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Snowflake sees annual revenue above estimates on strong AI demand
Snowflake expects fiscal 2027 product revenue of US$5.7 billion, above analysts’ average estimate of US$5.5 billion compiled by LSEG, driven by rising AI demand.
The cloud data platform, with over 13,000 clients including BlackRock and Figma, reported Q4 product revenue up 30% to US$1.2 billion, beating analysts’ estimate of US$1.2 billion.
CEO Sridhar Ramaswamy said the company signed its largest deal ever, over US$400 million, without naming the client.
Snowflake forecasts Q1 product revenue between US$1.3 billion and US$1.3 billion, above analysts’ midpoint estimate of US$1.2 billion. It aims for a 75% product gross margin in 2027, down from 75.8% in fiscal 2026.
🔗 Source: Reuters
🧠 Food for thought
Implications, context, and why it matters.
A strong quarter, but a rival is moving faster
- Snowflake’s guidance came in above expectations, yet its forecast of 27% product revenue growth for fiscal 2027 trails Databricks, which grew at over 55% a year at a similar revenue scale in late 2025 1.
- That gap likely kept the market response subdued, since investors often judge cloud companies against close competitors 1.
- Snowflake’s net revenue retention has leveled off at 125%, down from a 171% peak, while Databricks has kept retention above 140% 1.
- The contrast stands out most in AI, where Databricks reported a $1 billion AI revenue run-rate versus Snowflake’s roughly $100 million AI revenue run rate as of its Q3 FY2026 earnings in December 2025 1.
A measured shift toward running more enterprise workloads
- The deals fit a plan to move Snowflake beyond data governance and analytics, toward a place where enterprises build and run AI-native applications and workflows 2.
- Snowflake’s $600 million acquisition of Observe, an app-monitoring platform, takes aim at the $50 billion IT operations market and ties observability to Snowflake’s data and AI products 2.
- Two separate $200 million partnerships with OpenAI and Anthropic back a model-agnostic approach, keeping Snowflake positioned as a secure hub for enterprise AI work while giving customers options among model providers 3.
- New AI products factor into fiscal 2027 non-GAAP product gross margin guidance of 75%, down from 75.8% in fiscal 2026, since management said these newer offerings carry lower margins than the core business 2.
