Summary
Snowflake's second quarter of fiscal 2027, which ended July 31, 2026, produced revenue of $1.55 billion, up 35.1% from the prior-year quarter. The company said the period marked a third consecutive quarter of product revenue growth acceleration, helped by the core data platform and a meaningful step-up in AI revenue. Customer counts continued to build. Total customers reached 14,554 as of July 31, 2026, up from 13,245 as of January 31, 2026, and 692 net new customers were added in the quarter, a figure the company said was up 32% year over year. The large-customer cohort expanded too, to 828 accounts with more than $1 million in trailing 12-month product revenue, up 27%, and 829 Forbes Global 2000 customers. Net revenue retention was 126%, compared with 125% as of July 31, 2025.
Margins improved but GAAP results stayed negative. Gross profit was $1.04 billion, up 34.1%, and gross margin was 67.0%, down 0.5 percentage points from the prior-year quarter. The operating loss narrowed to $262.97 million from $340.28 million, and operating margin improved to -17.0% from -29.7%. The net loss narrowed to $191.72 million from $298.02 million, and diluted loss per share narrowed to $0.55 from $0.89. On a non-GAAP basis, the company reported operating income of $237.0 million, a 15.3% margin, and non-GAAP net income of $235.3 million. The difference between the two presentations is mostly stock-based compensation.
Cash generation was positive. Net cash provided by operating activities was $91.4 million in the quarter, up 22.0%, and capital expenditures were $7.55 million, down 54.7%. Free cash flow, a non-GAAP measure, was $83.8 million, and adjusted free cash flow was $92.3 million. For the first six months of fiscal 2027, operating cash flow was $334.58 million, up 10.3%, and capital expenditures were $18.00 million, down 70.8%. Deferred revenue, current portion, was $2.57 billion, up 13.2% from a year earlier, while remaining performance obligations were $9.00 billion, up 30.4%. The company expects about 54% of RPO to be recognized as revenue in the 12 months ending July 31, 2027, and the weighted-average remaining life of capacity contracts was 2.4 years.
Guidance points to continued growth. For the third quarter of fiscal 2027, product revenue is guided to $1,588 million to $1,593 million, which the company said implies 37% to 38% year-over-year growth, with a non-GAAP operating margin of 15.5% and 382 million non-GAAP diluted shares. For the full fiscal year, the company raised product revenue guidance to $6,070 million, or 36% growth, from a previous $5,840 million and 31% growth. Full-year guidance also calls for a non-GAAP product gross margin of 74.0%, a non-GAAP operating margin of 14.5%, up from 13.5%, a non-GAAP adjusted free cash flow margin of 23.0% and 380 million non-GAAP diluted shares.
Costs and commitments are climbing with the AI buildout. In April 2026, the company amended a third-party cloud infrastructure agreement, committing to $6.0 billion of cumulative minimum spend over a five-year term ending March 31, 2031, with annual minimums ranging from $900.0 million to $1.25 billion. It also amended an AI service provider agreement, adding $190 million to the first contract year and raising the total minimum purchase commitment to $390 million, of which $270 million remained as of July 31, 2026. Unrecognized compensation cost on unvested equity awards was about $3.8 billion, to be recognized over a weighted-average period of 2.6 years. Management continues to flag customers rationalizing budgets, shortening contract durations and optimizing AI usage, along with competition and new pricing approaches such as AI credits and tiered storage. Snowflake repurchased 1.7 million shares for $300.0 million in the first six months of fiscal 2027, leaving $802.7 million available under the program.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2027 | Q1 FY2027 | QoQ | Q2 FY2026 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.55B | $1.39B | +11.2% | $1.14B | +35.1% |
| Gross profit | $1.04B | $926.5M | +11.9% | $773.2M | +34.1% |
| Gross margin | 67.0% | 66.6% | +0.4 pp | 67.5% | -0.5 pp |
| Research & development | $567.5M | $534.9M | +6.1% | $492.0M | +15.3% |
| Sales & marketing | $611.6M | $589.0M | +3.8% | $502.0M | +21.8% |
| General & administrative | $120.6M | $128.7M | -6.3% | $119.5M | +0.9% |
| Total operating expenses | $1.30B | $1.25B | +3.8% | $1.11B | +16.7% |
| Operating income (loss) | -$263.0M | -$326.2M | +19.4% | -$340.3M | +22.7% |
| Operating margin | -17.0% | -23.4% | +6.4 pp | -29.7% | +12.7 pp |
| Net income (loss) | -$191.7M | -$295.6M | +35.1% | -$297.9M | +35.6% |
| Net margin | -12.4% | -21.3% | +8.9 pp | -26.0% | +13.6 pp |
| Diluted EPS | -$0.55 | -$0.86 | +$0.31 | -$0.89 | +$0.34 |
Risks
Enterprise adoption of AI may significantly transform the competitive landscape, as frontier AI model providers may vertically integrate into data storage and management layers or develop their own database solutions, and companies may use AI to develop software internally, reducing demand for third-party solutions. Public cloud providers AWS, Azure, and GCP are also primary competitors, and Snowflake runs a substantial majority of its business on AWS.
