Snowflake Inc. 2027 Q2 Earnings Call

Please go ahead. Good afternoon, and thank you for joining us on Snowflake's second quarter fiscal 2027 earnings call.

Joining me on the call today are Sridhar Ramaswamy, our Chief Executive Officer, Brian Robins, our Chief Financial Officer, and Christian Kleinerman, our Executive Vice President of Product, who will participate in the Q&A session. During today's call, we will review our financial results for the second quarter fiscal 2027 and discuss our guidance for the third quarter and full year fiscal 2027. During today's call, we will make forward-looking statements, including statements related to our business operations and financial performance. These statements are subject to risks and uncertainties, which could cause them to differ materially from our actual results. Information concerning these risks and uncertainties is available in our earnings press release, our most recent Forms 10-K and 10-Q, and our other SEC reports.

All our statements are made as of today, based on information currently available to us. Except as required by law, we assume no obligation to update any such statements. During today's call, we will also discuss certain non-GAAP financial measures. See our investor presentation for the definition of the non-GAAP financial measures and a reconciliation of GAAP to non-GAAP measures and business metric definitions, including customer count and adoption. The earnings press release and investor presentation are available on our website at investors.snowflake.com. A replay of today's call will also be posted on the website. With that, I would now like to turn the call over to Sridhar.

Thank you, Catherine. Thank you all for joining us today. We're in the midst of a once-in-a-lifetime technology shift, and Snowflake remains at the center of the enterprise AI revolution. AI is fundamentally changing how enterprises build, operate, and make decisions. To stay competitive, every organization faces a new imperative: become an agentic enterprise, and do it quickly, safely, and cost efficiently. Snowflake is making this transformation a reality. We bring together the core elements of an agentic enterprise, a governed data foundation, access to leading AI models, deep application workflows, and a unifying agentic control plane that orchestrates across these elements to turn intent into governed action. By putting intelligence to work at scale, our customers are building faster, executing more efficiently, and reimagining their businesses in ways that weren't possible before. Put simply, the agentic enterprise runs on Snowflake.

The traction is translating into strong business performance, as evidenced by our Q2 results. Product revenue came in at $1.49 billion, with growth accelerating to 37% year-over-year, marking our second consecutive quarter of record sequential dollar growth. After exiting Q4 of last fiscal year at 30% year-over-year growth, we have now added 7 points of acceleration in just 2 quarters. With our continued focus on executing with discipline and operational rigor, our Q2 non-GAAP operating margin expanded by more than 400 basis points year-over-year to 15%. Thank you to all of our Snowflakes for the hard work and dedication that made this performance possible. As these results convincingly demonstrate, AI is compounding Snowflake's advantage across 3 reinforcing dynamics. First, AI is bringing new workloads onto the platform.

To power their AI initiatives, enterprises need a governed, unified foundation for data and context, and companies across industries are turning to Snowflake to power that foundation. Second, our first-party AI products, CoCo and CoWork, continue to see rapid adoption. As customers build and deploy agents on Snowflake, we are expanding our role into the agentic control plane and creating new opportunities for growth. Third, AI activation continues to lift overall platform consumption. Customers using AI on Snowflake consume more across the data platform, creating a structural multiplier for our business. Together, these dynamics show how the agentic enterprise has created a powerful flywheel across our business, and that flywheel is accelerating. At the heart of this momentum is the continued strength of our core business. Snowflake now provides the data and AI foundation for 14,554 customers around the world.

Customers continue to turn to Snowflake because our AI Data Cloud is easy to use, seamlessly connected for collaboration, and trusted, with enterprise-grade governance and security. This quarter, we added 692 net new customers, including 14 from the Forbes Global 2000, representing a 32% increase in net new customer additions year-over-year. At the same time, some of the world's most recognizable enterprises are deepening their relationships with Snowflake. Companies like BlackRock and Block are running more of their mission-critical work on Snowflake, and in several cases, adopting CoCo to move faster. The pattern is consistent. The more our customers build on Snowflake, the more they lean in. In fact, 65 customers have now crossed $10 million in trailing 12-month product revenue, demonstrating how our largest customers continue to go all in on Snowflake.

