Snowflake Inc. (SNOW) Q2 2026 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call highlights strong product revenue growth, successful AI and machine learning adoption, and increased guidance for FY 2026 revenue, which suggests positive momentum. The Q&A section further supports this with positive analyst sentiment towards AI's role in business value and strong collaborations with Microsoft Azure. Despite some unclear responses, the overall sentiment is positive, indicating a likely stock price increase.

Key Financial Performance

Product Revenue $1.09 billion, up 32% year-over-year. The growth was attributed to strength in the core business and new features across product categories outperforming expectations.

Remaining Performance Obligations $6.9 billion, with a year-over-year growth of 33%. This reflects strong customer commitments and contract renewals.

Net Revenue Retention Rate 125%, indicating healthy customer retention and expansion.

Non-GAAP Operating Margin 11%, an increase reflecting focus on efficiency and operational rigor.

Non-GAAP Product Gross Margin 76.4%, showing strong profitability in product delivery.

Non-GAAP Adjusted Free Cash Flow Margin 6%, with expectations for improvement in the second half of the year due to contracted billings and large deal volumes.

Cash and Investments $4.6 billion in cash, cash equivalents, short-term and long-term investments, indicating strong liquidity.

You have reached the limit Upgrade to access full content

Get started

Operating Highlights

Snowflake Intelligence: Now in public preview, enabling users to interact with enterprise data using natural language and create intelligent agents.

Cortex AI SQL: Introduced AI natively into SQL, allowing customers to invoke AI models directly within Snowflake.

Gen2 warehouses: Launched to deliver up to 2x faster performance and greater efficiency.

Snowflake Postgres: Enabled enterprise-grade Postgres SQL for AI-powered applications within Snowflake AI Data Cloud.

Snowflake OpenFlow: Expanded connectivity platform, supporting structured, unstructured, batch, or streaming data, and change data capture from Oracle.

Snowpark Connect for Apache Spark: Now in public preview, allowing customers to bring Spark workloads directly into Snowflake.

Customer Growth: Added 533 customers, including 15 Global 2000 companies, with 50 customers crossing $1 million in trailing 12-month revenue.

AI Adoption: AI influenced nearly 50% of new logos won in Q2, with 25% of all deployed use cases powered by AI.

Data Sharing: 40% of customers are now data sharing on Snowflake, driving network effects.

Open Data Formats: Over 1,200 accounts using Apache Iceberg, highlighting leadership in open standards.

Revenue Growth: Product revenue for Q2 was $1.09 billion, up 32% year-over-year.

Operational Efficiency: Non-GAAP operating margin increased to 11%, reflecting focus on efficiency.

Free Cash Flow: Non-GAAP adjusted free cash flow margin was 6% for Q2, expected to improve in the second half of the year.

AI Leadership: Integrated OpenAI's GPT-5 models into Cortex, providing flexibility for enterprise AI applications.

Partnerships: Expanded partnerships, including a strategic partnership for change data capture from Oracle.

Community Engagement: Snowflake Summit attracted over 22,000 participants, showcasing momentum and excitement around the AI Data Cloud.

You have reached the limit Upgrade to access full content

Get started

Risk or Challenges

Economic Uncertainties: The company acknowledges risks and uncertainties that could cause forward-looking statements to differ materially from actual results. These include economic conditions that may impact financial performance.

Competitive Pressures: Snowflake faces competitive pressures in the AI and data cloud markets, as evidenced by the need to continuously innovate and expand its product offerings to maintain leadership.

Regulatory Hurdles: The company operates in a highly regulated environment, particularly in industries like healthcare and finance, which could pose compliance challenges.

Supply Chain Disruptions: Although not explicitly mentioned, the reliance on partnerships and integrations with other technology providers could expose the company to supply chain or operational disruptions.

Strategic Execution Risks: The company is heavily investing in growth and innovation, which requires precise execution to avoid inefficiencies or misallocation of resources.

Customer Retention and Acquisition: While customer retention rates are strong, the company must continue to add new customers and maintain existing ones to sustain growth, which could be challenging in a competitive market.

Technological Dependencies: Snowflake's reliance on partnerships with cloud providers and other technology companies could pose risks if these partnerships are disrupted or fail to deliver expected benefits.

Financial Performance Risks: The company’s financial outlook is dependent on achieving high growth rates and maintaining margins, which could be impacted by market conditions or operational inefficiencies.

You have reached the limit Upgrade to access full content

Get started

Guidance & Outlook

Product Revenue Guidance for Q3 FY '26: Expected product revenue between $1.125 billion and $1.13 billion, representing 25% to 26% year-over-year growth.

Product Revenue Guidance for FY '26: Increased product revenue guidance to $4.395 billion, representing 27% year-over-year growth.

Non-GAAP Operating Margin for Q3 FY '26: Expected non-GAAP operating margin of 9%.

Non-GAAP Product Gross Margin for FY '26: Expected non-GAAP product gross margin of 75%.

Non-GAAP Adjusted Free Cash Flow Margin for FY '26: Expected non-GAAP adjusted free cash flow margin of 25%.

You have reached the limit Upgrade to access full content

Get started

Shareholder Return Plan

Repurchase Program: We did not utilize our repurchase program in Q2. We have $1.5 billion remaining on our authorization through March 2027.

You have reached the limit Upgrade to access full content

Get started

Key Q&A

Q:What is the durability of growth on the other side of data transformation efforts?

