Snowflake Inc. 10-Q Summary: Quarter Ended July 31, 2026
Business Context and Reporting Period
This report covers Snowflake Inc.'s financial results for the quarterly period ended July 31, 2026 (Fiscal Q2 2027). Snowflake operates a cloud-based data platform, the "AI Data Cloud," utilizing a consumption-based business model. The company reported a net loss for the period but demonstrated significant revenue growth driven by increased platform consumption and strategic acquisitions.
Key Financial Metrics
| Metric | Three Months Ended July 31, 2026 | Six Months Ended July 31, 2026 |
|---|---|---|
| Revenue | $1.55 billion | $2.94 billion |
| Net Loss | $(191.7) million | $(487.3) million |
| Operating Loss | $(263.0) million | $(589.1) million |
| Gross Margin | 67% | 67% |
| Free Cash Flow (Non-GAAP) | $83.8 million | $334.6 million (Operating Cash Flow) |
| Cash & Investments | $4.3 billion (as of July 31, 2026) | |
| Convertible Senior Notes | $2.3 billion principal outstanding |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 35% year-over-year (YoY) for the quarter and 34% YoY for the six-month period, primarily driven by increased consumption from existing customers.
- Profitability: The net loss narrowed significantly compared to the prior year. Net loss for the quarter decreased from $298.0 million in Q2 2025 to $191.7 million in Q2 2026. Operating loss improved from $340.3 million to $263.0 million.
- Expense Management: General and Administrative (G&A) expenses decreased 24% for the six-month period compared to the prior year, largely due to the absence of $108.6 million in asset impairment charges related to office facility exits recorded in the prior year.
- Acquisitions: The company completed two significant acquisitions: Observe, Inc. (AI-powered observability) for $595.8 million and Natoma Labs, Inc. (AI agents) for $128.3 million. These transactions increased goodwill and intangible assets.
- Stock Repurchases: The company repurchased 1.7 million shares for $300.0 million during the six months ended July 31, 2026. Approximately $802.7 million remains available under the repurchase program.
Guidance, Outlook, and Risks
- Outlook: Management expects to generate positive net cash flows from operating activities for fiscal 2027. The company continues to invest heavily in AI capabilities and platform innovation.
- Remaining Performance Obligations (RPO): RPO stood at approximately $9.0 billion as of July 31, 2026. Management expects approximately 54% of this amount to be recognized as revenue in the next 12 months.
- Key Risks:
- AI Strategy Execution: Success depends on effective product development, partner relationships, and customer adoption of AI features.
- Legal Proceedings: The company faces multiple class actions, including securities litigation, copyright infringement claims regarding LLM training, and data security breach allegations.
- Cloud Infrastructure Costs: Gross margins are influenced by third-party cloud provider pricing. The company has entered into significant minimum spend commitments ($390 million for AI services and $6.0 billion for cloud infrastructure).
- Convertible Notes: The "Sale Price Trigger" for the company's 0% convertible senior notes was met in Q2 2026, allowing holders to convert notes into stock during the quarter ending October 31, 2026.
Investor Verification Checklist
- Verify the impact of the Observe and Natoma acquisitions on future amortization expenses and integration synergies.
- Monitor the conversion activity of the $2.3 billion convertible senior notes given the triggered sale price condition.
- Assess the trajectory of third-party cloud infrastructure costs relative to revenue growth, particularly regarding AI inference and GPU usage.
- Review the status and potential financial exposure of ongoing litigation regarding data security and copyright infringement.
- Track the Net Revenue Retention Rate (126% as of July 31, 2026) to gauge customer consumption trends amidst macroeconomic uncertainty.