Summary
Snowflake's fiscal 2022 second quarter, ended July 31, 2021, produced revenue of $272.2 million, up 104% from the prior-year quarter. Six-month revenue through July 31, 2021 was $501.1 million, up 107.1%. Gross profit for the quarter was $166.1 million, up 100.8%, though gross margin slipped to 61.0%, down 1.1 percentage points from the prior-year quarter. The GAAP picture stayed deeply unprofitable. The quarter's operating loss was $200.1 million and widened from the prior-year quarter. Operating margin was -73.5%, down 15.2 percentage points. Net loss was $189.7 million, while diluted EPS improved to -$0.64. A large share of that gap comes from stock-based compensation. Non-GAAP operating loss was $21.9 million, a negative 8% operating margin, and non-GAAP total gross profit was $189.7 million, or 70% of revenue.
Consumption and customer metrics held up. Remaining performance obligations were $1.5 billion at July 31, 2021, and deferred revenue, current portion, was $701.8 million. Net revenue retention was 169%, up from 158% a year earlier. Total customers reached 4,990. The count of customers with trailing 12-month product revenue above $1 million climbed to 116 from 56 a year earlier. Cash flows improved. Operating cash flow was negative $6.1 million for the quarter, up $32.6 million from the prior-year quarter. Year-to-date operating cash flow was $15.7 million, up $61.0 million. Capital expenditures were $3.5 million for the quarter, down $1.2 million, and $9.9 million year to date, up $3.2 million. Non-GAAP free cash flow was negative $12.0 million, and adjusted free cash flow was $2.8 million, the third quarter in a row of positive adjusted free cash flow.
Guidance covers both the next quarter and the full fiscal year. For the third quarter of fiscal 2022, management guided product revenue to $280 million to $285 million. It guided the third-quarter non-GAAP operating loss margin to negative 7% and weighted-average shares to 303 million. For the full fiscal year, product revenue guidance is $1,060 million to $1,070 million. Full-year product gross profit margin is guided to 73%, the operating loss margin to negative 9%, and adjusted free cash flow margin to 7%. Full-year weighted-average shares are expected at 300 million.
The risks center on the consumption model. Snowflake records product revenue as customers consume compute, storage, and data transfer resources, so results can swing with customer behavior. The MD&A warns that slower consumption, new software releases, or hardware improvements such as better storage compression could cut resource use and revenue. Competition, pricing, and discounting could pressure gross margin. COVID-19 remains a factor: the company saw longer sales cycles for some prospective customers and delays in professional services, along with a modest lift from higher existing-customer consumption. Concentration matters too. Customers from the Fortune 500, 212 of them, contributed about 27% of revenue for the six months ended July 31, 2021. Management has said net revenue retention will decline over time as the customer base matures. Stock-based compensation is a heavy drag, with $1.5 billion of unrecognized cost to be recognized over a weighted-average period of 3.1 years. The MD&A also states that deferred revenue is not a meaningful indicator of future revenue in any given period. Headline growth is intact, but the operating loss and the path to durable cash generation remain the open questions.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2022 | Q1 FY2022 | QoQ | Q2 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $272.2M | $228.9M | +18.9% | — | — |
| Gross profit | $166.1M | $131.6M | +26.2% | — | — |
| Gross margin | 61.0% | 57.5% | +3.5 pp | — | — |
| Research & development | $118.1M | $109.8M | +7.6% | — | — |
| Sales & marketing | $182.9M | $166.8M | +9.7% | — | — |
| General & administrative | $65.2M | $60.6M | +7.7% | — | — |
| Total operating expenses | $366.2M | $337.2M | +8.6% | — | — |
| Operating income (loss) | -$200.1M | -$205.6M | +2.7% | — | — |
| Operating margin | -73.5% | -89.8% | +16.3 pp | — | — |
| Net income (loss) | -$189.7M | -$203.2M | +6.6% | — | — |
| Net margin | -69.7% | -88.8% | +19.1 pp | — | — |
| Diluted EPS | -$0.64 | — | — | — | — |
Risks
The company's consumption-based revenue model limits visibility into the timing of revenue recognition, as customers control when they consume resources. Total revenue increased 104.4% year-over-year to $272.2 million in Q2 FY2022, but customers may consume more slowly than expected, causing revenue fluctuations.
The company faces competition from large public cloud providers like AWS, Azure, and GCP, which are also its infrastructure providers and competitors. A substantial majority of its business runs on AWS, and these providers could embed competing features, bundle products, or provide unfavorable pricing, harming Snowflake's competitive position and gross margins.
The company has a history of operating losses, with net loss widening to $189.7 million in Q2 FY2022 from $77.6 million in Q2 FY2021. It expects costs to increase and may not achieve profitability, as it intends to invest significantly in growth rather than optimize for near-term profitability.
Stock-based compensation expense increased significantly to $164.0 million in Q2 FY2022 from $18.2 million in Q2 FY2021, primarily due to IPO-related RSU recognition. This negatively impacted total gross margin, which declined to 61.0% in Q2 FY2022 from 62.1% in Q2 FY2021.
Sales to large enterprise customers involve longer sales cycles, substantial upfront costs, and less predictability. The company plans to expand its direct sales force, but failure to hire, develop, and retain effective sales personnel could harm revenue growth.
The COVID-19 pandemic could continue to adversely impact business, including lengthening sales cycles, reduced demand, and difficulties in collections. Although results for Q2 FY2022 were not adversely impacted, uncertainty remains regarding future waves and customer spending.
Future growth depends on expanding partner relationships with global system integrators, resellers, and other partners. If the company fails to grow and maintain these relationships, its ability to attract and retain customers and expand consumption may be impacted.
The company experiences seasonality with higher orders in the fourth fiscal quarter, impacting remaining performance obligations (RPO). This seasonality is expected to become more pronounced as it targets large enterprise customers.
SaaS KPIs
All quarters →Net Revenue Retention Rate
Total Customers
Remaining Performance Obligations
Non-GAAP Operating Margin
Adjusted Free Cash Flow Margin
Free Cash Flow Margin
Adjusted Free Cash Flow
Product Revenue
Customers with Trailing 12-Month Product Revenue Greater than $1 Million
Free Cash Flow
Non-GAAP Product Gross Margin
Summary, forecast, risks and KPIs are extracted from Snowflake Inc.'s SEC filings for Q2 FY2022 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.