Part of our strength is in extending our customers' reach to the critical data that sits outside of their organization. Currently, 43% of our customers share data on Snowflake with at least one Stable Edge, demonstrating Snowflake's role as the circulatory system of the modern enterprise. We enable data, applications, and AI agents to move securely and seamlessly, not just within, but across organizations. In fact, Credit chose Snowflake for our data-sharing capabilities, which now facilitate privacy-safe ads measurement. As customers move quickly to modernize their data estates and establish a strong contact layer for AI, more and more customers are migrating workloads to our platform, a process now massively accelerated with AI. For example, one of the largest Australian banks migrated its financial crime platform to Snowflake, processing 17 billion transactions and delivering 10x faster query performance.

Now, they're building AI agents on Snowflake to accelerate the migration of the rest of their data estate and automate legacy data discovery and mapping. As AI strengthens demand for our core platform, it is also expanding Snowflake's opportunity to deliver a new generation of AI-powered products and experience. Because Snowflake sits at the center of our customers' data, business context, AI models, and workflows, we are uniquely positioned to become the governed control plane for the agentic enterprise. Our breakout AI products, CoWork and CoCo, bring that vision to life. They provide a governed layer where users across the business, from knowledge workers to builders, can put the full power of their enterprise context to work, all with simple conversational language. With CoWork and CoCo, customers are reimagining some of their most critical business processes, from supply chain operations to enterprise-wide sales motion.

Sayari, whose risk intelligence supports Fortune 100 enterprises and national security agencies, chose Snowflake to rebuild its global data infrastructure and cut costs by more than half. Its engineers are now using CoCo to accelerate the migration of 12 billion records into an AI-ready foundation. As more customers see what's possible with this technology, adoption continues to build. CoWork expanded to 5,800 accounts, up nearly 11% quarter-over-quarter. Meanwhile, CoCo continues to see rapid adoption, surpassing 9,100 accounts and adding more than 2,000 net new accounts in this quarter alone. We have customers like 1Password, the security company trusted by more than 200,000 businesses, which choose Snowflake for our CoCo capabilities. CoCo enables their team to move key data pipelines into Snowflake quickly, laying the foundation for their data and AI work.

The world's number one job site, Indeed, has rolled out CoWork and CoCo across its data teams and integrated Snowflake into its core data architecture, citing lower cost and greater efficiency, which compounds at the scale that they operate in, over 60 countries and 28 languages. The opportunity goes beyond adoption. By making it possible to build, collaborate, and interact with enterprise data through conversational language, CoWork and CoCo are bringing entirely new users to Snowflake. Within accounts adopting these products, we see a step change in user growth as Snowflake reaches new lines of business and expands its footprint within existing teams. As we continue to develop CoWork and CoCo as agency control planes, we are also building out the broader platform enterprises need to put AI to work at scale.

Model choice gives customers the flexibility to select from leading frontier and open models and evolve their approach as the market changes. Post-training lets them adapt models to their specific data and business context. Agent observability and analytics give customers full visibility into what their AI is doing, how it's performing, and what it costs. To help our customers optimize cost, performance, and speed, we've introduced Cortex AI Gateway, which dynamically routes each task to the right model based on customer-defined policies and real-world performance data with cost and governance controls built in. As those economics improve, customers can deploy AI more broadly and with greater confidence, creating another catalyst for adoption and consumption on Snowflake. Cortex AI Gateway also extends AI from insight to action through its integration of Natoma.

Users can now send emails, summarize Slack conversations, open Jira tickets, and act across their business, all without leaving CoWork or CoCo. We have also continued to advance how our agents understand the unique context of a business. At Snowflake Summit, we introduced Cortex Sense, which captures the business definitions and institutional knowledge an AI agent needs and provides that context at the moment it answers a question. This means Snowflake is giving AI both the context to understand a business and the ability to act on its behalf with enterprise security, governance, and observability built in. As we drive this AI transformation for our customers, we are leading from the front, using CoCo and CoWork throughout our own business to accelerate productivity and efficiency.