Snowflake Inc.

Q1 product revenue was $1.334 billion, up 34% year over year, accelerating from 30% last quarter and 26% a year ago. Non-GAAP operating margin reached 12%, expanding over 300 basis points year over year, and net revenue retention increased to 126%. The company added 616 net new customers, bringing total customers to 13,912, and ended the quarter with 64 customers spending more than $10 million trailing 12 months and 79 customers spending more than $1 million trailing 12 months. For the balance of FY27, Snowflake raised full-year product revenue guidance to $5.84 billion (+31% YoY), guided Q2 product revenue to $1.415 billion-$1.42 billion (+30% YoY), reaffirmed 75% non-GAAP product gross margin, raised full-year non-GAAP operating margin guidance to 13.5% from 12.5%, and reiterated a 23% non-GAAP adjusted free cash flow margin guide. Management said the Observe acquisition should add about 1 percentage point of product revenue growth for the full year, and that the planned Natoma acquisition will bring 20 employees.

Sridhar Ramaswamy framed Snowflake as a key platform for the “agentic enterprise,” arguing that AI is strengthening the business on three fronts: faster core platform consumption, rapid adoption of CoCo and Snowflake Intelligence, and second-order consumption gains from customers moving from prompts to pipelines and workflows. His tone was confident and expansive, emphasizing that Snowflake is extending from data infrastructure into an “agentic control plane” where intent becomes governed action. He also highlighted customer wins, product velocity, and the strategic value of the AWS, OpenAI, SAP, and Natoma partnerships.

Brian Robins emphasized that the quarter’s acceleration came from both the core data platform and AI, with product revenue growth up about 400 basis points to 34%. He pointed to RPO growth of 38%, 79 customers above $1 million trailing 12-month spend, and disciplined hiring: 190 employees added, including 173 from Observe and only 17 organic hires. On capital allocation, Snowflake repurchased about $300 million of stock in Q1, has about $800 million remaining under the original $4.5 billion authorization, and finished the quarter with $4.4 billion in cash, cash equivalents, and investments. He also said the 5-year, $6 billion AWS contract is fully incorporated into guidance and that the company expects 75% product gross margin, 12.5% Q2 operating margin, and 13.5% full-year operating margin, with a 150 basis point headwind from Observe still embedded.

Analysts focused on what caused the sharp inflection in the quarter, how CoCo changes customer spend and usage, whether AI tools could face cost throttling, and whether lower-margin AI products would pressure gross margin. Management said CoCo only went GA on February 5, had the largest impact on the guide, and is both driving direct AI revenue and increasing core platform consumption because it makes migrations, pipelines, and agent creation faster. On margins, Brian said AI products do have lower gross margin, but Snowflake is offsetting that through lower bandwidth costs, including the AWS contract, to hold full-year product gross margin at 75%. Management also stressed that guidance philosophy is unchanged and that the uplift reflects one quarter of observed CoCo behavior plus core reacceleration, not a change in forecast discipline.