Snowflake (SNOW) Q3 2026 earnings review
Bookings Accelerate as AI Momentum Builds, Driving Raised FY26 Outlook
Snowflake reported a strong Q3, beating revenue expectations and raising its full-year guidance. Product revenue grew a healthy 29% YoY to $1.16 billion. However, the standout metric was Remaining Performance Obligations (RPO), a key indicator of future revenue, which accelerated to 37% YoY growth ($7.88 billion), signaling a significant uptick in large enterprise commitments. Management highlighted tangible traction in its AI offerings, achieving a $100M AI revenue run rate ahead of schedule. While Q4 guidance implies a slight growth moderation to 27%, the robust bookings and raised full-year outlook suggest the business is gaining momentum heading into the new year.
🐂 Bull Case
RPO growth accelerated to 37% YoY from 33% last quarter, its highest rate in a year. The company signed a record four nine-figure deals, indicating large enterprises are deepening their commitment to the platform.
Snowflake achieved a $100M AI revenue run rate one quarter earlier than expected, with 1,200 customers already using the new Snowflake Intelligence product. AI is now influencing 50% of bookings, validating its role as a key growth catalyst.
Net Revenue Retention remained stable at a healthy 125% for the second consecutive quarter, arresting a prior trend of moderation and demonstrating strong consumption trends within the existing customer base.
🐻 Bear Case
Q4 guidance for 27% YoY product revenue growth represents a deceleration from the 29% achieved in Q3. Similarly, guided non-GAAP operating margin of 7% is a step down from 11% in Q3.
The data and AI landscape remains highly competitive. The earnings call included questions about rivals' 'zero copy' data sharing features, underscoring the constant need for innovation to maintain a technology lead.
⚖️ Verdict: 🟢
Bullish. The acceleration in RPO is a powerful leading indicator that outweighs the slight guided moderation in Q4 revenue growth. It suggests that the AI narrative is successfully translating into larger, long-term customer commitments. The combination of stabilizing NRR and record new customer adds points to a healthy and broadening business.
Key Themes
AI Moves From Narrative to Revenue
Snowflake's AI strategy is showing tangible results. The company reached a $100 million AI revenue run rate ahead of plan, driven by strong adoption of products like Cortex AI and Snowflake Intelligence, which already has 1,200 customers. Management stated AI influenced 50% of bookings signed in the quarter and 28% of all deployed use cases now incorporate AI. This transition from a future vision to a present-day revenue driver is a significant positive development.
Bookings Momentum Accelerates with Record Large Deals
Future growth visibility improved significantly this quarter. RPO growth accelerated to 37% YoY, up from 33% in Q2. This was fueled by a record quarter for large deals, with the company signing four contracts each with a total value over $100 million. This demonstrates increasing strategic commitment from the world's largest enterprises who are standardizing on Snowflake for their data and AI initiatives.
Go-to-Market Engine Drives Record New Customer Adds
Snowflake's top-of-funnel execution is strengthening. The company added a record 615 new customers in Q3, an acceleration from 533 in Q2 and 451 in Q1. This shows the company's value proposition is resonating in the market and that recent investments in the go-to-market organization are yielding positive results.
Data Contradiction: Guided Growth Decelerates Amid Bullish Tone
While management's tone and bookings results were very strong, the official Q4 product revenue guidance points to a deceleration. The midpoint of the guidance implies 27% YoY growth, a step down from the 29% reported in Q3 and 32% in Q2. This disconnect between forward-looking bookings and near-term revenue guidance is a point for monitoring, though it may reflect management's conservatism or holiday seasonality.
Platform Openness and Partnerships as a Key Strategy
Snowflake continues to emphasize its open ecosystem strategy to win in a complex data landscape. Management highlighted a landmark partnership with SAP, and others with Workday, Splunk, and Palantir. This approach aims to make Snowflake the central hub for enterprise data by ensuring seamless integration with other critical systems, contrasting with more proprietary approaches from competitors.
Other KPIs
Stable. The NRR of 125% marks the second consecutive quarter at this level, following 124% in Q1. This stabilization, after a multi-year decline, indicates that consumption within the existing customer base is healthy and churn remains low, providing a solid foundation for growth.
Accelerating. This cohort of large customers grew 29% YoY. This metric demonstrates Snowflake's continued success in landing and expanding within the largest and highest-spending enterprises, which is the core of its business model.
Stable for the quarter, but guided down. The 11% margin in Q3 matched Q2 and showed strong YoY expansion from 6% in the prior year. However, guidance for 7% in Q4 implies a sequential contraction, which management attributed to timing to meet the full-year 9% target rather than a fundamental shift in profitability.
Guidance
Decelerating. The midpoint of $1,197.5M implies 27% YoY growth. This represents a sequential deceleration from the 29% growth reported in Q3 and the 32% reported in Q2. This could reflect conservatism or typical Q4 holiday seasonality.
Stable growth trend. The revised guidance was raised by $51M and now implies 28% YoY growth for the full year. This raise signals management's increased confidence in the business outlook, supported by the strong Q3 bookings.
Decelerating. The Q4 guidance is a sequential step down from 11% in Q2 and Q3. Management indicated this is not a concern but rather a function of managing expenses to achieve the reiterated full-year operating margin target of 9%.