Snowflake (NYSE: SNOW) turned the AI narrative into P&L impact. Product revenue hit $1.33 billion, up 34% year over year and $67 million above consensus. It was the strongest sequential dollar growth in the company's history. Total revenue of $1.39 billion rose 33%, and non-GAAP diluted EPS of $0.39 cleared the $0.32 estimate by a comfortable margin.
This was no one-off. Management raised full-year product revenue guidance to $5.84 billion from $5.66 billion, implying 31% YoY growth versus the prior 27% outlook. Non-GAAP operating margin guidance was lifted to 13.5% from 12.5%. The revisions signal that Q1's acceleration is durable, not seasonal or lumpy.
The engine is AI. Snowflake added 46 net new customers spending over $1 million on a trailing 12-month basis, bringing that cohort to 779, up 29% YoY. More than 13,600 accounts are now using Snowflake AI capabilities. Accounts using Snowflake Intelligence more than doubled quarter over quarter. Cortex Code, the company's AI coding assistant, is already in use across over 7,100 accounts. These are expanding deployments that drive consumption.
A $6 billion multi-year AWS agreement signed during the quarter reinforces the platform's cloud-agnostic positioning. It also locks in a major partner for enterprise AI workloads. The pending acquisition of Natoma, an enterprise Model Context Protocol platform for AI agents, extends Snowflake's governance layer beyond data to the actions AI agents take across business workflows. The acquisition is small in dollar terms but strategically significant. It positions Snowflake as the control plane for the agentic enterprise, not just a data warehouse.
The margin story is more nuanced. GAAP operating loss narrowed to $326 million from $447 million a year ago. Non-GAAP operating income of $166 million (11.9% margin) improved from $92 million (8.8% margin) last year. The 310bp expansion came despite heavy investment in R&D, where non-GAAP expense rose 19% to $284 million. Stock-based compensation remains a large GAAP drag at $402 million. The non-GAAP trajectory is clearly improving. The raised full-year operating margin guidance to 13.5% suggests management sees operating leverage building as revenue scales.
Remaining performance obligations of $9.21 billion, up 38% YoY, provide visibility into future revenue that the consumption model typically lacks. The net revenue retention rate of 126% indicates existing customers are expanding usage faster than they are optimizing it away. That metric, combined with the 813 Forbes Global 2000 customers, suggests Snowflake is deepening its enterprise base.
Q2 product revenue guidance of $1.415-$1.420 billion implies 30% YoY growth. That's a deceleration from Q1's 34% but still above the prior full-year guide. The question is whether AI-driven consumption can sustain this pace as the base grows. The $6B AWS deal and the Natoma acquisition will take time to contribute. They signal that Snowflake is investing aggressively to own the AI data layer. For now, the quarter validates the thesis that AI is accelerating the core platform business, not just adding a new product line.