Snowflake 2026 Q1 Earnings Misses Targets as Net Income Widens 35.3%

Snowflake(SNOW) reported its fiscal 2026 Q1 earnings on May 21st, 2025. Snowflake's latest earnings report fell short of expectations, primarily driven by a deepening net loss of 35.3% compared to the previous year's corresponding quarter. The company did not adjust its guidance, maintaining its revenue target for the fiscal year 2026. Despite the widening net loss, Snowflake continues to maintain its growth outlook with a projected 25% year-over-year revenue increase for the next quarter.

Revenue
Snowflake's revenue climbed by 25.7% to reach $1.04 billion in the first quarter of fiscal 2026, compared to $828.71 million during the same period in 2025. Product revenue was a significant contributor, accounting for $996.81 million, while professional services and other revenue added $45.26 million to the total.

Earnings/Net Income
Snowflake's losses deepened to $1.29 per share in 2026 Q1 from a loss of $0.95 per share in 2025 Q1, marking a 35.8% wider loss. Meanwhile, the company's net loss expanded to $-429.95 million in 2026 Q1, representing a 35.3% increase from the $-317.82 million loss recorded in 2025 Q1. Snowflake has sustained losses for seven years in the corresponding fiscal quarter, highlighting ongoing financial headwinds. EPS reflects the company's continuing struggle with profitability.

Price Action
The stock price of Snowflake has edged down 0.99% during the latest trading day, has edged down 1.28% during the most recent full trading week, and has surged 30.74% month-to-date.

Post-Earnings Price Action Review
In the aftermath of the earnings report, Snowflake's stock exhibited moderate returns for investors employing a buy-and-hold strategy following a quarterly revenue decline. This approach, executed over a 30-day period, yielded a compound annual growth rate (CAGR) of 17.07%, surpassing the benchmark by an excess return of 14.85%. Despite the profitability indicated, the strategy was characterized by significant volatility and risk, as evidenced by a low Sharpe ratio of 0.29 and a substantial maximum drawdown of -56.42%. These factors underscore the high-risk nature of the strategy and the crucial importance of effective risk management when investing in Snowflake shares.

CEO Commentary
Sridhar Ramaswamy, CEO, expressed pride in Snowflake's strong performance, noting, "We are off to a strong start to the year." He highlighted product revenue growth of 26% year-over-year, emphasizing the company's operational rigor and investment in growth. Ramaswamy stated, "We are building our strength in executing with urgency and focus to capture the opportunities ahead." He underscored the importance of product cohesion and highlighted strategic advancements in AI and data connectivity. He characterized the company’s momentum positively, stating, "We have an incredible product momentum, and we are continuing to innovate at lightning speed," reflecting an optimistic leadership outlook.

Guidance
Snowflake expects Q2 product revenue to be between $1.035 billion and $1.04 billion, representing 25% year-over-year growth. For the full fiscal year 2026, the company is guiding to a revenue target of $4.325 billion, also reflecting 25% year-over-year growth. Additionally, it anticipates a non-GAAP operating margin of 8% for Q2, with a projected non-GAAP adjusted free cash flow margin of 25% for the year.

Additional News
During the recent weeks, Snowflake has been at the center of several notable developments beyond its earnings report. The company was involved in strategic advancements, particularly in the AI space, which has sparked considerable discussion among industry analysts. Snowflake's expansion in the AI arena is seen as a strategic move to strengthen its data cloud capabilities. Additionally, there is speculation about potential shifts in the executive lineup, with discussions surrounding key C-level changes aimed at navigating the evolving market landscape. Furthermore, Snowflake has engaged in dialogues about enhancing shareholder value, sparking conversations around potential dividend or buyback initiatives to bolster investor confidence amidst fluctuating market conditions.