Snowflake, Inc. Q4 FY2025 earnings call

• Core business is strong with product delivery in overdrive and go-to-market engine humming.
• Innovations include Cortex AI, partnerships with Microsoft (expanding OpenAI models in Cortex), and data sharing capabilities.
• Events like Build Summit had over 20,000 attendees, showing momentum.
• Strong adoption of new data engineering and AI features, with Snowpark contributing to growth.
• Large customers like ExxonMobil, Honeywell, etc., are using Snowflake, and customers are seeing cost savings and easier data collaboration.

In FY '25, product revenue grew 30% year-over-year to reach $3.5 billion. Snowpark contributed 3% of FY '25 product revenues. Technology customers outperformed, with financial services being the top vertical and EMEA a strength. Remaining performance obligations grew 33% year-over-year. In Q4, product revenue was $943 million, up 28% year-over-year, and net revenue retention was 126%.

• Q1 product revenue expected between $955 million and $960 million, 21%-22% year-over-year growth.
• FY '26 product revenue expected to be approximately $4.28 billion, 24% year-over-year growth.
• Non-GAAP product gross margin expected to be approximately 75%, non-GAAP operating margin 8%, non-GAAP adjusted free-cash flow margin 25%.
• Stock-based compensation (SBC) as a percent of revenue expected to decrease to ~37% in FY '26 from 41% and continue decreasing.

Q: Sanjit Singh asked about large customers in Q4 exhausting their commitments. How usual or unusual is that and do they expect these customers to sign new contracts?

A: Mike Scarpelli said he fully expects they'll sign new contracts, as it's common for large customers to purchase as they consume, and timing may vary but they'll likely renew.

Q: Kirk Materne asked about adjacencies and sales comp model. Mike Scarpelli said the biggest change in sales comp is a step back in allocation but reps will have a quota on bookings with bulk of earnings from consumption revenue. Sridhar Ramaswamy talked about being the AI data cloud and partnerships with companies like ServiceNow and Salesforce.

Q: Raimo Lenschow asked about adjacencies and guidance conservatism. Sridhar Ramaswamy talked about working with partners in streaming and ingestion, and Mike Scarpelli said guidance is appropriate and he feels good about it.

Q: Brad Zelnick asked about Cortex Agents differentiation and trends with large customers. Sridhar Ramaswamy talked about Cortex Agents' uniqueness due to centrality of data, and Mike Scarpelli said momentum continues with large customers and they're growing and consuming well.

Q: Brent Bracelin asked about product growth acceleration and AI-powered advertising. Mike Scarpelli said it's due to core business strength and new products going into production, and Sridhar Ramaswamy talked about AI-powered advertising and multimodal capabilities in Cortex.

Q: Alex Zukin asked about spend intensity and Iceberg impact. Sridhar Ramaswamy talked about multifaceted efforts including product velocity, sales execution, and partner work, and Mike Scarpelli said NRR is stable and Iceberg is a tailwind.

Q: Sonak Kolar asked about industry developments and Snowflake's opportunities. Sridhar Ramaswamy talked about partnerships with model makers and the impact on customers.

Q: Matt Martino asked about Sales Kickoff takeaways. Sridhar Ramaswamy talked about unifying around a common message and sophistication in taking products to market.

Q: Joel Fishbein asked about Microsoft partnership and revenue impact. Sridhar Ramaswamy talked about the partnership enabling access to OpenAI models within Snowflake security, and Mike Scarpelli said it's too early to quantify revenue impact but is positive.