Financial Report Forecast | After a sharp rise of nearly 50% during the year, Snowflake (SNOW.US) ushered in an “AI success” testing time

The Zhitong Finance App learned that the cloud computing and AI data platform Snowflake (SNOW.US) will announce financial results for the second quarter of the 2026 fiscal year after the US stock market on September 2, EST. Against the backdrop of a nearly 50% rise in stock prices and high valuations during the year, this financial report is seen as a key point in verifying whether its AI story can continue to be realized.

The market generally expects the company's Q2 earnings per share to reach $0.45, up about 29% year over year; total revenue is expected to be US$1.48 billion, up nearly 30% year over year. The options market suggests that the stock price may fluctuate about 10% in both directions after the earnings report.

According to analysts, investors will focus on the three major indicators of product revenue growth rate, remaining performance obligation (RPO), and net revenue retention rate (NRR), and also pay close attention to whether management will drastically raise the annual guidance to prove that AI-related demand is being rapidly converted into actual revenue.

Product revenue: 30% growth is the bottom line, and the $6 billion annual guideline is the focus

Snowflake handed over an impressive report card in the first quarter. Product revenue reached $1.33 billion, up 34% year over year, significantly faster than 30% in the previous quarter and 29% in the third quarter of last year. The company's management attributed the growth to customers migrating more workloads to the Snowflake platform to develop AI applications, while its own AI products — in particular, the AI programming agent Cortex Code (CoCo) — also began contributing incremental revenue.

For the second quarter, Snowflake's product revenue guidance was approximately $1.4 billion, corresponding to a 30% year-on-year increase. Although the growth rate has slowed from the first quarter, if it can be fulfilled or even exceeded, it means that the acceleration in the first quarter was not a one-time event, but a sustainable trend.

Also worth noting is the year-round guide. Snowflake had previously raised its fiscal 2026 product revenue forecast to $5.84 billion, an increase of 31% year over year, but this figure is still below Wall Street's general forecast of about $6.1 billion.

Seeking Alpha analyst Louis Gerard pointed out that in the current situation where market expectations are full, simply raising the guidelines to around US$5.9 billion is “far from enough.” He believes that if management raises the annual product revenue guide to close to or above 6 billion US dollars, it will be enough to show that management actually sees an inflection point in AI-related consumption in the second half of the year. Conversely, if the guidance increase is limited, even if the second-quarter results slightly exceed expectations, stock prices may face pressure to “run out of advantage.”

RPO and customer growth: Is the “reservoir” of future revenue still expanding

The remaining performance obligation (RPO) is an important leading indicator of Snowflake's future contract revenue. In the first quarter, the company's RPO reached $9.2 billion, an increase of 38% year over year, indicating that customers are still locking in long-term expenses. Meanwhile, Snowflake added 616 net new customers in the first quarter, up 38% year over year. The company also revealed that 64 customers spent more than $10 million in the past 12 months, and 79 customers crossed the $1 million spending threshold.

This data shows that Snowflake's growth is not simply based on a small number of new customers, but is based on a broad customer base. If the RPO continues to grow at a year-on-year rate of more than 30% in the second quarter, and the number of major customers further increases, it will indicate that the long-term willingness of enterprise customers to invest in the Snowflake platform has not weakened due to macroeconomic uncertainty, but has instead increased under the impetus of AI-ready demand.

Net revenue retention rate: Can AI actually convert money into customer wallets

The net revenue retention rate (NRR) directly reflects changes in existing customer spending on the Snowflake platform. In the first quarter, Snowflake's NRR reached 126%, meaning that revenue contributed by old customers increased 26% year over year (excluding new customers). Management attributed this strong performance to increased customer use of AI-related features, particularly new products such as COCO and Snowflake Intelligence.

Specifically, in the first quarter, more than 7,100 accounts used the CoCo programming agent, and the number of accounts using Snowflake Intelligence doubled month-on-month. These AI features not only increased customer stickiness, but also directly boosted the consumption of underlying data platforms.

In the second quarter, if the NRR can be maintained at around 126%, or even increased further, it will send a strong signal to the market: Snowflake's AI strategy is not just a concept, but is actually driving existing customers to increase spending. This is the proof Wall Street would most like to see. Wall Street analysts already expect Snowflake's revenue and earnings per share to grow 25.6% and 39.8%, respectively, in the 2028 fiscal year.

Analysts are optimistic, but “pass” is no longer enough to meet the market

Although Snowflake's stock price has nearly doubled since the last earnings report, many Wall Street institutions remained positive ahead of the earnings report.

Oppenheimer analysts said that their channel survey showed that Snowflake's consumption and project reserves were strong in all regions and vertical industries, large transactions were gaining momentum, migration activities were accelerating, and the use of CoCo was rapidly expanding.

RBC Capital Markets also believes that Snowflake is one of the few software companies directly benefiting from the “AI-ready” trend, and the widespread adoption of CoCo may drive product revenue growth to continue to rise. The bank's analysis team, led by Matthew Hedberg, even compared it to Cloudflare's (NET.US) stock price performance after the earnings report, believing that Snowflake is expected to continue rising after proving that it is a “first-tier AI beneficiary.”

Historical data also provided some support for the bulls: in the past two years, Snowflake's EPS exceeded market expectations 88% of the time, and revenue exceeded expectations by 100%. However, Seeking Alpha analyst Agar Capital warned that at the current valuation level, “just following the company's guidelines is not enough,” and the market needs to see more substantial benefits. In particular, he noted that if NRR were to rise further, it would send a very positive signal to Snowflake's ability to boost customer spending through AI workloads.

At the valuation level, based on earnings over the next 12 months, Snowflake's forward-looking price-earnings ratio is as high as 121 times, which means that the market has taken into account a large amount of future growth. The cumulative increase in stock prices during the year was about 48% to 51%, and the current stock price is close to the average target price of Wall Street analysts.

Of the 45 analysts covering Snowflake, 36 gave a “strong buy” rating, 3 gave a “moderate buy”, 5 gave a “hold”, and only 1 gave a “strong sell”. The overall rating was “strong buy.”

Options market: 10% shock in pricing, short-term emotional bias

The options market's reaction to Snowflake's earnings report is also worth watching. Based on cross-style options that expire on September 4 and have an exercise price of about $322.50, the implied fluctuation in market pricing is about 10.15%. This means that investors expect the stock price to fall between approximately $289.24 and $354.60 after the earnings report.

Judging from the trading flow, short-term options activity before the earnings report was clearly bearish. On the most recent trading day, the trading volume of put options reached 4,197, while the volume of call options was only 2,229, and the bearish/bullish volume ratio was as high as 1.88, indicating that some capital bought downward protection before financial reports. However, looking at contracts that have never been closed, the overall structure is more balanced: the bearish/bullish open position ratio is 0.77, indicating that bullish options still account for the majority of existing positions.

Among the options that expire on September 4, the maximum open position volume of the put option is concentrated at the exercise price of 240 US dollars, while the maximum open position volume of the call option is at the exercise price of 375 US dollars. Although these points are far from current stock prices and cannot be considered direct price predictions, they provide important psychological reference points. Of all the expiring contracts, the $160 put option and the $340 call option each hold the highest amount of open positions, which is also worth paying attention to.