TenQ

The Snowflake story

Snowflake provides a cloud data platform billed on usage, and its central question is whether AI tools can deepen customer consumption while narrowing the gap between adjusted profits and GAAP losses.

Written from Snowflake's own filings with the SEC, and rewritten when it publishes a new earnings release. Updated 2026-09-30.

  • $328.12share price, last close
  • $115.8Bmarket value
  • 13/36TenQ Score checks passed

The story in brief

  • Consumption growth accelerated. In the quarter to July 2026, product revenue reached $1.49 billion, up 37% year-over-year, with net revenue retention of 126%.
  • AI expands the platform. Snowflake is extending its data platform into AI agents and transactional databases through Snowflake Intelligence and Snowflake Postgres.
  • Cash comes with dilution. Over the last twelve months, Snowflake generated $1.2 billion in free cash flow while recording $1.6 billion in stock-based pay.

What drives the business

  • Snowflake's consumption-based platform brings together data storage, analytics, AI, applications, and collaboration, with revenue tied to customers' use of compute, storage, and data transfer rather than simply the passage of a contract term.
  • Its expansion through Snowpark, Snowflake Intelligence, and Snowflake Postgres gives developers and business users more ways to work with data on the same platform.
  • Large enterprises are important to that model: Forbes Global 2000 customers contributed approximately 43% of revenue in the fiscal year ended January 31, 2026, and 828 customers generated more than $1 million in product revenue over the twelve months ended July 2026.
  • In the quarter to July 2026, Snowflake named 1Password and Indeed as customers choosing its platform for data and AI transformation, while CoCo surpassed 9,100 accounts and CoWork reached 5,800 accounts.
  • Contracted revenue not yet recognized reached $9.00 billion at July 31, 2026, up 30% year-over-year, although customer consumption determines when that demand becomes revenue.

What the price assumes

The reverse DCF gives no measurable growth assumption because its negative cash flow premise conflicts with reported free cash flow of $1.2 billion over the last twelve months.

At 21.3x sales, the price rests on future profits, while Snowflake delivered revenue growth of 32.0% over the last twelve months and annual revenue growth of 31.4% over the last three years.

Its free cash flow yield of 1.0% falls short of the TenQ check's 3.0% bar, and Value passes 1 of 6 checks.

What could change the story

  • Customers can optimize consumption and roll unused capacity into later periods, so signed contracts and AI account adoption do not ensure a matching pace of revenue recognition.
  • Snowflake identifies AI credit pricing, Iceberg tables, tiered storage pricing, and adaptive warehouses as changes that could affect consumption.
  • The operating margin was -22.8% over the last twelve months, and adjusted operating results exclude stock-based compensation-related charges, leaving a substantial distinction between adjusted profitability and GAAP results.
  • Shares increased 5.9% over three years, showing that cash generation has not prevented dilution.
  • Cash and short-term investments of $2.3 billion matched total debt of $2.3 billion, while near-term liquidity failed the TenQ check at 0.94 against a 1.50 bar.

What to watch next

  • For the third quarter of fiscal 2027, Snowflake expects product revenue between $1,588 million and $1,593 million, representing 37% to 38% year-over-year growth, and a non-GAAP operating margin of 15.5%.
  • For fiscal 2027, its raised outlook calls for $6,070 million in product revenue, 36% growth, a non-GAAP operating margin of 14.5%, and a non-GAAP adjusted free cash flow margin of 23.0%.
  • The next releases will show whether net revenue retention, customers contributing more than $1 million, and CoCo and CoWork usage support continued consumption growth, and whether stock-based pay and GAAP losses narrow alongside adjusted margin gains.

Sources

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