Snowflake reported the quarter ended 31 July after the US close on 2 September with $1.547 billion of total revenue and $0.62 of non-GAAP diluted earnings per share, against consensus of $1.48 billion and $0.45. Revenue beat by 4.5%, earnings by 37.8%. On a GAAP basis the quarter lost $0.55 a share. The full figure set is on the release page.
The number the market trades is product revenue, and it came in at $1.492 billion, up 36.8% year on year — a third consecutive quarter of acceleration, and 5.25% above the midpoint of the company's own guide. Snowflake then raised full-year product revenue to $6.07 billion from $5.84 billion. The shares rose about 22% after hours, to $374.63 against a $305.84 close.
Two things qualify that. About one percentage point of the raised full-year growth is the Observe acquisition rather than the platform, which the chief financial officer said plainly. And remaining performance obligations fell $210 million sequentially to $9.00 billion, the second consecutive quarterly decline, while revenue accelerated.
What the preview asked, and what the print answered
Product revenue against the $1,415-1,420 million guide and the $1,424 million consensus implied — $1,492 million. Our preview set the historical beat band at 2.4-5.5% above the guided midpoint. This one landed at 5.25%, at the top of that band and the fourth straight beat. Nothing about the guide's conservatism changed.
The full-year guide, then at $5,840 million — raised to $6,070 million. The preview called this the anchor of the bear case in our model, and said that leaving it alone after a beat would turn an implied 29.5% second-half deceleration into a forecast. It was not left alone: the raise is $230 million, and management now guides 36% growth against 31%. But roughly a point of that is acquired, so the organic raise is smaller than the headline.
Free cash flow against $58.2 million and a 5.1% margin — $83.8 million and 5.42%. Up 43.9% on the year-ago July quarter. As the preview said, the quarterly figure looks bad and carries little information: the July quarter is structurally the trough for this business, against 59.6% in the January quarter. The number that carries information, the full-year adjusted free-cash-flow margin, was reiterated at 23.0%.
Remaining performance obligations against $9.21 billion — $9.00 billion. Down $210 million sequentially and still up 30% year on year. The release gives no duration split; the call does, and it is the missing half: approximately 54% is expected to convert to revenue within twelve months, about 42% higher than the equivalent figure a year ago. Management attributes the shape to customers favouring fourth-quarter renewals, with bookings "increasingly weighted towards the fourth quarter."
Net revenue retention against 126%, and customers above $1 million against 779 — 126% held, and 828. Retention did not move. The $1 million cohort grew to 828. The call added the tier the release omits: 65 customers are now past $10 million of trailing-12-month product revenue.
What management said about AI — a great deal, and still no number. The chief financial officer attributed the quarter to "a meaningful step-up in AI revenue" and quantified none of it. What was quantified is adoption: CoCo past 9,100 accounts, having added more than 2,000 in the quarter, and CoWork at 5,800, up nearly 11% sequentially. As the preview said to expect: words, not a number, and they should be read as such.
What changed in the story
The margin expansion is a headcount story, and the company said so. Non-GAAP operating margin reached 15.3%, up more than 400 basis points year on year, and the full-year guide went from 13.5% to 14.5%. The mechanism is not pricing: Snowflake has added 334 employees year to date, 173 of them from the Observe acquisition, against 935 in the same period last year. Management frames it as offsetting "growing cloud costs with slowing headcount expense" — and, unusually, spent much of the call describing its own products doing that work internally, from $400,000 of annual agency spend removed in marketing to a long-range planning process that ran on three people and fifty spreadsheets and now runs on one analyst.
The customer count is a call disclosure, and it is not the arithmetic. The release publishes net additions — 692 in the quarter, up 32% — but not the total. On the call it is 14,554. Note that the prior count of 13,912 plus 692 gives 14,604: the count absorbs churn and definitional adjustments, so differencing it does not work, and anyone doing so is 50 customers ahead of the company.
The AI mix costs margin. The revised full-year outlook "includes a higher revenue mix from fast-growing AI workloads, which carry a lower contribution margin today", and non-GAAP product gross margin is guided to 74.0% against the 74.7% just delivered.
