Snowflake, the company behind the so-called AI Data Cloud, has released its financial results for the second fiscal quarter of 2026 (ended July 31, 2025), confirming solid revenue growth, accelerated adoption of its artificial intelligence services, and an increasingly robust customer base.
The company achieved $1.145 billion in total revenue, of which $1.090 billion was product revenue, representing a 32% increase compared to the same period last year. This result reinforces the strength of Snowflake’s consumption-based model compared to traditional subscription models.
Growth driven by major clients
One of the most notable indicators is the increase in high-value customer base. According to the report:
- 654 clients generated over $1 million in product revenue in the last 12 months (+30% YoY).
- 751 companies on the Forbes Global 2000 list already use Snowflake (+5% YoY).
- The net revenue retention rate (NRR) remained a solid 125%, reflecting that existing customers are expanding their use of the platform.
- The remaining performance obligations (RPO) reached $6.9 billion, a 33% increase from 2024, ensuring future revenue.
For CEO Sridhar Ramaswamy, these figures confirm that “thousands of companies are betting their future on Snowflake, and more than 6,100 accounts utilize its AI capabilities every week.”
Profitability under pressure but showing signs of improvement
Although Snowflake continues to grow strongly, it still reports losses under GAAP accounting standards. In the quarter:
- GAAP operating loss: –$340 million (–30% margin).
- Non-GAAP operating profit: $128 million (11% margin).
- Adjusted free cash flow: $68 million (6% margin).
The main difference between GAAP and non-GAAP stems from high stock compensation costs, a common practice among high-growth tech companies aiming to attract and retain talent.
Outlook: Sustained growth
Looking ahead to the third fiscal quarter of 2026, Snowflake projects:
- Product revenue: between $1.125 billion and $1.130 billion (+25–26% YoY).
- Non-GAAP operating margin: around 9%.
- Weighted average diluted shares: 374 million.
For the fiscal year’s end, forecasts include:
- Product revenue of $4.395 billion (+27% YoY).
- Non-GAAP gross margin: 75%.
- Adjusted free cash flow: +25%.
Snowflake’s role in the AI race
The core driver of Snowflake is its ability to position itself as a critical infrastructure for generative AI and advanced data analysis. Its AI Data Cloud platform integrates storage, processing, and deployment of models in a single environment, reducing complexity for companies seeking rapid innovation.
Among the most active sectors adopting the platform are:
- Finance: risk optimization and real-time fraud detection.
- Healthcare: biomedical research and personalized treatments.
- Retail and Consumer: demand forecasting and personalized experiences.
- Public sector: digital sovereignty projects and critical data analysis.
Challenges on the horizon
Despite strong results, Snowflake faces significant challenges:
- Pending profitability: still not GAAP profitable.
- Dependence on third-party cloud infrastructure (AWS, Azure, Google Cloud), which are both partners and competitors.
- Competitive pressure: from open data platforms to clouds with native AI integration.
- Uncertain economic environment: which could slow corporate client spending.
Conclusion
Snowflake has established itself as one of the key players in the AI era. Its strong revenue growth, expansion of large clients, and increase in future contracts position it as a leader.
The challenge will be converting this rapid growth into sustainable profitability while reinforcing its strategic independence from major hyperscalers.
Frequently Asked Questions (FAQ)
1. What sets Snowflake apart from other cloud providers?
Snowflake isn’t a general-purpose cloud but a data and AI-focused platform with a consumption-based model that allows companies to pay only for what they use.
2. Why does Snowflake still report GAAP losses?
Primarily due to high stock compensation and R&D expenses necessary to maintain growth and competitiveness.
3. What does a net retention rate of 125% indicate?
It means current clients are not only retained but also increasing their spending year over year, indicating loyalty and confidence in the platform.
4. What is Snowflake’s AI strategy?
The company aims to establish itself as the infrastructure where businesses can train, deploy, and operate AI models in an integrated and secure manner, facilitating innovation across multiple sectors.
via: Financial News