Two weeks ago, Datadog (DDOG, Financial) issued disappointing Q1 and FY25 guidance, sparking concerns about reduced enterprise spending on data analytics and affecting investor sentiment toward Snowflake (SNOW, Financial). Since then, DDOG shares have dropped by about 14%. However, SNOW is bouncing back with impressive Q4 results and a bullish FY26 outlook. SNOW's product revenue grew 28% year-over-year to $943.3 million in Q4, surpassing its guidance of $906-$911 million. Additionally, SNOW's FY26 product revenue forecast of $4.28 billion exceeded expectations, dispelling concerns fueled by DDOG's guidance.

SNOW announced that CFO Michael Scarpelli plans to retire once a successor is found. Despite the surprising news, investors remain optimistic due to SNOW's momentum and new product developments, including Snowpark and AI advancements, which contributed 3% of total FY25 revenue.

• SNOW reported over 4,000 customers using its AI and machine learning technology weekly, up from 3,200 last quarter. Cortex AI, which integrates GenAI into SNOW's platform, is gaining traction. SNOW expanded its partnership with Microsoft (MSFT, Financial), allowing customers to access OpenAI's LLMs through its platform.
• SNOW's core data warehouse business remains strong despite economic uncertainty. CEO Sridhar Ramaswamy highlighted the company's success in multi-product adoption, evidenced by a net revenue retention rate of 126%.
• SNOW is improving efficiency by eliminating redundant management layers and centralizing teams. These efforts led to a Q4 non-GAAP operating margin increase of three percentage points quarter-over-quarter to 9%, surpassing its 4% guidance.
• While SNOW's Q1 FY26 product revenue guidance of $955-$960 million fell slightly short of expectations, the company's history of conservative guidance keeps investors optimistic.

Overall, SNOW delivered a strong performance, alleviating fears of slowing consumption trends and rising competition, particularly from Databricks. The company's focus on AI-driven innovations is reigniting growth.