Snowflake 2026 Q2 Earnings Beats Expectations, Narrows Losses

Snowflake reported better-than-expected results in Q2 2026, with revenue rising 31.8% year-over-year and losses narrowing. The company also raised its full-year product revenue guidance, reflecting strong demand for its AI-driven data analytics services.

Revenue
Snowflake’s total revenue climbed to $1.14 billion in Q2 2026, up from $868.82 million in the same period a year ago, driven by robust product revenue growth. Product revenue accounted for the majority of the top-line performance, reaching $1.09 billion, reflecting a 32% year-over-year increase. Professional services and other revenue supplemented the total with $54.47 million. The strong performance underscores growing demand for Snowflake’s data analytics platform, particularly in the AI space.

Earnings/Net Income
Snowflake narrowed its net loss to $297.93 million in Q2 2026, a 6.2% reduction from $317.77 million in the prior year, while the loss per share improved to $0.89 from $0.95, a 6.3% improvement. Despite these improvements, the company continues to report annual losses for the seventh consecutive year, indicating that profitability remains a work in progress.

Price Action
Snowflake’s stock edged down 0.67% in the latest trading day but gained 2.87% over the past week. However, it declined 8.36% month-to-date, reflecting ongoing investor caution.

Post-Earnings Price Action Review
A strategy of buying SNOW following a revenue beat and selling after 30 days yielded a -32.48% return, significantly underperforming the benchmark’s 40.78%. With a CAGR of -9.87%, the approach was characterized by a high-risk profile, as indicated by a Sharpe ratio of -0.16 and a maximum drawdown of 0%.

CEO Commentary
CEO Sridhar Ramaswamy emphasized the company’s focus on simplicity, AI innovation, and operational efficiency. He highlighted the 32% year-over-year growth in product revenue, the 33% increase in remaining performance obligations, and the addition of 533 new customers. Ramaswamy noted that 50% of new customers and 25% of use cases now involve AI, reinforcing Snowflake’s role as a key enabler of enterprise AI adoption.

Guidance
Snowflake raised its FY26 product revenue guidance to $4.395 billion, up from prior expectations, signaling confidence in its growth trajectory. For Q3, the company expects product revenue between $1.125 billion and $1.13 billion, representing 25–26% year-over-year growth. Non-GAAP operating margin is projected at 9% for both Q3 and FY26, while free cash flow margin for the full year is forecasted at 25%.

Additional News
The company addressed growing market concerns about AI startups eroding traditional software vendors’ market share. Snowflake’s recent financial performance and strategic AI integrations helped alleviate these concerns. The company reported a 13% post-earnings stock price surge and a net income retention rate of 125%, indicating strong customer loyalty. Meanwhile, rival Databricks raised a fresh round of funding, boosting its valuation above $100 billion. Despite the broader software sector’s struggles, Snowflake remains a top-performing stock, gaining nearly 30% year-to-date. Analysts remain cautiously optimistic, with U.S. Bank upgrading the stock to “Buy” with a $240 price target.