A:Sridhar Ramaswamy stated that data modernization is just the beginning of the journey, driven by the need to scale legacy systems. He emphasized that AI transformation depends on having AI-ready data, which Snowflake provides. He expressed confidence that Snowflake is at the start of a journey where data will increasingly do more for customers.

Q:Is there already a contribution from the European side after splitting the U.S. organization into Hunters and Farmers?

A:Michael P. Scarpelli mentioned that Europe is still developing but contributing. The groundwork is being laid, and while most new customers are from the U.S., the setup is being replicated in EMEA and APJ, which is expected to yield results.

Q:Was there anything unique with Microsoft or Azure that contributed to the quarter's results?

A:Michael P. Scarpelli noted that Azure was the fastest-growing cloud, growing 40% year-over-year, due to better alignment between Snowflake and Microsoft's field teams. Sridhar Ramaswamy added that there is depth and breadth in collaboration with Azure, including infrastructure, OneLake, Office Copilot, and Power BI, which are long-term benefits.

Q:How did newer products contribute to the guide for 3Q?

A:Michael P. Scarpelli stated that newer products outperformed expectations in Q2. While a modest amount was included in the forecast, the guide for 3Q is based on current consumption patterns. He noted that Q2 was stronger than anticipated due to the nature of the consumption model.

Q:Is the acceleration in consumption due to normalization of demand or inclusion in AI-centric budgets?

A:Sridhar Ramaswamy explained that the core analytics business remains strong, with net revenue retention at 125%. He noted that AI components of the data platform are delivering value, with budgets being allocated for AI projects. Approximately 25% of use cases in Q2 involved AI, and this trend is expected to continue and accelerate.

Q:What gives confidence that AI in the enterprise is about to work through tangible business cases?

A:Sridhar Ramaswamy highlighted the progress in AI capabilities, such as Snowflake Intelligence, which can answer complex questions and perform cross-cutting analysis. He mentioned partnerships with OpenAI and Anthropic, which provide customers with advanced models combined with their business data. He expressed confidence in AI's ability to create massive value for enterprises.

Q:What is driving the increase in professional services revenue?

A:Michael P. Scarpelli explained that the increase was due to milestones being hit for a large customer, leading to deferred revenue recognition. He emphasized that most professional services are done by GSIs, with Snowflake focusing on expert services.

Q:Is the net revenue retention metric turning a corner?

A:Michael P. Scarpelli noted that net revenue retention improved due to large customers migrating new workloads, which caused an uptick in consumption. He stated that optimizations are not causing any unusual effects and that customers are in a healthy place regarding consumption.

Q:What is the outlook for new workload migrations in the second half?

A:Michael P. Scarpelli stated that new workload migrations are expected to continue, with SEs doing a good job identifying use cases. These include on-prem migrations and migrations from first-generation cloud infrastructure.

Q:What is the opportunity in Global 2000 accounts?

A:Michael P. Scarpelli mentioned that the average Global 2000 customer could spend $10 million annually on Snowflake. Approximately 50% of $1 million-plus customers are Global 2000. Sales reps focus on articulating business value rather than cost.

Q:How is the integration of Crunchy progressing?

A:Christian Kleinerman stated that the integration is progressing well, with Snowflake Postgres offering enterprise readiness and capabilities. Customer interest is strong, and the product will be in preview soon.

Q:What is the sustainability of the core analytics market as a growth driver?

A:Sridhar Ramaswamy emphasized that the core analytics market remains strong, with significant opportunities in migrating legacy systems. He noted that innovation in migration technology and AI is essential for long-term success.

Q:What is the monetization strategy for AI products?

A:Sridhar Ramaswamy explained that AI capabilities were designed to be easy to use and provide quick value. Broad adoption has been achieved without a massive sales effort. Specialists focus on use cases that drive meaningful revenue, with the consumption model ensuring revenue aligns with customer value.

Q:What are the primary use cases for Cortex AI?

A:Sridhar Ramaswamy mentioned use cases such as creating customer 360 views, flexible data access, and Agentic AI for taking actions like updating records. These use cases are driving utility and adoption.

Q:Review of Unclear Management Responses

A:Management avoided directly addressing the question about whether the acceleration in consumption was due to normalization of demand or inclusion in AI-centric budgets. While they provided insights into the core business and AI trends, the response lacked clarity on the specific drivers of the acceleration.

You have reached the limit Upgrade to access full content

Get started

Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

SNOW Transcript

Snowflake Inc. (SNOW) Presents at UBS Global Technology and AI Conference 2025 Transcript

Neutral12-4

Snowflake Inc. (SNOW) Q3 2026 Earnings Call Transcript

Positive12-3

The earnings call highlights several positive aspects: Snowflake's expansion into a complete data platform, strong AI integration, and a $200 million partnership with Anthropic. The company's optimistic guidance, increased product revenue expectations, and positive customer adoption trends in AI products contribute to a positive sentiment. However, some lack of clarity in management's responses and guidance for FY '27 slightly tempers the enthusiasm. Overall, the positive factors outweigh the negatives, suggesting a stock price increase in the short term.

Snowflake Inc. (SNOW) Presents At Goldman Sachs Communicopia + Technology Conference 2025 Transcript

Neutral9-8

Snowflake Inc. (SNOW) Q2 2026 Earnings Call Transcript

Positive8-27

SNOW Report

Frequently Asked Questions

Where does this earnings call transcript come from?

All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.

How soon is the transcript available after the earnings call ends?

Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.

Is the transcript edited or altered in any way?

No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.

Why do some answers appear as “Unclear” or “Inaudible”?

When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.

Who creates the AI Summary and Key Q&A highlights shown above the transcript?

They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.