Snowflake Inc. Q1 FY2026 earnings

Snowflake reported first quarter fiscal 2026 revenue of $1.04 billion, up 25.7% from $828.71 million in the prior-year quarter. The consumption model kept working. Remaining performance obligations reached $6.70 billion, up 34.0% from $5.00 billion a year earlier. Net revenue retention was 124% as of April 30, 2025, and the company ended the quarter with 11,578 total customers, up from 11,127 at the end of the prior fiscal year. Large accounts carry the business: 606 customers generated more than $1 million in trailing twelve-month product revenue, 27% more than a year ago, and 754 Forbes Global 2000 companies were on the platform, up 4% year over year. Those large customers contributed about 41% of revenue in the quarter.

Profitability on a GAAP basis went the other way. Gross profit rose 24.6% to $693.29 million, but gross margin slipped to 66.5% from 67.1%. Operating loss widened to $447.26 million from $348.57 million, and operating margin fell to negative 42.9% from negative 42.1%. A $106.5 million impairment charge tied to the cease-use of the San Mateo office landed in general and administrative expense and did much of the damage. Net loss widened to $430.09 million from $316.99 million, and diluted loss per share widened to $1.29 from $0.95.

Non-GAAP numbers tell a different story, and management leans on them. Non-GAAP product gross profit was $754.1 million, a 76% margin, and non-GAAP operating income was $91.7 million, a 9% margin, against $36.2 million a year earlier. The gap between the two views is mostly stock-based compensation, which totaled $379.46 million in the quarter, plus the impairment charge and amortization of acquired intangibles. The company keeps investing heavily in research and development, sales and marketing, and the broader AI Data Cloud, and those costs are still scaling alongside revenue rather than behind it.

Cash generation slowed. Operating cash flow was $228.37 million, down 35.8% from $355.47 million a year earlier, and free cash flow was $183.4 million. Adjusted free cash flow, which adds back net cash paid on payroll tax items on employee stock transactions, was $206.3 million. Capital expenditures rose 172.3% to $44.99 million, and deferred revenue was $2.31 billion, up 19.3% from the prior-year quarter. Management attributed the operating cash flow decline to higher cash expenditures to support growth and the timing of payments and collections. The company repurchased 3.2 million shares for $490.6 million during the quarter, leaving $1.5 billion available under its program.

Guidance for the second quarter of fiscal 2026 puts product revenue at $1,035 million to $1,040 million, about 25% growth, with a non-GAAP operating margin of 8%. For the full fiscal year 2026, management guided product revenue of $4,325 million, roughly 25% growth, a non-GAAP product gross margin of 75%, a non-GAAP operating margin of 8%, and an adjusted free cash flow margin of 25%. The risk list is familiar: macro pressure that pushes customers to rationalize budgets and optimize consumption, shortened contract durations, competition, and cybersecurity threat activity directed at customers. Management also warns that net revenue retention should decline over the long term as long-tenured customers become a larger share of the base. About half of remaining performance obligations are expected to convert to revenue in the twelve months ending April 30, 2026, and the weighted-average remaining life of capacity contracts was 2.4 years.

The quarter shows a business still growing at a mid-twenties pace on the top line while absorbing heavier investment and one-off charges below it. Full-year guidance keeps the growth rate near the same level, which implies management expects consumption trends to hold. With $4.9 billion in cash, cash equivalents, and short-term and long-term investments, Snowflake has room to keep funding that plan, the buyback, and any strategic acquisitions it chooses to pursue.