Snowflake Q1 Earnings Call Highlights

Key Points

• Snowflake posted accelerating Q1 fiscal 2027 growth, with product revenue up 34% year over year to $1.334 billion and net revenue retention rising to 126%. Non-GAAP operating margin also improved to 12%, up more than 300 basis points from a year earlier.
• The company raised its full-year outlook to $5.84 billion in product revenue, implying 31% growth, and lifted full-year non-GAAP operating margin guidance to 13.5%. Management said the upgraded outlook reflects stronger demand and the impact of the new five-year, $6 billion AWS contract.
• AI products are becoming a major growth driver, with Snowflake Intelligence usage more than doubling quarter over quarter and Cortex Code now used by over 7,100 accounts. The company also said customer expansion remains strong, including 64 customers above $10 million in trailing 12-month revenue and 38% growth in remaining performance obligations.

Snowflake NYSE: SNOW reported accelerating growth in its first quarter of fiscal 2027 and raised its full-year outlook, with executives pointing to stronger demand for its core data platform and early traction from artificial intelligence products including Snowflake Intelligence and Cortex Code.

Chief Executive Officer Sridhar Ramaswamy said product revenue reached $1.334 billion, up 34% year over year. He said that marked an acceleration from 30% growth in the prior quarter and 26% a year earlier, as well as the company’s strongest sequential dollar growth in its history. Snowflake’s net revenue retention rate increased to 126%, and non-GAAP operating margin expanded by more than 300 basis points year over year to 12%.

Ramaswamy framed the quarter around Snowflake’s push into what he called the “agentic enterprise,” where employees and AI agents work together across data, applications and workflows. He said Snowflake’s platform brings together governed enterprise data, access to AI models, connectivity to business applications and an “agentic control plane” through Snowflake Intelligence and Cortex Code, also referred to as Coco.

“AI is fundamentally reshaping how work gets done, and Snowflake is at the center of the transformation,” Ramaswamy said.

Snowflake Raises Fiscal 2027 Revenue Outlook

Chief Financial Officer Brian Robins said the company now expects fiscal 2027 product revenue of $5.84 billion, representing 31% year-over-year growth. That is up from the company’s prior expectation of 27% growth, according to remarks on the call.

For the second quarter, Snowflake expects product revenue between $1.415 billion and $1.42 billion, representing 30% year-over-year growth. The company also raised its full-year non-GAAP operating margin guidance to 13.5% from 12.5%, while reiterating its non-GAAP adjusted free cash flow margin guidance of 23%.

Robins said the outlook incorporates the company’s recent five-year, $6 billion contract with Amazon Web Services. He said the agreement more than doubles Snowflake’s prior contract with AWS, signed in fiscal 2023, and includes an expanded go-to-market investment and collaboration from AWS.

Robins said Snowflake’s Observe acquisition contributed less than one percentage point of product revenue growth in the first quarter, and the company continues to expect it to add roughly one percentage point of product revenue growth for the full year. He said the full-year outlook for non-GAAP operating margin and non-GAAP adjusted free cash flow margin includes an approximately 150 basis-point headwind related to Observe.

AI Products Drive Consumption and Adoption

Executives repeatedly emphasized that AI is affecting Snowflake in multiple ways: increasing usage of the core platform, creating revenue from AI products and accelerating customers’ ability to build new workloads on Snowflake.

Ramaswamy said accounts using Snowflake Intelligence more than doubled quarter over quarter. He also said Cortex Code is in use with more than 7,100 accounts, making it one of the fastest-adopted products in the company’s history. Robins said Cortex Code was the largest driver of the increase in Snowflake’s forecast because the company now had observed usage behavior to include in its model after the product became generally available during the quarter.

In response to an analyst question, Ramaswamy said AI has created a “healthy secular tailwind” for the core data platform, while products such as Snowflake Intelligence and Cortex Code are also creating second-order effects by making it easier for customers to complete projects, create pipelines, develop agents and accelerate migrations.

