Snowflake Q2 Earnings Beat Estimates, Revenues Up Y/Y, Shares Rise

Snowflake SNOW reported second-quarter fiscal 2026 non-GAAP earnings of 35 cents per share, beating the Zacks Consensus Estimate by 34.62%. The company reported earnings of 18 cents per share in the year-ago quarter.

Revenues of $1.15 billion beat the consensus mark by 5.51% and rallied 31.8% year over year. Americas, EMEA (Europe, the Middle East and Africa) and APJ (Asia Pacific and Japan) contributed 78%, 16% and 6% to revenues, respectively.

Snowflake shares are up roughly 20% at the time of writing this article. SNOW shares have returned 54.4% compared with the Zacks Computer & Technology sector’s appreciation of 13.4%.

SNOW’s Q2 Details    

Snowflake’s product revenues contributed 95.2% to total revenues. The figure was $1.09 billion, up 31.5% year over year. Professional Services and other revenues contributed 4.8% of total revenues. The figure was $54.5 million, up 37.7% year over year.

In the fiscal second quarter, Snowflake saw a net revenue retention rate of 125% for existing customers. The company reported 19% year-over-year growth in the number of customers, reaching 12,062 in the reported quarter. The company now has 654 customers with trailing 12-month product revenues greater than $1 million (up 27% year over year) and 751 Forbes Global 2000 customers. 

The non-GAAP gross margin contracted 10 basis points (bps) year over year to 72.8%. Product gross margin was 76% in the reported quarter.

Research & development expenses, as a percentage of revenues, decreased 420 bps on a year-over-year basis to 21.6%. General & administrative expenses, as a percentage of revenues, were 6%, down 80 bps year over year. Sales and marketing expenses, as a percentage of revenues, declined 130 bps on a year-over-year basis to 34.2%.

Operating margin expanded 610 bps on a year-over-year basis to 11.1%.

SNOW’s Balance Sheet & Cash Flow Details

As of July 31, 2025, Snowflake had cash, cash equivalents and short-term investments of $3.59 billion compared with $3.91 billion as of April 30.

The remaining performance obligations at the end of the second quarter of fiscal 2025 were $6.9 billion, up 33% year over year. Snowflake expects nearly 50% to be recognized as revenue over the next 12 months.

The adjusted free cash flow was $67.8 million in the reported quarter.

SNOW Offers Positive Guidance

For the third quarter of fiscal 2026, Snowflake expects product revenues in the range of $1.125-$1.13 billion. The projection range indicates year-over-year growth between 25% and 26%. The operating margin is expected to be 9% for the fiscal third quarter.

For fiscal 2026, Snowflake expects product revenues of $4.395 billion, indicating 27% year-over-year growth. Product gross margin expected to be 75%, operating margin of 9% and free cash flow margin of 25%.

Zacks Rank & Stocks to Consider

Currently, Snowflake has a Zacks Rank #3 (Hold).

Astera Labs ALAB, Amphenol APH and Reddit RDDT are some better-ranked stocks that investors can consider in the broader sector. 

Astera Labs, Amphenol and Reddit each carry a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Astera Labs, Amphenol and Reddit is currently pegged at 47.8%, 20.6% and 34.9%, respectively.

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This article originally published on Zacks Investment Research (zacks.com).

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