Key Highlights

● Product revenue was $1,491.9 million, up 37% year on year.

● Full-year product revenue forecast rose to $6,070 million from $5,840 million.

● Net revenue retention was 126% with 828 customers above $1 million.

● The fiscal 2027 non-GAAP operating margin target rose to 14.5%.

A higher forecast after faster growth

Snowflake Inc. (NYSE:SNOW) reported results for the second quarter of fiscal 2027, which ended on 31 July 2026, alongside a conference call on 2 September 2026. Product revenue was $1,491.9 million, up 37% year on year, and the company raised its full-year product revenue forecast to $6,070 million, up 36%, from a previous $5,840 million, or 31%. The revision is the clearest indication of how management now views demand for its data platform. Chief executive Sridhar Ramaswamy described it as another strong quarter, and the raised operating margin target accompanies the higher revenue outlook.

Business and sector position

Snowflake provides a cloud data platform that lets organisations store, process and analyse information and build artificial intelligence applications on it. Revenue is largely consumption based, meaning customers pay for the computing and storage they use, so product revenue reflects usage over time. The company competes with the large cloud providers' own data services and with other data and analytics vendors, while also running on the major public clouds. Its customers include many of the world's largest companies, which often expand usage gradually as more workloads and data move onto the platform. Usage varies by customer workload.

What the latest report showed

Total revenue was $1,546.8 million, up 35%. Remaining performance obligations were $9.00 billion, up 30%, and the net revenue retention rate was 126%. Snowflake had 828 customers with trailing twelve-month product revenue above $1 million, up 27%, and added 692 net new customers in the quarter. It counted 829 Forbes Global 2000 customers. Non-GAAP product gross margin was 74.7%, and the company said more than 330 product capabilities reached general availability in the first half. The company also launched Cortex Sense and Cortex AI Gateway, which integrates Natoma, as it extends the platform towards artificial intelligence applications. Net revenue retention of 126% means existing customers spent more than a year earlier.

Financial performance and context

Non-GAAP operating income was $237.0 million, a margin of 15.3%, while the GAAP net loss was $191.7 million, or $0.55 per share. Adjusted free cash flow was $92.3 million, a 6.0% margin. Cash and investments were about $4.33 billion at 31 July 2026, against $2.28 billion of convertible senior notes. Snowflake made no share repurchases in the quarter, having bought back $300.0 million in the first six months of the year, compared with $490.6 million in the same period last year. Product revenue of $1,491.9 million compares with product revenue guidance for the third quarter of about $1.59 billion, implying continued sequential growth. Goodwill rose from about $1.19 billion to $1.64 billion in the half, and $254 million was paid for business combinations.

Risks and uncertainties

Consumption pricing means revenue can vary with customer usage and optimisation decisions, and the GAAP loss shows that profitability on that basis has yet to arrive. The full-year adjusted free cash flow margin forecast is 23.0%, well above the 6.0% reported for this quarter, so reaching that target depends on stronger cash generation in other quarters. Competition from hyperscale providers and shifts in customer data strategy are further uncertainties. Management has also paid for acquisitions this year, so integration risk is relevant.

Third-quarter forecast under test

For the third quarter, Snowflake guides to product revenue of $1,588 million to $1,593 million, up 37% to 38%, and a non-GAAP operating margin of 15.5%. For the full year it targets a non-GAAP operating margin of 14.5%, raised from 13.5%, and non-GAAP product gross margin of 74.0%. Developments to follow include the pace of new artificial intelligence product adoption, net revenue retention, large-customer growth and whether the company resumes repurchases. The next quarterly report will test the third-quarter forecast.