Snowflake Inc. SNOW used its second-quarter fiscal 2027 earnings call to emphasize accelerating AI adoption, stronger core-platform consumption and a higher full-year product revenue outlook. Management framed AI as a multiplier across new workloads, users and existing customer spending.
The reported quarter also cleared Zacks expectations. Non-GAAP EPS of $0.62 beat the Zacks Consensus Estimate of $0.45, while revenues of $1.54 billion topped the $1.47 billion consensus.
SNOW Raises Product Revenue Outlook
Chief financial officer Brian Robins raised fiscal 2027 product revenue guidance to $6.07 billion, representing 36% year-over-year growth, from the prior $5.84 billion and 31% growth outlook.
For the fiscal third quarter, Robins guided product revenues to $1.588 billion-$1.593 billion or 37-38% growth. He said forecasts continue to rely on observed consumption patterns rather than a changed methodology.
Snowflake also lifted full-year non-GAAP operating margin guidance to 14.5% from 13.5%, while reiterating 23% adjusted free cash flow margin guidance.
Snowflake Ties AI to Core Consumption
Chief executive officer Sridhar Ramaswamy said AI is strengthening Snowflake through new workloads, adoption of CoCo and CoWork, and higher broader platform consumption by customers using AI.
In the Q&A session, an Evercore ISI analyst asked how much of the acceleration came from newer AI products versus the core business. Ramaswamy said AI products contributed approximately half, with core products and faster migrations supplying the rest.
Robins added that fiscal second-quarter product revenues rose 37% year over year, marking a third straight quarter of acceleration, with strength across both the core data platform and AI revenues.
SNOW Deepens Agent Adoption and Customer Reach
Ramaswamy said CoCo surpassed 9,100 accounts after adding more than 2,000 during the second quarter, while CoWork expanded to 5,800 accounts.
He also highlighted customer use cases spanning data migration, sales, finance and supply-chain processes. Snowflake added 692 net new customers, including 14 net new Forbes Global 2000 customers.
Robins said net revenue retention was 126%, while 828 customers generated more than $1 million in trailing 12-month product revenues. Remaining performance obligations reached $9 billion, up 30% year over year.
Snowflake Faces Q&A on Growth Quality
A Morgan Stanley analyst pressed management on whether the acceleration was broad and durable. Ramaswamy said growth came from a broad customer base and that AI-native companies remained a small share of revenue.
He also stressed that CoCo can help customers optimize queries and warehouse usage, supporting more efficient consumption. Robins said gross retention had remained relatively flat across recent quarters.
Robins further noted that Snowflake is selling to a wider set of decision-makers, including CFOs, CROs, CMOs and CEOs, as AI use cases reach beyond traditional data teams.
SNOW Balances AI Mix With Margin Discipline
A UBS analyst asked about model choice and its margin implications. Ramaswamy said customers increasingly want flexibility across frontier and open models, while Christian Kleinerman, executive vice president of product management, called neutrality a competitive advantage.
Robins said the higher mix of fast-growing AI workloads prompted Snowflake to guide fiscal 2027 non-GAAP product gross margin to 74%, reflecting lower contribution margins for those workloads today.
At the same time, Robins emphasized operating leverage. He cited disciplined headcount management as a driver of second-quarter margin performance, while Ramaswamy reiterated the company’s target for GAAP profitability in the fiscal fourth quarter of 2028.
Snowflake Keeps Strategy Focused
Management’s message centered on using CoCo, CoWork and the broader AI platform to bring more workloads onto Snowflake while expanding its role in enterprise workflows. Product velocity, model choice and governed AI execution remain central priorities.
The tone stayed focused on pairing growth with discipline. Robins emphasized stronger consumption across core and AI products, while Ramaswamy kept the strategic emphasis on turning AI adoption into broader platform usage.
SNOW Rank and Style Scores Send Mixed Signals
SNOW carries a Zacks Rank #2 (Buy). Its Growth Score of A is favorable under the Style Scores framework, but the Value Score of F, Momentum Score of D and VGM Score of D provide weaker style-based support. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks methodology generally favors stocks with a Zacks Rank #1 or 2 paired with A or B Style Scores. SNOW’s current signals are therefore mixed across styles, and its Zacks Rank can change as earnings estimates are revised following the latest results.
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Snowflake Inc. (SNOW): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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