Snowflake's AI strategy relies on incorporating third-party frontier AI models such as Anthropic and OpenAI, whose providers have substantial leverage over pricing and commercial terms. It has accepted and may continue to accept non-standard terms that contribute to margin compression, and access could be suspended or restricted, while open-source models require significant infrastructure investment.
Adverse macro- and microeconomic conditions, including inflation, high interest rates, tariffs, and geopolitical conflicts, have caused and may continue to cause customers to rationalize budgets, prioritize cash flow management, shorten contract duration, and optimize consumption, including by reducing storage through shorter data retention policies and optimizing AI usage.
Because revenue is recognized on consumption rather than ratably over contract terms, Snowflake has limited visibility into the timing of revenue recognition. Customers have flexibility in the timing and level of consumption, and unexpected fluctuations may cause actual results to differ from forecasts.
Following May 2024 cyberattacks on customer Snowflake accounts, Snowflake has faced numerous lawsuits, regulatory investigations, and lawmaker inquiries, even though it identified no vulnerability or misconfiguration in its systems. Additional similar attacks have been disclosed, and under the shared responsibility model Snowflake may suffer reputational harm even when customers fail to implement MFA and network access policies.
Snowflake is named in securities class action lawsuits, a class action alleging copyright infringement in connection with large language model training, and numerous class actions related to cybersecurity matters. These proceedings may result in substantial costs, divert management attention, and may not be fully covered by insurance.
Gross margin declined to 67.0% in FY2027 Q2 from 67.5% in FY2026 Q2, and product gross margin was 71% compared with 72% in the prior-year periods, due to costs from newly launched product capabilities that have not yet reached economies of scale. AI offerings and third-party model terms may contribute to further margin compression.
Sales to large enterprises involve longer sales cycles, stronger customer leverage in negotiating pricing and terms, extensive compliance and vendor diligence programs, and higher upfront costs. Snowflake has historically seen consumption growth from large enterprises take longer than from smaller enterprises.
Sales to federal, state, local, and foreign governments and heavily regulated organizations require special contract terms, non-standard deployments, supply chain restrictions, and certifications such as FedRAMP Class C/D and Department of War Impact Levels 4 and 5. Failure to obtain or maintain these could restrict sales and increase compliance costs.
Snowflake has material minimum purchase commitments, including a cumulative $6.0 billion third-party cloud infrastructure commitment through March 2031 and a $390 million AI service provider commitment through November 2028. If it fails to meet minimum spend requirements, it may be required to pay the difference.
Execution of AI strategy depends on access to GPUs and the ability to recruit and retain AI-skilled personnel, both currently in high demand. Snowflake has experienced and may continue to experience difficulties sourcing GPUs, and long-term commitments in an unpredictable market may lead to GPU spending in excess of actual utilization.
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
Forbes Global 2000 Customers
Free Cash Flow
Customers with Trailing 12-Month Product Revenue > $1 Million
Customers with Trailing 12-Month Product Revenue > $10 Million
Customers with Trailing 12-Month Product Revenue > $5 Million
Summary, forecast, risks and KPIs are extracted from Snowflake Inc.'s SEC filings for Q2 FY2027 (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 6, 2026.