Snowflake reports product revenue up 32% to USD $1.09B

Snowflake reported its financial results for the second quarter of fiscal 2026, with product revenue reaching USD $1.09 billion, an increase of 32% year-over-year.

The company posted total revenue for the quarter of USD $1.1 billion, matching the 32% year-over-year growth rate of its product revenue. Snowflake's net revenue retention rate reached 125% as of July 2025, indicating continuing expansion among existing customers.

Customer base

Snowflake stated it now has 654 customers with trailing 12-month product revenue greater than USD $1 million. This figure represents a 30% uptick compared to the previous year. The number of Forbes Global 2000 customers reached 751, an increase of 5% year-over-year.

The company's remaining performance obligations - a key indicator of contracted future revenue not yet recognised - stood at USD $6.9 billion, an increase of 33% year-over-year. These figures reflect continued interest in Snowflake's platform amongst existing and new enterprise customers.

Management comment

"Snowflake delivered yet another strong quarter, with product revenue of $1.09 billion, up a strong 32% year-over-year, and remaining performance obligations totaling $6.9 billion. Thousands of customers are betting their business on Snowflake and more than 6,100 accounts are using Snowflake's AI every week. Customers love that our platform is easy to use, connected to enable fluid access to data wherever it sits, and trusted by companies of all sizes and industries. We have an enormous opportunity ahead as we continue to empower every enterprise to achieve its full potential through data and AI," said Sridhar Ramaswamy, CEO of Snowflake.

Profitability metrics

For the quarter, non-GAAP product gross profit was reported at USD $833.6 million, resulting in a non-GAAP product gross margin of 76%. On a GAAP basis, product gross profit was USD $788.2 million, yielding a product gross margin of 72%.

Non-GAAP operating income for the period was USD $127.6 million, which translates to an 11% operating margin. On a GAAP basis, the company posted an operating loss of USD $340.3 million, equating to a negative operating margin of 30%.

Net cash provided by operating activities reached USD $74.9 million, amounting to 7% of revenue, while free cash flow stood at USD $58.2 million or 5%. Adjusted free cash flow for the quarter totalled USD $67.8 million, representing 6% of revenue.

Guidance

Snowflake provided its outlook for the third quarter and full fiscal year 2026. For the third quarter, product revenue is expected to be in the range of USD $1.125 billion to USD $1.130 billion, representing anticipated year-over-year growth between 25% and 26%. Non-GAAP operating income margin is forecast at 9% for the third quarter.

For the full fiscal year 2026, Snowflake projects product revenue of USD $4.395 billion, a 27% year-over-year increase. The company anticipates achieving a non-GAAP product gross profit margin of 75%, a non-GAAP operating income margin of 9%, and an adjusted free cash flow margin of 25% for the full year.

Key operational metrics

Snowflake tracks key business metrics including product revenue, net revenue retention rate, and customers with trailing 12-month product revenue greater than USD $1 million. Product revenue is driven by customer consumption rather than subscription contracts, with flexibility provided to customers to use resources according to their needs. The company notes that its consumption-based model distinguishes it from subscription-based software companies.

Net revenue retention rate is calculated based on the consumption of existing customers over a two-year trailing period, accounting for factors such as acquisitions or consolidations.

In its operational disclosures, Snowflake clarified that customer numbers are based on unique contractual accounts and may include organisations with multiple divisions or subsidiaries as separate customers. The Forbes Global 2000 customer metric is based on the 2025 Forbes list and is adjusted annually to account for changes to the list and corporate structure events.

Non-GAAP measures

The announcement included several non-GAAP financial measures, such as product gross profit, operating income, and adjusted free cash flow. These exclude, where appropriate, stock-based compensation expenses, amortisation of acquired intangibles, expenses related to acquisitions, debt issuance costs, restructuring charges, and certain other non-cash or non-recurring items. Snowflake asserted that these adjusted metrics provide supplemental information on core business performance and are used internally for decision-making purposes.

Management stressed that non-GAAP results should be considered alongside GAAP financials, as both provide insight into the company's financial health. The company's explanations and reconciliation tables were provided together with the announcement for clarity.