Snowflake (SNOW) 1st Quarter Earnings Live Coverage

• EPS (Non-GAAP): Not disclosed in the release — awaiting transcript or call.
  (The pre-release guidance implied ~$0.22–$0.23. Likely in line or modest beat)

• Product Revenue: $996.8M actual vs. $1.01B estimate → ~1.3% miss

• Total Revenue: $1.04B actual vs. $1.02–$1.03B consensus range → Slight beat

Note: SNOW’s after-hours +5.6% move suggests Street was bracing for a softer print; RPO strength offset revenue miss.

Snowflake shares rose 5.6% after hours following its Q1 print, signaling that the market was bracing for worse and found the steady revenue growth and robust RPO more than enough to offset deepening losses. While profitability remains a drag, the strong customer expansion and $6.7B in RPO validated the demand story — especially with enterprise software sentiment still fragile across the board.

This price action suggests investors were more concerned about a usage slowdown or a reset in long-term guidance — neither of which materialized. The 606 million-dollar customers and continued momentum in AI narrative positioning helped reinforce Snowflake’s status as a durable platform name with optionality, even if monetization of next-gen features like Cortex and Snowpark is still emerging.

That said, this reaction also likely reflects relief more than re-rating. For Snowflake to reclaim its high-multiple valuation and push beyond the $190–$200 zone, investors will eventually need more than just growth. Margin progress or explicit AI revenue metrics would be the likely fuel for a true breakout — but tonight, it’s clear the bar was set low enough for a beat to rally the stock.

Snowflake’s fiscal Q1 2026 results came in largely aligned with investor expectations on the top line, but profitability remains a sticking point. Product revenue rose 26% year-over-year to $996.8 million, meeting guidance and extending the company’s streak of solid double-digit growth. Total revenue hit $1.04 billion, a new quarterly record. Remaining performance obligations grew 34% to $6.7 billion, suggesting healthy forward demand.

Despite the top-line strength, Snowflake posted a GAAP net loss of $430 million, or $1.29 per share, a significantly wider loss than the same quarter last year. Operating expenses climbed over 25%, with sales and marketing costs topping $458 million and R&D reaching $472 million. Adjusted free cash flow also shrank year-over-year to $206.3 million, reflecting heavier investment in operations and headcount amid platform expansion.

The AI Data Cloud strategy was again front and center. Snowflake now serves 606 customers generating more than $1 million in trailing 12-month product revenue, up 27% YoY. But profitability remains elusive as the company continues to prioritize infrastructure scale and product build-out over margin.

Snowflake has topped EPS estimates in three of the last four quarters, but price reactions have been muted — with the exception of the Q1 FY25 miss, which triggered a sharp selloff. The pattern is clear: beats don’t drive the stock unless accompanied by upside in usage metrics like RPO or product revenue.

For tonight, merely hitting numbers may not be enough. Investors will be listening closely for evidence of traction in AI-native features and signs that larger enterprise customers are expanding usage across Snowflake’s platform.

Investor sentiment on Snowflake remains split. Institutional ownership remains high, but options activity ahead of earnings has leaned bullish, with elevated call volume near the $190 and $200 strikes. Despite the stock’s strong year-to-date performance, short interest is modest — under 3% of float — suggesting limited outright bearish conviction.

However, many large funds have taken a wait-and-see stance following Snowflake’s stock-based comp controversy and uneven quarterly billings trends. Sell-side analysts are cautiously optimistic, with most ratings clustered in the Buy-to-Hold range and a median target around $203 — only modestly above current levels.

Earnings-day volatility is typically elevated for SNOW, with options pricing implying a post-print move of ~7–9%. A strong RPO or AI monetization update could push shares through recent resistance, while muted platform usage data could invite a reset.

On the last call, Snowflake executives leaned hard into the AI Data Cloud narrative. CEO Sridhar Ramaswamy highlighted Cortex, Snowpark Container Services, and partnerships with Nvidia as cornerstones of Snowflake’s long-term roadmap. The company repeatedly emphasized that generative AI workloads would become a major source of data growth — and that Snowflake is positioned to be the “governed data layer” for those deployments.

But investors came away with more vision than numbers. There was no quantification of AI’s contribution to RPO or ARR, and management offered little detail on attach rates for Snowpark or Cortex.

Another focus was operational discipline. CFO Mike Scarpelli emphasized cost control and headcount restraint as drivers of recent EPS strength, while acknowledging that stock-based compensation remains elevated. With share-based comp still at over 40% of revenue, Snowflake’s narrative needs to transition from visionary to operationally credible.

What to watch this quarter:

• Updated commentary on AI feature usage and client interest

• Any revenue disclosure tied to Cortex or Snowpark

• Signals on NRR or multi-product adoption

• Tone shift from visionary to accountable execution

In recent quarters, Snowflake has delivered impressive headline beats but raised concerns under the surface — particularly around deal timing and monetization of new AI products. While Q4 FY25 posted a strong $0.30 EPS vs. $0.17 estimate, much of the beat was driven by expense control rather than accelerating usage.

The company has emphasized its AI Data Cloud vision and the rollout of Snowflake Cortex — a generative AI suite embedded in the platform — but has not disclosed revenue contribution from these new services. Analysts will be pressing for any update on attach rates or NRR improvements tied to AI features.

Another key trend is stock-based compensation. SBC accounted for 41% of revenue last year, drawing scrutiny from institutional investors. Any moderation here — especially as revenue scales — could boost confidence in the path to GAAP profitability.

Watch for:

• RPO growth (billings proxy)

• AI-related platform adoption commentary

• SBC as % of revenue

• New customer count and expansion rates

Snowflake operates in a sweet spot of enterprise software — a data infrastructure layer increasingly central to AI deployment. But that macro opportunity has yet to fully translate into breakout earnings power. With usage-based revenue still sensitive to customer optimization cycles, investors are looking for signals that the stabilization seen across AWS and Azure is flowing into Snowflake’s billings and RPO.

Last quarter’s beat was strong on paper — $0.30 EPS vs. $0.17 expected — but was driven more by cost control than visible AI monetization. This quarter, investors will be looking closely at product revenue growth, RPO trajectory, and any signs that Snowflake’s newer features like Cortex AI and Snowpark Containers are seeing measurable traction.

The AI Data Cloud story is compelling, but to move the stock higher, Snowflake must prove it is winning real workloads and expanding usage — not just demoing new features. Gross margin and customer count detail will be key earnings call focal points.