growth (+40% YoY) and EMEA alignment are catalysts for new logos and migrations; AWS remains largest base .
  • Margin discipline: Non-GAAP operating margin expanded to 11%; FY26 margin guidance raised to 9% alongside sustained 75% non-GAAP product gross margin .
  • KPIs strengthening: NRR ticked up to 125%, RPO back to $6.9B, and million-dollar customers jumped to 654, indicating durable enterprise penetration .
  • Cash and FCF cadence: $4.6B liquidity and adjusted FCF margin expected to be 25% in FY26; FCF seasonality weighted to 2H given billings/renewals .
  • Near-term focus: Monitor Q3 product revenue delivery against $1.125–$1.130B guidance and enterprise AI monetization progress; watch Azure-driven EMEA pipeline and large workload migration timing .