• Q4 Product Revenue: $943 million, up 28% year over year.
• Remaining Performance Obligations: $6.9 billion, with 33% year-over-year growth.
• Net Revenue Retention Rate: 126%.
• Q4 Non-GAAP Operating Margin: 9%.
• Q4 Non-GAAP Adjusted Free Cash Flow Margin: 43%.
• FY25 Product Revenue: $3.5 billion, 30% year-over-year growth.
• FY25 Non-GAAP Product Gross Margin: 76%.
• FY25 Non-GAAP Operating Margin: 6%.
• FY25 Non-GAAP Adjusted Free Cash Flow Margin: 26%.
• Share Repurchase: $1.9 billion used to repurchase 14.8 million shares at $130.87 average price.
• Cash and Investments: $5.3 billion at year-end.
• Q1 FY26 Product Revenue Guidance: $955 million to $960 million, 21% to 22% year-over-year growth.
• FY26 Product Revenue Guidance: Approximately $4.28 billion, 24% year-over-year growth.
• FY26 Non-GAAP Product Gross Margin Guidance: Approximately 75%.
• FY26 Non-GAAP Operating Margin Guidance: 8%.
• FY26 Non-GAAP Adjusted Free Cash Flow Margin Guidance: 25%.
• FY26 Stock-Based Compensation as a Percent of Revenue: Expected to decrease to approximately 37% from 41%.

• Warning! GuruFocus has detected 4 Warning Signs with SNOW.

Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Snowflake Inc (NYSE:SNOW) reported a strong 28% year-over-year increase in Q4 product revenue, reaching $943 million.
• The company achieved a healthy net revenue retention rate of 126%, indicating strong customer loyalty and expansion.
• Snowflake Inc (NYSE:SNOW) has seen significant growth in its data engineering business and strong adoption of open data formats like Apache Iceberg.
• The company introduced over 400 product capabilities in the past year, doubling the amount from the previous year, showcasing rapid innovation.
• Snowflake Inc (NYSE:SNOW) has expanded its partnership with Microsoft, integrating OpenAI's models into its Cortex platform, enhancing its AI capabilities.

Negative Points

• Some large customers exhausted their commitments but did not renew, opting instead to purchase as they consume, which could indicate potential volatility in future revenue.
• The Q1 product revenue growth guidance of 21% to 22% represents a slowdown compared to previous quarters.
• Non-GAAP product gross margin is expected to slightly decrease to approximately 75% for FY26.
• The company faces ongoing challenges with performance improvements, which are a regular part of its business operations.
• Snowflake Inc (NYSE:SNOW) is experiencing a transition in its CFO position, which could lead to uncertainties during the leadership change.

Q & A Highlights

Q: How usual is it for large customers to exhaust their commitments and not renew immediately, and do you expect them to sign new contracts? A: Michael Scarpelli, CFO: It's not unusual for large customers to exhaust their commitments before the end of the contract term. They have the option to either renew early or continue purchasing under the same terms until the contract ends. We expect these customers to sign new contracts within the next month to six months.

Q: Can you provide insights on the adoption trends within the data engineering portfolio and AI/ML application platform? A: Sridhar Ramaswamy, CEO: We are seeing robust adoption of technologies like Snowpark and dynamic tables. AI is a newer product area, but we are seeing broad adoption. Our approach of building solid primitives like our search product, which is among the best globally, is gaining traction. We expect these innovations to contribute significantly in the latter half of the year.

Q: How do you interpret recent partnerships between data companies and enterprise software vendors? A: Sridhar Ramaswamy, CEO: We position ourselves as the AI data cloud, providing value from data, especially analytic and predictive value. We have partnerships with companies like ServiceNow and Salesforce, enabling bidirectional data integration. These partnerships give customers the choice of where their data should reside, and we are uniquely positioned as a central data repository.

Q: What are the growth levers for Snowflake, particularly in AI-powered advertising? A: Sridhar Ramaswamy, CEO: We have been involved in marketing and advertising for a while, with many CDP startups building on Snowflake. Our acquisition of a company for data clean rooms enhances conversion lift capabilities. As we introduce multimodal capabilities into Cortex, the scope of what is achievable with Snowflake expands, including generative applications for creative and copy generation.

Q: Can you elaborate on the partnership with Microsoft and its impact on Snowflake? A: Sridhar Ramaswamy, CEO: Our partnership with Microsoft allows OpenAI models to be accessible within Snowflake's security perimeter, enabling customers to build world-class applications without data leaving Snowflake. This partnership enhances our product offerings and provides significant value to our customers, although it's too early to quantify the revenue impact.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.