Snowflake Q2 FY2027 Earnings: Product Revenue Growth Accelerates to 37%

Snowflake (NYSE: SNOW) reported Q2 FY2027 revenue of $1.55 billion, up 35% year over year, while product revenue rose 37% to $1.49 billion for the quarter ended July 31, 2026. GAAP operating loss was $263.0 million, while non-GAAP operating income reached $237.0 million and adjusted free cash flow was $92.3 million. Core platform demand and a step-up in AI revenue drove the acceleration, prompting management to raise full-year product revenue and non-GAAP operating margin guidance.

Core Earnings Data

Product revenue is Snowflake’s principal growth measure because it is recognized according to customer consumption of compute, storage, and data-transfer resources. CFO Brian Robins said Q2 marked the third consecutive quarter of accelerating product revenue growth, supported by the core data platform and higher AI revenue.

The quarter also produced positive operating cash flow and non-GAAP operating income, although Snowflake remained loss-making under GAAP.

Business and Customer Performance

Snowflake reported expansion across contracted demand, large customers, and AI product usage. Remaining performance obligations increased 30% to $9.00 billion, while the number of customers generating more than $1 million in trailing 12-month product revenue grew 27%.

AI adoption also increased during the quarter. CoCo added more than 2,000 accounts and surpassed 9,100, while CoWork reached 5,800 accounts.

CoCo and CoWork account figures represent the average of the quarter’s final four weeks and count capacity and on-demand accounts using the respective features weekly under Snowflake’s internal classification. Separately, Snowflake launched more than 330 product capabilities into general availability during the first half of FY2027, 35% more than a year earlier.

Product Growth Accelerated While GAAP Profitability Remained Negative

The accounting-basis differences were material. Non-GAAP product gross margin was 74.7%, 3.8 percentage points above the 70.9% GAAP margin. At the operating level, Snowflake reported a 15.3% non-GAAP profit margin but a negative 17.0% GAAP margin, representing an approximately $500 million difference between the two operating results.

Snowflake’s non-GAAP definitions exclude, as applicable, stock-based compensation-related charges, amortization of acquired intangible assets, acquisition and strategic investment costs, restructuring items, and certain other expenses. Consequently, the improving non-GAAP margin demonstrates operating discipline under management’s preferred performance measure, but it does not mean Snowflake has reached GAAP operating profitability.

Cash generation was positive but modest relative to revenue. Adjusted free cash flow was approximately $8.5 million higher than free cash flow after adjusting for payroll-tax-related items associated with employee stock transactions. The company notes that the timing of these payments can affect individual quarters.

The 6.0% Q2 adjusted free cash flow margin was also well below the 23.0% full-year outlook. Because the quarterly and annual periods are not directly comparable, subsequent-quarter cash conversion will be an important measure of progress toward that target.

Earnings Guidance

Management increased full-year product revenue guidance by $230 million, or about 3.9%, and raised the expected growth rate from 31% to 36%. It also lifted the full-year non-GAAP operating margin outlook by one percentage point.

The Q3 product revenue range implies 37% to 38% growth, which would maintain or modestly increase Q2’s 37% rate.

Recent Insider Transactions

Across the supplied six-month insider data, Snowflake insiders purchased 4,203,802 shares in 34 transactions and sold 2,754,088 shares in 49 transactions, producing net purchases of 1,449,714 shares. Total insider holdings were listed at 10.27 million shares, with a 16.40% net purchase ratio.

The latest 10 reported entries were dominated by sales, alongside two stock gifts and one derivative-security conversion. The table presents transaction values as reported; individual share counts were not supplied for these entries.

These entries describe the transactions but do not establish why each insider traded or indicate a view on Snowflake’s prospects.

Risks Investors Need to Watch

• Consumption-based revenue can vary: Customers control when and how much they consume, so usage in one quarter does not necessarily indicate future product revenue.
• RPO is not a direct revenue forecast: The timing of consumption, contract renewals, capacity purchases, unused-capacity rollovers, and foreign-exchange changes can affect how and when the $9.00 billion balance becomes revenue.
• GAAP profitability remains negative: The wide difference between the GAAP operating loss and non-GAAP operating income means progress under the adjusted measure has not yet translated into GAAP operating profitability.
• Raised guidance requires sustained execution: Achieving 36% full-year product revenue growth and a 14.5% non-GAAP operating margin will require Snowflake to preserve its recent growth acceleration while maintaining cost discipline.
• AI revenue disclosure remains limited: CoCo and CoWork adoption increased, and management cited a step-up in AI revenue, but the release did not quantify AI revenue separately.

Summary

Snowflake’s Q2 FY2027 results combined accelerating product revenue growth with expanding large-customer and AI usage metrics. Management’s higher full-year product revenue and non-GAAP operating margin guidance indicates increased confidence in that momentum, but the GAAP operating loss and modest Q2 cash-flow margins remain important counterpoints. The next areas to monitor are Q3 consumption growth, the conversion of customer and AI adoption into revenue, progress toward the full-year cash-flow target, and whether the GAAP–non-GAAP profitability gap begins to narrow.