Snowflake 2026 Q3 Earnings Beats Expectations with 28.7% Revenue Growth and 11.2% Narrowed Losses

Snowflake (SNOW) reported Q3 2026 results exceeding revenue estimates while narrowing losses year-over-year. The company guided to 27% product revenue growth for Q4, below prior expectations, triggering market concerns. Analysts remain divided, with some highlighting AI-driven momentum and others cautioning on valuation pressures.

Revenue

Snowflake’s total revenue surged 28.7% to $1.21 billion in Q3 2026, driven by robust demand for its data analytics platform. Product revenue, the core driver, reached $1.16 billion, reflecting 29% year-over-year growth. Professional services and other revenue added $54.53 million, maintaining a steady contribution to the top line. The performance outpaced consensus estimates and underscored the company’s ability to capitalize on enterprise AI adoption.

Earnings/Net Income

The company narrowed its net loss to $291.60 million in Q3 2026, a 11.1% reduction from $327.90 million in the prior-year period. Earnings per share improved to a loss of $0.87 from $0.98, reflecting operational efficiencies. Despite these improvements, Snowflake has posted losses in seven consecutive Q3 reports, signaling persistent financial challenges. The 11.2% improvement in EPS indicates progress, though continued losses highlight ongoing headwinds.

Post-Earnings Price Action Review

Following the earnings release, Snowflake’s stock faced downward pressure, dropping 2.05% on the day and 8.94% for the week. The market reacted negatively to management’s guidance, which cut operating margin expectations to 7% for Q4. While the Q3 results exceeded revenue forecasts and showed margin expansion on a non-GAAP basis, the guidance shortfall triggered an 11% selloff. Analysts remain split, with some viewing the pullback as a buying opportunity and others cautioning about valuation pressures.

CEO Commentary

CEO Sridhar Ramaswamy emphasized Snowflake’s AI-driven growth, noting a $100 million annualized AI revenue run-rate achieved ahead of schedule. Strategic partnerships with SAP, Anthropic, and AWS, alongside Snowflake Intelligence’s adoption by 1,200 customers, were highlighted as key differentiators. Ramaswamy reiterated the company’s focus on operational rigor and ecosystem expansion, expressing confidence in AI’s role in sustaining customer retention and long-term growth.

Guidance

CFO Brian Robins provided Q4 guidance for product revenue of $1.195–$1.2 billion, representing 27% year-over-year growth. For FY 2026, product revenue is projected to reach $4.446 billion, with non-GAAP product gross margin targeting 75%, operating margin at 9%, and adjusted free cash flow margin at 25%. The guidance reflects disciplined growth execution, supported by strong bookings and 615 new customers in Q3.

Additional News

In the three weeks preceding the earnings report, Snowflake announced a $200 million multi-year AI partnership with Anthropic, expanding access to Claude models within Snowflake Intelligence. The company also surpassed $2 billion in AWS Marketplace sales in 2025, solidifying its cloud integration strategy. Additionally, insider selling activity intensified, with executives including former CEO Frank Slootman offloading shares totaling $2.5 million via prearranged trading plans.

Market Reaction and Analyst Outlook

Post-earnings, the stock traded at $229.41, down 13.80% month-to-date, reflecting investor caution despite strong revenue growth. Analysts remain optimistic about Snowflake’s AI and cloud partnerships but emphasize valuation concerns. The median price target of $275 implies 17% upside, though some models suggest fair value closer to $180–$195. Institutional ownership remains stable at 65%, while insider selling continues to draw scrutiny.

Competitive Positioning

Snowflake’s partnerships with Anthropic, AWS, and SAP reinforce its role as a central infrastructure layer for enterprise AI workloads. The $100 million AI revenue run-rate and 7,300 weekly AI users highlight its market traction. However, competition from Databricks and hyperscalers like Azure and Google Cloud remains intense, prompting strategic investments in R&D and pricing flexibility for long-term contracts.

Path to Profitability

Despite narrowing losses, Snowflake remains unprofitable under GAAP, with a trailing 12-month net loss of $1.35 billion. The company’s focus on AI monetization and margin expansion will be critical to justifying its $78 billion market cap. Institutional investors and analysts remain divided, with some advocating for long-term AI growth potential and others cautioning about decelerating revenue growth and margin pressures.