SNOW · Q1 2026 Earnings
BullishSnowflake
Reported May 21, 2025
30-second summary
Snowflake delivered $1.04B revenue (+26% YoY) with product revenue of $997M (+26% YoY), and management raised FY26 product revenue guidance to $4.325B (+25% YoY) — a rare in-year guide hike from a company that has historically managed expectations downward. Cortex AI is now embedded in 5,200+ accounts on a weekly basis and is being framed as a "foundational pillar" rather than a pilot. The tone shift is material: management is leaning into acceleration, not hedging against macro.
Headline numbers
EPS
Q1 FY2026
$0.24
Revenue
Q1 FY2026
$1.04B
+26.0% YoY
Gross margin
Q1 FY2026
72.0%
Free cash flow
Q1 FY2026
$0.18B
Operating margin
Q1 FY2026
9.0%
Key financials
Q1 FY2026| Metric | Q1 FY2026 | YoY |
|---|---|---|
| Revenue | $1.04B | +26.0% |
| EPS | $0.24 | — |
| Gross margin | 72.0% | — |
| Operating margin | 9.0% | — |
| Free cash flow | $0.18B | — |
Guidance
Prior quarter data unavailable — comparison not possible.
Segment performance
Q1 FY2026| Segment | Q1 FY2026 | YoY |
|---|---|---|
| Product revenue | $0.997B | +26.0% |
Platform metrics
Q1 FY2026| Segment | Q1 FY2026 |
|---|---|
| Net Revenue Retention Rate | 124% |
| Customers with trailing 12-month product revenue > $1M | 606 |
| Forbes Global 2000 customers | 754 |
| Remaining Performance Obligations | $6.7B |
Profitability
Q1 FY2026| Segment | Q1 FY2026 |
|---|---|
| Product gross margin (non-GAAP) | 76% |
| Operating margin (non-GAAP) | 9% |
| Free cash flow margin | 18% |
| Adjusted free cash flow margin | 20% |
Management tone
Management's posture this quarter is significantly more bullish than Snowflake's historical cautious framing. The shifts are concrete and span multiple operational dimensions, not just AI hype.
AI moved from experiment to operating model. A year ago Cortex was positioned as a nascent capability worth exploring; this quarter it's described as infrastructure. As CEO Sridhar Ramaswamy put it: "Cortex AI has gone from a nascent product area to a foundational pillar of enterprise AI strategies for customers around the world." The 5,200+ weekly active AI/ML accounts figure is the substantive backing — this is no longer a forward-looking pitch, it's a current-state disclosure.
Growth narrative pivoted from "stable amid macro" to "accelerating with runway." The notable line — "We are in the zone and there's still an enormous opportunity ahead" — is the kind of phrasing Snowflake management has historically avoided. Combined with the in-year FY guide raise (rare for this company), it signals management believes the consumption environment has stabilized in a way that supports leaning forward, not managing down.
Go-to-market is being re-architected, not just executed. New CRO Mike Gannon is being publicly credited with "renewed focus and rigor" — a tonal admission that prior execution had slack. Paired with aggressive Q1 FY2026 sales and marketing hiring (called out by J.P. Morgan's Mark Murphy as larger than expected), this signals a deliberate investment cycle rather than steady-state operations.
Product surface area is widening beyond structured data. The unstructured-data and Apache Iceberg messaging marks a positioning shift from "the cloud data warehouse" to end-to-end data lifecycle — a framing that puts Snowflake more directly into Databricks' territory.
Hedging remains, but on margin only. The hedging language ("approximately 75%", "we forecast based on observed customer behavior") is concentrated in margin and consumption guidance, not in growth or AI commentary. That's the inverse of recent quarters.
Recurring themes management leaned on this quarter:
Risks management surfaced:
Q&A highlights
Cash Rangan · Goldman Sachs
Given strong execution, 135 new products launched, record landing customers, and AI as a new revenue driver, why isn't Net Revenue Retention (NRR) better than 124%? What could a new CRO do to improve it further?
Management explained that newer customers not yet in the NRR cohort are contributing to overall growth beyond the NRR metric. A large customer grew less this year but is still performing well, which impacts the dynamics. Management reiterated that NRR and revenue growth will converge over time as the company matures.
Carl Kierstad · UBS
How does Snowflake's current macro environment compare to 2022-2023 downturn? Is it post-COVID optimization completion, better product portfolio, or less severe macro pressure?
Management attributed the difference to customer base evolution: COVID-era startups were capital-rich and cost-agnostic, whereas current customer base comprises mature large enterprises focused on cost efficiency. No major optimizations planned by customers unlike post-COVID period. No observed impact from tariffs or other current macro headwinds. Strong new customer additions and RPO growth indicate customer confidence.
Mark Murphy · JP Morgan
Q1 sales and marketing hiring was much larger than expected. Is this driven by confidence in broader business, or specifically Cortex/Snowpark pipeline opportunities?
Management attributed hiring primarily to overall business confidence rather than any single product. Q1 is always the largest hiring quarter to onboard employees for sales kickoff and enable them with new features. Management remains focused on operational excellence despite the strong hiring.
Sanjay Singh · Morgan Stanley
How was consumption trending exiting Q1 and through May? What are monetization trends for Cortex, and are customers making commitments around Cortex that drive consumption?
Management declined to comment on consumption within the quarter, citing guidance already provided based on observed customer behavior through today. On Cortex: customers are investing in Snowflake for AI readiness; monetization is integrated into existing spend (not sold separately). Adoption follows graduated approach from simple chatbots to compound systems and multi-step flows. Every CDO now views data strategy as unlock for AI both today and future.
Kirk Matern · Evercore ISI
Snowpark and dynamic tables are outperforming. How much is product maturation vs. go-to-market enablement and sales execution?
Management attributed outperformance to both product maturity (Snowpark, dynamic tables, Iceberg, Connectors) and go-to-market execution. Sales team was bolstered with specialists in AI and data engineering to identify high-value use cases, pioneer implementations as templates, and partner with GSIs. Emphasis on end-to-end data lifecycle (injection to insight). Combination of great products and capable go-to-market team required.
What to watch into next quarter
Whether NRR breaks back above 125% — flat-to-down NRR despite record new logos and AI uptake is the one tension in this print. If it slips below 124% next quarter, the "large customer underexpansion" excuse looks structural.
Q2 FY26 product revenue vs. the $1.035–1.040B guide — Snowflake just raised the FY by what looks like a meaningful amount; a Q2 beat with another FY raise would validate the acceleration narrative, an in-line print would not.
Cortex monetization disclosure — management explicitly said Cortex is not sold separately. Watch for whether they break out AI-attributable consumption or maintain the integrated framing; the latter limits the bull case's ability to value the AI contribution.
Operating margin trajectory — Q1 FY2026 came in at 9% vs. 8% FY guide. Sustained margin above guide while sales/marketing hiring ramps would confirm operating leverage; reversion to 7-8% would suggest the hiring is front-loaded cost without near-term return.
RPO growth rate next quarter — $6.7B current; sustained double-digit RPO growth is the leading indicator that the FY raise is achievable.
Sources
- Snowflake Q1 FY2026 Press Release & Financial Statements — https://www.sec.gov/Archives/edgar/data/1640147/000164014725000094/fy2026q1earnings.htm
- Snowflake Q1 FY2026 earnings call commentary (management prepared remarks and Q&A)
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