Snowflake Q3 Earnings Beat Estimates, Revenues Up Y/Y, Shares Fall

Snowflake SNOW reported third-quarter fiscal 2026 non-GAAP earnings of 35 cents per share, beating the Zacks Consensus Estimate by 12.90%. The company reported earnings of 20 cents per share in the year-ago quarter.

Revenues of $1.21 billion beat the consensus mark by 2.68% and rose 29% 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 have plunged more than 8% in after-hours trading.

SNOW’s Q3 Details  

Snowflake’s product revenues were $1.16 billion, which accounted for 96% of total revenues. The figure represents a year-over-year increase of 29%. Professional Services and other revenues were $54.5 million, which contributed 4% of total revenues, representing a 30% year-over-year increase.

Snowflake Inc. Price, Consensus and EPS Surprise

Snowflake Inc. price-consensus-eps-surprise-chart | Snowflake Inc. Quote

In the fiscal third quarter, Snowflake saw a net revenue retention rate of 125% for existing customers. The company reported 20% year-over-year growth in the number of customers, reaching 12,621 in the fiscal third quarter. The company now has 688 customers with trailing 12-month product revenues greater than $1 million (up 29% year over year) and 766 Forbes Global 2000 customers. 

The non-GAAP gross margin contracted 30 basis points (bps) year over year to 73%. Product gross margin was 76% in the reported quarter.

Research & development expenses, as a percentage of revenues, decreased 290 bps on a year-over-year basis to 21%. General & administrative expenses, as a percentage of revenues, were 6%, down 130 bps year over year. Sales and marketing expenses, as a percentage of revenues, declined 70 bps on a year-over-year basis to 35.4%.

Operating margin expanded 460 bps on a year-over-year basis to 10.8%.

SNOW’s Balance Sheet & Cash Flow Details

As of Oct. 31, 2025, Snowflake had cash, cash equivalents, and short-term investments of $3.36 billion compared with $3.59 billion as of July 31, 2025.

The remaining performance obligations at the end of the third quarter of fiscal 2025 were $7.88 billion, up 37% year over year.

The adjusted free cash flow was $136.4 million in the reported quarter.

SNOW Offers Positive Q4 and FY26 Guidance

For the fourth quarter of fiscal 2026, Snowflake expects product revenues in the range of $1.195-$1.2 billion. The projection range indicates year-over-year growth of 27%. The operating margin is expected to be 7% for the fiscal fourth quarter.

For fiscal 2026, Snowflake expects product revenues of $4.446 billion, indicating 28% year-over-year growth. The company anticipates a product gross margin of 75%, operating margin of 9% and a free cash flow margin of 25%.

SNOW’s Zacks Rank & Stocks to Consider

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

Advanced Energy Industries AEIS, Allot ALLT, and Amphenol APH are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. Each stock presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Advanced Energy Industries’ shares have surged 78.4% in the past six months. The Zacks Consensus Estimate for Advanced Energy Industries' 2025 earnings is pegged at $6.23 per share, indicating an increase of 9.6% over the past 30 days. The figure also rose 67.92% from the year-ago quarter’s reported figure. 

Allot shares have gained 7.5% in the past six months. The Zacks Consensus Estimate for Allot 2025 earnings is pegged at 22 cents per share, which increased 57.1% over the past 30 days. This indicates year-over-year growth of 450%.

Amphenol shares have gained 54.4% in the past six months. The Zacks Consensus Estimate for Amphenol’s 2025 earnings has increased 2.17% to $3.29 per share in the past 30 days, indicating year-over-year growth of 49.9%.

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

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