Snowflake — Second Quarter Fiscal 2027 Earnings Summary

Financial Performance

• Total revenue was $1.55 billion, representing 35% year-over-year growth.
• Product revenue was $1.49 billion, representing 37% year-over-year growth.
• Net revenue retention rate was 126%.
• GAAP operating loss was $263.0 million (17.0% of revenue); Non-GAAP operating income was $237.0 million (15.3% of revenue).
• GAAP net loss attributable to Snowflake Inc. was $191.7 million; Non-GAAP operating margin expanded to 15.3%.
• Net cash provided by operating activities was $91.4 million (5.9% of revenue).
• Free cash flow was $83.8 million (5.4% of revenue); Adjusted free cash flow was $92.3 million (6.0% of revenue).
• Remaining performance obligations (RPO) were $9.00 billion, representing 30% year-over-year growth.
• Customers with trailing 12-month product revenue greater than $1 million reached 828, up 27% year-over-year.
• Total customers with trailing 12-month product revenue greater than $1 million reached 828, up 27% year-over-year.
• 829 Forbes Global 2000 customers.

Guidance and Future Outlook

• Full-year fiscal 2027 product revenue guidance raised to $6.07 billion, representing 36% year-over-year growth (previously $5.84 billion or 31%).
• Full-year fiscal 2027 non-GAAP operating margin guidance raised to 14.5% (previously 13.5%).
• Full-year fiscal 2027 non-GAAP product gross margin guidance set at 74.0%.
• Full-year fiscal 2027 non-GAAP adjusted free cash flow margin guidance set at 23.0%.
• Third quarter fiscal 2027 product revenue guidance set at $1,588 million to $1,593 million, representing 37% to 38% year-over-year growth.
• Third quarter fiscal 2027 non-GAAP operating margin guidance set at 15.5%.
• Full-year fiscal 2027 non-GAAP weighted-average diluted shares guidance set at 380 million.
• Third quarter fiscal 2027 non-GAAP weighted-average diluted shares guidance set at 382 million.

Business Segments and Product Lines

• CoCo (AI agent platform) surpassed 9,100 accounts, adding more than 2,000 accounts in the quarter.
• CoWork expanded to 5,800 accounts.
• Launched over 330 product capabilities to general availability in the first half of fiscal 2027, up 35% year-over-year.
• Introduced Cortex Sense for business context and Cortex AI Gateway, integrating Natoma to extend AI from insight to action.
• Added 692 net new customers in the quarter, up 32% year-over-year.
• Added 14 net new Forbes Global 2000 customers in the quarter.
• Customer wins include 1Password and Indeed choosing Snowflake for data and AI transformation; Sayari using CoCo to migrate 12 billion records while cutting costs by more than half.

Market and Competitive Landscape

• Management describes the market as an "enterprise AI revolution" where AI compounds advantages and creates a flywheel effect.
• The "Agentic Enterprise" is identified as a key trend running on Snowflake.
• Rapid pace of innovation and tight go-to-market execution are cited as positioning the company to capture market opportunities.

Risks and Challenges

• Forward-looking statements are subject to risks including general market conditions, inflation, tariffs, trade wars, government shutdowns, and interest rate fluctuations.
• Risks include the ability to attract and retain customers, execute AI strategy, and respond to emerging technology trends.
• Potential variability in stock-based compensation, employee stock transactions, and future hiring/retention needs impacts GAAP results.
• Risks related to the conversion of 0% convertible senior notes due 2027 and 2029, including settlement timing and method (cash, shares, or combination).
• Risks include customer budget rationalization, shortened contract durations, and the extent to which customers optimize consumption of AI features.
• Risks related to cybersecurity threats, intellectual property protection, and ability to manage growth.

Management Commentary and Tone

• CEO Sridhar Ramaswamy stated the company delivered a "strong quarter" with accelerating product revenue growth driven by AI.
• CFO Brian Robins highlighted the third consecutive quarter of product revenue growth acceleration and the delivery of this growth while expanding operating margin.
• Management emphasized balancing growth with operational discipline as a top priority.
• Tone is confident regarding the "flywheel effect" of AI and the rapid adoption of CoWork and CoCo.

Other Key Points

• Fiscal year ends January 31.
• Reconciliation of GAAP to non-GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty of future expenses.
• The potential impact of future stock repurchases is not reflected in the guidance for weighted-average shares used in computing net income per share.
• The dilutive effect of convertible notes is reflected in guidance, estimated at approximately 10 million shares per quarter and full-year, net of capped call transactions.
• The company no longer attributes a portion of non-GAAP net income to noncontrolling interest as of the fourth quarter of fiscal 2026.
• Conference call scheduled for September 2, 2026, at 2 p.m. Pacific Time.