Snowflake shares surge 22% on strong earnings despite bookings miss

Snowflake shares surged 22% in extended trading after reporting strong fiscal second-quarter results that beat expectations, with revenue rising 35% to $1.55 billion and adjusted EPS reaching 62 cents. The growth was fueled by rapid adoption of AI tools like CoCo and CoWork, which CEO Sridhar Ramaswamy credited for half of the business acceleration. However, Snowflake missed analyst expectations for remaining performance obligations, which came in at $9.00 billion against a $9.37 billion forecast, and recorded a GAAP net loss of $191.7 million due to heavy stock-based compensation.

Snowflake Q2 earnings beat

• ▪Snowflake's product revenue for the fiscal second quarter ending July 31, 2026, rose 37% year over year to $1.49 billion, beating analyst expectations of $1.42 billion.
• ▪Snowflake shares rose 22% in extended trading on September 2, 2026, following the release of its fiscal second-quarter financial results.
• ▪Snowflake's net revenue retention rate reached 126% for the fiscal second quarter ending July 31, 2026, with 828 customers spending more than $1 million annually.
• ▪Snowflake reported adjusted earnings of 62 cents per share for the fiscal second quarter ending July 31, 2026, exceeding analyst expectations of 45 cents per share.
• ▪Snowflake added 692 net new customers during the fiscal second quarter ending July 31, 2026, bringing its total customer count to over 14,500.
• ▪Snowflake reported revenue of $1.55 billion for the fiscal second quarter ending July 31, 2026, representing a 35% year-over-year increase and beating the LSEG consensus estimate of $1.48 billion.

AI product adoption growth

• ▪Snowflake's CoCo artificial intelligence coding assistant reached 9,100 accounts, adding more than 2,000 accounts during the fiscal second quarter ending July 31, 2026.
• ▪Snowflake CEO Sridhar Ramaswamy stated that artificial intelligence products accounted for approximately half of the business acceleration the company experienced during the quarter.
• ▪Snowflake's CoWork artificial intelligence product, which answers questions about a company's own data, expanded to 5,800 accounts during the fiscal second quarter ending July 31, 2026.

Remaining performance obligations shortfall

• ▪Snowflake's remaining performance obligations grew 30% year over year to $9.00 billion for the quarter ending July 31, 2026, missing analyst expectations of $9.37 billion.
• ▪Snowflake stated in its earnings release that remaining performance obligations are not necessarily indicative of future product revenue growth because the metric does not account for the timing of customer consumption.

GAAP versus non-GAAP results

• ▪Snowflake's stock-based compensation-related charges totaled $456.4 million for the fiscal second quarter ending July 31, 2026, which exceeded its non-GAAP operating income.
• ▪Snowflake reported non-GAAP operating income of $237.0 million, representing a 15.3% margin, and non-GAAP net income of $235.3 million for the fiscal second quarter ending July 31, 2026.
• ▪Snowflake recorded a GAAP net loss of $191.7 million, or 55 cents per share, for the fiscal second quarter ending July 31, 2026, narrowing from a net loss of $297.9 million, or 89 cents per share, in the prior-year period.

Raised full-year guidance

• ▪Snowflake raised its full-year fiscal 2027 non-GAAP operating margin forecast to 14.5%, up from the 13.5% projected in May 2026.
• ▪For the fiscal third quarter of 2027, Snowflake expects product revenue between $1.588 billion and $1.593 billion, exceeding the analyst consensus of $1.50 billion.
• ▪Snowflake raised its full-year fiscal 2027 product revenue guidance to $6.07 billion, representing 36% year-over-year growth, up from the $5.84 billion projected in May 2026.