- Product Revenue Growth Snowflake reported product revenue of $1.09 billion, a 32% YoY increase, with a net revenue retention rate of 125%.
- AI Adoption Surge 25% of Q2 use cases involved AI, driven by tools like Cortex AI SQL and Snowflake Intelligence, accelerating customer budget allocations for AI projects.
- Revenue Guidance Raised FY 2026 product revenue guidance increased to $4.395 billion (27% YoY growth), with Q3 projected to reach $1.125–$1.13 billion (25–26% YoY growth).
- Cloud Growth Momentum Azure emerged as Snowflake’s fastest-growing cloud, expanding 40% YoY, fueled by improved Microsoft alignment and enterprise demand.
- Customer Expansion Added 533 customers, including 15 Global 2000 companies, with 50% of million-dollar+ customers being Global 2000 firms, targeting $10M annual spend per client.
Operational Highlights
Snowflake is executing with intensity and alignment, driving operational rigor, and investing aggressively in growth. The company's product strategy is focused on delivering a cohesive product with fast time to value, simplicity, and ease of use. Snowflake Intelligence, in public preview, enables users to talk to their enterprise data, turning structured and unstructured data into actionable insights through natural language.
Growth Drivers
The company's go-to-market teams are demonstrating renewed focus and rigor, with a healthy retention rate and the addition of 533 customers, including 15 Global 2000 companies this quarter. Snowflake is also investing in partnerships, with over 12,000 global partners, including leading cloud providers, technology innovators, and system integrators. Mike Scarpelli highlighted that Azure was Snowflake's fastest-growing cloud, growing 40% year over year.
Valuation
With a P/S Ratio of 19.27 and an expected revenue growth rate of 27.7% next year, Snowflake's valuation appears to be reasonable. However, the company's P/E Ratio is -57.52, indicating that it is not profitable on a GAAP basis. The EV/EBITDA ratio is also negative at -68.45, which is not surprising given the company's negative EBITDA. Analysts should keep an eye on the company's progress in achieving profitability.
AI and Data Platform
Snowflake's AI components of the data platform are delivering enormous value, with 25% of use cases deployed in Q2 involving AI in some form. The company is seeing more and more recognition from large customers for AI projects, which is driving budgets and increasing adoption. Sridhar Ramaswamy discussed the convergence of frontier models, saying that every prediction about plateauing has been proven wrong, and believes there's ample runway for growth.
Customer Adoption
Roughly 50% of Snowflake's million-dollar-plus customers are Global 2000 companies, and Mike Scarpelli believes these customers can potentially spend $10 million a year on Snowflake. The company is focused on getting reps and SCs to drive productivity and bookings, and will continue to add to the sales organization as long as it sees productivity. Customer interest in Snowflake Postgres is strong, and they're excited about the enterprise readiness and capabilities.