Stock-based compensation is still larger than the operating loss. $456 million, 29.5% of revenue, against a GAAP operating loss of $263 million. The company is non-GAAP profitable at 15% and GAAP unprofitable at −17%, and the entire distance between those two numbers is one line. Management reaffirmed GAAP profitability in the fourth quarter of fiscal 2028.
Against the model
Our Snowflake model was rebuilt on this print. It is a customer-count-times-revenue-per-customer build, and both inputs now come from the call rather than the release: 14,554 customers and $102,505 of product revenue per customer per quarter, up 6.9% sequentially. It reproduces the guided quarter — $1,590.8 million of third-quarter product revenue against a $1,588-1,593 million guide — and lands full-year product revenue at about $6,113 million against the $6,070 million guided.
The previous build was tuned to reproduce the $5,840 million guide, and its bear case was anchored on the second-half deceleration that guide implied. That anchor is gone. In its place the bear case now rests on the two things this print did not settle: that about a point of growth is acquired, and that remaining performance obligations have now fallen sequentially twice while revenue accelerated.
At a $305.84 close the base fair value is $287.13. Treat that number with care: Snowflake is barely EBITDA-positive inside the projected window, so 94% of enterprise value sits in the terminal and one turn of the exit multiple is worth about $29 a share — more than the entire projected free cash flow of the next three years. The shares traded 22% higher after hours than the close this is measured against, so the comparison will look different on the next update.
What is coming
The third quarter ends 31 October 2026. Management guided product revenue to $1,588-1,593 million, up 37-38% year on year, and non-GAAP operating margin to 15.5%. For the full year: product revenue $6,070 million, non-GAAP product gross margin 74.0%, non-GAAP operating margin 14.5% and an adjusted free-cash-flow margin of 23.0%. There is no revenue guide beyond the product line and no earnings guide on either basis — the per-share consensus is entirely a Street construction. The fiscal fourth quarter is where the renewals land, and on this call management said to expect bookings to concentrate there.
What we learned
- Product revenue accelerated for a third straight quarter, to 36.8%. $1.492B against a guided midpoint of $1,417.5M — a 5.25% beat, at the top of the historical 2.4-5.5% band, and seven points added in two quarters.
- The full-year guide was raised $230M — but about a point of it is bought. $6.07B from $5.84B, 36% growth against 31%, and the CFO said it "includes approximately one percentage point of growth from Observe".
- Remaining performance obligations fell again, to $9.00B. Down $210M sequentially for a second quarter while revenue accelerated. About 54% converts within twelve months, a split the release does not give.
- The customer count is 14,554, and it is a call disclosure. The release gives only 692 net adds. 13,912 + 692 = 14,604, so the count is not the prior count plus adds — it absorbs churn.
- Margin expansion is headcount, not price. Operating margin up 400bp to 15.3% on 334 employees added year to date, 173 from Observe, against 935 a year earlier. Stock compensation remains 29.5% of revenue.
Snowflake reported the quarter ended 31 July 2026 after the US close on 2 September 2026. Revenue and its product and services split, the GAAP and non-GAAP results and their bridge, cash flow, the balance sheet, net revenue retention, remaining performance obligations, the customer tiers and all third-quarter and full-year guidance are the company's own, from its results release; the full figure set is on the Q2 FY2027 earnings page. Quotations, the total customer count, the 65 customers above $10 million, the twelve-month share of remaining performance obligations, the Observe contribution to the guide and the headcount figures are from the earnings call held the same afternoon and sit on the call page; that transcription carried no speaker labels, so only prepared remarks are quoted. Consensus of $0.45 on $1.48 billion is press-reported from third-party estimate feeds and is not a series this site stores or verifies; the revenue figure is total revenue, not product revenue. Ours rather than the company's: every margin, growth and beat ratio computed from reported figures, the revenue-per-customer figures, and the model comparison — our Snowflake model of 3 September 2026, whose fair values and exit multiple are assumptions, not company forecasts. The $305.84 close and $374.63 after-hours quote are 2 September 2026; a live quote will differ. All guidance is forward-looking.
