Q2 FY2027 results
| Metric | Result | Change |
|---|---|---|
| Product Revenue | $1.49 billion | 37% year-over-year growth |
| Non-GAAP Operating Margin | 15% | expanded more than 400 basis points year-over-year |
| Net New Customers | 692 | 32% increase year-over-year |
| Remaining Performance Obligations | $9 billion | 30% year-over-year growth |
| Global 2000 Customers | 829 | 14 net new added in Q2 |
Guidance and outlook
- For FY 2027, we now expect product revenue of $6.07 billion, representing 36% year-over-year growth.
- In Q3, we expect product revenue between $1.588 billion and $1.593 billion, representing 37% to 38% year-over-year growth.
- For FY 2027, we now expect 74% non-GAAP product gross margin.
- We are increasing our FY 2027 non-GAAP operating margin guidance from 13.5% to 14.5%.
- For Q3, we expect non-GAAP operating margin of 15.5%.
- We're reiterating our full year non-GAAP adjusted free cash flow margin guide of 23%.
How management sounded
Positive (+7 on our -10 to +10 scale). Management highlighted a third consecutive quarter of accelerating product revenue growth and raised full-year guidance, citing strong demand for AI products and core platform consumption. Management sounded more upbeat than on 48% of the 190 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Q&A summary
Quality of acceleration
Asked: Morgan Stanley asked about the quality of the acceleration and if it is driven by irrational behavior.
Answer: Management stated growth is broad-based, not concentrated in AI-native companies, and that AI tools like CoCo actually make cost optimization easier.
Contribution of new products
Asked: Evercore ISI asked how much of the acceleration is coming from newer products versus the core flywheel.
Answer: Management estimated the contribution is roughly even, noting that AI products drive consumption of the core platform.
Model neutrality
Asked: UBS asked if being model neutral is a competitive advantage and if there is a mix shift in model usage.
Answer: Management confirmed model neutrality is a strong advantage, allowing customers to switch models to optimize cost and performance, and noted they are seeing interest in post-training open models.
AI consumption uplift
Asked: Bank of America asked about the consumption uplift for AI adopters versus non-adopters.
Answer: Management declined to share specific uplift numbers but noted that the effect is noticeable across cohorts and that AI adoption drives deeper engagement and consumption.
What to watch before the next call
- The sustainability of the flywheel effect as AI adoption scales across the broader customer base.
- The impact of model mix shifts on non-GAAP product gross margins as customers potentially move toward different model types.
- The company's ability to maintain disciplined headcount management while continuing to drive product innovation.
