Snowflake (SNOW) raised its full-year growth target from 31% to 36%. Shares closed up 16.6% on September 3.
Key points
- Full-year product revenue guide raised to 36%
- Product revenue up 37% to $1.49 billion
- Shares closed up 16.6% at $356.56
- Still below its $429 record from December 2020
Snowflake (SNOW) furnished its results in an 8-K after the close on September 2nd, with the press release attached as Exhibit 99.1. I went past the quarter and read the outlook section first, because that's where a company tells you whether it has changed its mind about the year.
Snowflake had. It now expects $6,070 million of product revenue for fiscal 2027, where the last figure it published was $5,840 million. That's 36 percent growth against the 31 percent it had been carrying, with two quarters still to go. The margin target moved up too, to 14.5 percent.
The guidance sat on top of a quarter that came in ahead of forecasts, which is the other half of why the stock moved. Snowflake earned $0.62 a share on a non-GAAP basis, where analysts had been looking for $0.45 and the same three months last year produced $0.35. Revenue reached $1.55 billion against about $1.48 billion expected. On a GAAP basis it lost $0.55 a share, an improvement on the $0.89 loss a year earlier.
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What is Snowflake's new full-year guidance?
| Fiscal 2027 measure | Previous guidance | New guidance |
|---|
| Product revenue | $5,840 million | $6,070 million |
| Product revenue growth | 31% | 36% |
| Non-GAAP operating margin | 13.5% | 14.5% |
Brian Robins, Snowflake's chief financial officer, called it the company's "third consecutive quarter of product revenue growth acceleration." He put that down to the core data platform plus "a meaningful step-up in AI revenue." Chief executive Sridhar Ramaswamy said it in fewer words, that Snowflake continues to "power the enterprise AI revolution." Third-quarter product revenue is guided to $1.588 billion to $1.593 billion. Full-year non-GAAP product gross margin is set at 74.0 percent.
What the quarter itself looked like
| Quarter ended July 31 | Result | Change |
|---|
| Product revenue | $1.49 billion | +37% |
| Total revenue | $1.55 billion | +35% |
| Remaining performance obligations | $9.00 billion | +30% |
| Customers above $1 million | 828 | +27% |
| Net revenue retention | 126% | |
Remaining performance obligations is the line I look for first. It's contracted future revenue Snowflake hasn't recognized yet, and it stretches across several years, so the coming year accounts for only part of the total. The release says RPO leaves out on-demand arrangements altogether, and Snowflake adds that the figure is "not necessarily indicative of future product revenue growth." It grew 30 percent, which trails the 37 percent that product revenue grew.
Is Snowflake profitable?
It depends which set of books you read, and the release prints both. On a GAAP basis Snowflake lost $263.0 million at the operating line, a negative 17.0 percent margin. On the non-GAAP basis the same three months produced $237.0 million of operating income. That's a positive 15.3 percent margin, and a $500 million gap in a single quarter. Most of it is stock-based compensation, which the non-GAAP figures leave out. Snowflake pays a lot of its people in shares. The cash stays in the business when it does, and that's why free cash flow still came in at $83.8 million, or $92.3 million on the adjusted basis Snowflake uses for guidance. Those shares can dilute existing holders unless repurchases offset the new issuance.
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What did Snowflake say about its AI products?
The release counts accounts for two AI products, CoCo and CoWork. CoCo passed 9,100 accounts and added more than 2,000 in the quarter, and CoWork reached 5,800. A footnote says both are four-week averages taken at the end of the quarter, counted on Snowflake's own internal classification. That makes them a measure of usage. The separately reported customer figure is another company-defined metric, showing 828 customers above $1 million of trailing 12-month product revenue, with 829 Forbes Global 2000 customers alongside it. Snowflake also brought more than 330 product capabilities to general availability in the first half of fiscal 2027, among them Cortex Sense and Cortex AI Gateway. The company listed 1Password and Indeed among its AI customer wins, and said Sayari cut its costs by more than half using CoCo to move 12 billion records.
How far is Snowflake from its record high?
The stock had been falling going into the release. It closed at $305.84 on September 2nd, down 4.4 percent on more than twice its usual volume. It opened at $377.25 the next morning and touched $384.55, a 52-week high and a gain of 25.7 percent on the prior close. Then it gave most of that back. Snowflake finished at $356.56, up 16.6 percent on the day. Volume reached 21.5 million shares, about 4.7 times its 30-day average.
Snowflake's record still sits above that, and it's an old one. The stock went public on the New York Stock Exchange at $120 a share in September 2020, and it reached $429.00 that December, which remains its high. Its low for the past year was $118.30, back on April 10th. The market value at the close was $123.6 billion. Reuters put the stock at about 121.8 times forward earnings after the move, against 72.7 times for Datadog (DDOG) and 52.1 times for MongoDB (MDB).
The 8-K stops short of saying why the guidance moved. Snowflake published a full-year number and a margin target, and the assumptions underneath them stay inside the company. So the split between existing customers spending more and new customers arriving is something the document leaves to you. Net revenue retention of 126 percent is the closest it comes, and that figure stops at July 31st. The 10-Q carries more detail, and you can watch for it on Snowflake's filings page.
"The Agentic Enterprise runs on Snowflake, and we're just getting started," Ramaswamy said. Snowflake sits in the middle of the argument about whether AI eats enterprise software or feeds it, and this filing lands on the second side of it.
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