A month has gone by since the last earnings report for Snowflake Inc. (SNOW Quick QuoteSNOW - Free Report) . Shares have lost about 4.1% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Snowflake due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Snowflake Q2 Earnings Beat on Product Revenues and AI Strength

Snowflake reported second-quarter fiscal 2027 non-GAAP earnings of 62 cents per share, up 77.1% year over year and surpassed the Zacks Consensus Estimate by 37.78%. 

Revenues of $1.55 billion increased 35.1% and beat the consensus mark by 4.91%. Growth was driven by strength in the core data platform and a meaningful step-up in AI revenue.

SNOW Top-line Details

SNOW’s fiscal second-quarter performance was driven by consumption across its core platform, with product revenues representing the majority of results. Product revenues rose 37% to $1.49 billion and accounted for 96% of total revenues in the fiscal second quarter. Professional services and other revenues were $54.9 million, representing the remaining 4% of revenues and increasing 0.8% year over year.

Geographically, the Americas contributed 77% of revenues, while EMEA accounted for 17% and APJ contributed 6%. Management said that product revenue growth accelerated for the third consecutive quarter, supported by the core data platform and AI demand.

Snowflake’s AI Products Broaden Platform Usage

CoCo surpassed 9,100 accounts, adding more than 2,000 during the quarter. CoWork expanded to 5,800 accounts, up nearly 11% sequentially. Management said that AI products, including CoCo, CoWork, AI functions and AI Gateway, contributed roughly half of the acceleration in growth.

Snowflake launched more than 330 product capabilities to general availability in the first half of fiscal 2027, up 35% year over year. New offerings included Cortex Sense and Cortex AI Gateway, which integrates Natoma to extend AI from insight to action. 

Customer use cases deployed on the platform increased 89% year over year, while use cases won per account executive rose 43%. Management also said that accounts using CoCo consumed more of the core platform, while gross retention remained relatively flat across recent quarters.

SNOW Expands Customer Scale and Commitments

SNOW ended the quarter with 14,554 total customers after adding 692 net new customers, a 32% year-over-year increase in net additions. The company added 14 Forbes Global 2000 customers, taking that total to 829.

Large-customer momentum remained strong, with 828 customers generating more than $1 million in trailing 12-month product revenues, up 27% year over year. Another 65 customers exceeded $10 million in trailing product revenues. 

Retention remained a key support for the consumption model. Net revenue retention rate was 126%, reflecting healthy expansion within the existing customer base. 

Contracted demand also remained solid, with remaining performance obligations (RPO) of $9.00 billion, up 30% year over year. Snowflake expects roughly 54% of RPO to be recognized as revenue over the next 12 months. As of July 31, 43% of customers had at least one stable data-sharing edge, while Marketplace listings reached 4,105, up 21%.

Snowflake’s Expense Discipline Lifts Operating Margin

The non-GAAP gross margin contracted 120 basis points (bps) year over year to 71.8%. Non-GAAP product gross margin was 74.7%. 

Non-GAAP sales and marketing expense represented 32% of revenues, down from 34% a year ago, while research and development fell to 20% from 22%, and general and administrative expense declined to 5% from 6%.

Non-GAAP operating income reached $237.0 million, producing a 15.3% operating margin. The year-ago non-GAAP operating margin was 11.1%. Management attributed the improvement to strong revenue growth and disciplined headcount management. 

Year to date, Snowflake added 334 employees, including 173 from Observe, compared with 935 additions in the year-ago period.

SNOW’s Cash Flow and Liquidity Details

As of July 31, 2026, cash, cash equivalents, and short- and long-term investments were $4.3 billion compared with $4.39 billion as of April 30.

In the reported quarter, net cash provided by operating activities was $91.4 million. Free cash flow totaled $83.8 million, while adjusted free cash flow was $92.3 million.

For the first six months of fiscal 2027, operating cash flow increased to $334.6 million from $303.3 million a year earlier, while adjusted free cash flow rose to $357.8 million from $274.0 million.

Snowflake Raises Fiscal 2027 Product Revenue Outlook

For the third quarter of fiscal 2027, Snowflake expects product revenues between $1.588 billion and $1.593 billion, implying 37% to 38% year-over-year growth. The company expects a non-GAAP operating margin of 15.5%.

For fiscal 2027, product revenues are projected to be $6.07 billion, representing 36% growth, up from the prior guidance of $5.84 billion and 31% growth. Snowflake also raised its non-GAAP operating margin outlook to 14.5% from 13.5%, expects a 74% non-GAAP product gross margin, and reiterated a 23% adjusted free cash flow margin.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

The consensus estimate has shifted 26.29% due to these changes.

VGM Scores

At this time, Snowflake has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock has a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Snowflake has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Snowflake is part of the Zacks Internet - Software industry. Over the past month, GitLab Inc. (GTLB Quick QuoteGTLB - Free Report) , a stock from the same industry, has gained 1.3%. The company reported its results for the quarter ended July 2026 more than a month ago.

Gitlab reported revenues of $286.25 million in the last reported quarter, representing a year-over-year change of +21.3%. EPS of $0.24 for the same period compares with $0.24 a year ago.

For the current quarter, Gitlab is expected to post earnings of $0.20 per share, indicating a change of -20% from the year-ago quarter. The Zacks Consensus Estimate has changed -6.4% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for Gitlab. Also, the stock has a VGM Score of F.