Snowflake’s growth accelerated again in the second quarter as AI drove customers to use more of its data platform. Product revenue jumped 37% year over year to $1.49 billion, while total revenue rose 35% to $1.55 billion.

Growth Is Accelerating

Snowflake’s product revenue growth has now improved from 30% two quarters ago, to 34% last quarter, and 37% in Q2.

The company raised its full-year FY27 product revenue forecast by $230 million to $6.07 billion, implying 36% growth. Q3 guidance points to another 37% to 38% increase.

Other key numbers included:

  • Net revenue retention: 126%
  • 828 customers spending more than $1 million annually, up 27%
  • $9 billion in remaining performance obligations
  • Non-GAAP operating margin of 15%, up 4 percentage points

AI Is Driving More Snowflake Usage

CEO Sridhar Ramaswamy said AI products directly account for roughly half of Snowflake’s recent growth acceleration.

But AI is also helping the core business. Companies need more organized and accessible data for AI applications, while AI agents can search, analyze and act on that data. Every additional workload creates more consumption on Snowflake.

Cortex Code has now passed 9,100 accounts, adding more than 2,000 during the quarter, while CoWork reached 5,800 accounts.

Snowflake also added 692 net new customers, up 32% year over year. Meanwhile, 65 customers now spend more than $10 million annually, compared with 45 a year ago.

AI Comes With Higher Costs

The AI expansion is not free.

Snowflake lowered its FY27 non-GAAP product gross-margin forecast from 75% to 74%, partly because AI models require additional computing and inference spending.

Still, the company raised its operating-margin forecast from 13.5% to 14.5%, suggesting that profitability is improving even as Snowflake spends more on AI.

Investor takeaway: Snowflake is showing that AI may increase software consumption rather than replace it. Growth has accelerated from 30% to 37% in just two quarters, customers are spending more, and margins are improving. The main question now is whether Snowflake can maintain that acceleration as AI becomes a larger part of its business.

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.