Robins said AI products have lower gross margins than Snowflake’s core platform, but the company is offsetting that with efficiencies such as lower bandwidth costs tied to the AWS agreement. Snowflake maintained its fiscal 2027 non-GAAP product gross margin guidance at 75%.

Customer Growth and Large-Account Expansion Continue

Snowflake ended the quarter with 13,912 customers. Ramaswamy said the company added 616 net new customers, up 38% year over year. Robins added that Snowflake added 13 Global 2000 customers during the quarter, compared with four in the same period last year.

The company also reported continued expansion among large customers. Ramaswamy said eight customers surpassed $10 million in trailing 12-month revenue during the quarter, bringing the total number of customers above that threshold to 64. Robins said remaining performance obligations grew 38% year over year, compared with 34% growth in the first quarter of last year.

Ramaswamy cited customer examples including Holiday Inn Club Vacations, Houzz, Nestlé and a large U.S. bank that completed a nearly two-year Teradata migration onto Snowflake. He also said one large wealth management firm deployed a Cortex-powered agent called Ask Your Data to its executive leadership team, with more than 60% of business inquiries that previously required analyst data pulls now answered on demand.

Snowflake also highlighted expansion activity from Global 2000 companies including Global Payments, Depository Trust & Clearing Corporation and Blue Yonder.

Natoma Deal Extends AI Agent Capabilities

Ramaswamy said Snowflake’s intended acquisition of Natoma will extend its agentic control plane into everyday business applications. He said Natoma will allow users to perform tasks such as sending emails, summarizing Slack conversations, checking calendars and opening Jira tickets from Snowflake Intelligence or Cortex Code.

Robins said the intended acquisition will bring 20 employees to Snowflake. Ramaswamy said the significance of the deal is not only convenience, but governance, because actions would occur from within an environment with enterprise security, permissions, observability and policy enforcement.

During the call, executives also discussed broader partnerships. Ramaswamy said Snowflake announced an expanded collaboration with AWS through the new $6 billion agreement and noted that Snowflake surpassed $7 billion in lifetime AWS Marketplace sales. He also referenced an expanded $200 million partnership with OpenAI and the general availability of joint capabilities from Snowflake’s partnership with SAP.

Company Cites Internal AI Productivity Gains

Snowflake executives said the company is also using its own AI products internally. Ramaswamy said Coco analyzes incoming customer support cases before an engineer engages, helping drive more than 25% faster case resolution times and a 25% increase in case throughput per engineer. He also said engineering teams that run Snowflake cloud deployment reduced complex case resolution time by nearly 30% and cut engineering time spent per ticket by roughly 40%.

Robins said Snowflake added 190 employees during the quarter, with 173 joining through the Observe acquisition. Excluding Observe, organic hiring was limited to 17 employees. He said the company remains focused on both growth and margin expansion.

Snowflake also repurchased approximately 1.7 million shares for about $300 million during the quarter. Robins said the company has roughly $800 million remaining under its original $4.5 billion repurchase authorization and ended the quarter with $4.4 billion in cash equivalents, short-term investments and long-term investments.

Ramaswamy also noted that co-founder and Chief Architect Benoit Dageville will step away from day-to-day operations in mid-June while continuing as a member of Snowflake’s board of directors. He said the product organization will continue to be led by Christian Kleinerman, Snowflake’s executive vice president of product.

About Snowflake NYSE: SNOW

Snowflake Inc is a cloud-native data platform company that provides a suite of services for storing, processing and analyzing large volumes of data. Its core offering, often described as the Snowflake Data Cloud, combines data warehousing, data lake and data sharing capabilities in a single managed service delivered across major public cloud providers. The platform is designed to support analytics, data engineering, data science and application workloads with a focus on scalability, concurrency and simplified administration.

Key products and capabilities include a multi-cluster, shared-data architecture that separates compute from storage; continuous data ingestion and streaming; support for structured and semi-structured data formats; tools for data governance, security and compliance; and developer frameworks for building data applications.

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