Snowflake grows 34 percent and reports on the next quarter on 27 August

Snowflake generated product revenue of 1.33 billion dollars in the first quarter of financial year 2027, up 34 percent on the year before. According to the company it was the largest absolute increase against a previous quarter in the history of the firm.

For the second quarter, whose figures are expected on 27 August, the group signals product revenue of 1.415 to 1.42 billion dollars. That would correspond to growth of 30 percent.

Full year guidance was raised to 5.84 billion dollars, which would mean 31 percent growth. The expectation for the adjusted operating margin rose from 12.5 to 13.5 percent.

The company could therefore close its first profitable financial year. Over the past twelve months it was not profitable.

The short version

• Product revenue rose 34 percent in the first quarter of financial year 2027 to 1.33 billion dollars.
• For the second quarter, whose figures are expected on 27 August, the group signals 1.415 to 1.42 billion dollars.
• Full year guidance was raised to 5.84 billion dollars, which would mean 31 percent growth.

Consumption rather than subscription

The business model differs from most software providers. Customers do not pay for a fixed contract volume but for the computing and storage capacity they actually use.

The technical basis for that is the separation of computing power and storage. Customers can scale both independently and pay only for what they consume.

For guidance that creates a particularity. The company explicitly stresses that its forecasts rest on existing consumption patterns. If usage rises more than expected, the result comes out better. If customers throttle their workloads, that takes effect immediately.

That is exactly why the measure for the expansion of existing customer relationships matters so much at this provider. It last stood at 125 percent, which means existing customers spend around a quarter more year on year.

Customer count grows 38 percent

The number of customers reached 13,912. In the first quarter 616 were added, an increase of 38 percent against the same period last year.

Customers include Figma and BlackRock among others. The group also discloses separately how many customers generate more than one million dollars of product revenue over twelve months and how many come from the group of the 2,000 largest companies worldwide.

Acquisitions in the field of AI programs

Chief executive Sridhar Ramaswamy describes artificial intelligence as a strong tailwind and the first quarter as a clear turning point. The group wants to develop from a foundation for enterprise data into the control layer for companies with programs that work on their own.

In May 2026 an agreement was signed to take over Natoma, a platform through which such programs can access tools and data securely.

An earlier acquisition named Observe contributes less than one percentage point to first quarter growth according to the company. For the full year around one percentage point is expected.

In addition an agreement with Amazon Web Services was concluded, which is fully included in the outlook.

Margins remain the weak point

For financial year 2027 Snowflake expects an adjusted gross margin in the product business of 75 percent. In the previous year it had stood at 76 percent.

The slight decline describes the same problem that currently affects the whole industry. Programs that carry out tasks on their own consume considerably more computing time than classic applications. Anyone who buys that computing time from large cloud providers passes on part of the revenue.

At ServiceNow the same effect led the share to fall 6.47 percent at first after a quarter with beaten targets.

For the second quarter Snowflake expects an adjusted operating margin of 12.5 percent. In the year earlier quarter product revenue had stood at 1.09 billion dollars at growth of 32 percent.

Frequently asked questions

What separates the consumption model from a subscription

Customers do not pay for a fixed contract volume but for the computing and storage capacity they actually use. The technical basis is the separation of computing power and storage. For guidance that means forecasts rest on existing consumption patterns.

How far do existing customers expand their spending

The measure for the expansion of existing customer relationships last stood at 125 percent. That means existing customers spend around a quarter more year on year. The number of customers reached 13,912, with 616 added in the first quarter.

Why does the gross margin fall slightly

For financial year 2027 Snowflake expects an adjusted gross margin in the product business of 75 percent, after 76 percent in the previous year. Programs that carry out tasks on their own consume considerably more computing time, and anyone who buys that from large cloud providers passes on part of the revenue.

This analysis is for information only and is not investment advice.