Snowflake Q2 Revenue Jumps 32 Percent

Snowflake (NYSE:SNOW) reported second quarter fiscal 2026 earnings on August 27, 2025, posting product revenue of $1.09 billion, up 32% year-over-year, non-GAAP operating margin of 11%, and net revenue retention of 125%. Management raised fiscal 2026 guidance, now expecting 27% product revenue growth. Key insights focus on AI-driven product momentum, strategic cloud partnerships, and accelerating customer acquisitions impacting Snowflake’s long-term positioning.

AI momentum broadens Snowflake’s use cases and adoption

AI influenced nearly 50% of new logos won, with Snowflake AI components powering 25% of all deployed use cases and over 6,100 customer accounts using Snowflake AI weekly—a robust sequential increase. Management emphasized that AI integration is accelerating both customer acquisition and usage expansion as enterprise clients increasingly seek unified platforms for analytics and advanced AI workloads.

"Our progress with AI has been remarkable. Today, AI is a core reason why customers are choosing Snowflake, influencing nearly 50% of new logos won in Q2. Once they're on our platform, AI becomes a cornerstone of their strategy, powering 25% of all deployed use cases with over 6,100 accounts using Snowflake's AI every week. We've embedded AI across the data life cycle to accelerate analytics, transform workflow, and even power migrations."
-- Sridhar Ramaswamy, Chief Executive Officer

The consumption-based business model enables Snowflake to organically scale AI monetization without requiring heavy upfront sales investment, allowing broader and faster proliferation of AI workloads that deepen customer entrenchment and revenue potential over the long term.

Azure partnership drives fastest cloud growth for Snowflake

While AWS remains the largest revenue contributor, Snowflake’s business on Microsoft Azure grew 40% year-over-year, outpacing all other clouds, as a result of targeted field alignment and strengthened Microsoft partnership, particularly in EMEA (Europe, Middle East, Africa) where Microsoft holds a strong presence. Strategic product-level integrations with Azure’s OneLake, Office Copilot, and Power BI further differentiate Snowflake in competing for cloud-native AI and data analytics workloads.

"I would say, actually, Azure was our fastest-growing cloud. It actually grew 40% year over year, our customers running on Azure. And I would say a lot of that is attributable to better alignment between our field and Microsoft. We've been spending a lot of time the last six months there. I would also say too that Microsoft is very strong in EMEA. We're seeing some good uptick in EMEA in our business as well with some large accounts that's contributing to that as well. But, clearly, the Azure cloud is the fastest growing, but it's off a lower base. AWS is still the biggest, but Microsoft is moving up."
-- Mike Scarpelli, Chief Financial Officer

Record customer additions validate revamped go-to-market engine

Snowflake added 533 net new customers, a 21% year-over-year rise, and achieved a record 50 new customers crossing the $1 million trailing twelve-month revenue threshold, now totaling 654 such large accounts (with roughly half from the Global 2,000). Aggressive sales and marketing hiring—adding 364 heads in the quarter alone—contributed to first-half hiring outpacing the prior two years combined, supporting pipeline maturation and broader geographic adoption through new sales motions in the U.S. and EMEA.

"With net new customer adds in the quarter up 21% year over year, it is clear that our new customer acquisition motion is yielding positive results. In the last quarter, 50 customers crossed the $1 million in trailing twelve-month revenue, a record for the company. $1 million-plus customers now total 654."
-- Mike Scarpelli, Chief Financial Officer

Continued expansion among enterprise-scale customers increases Snowflake’s wallet share opportunity and embeds long-term growth potential as clients standardize on the data platform for increasingly mission-critical and AI-centric workloads.

Looking Ahead

For the fiscal third quarter 2026, Snowflake guides to product revenue of $1.125 billion to $1.13 billion, representing 25% to 26% year-over-year growth and a 9% non-GAAP operating margin for the fiscal year. Full-year product revenue guidance increased to $4.395 billion, up 27% year-over-year, with a targeted 75% non-GAAP product gross margin, and a 9% non-GAAP operating margin for the quarter, and a 25% non-GAAP adjusted free cash flow margin for the fiscal year. Management reiterated expectations for continued feature launches and operational efficiency as primary growth drivers in the second half of the fiscal year.

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This article was created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Snowflake. The Motley Fool has a disclosure policy.