Review|SNOW 1Q26: Cortex Code Driving Acceleration, Reconfirmed
This was a Snowflake quarter that genuinely excited me. We’re also thrilled that in our Preview we boldly articulated the Snowflake upside we’d seen in our research, and built into our model that Cortex Code alone could contribute 2% of incremental revenue to Snowflake.
Following Datadog’s earnings, everyone has been asking which company most resembles Datadog in terms of earnings performance. The conclusion we provided in our Preview is Snowflake.
Looking back at our views on Snowflake over the past several quarters:
We first turned constructive on Snowflake’s inflection in 3Q24, arguing that Iceberg was incremental rather than a headwind, and boldly predicted that Snowflake would slow hiring and focus on OPM.
In our 3Q25 Preview, we believed Snowflake would face headwinds from Gen2 optimization and Snowpark Connect. At the same time, frontier labs were also optimizing on Snowflake, putting Snowflake’s revenue at risk.
In our 4Q25 Preview, we argued that Gen2 optimization was complete, Snowpark Connect had flipped from a negative to a positive, and frontier labs had finished optimization and were beginning to ramp consumption.
In our 1Q26 Preview, we interviewed 6 experts to understand Cortex Code’s progress. We boldly called Cortex Code the fastest-growing product in Snowflake’s history—far faster than Snowpark. We highlighted that Cortex Code is not just the data version of a coding agent, but also directly absorbs non-data workloads, which is why Cortex Code’s growth is far outpacing products like Text-to-SQL. We also argued that Cortex Code’s gross margin could come in higher than the market expects, because Cortex Code is priced 40% higher than Claude Code.
Our calls over the past three quarters have been validated one by one across three quarters of Snowflake’s results. This quarter, Snowflake devoted nearly the entire earnings call to discussing Cortex Code.
Earnings Snapshot
1Q26 product revenue grew 34% YoY, beating by 5.3%—the largest beat in recent history. Even excluding the Observe acquisition, the beat was still 4%.
2Q26 revenue guidance implies 30% YoY growth. Applying the typical 3% beat, this implies 34% YoY growth—meaning growth is still not decelerating.
FY26 revenue guidance was raised from 27% to 31%, one of the largest full-year revenue raises in Snowflake’s history. Based on this guide, Snowflake still believes growth will not decelerate for the full year.
2Q26 OPM guidance of 12.5% also came in 1% above expectations. Margins were not impacted by Cortex Code.
Key Earnings Call Topics
Cortex Code
Nearly all the focus on the call was about Cortex Code—consistent with our Preview, which was almost entirely dedicated to research on Cortex Code.
“Accounts using Snowflake Intelligence more than doubled QoQ.”
“CoCo is already in use across more than 7,100 accounts.”
“An Infinite Lambda engineer used CoCo to build a Customer 360 application in just 5 hours.” If you look closely at this case, CoCo is indeed absorbing Claude Code’s overflow demand. CoCo handled not only the database portion but also the work outside the database. In our Preview, we made one key call: “The reason CoCo is growing so fast is that half of its use cases are not data-centric. CoCo, by virtue of its speed, is absorbing Claude Code’s overflow demand.”
The 2027 guidance also incorporates Cortex Code’s contribution.
This is very close to our Preview research finding that Cortex Code may have contributed 2–3% to 2Q26 revenue, and could contribute even more by year-end.
“CoCo can outperform even frontier models on operations within Snowflake.” We reached the same conclusion in our Preview—CoCo leads Claude Code in data-centric scenarios.
