Snowflake(SNOW) - 2025 Q3 - Quarterly Results

Q3 FY2025 Financial and Operational Overview This section summarizes Snowflake's third quarter fiscal 2025 financial and operational performance, including key highlights, detailed results, future guidance, and corporate developments Third Quarter Fiscal 2025 Highlights Snowflake reported strong growth in its third quarter of fiscal 2025, with product revenue increasing 29% year-over-year to $900.3 million, demonstrating robust customer expansion and commitment Q3 FY2025 Key Performance Indicators | Metric | Value | YoY Growth | | :--- | :--- | :--- | | Product Revenue | $900.3 million | 29% | | Total Revenue | $942.1 million | 28% | | Remaining Performance Obligations (RPO) | $5.7 billion | 55% | | Net Revenue Retention Rate | 127% | N/A | | Customers with >$1M TTM Product Revenue | 542 | 25% | | Forbes Global 2000 Customers | 754 | 8% | - CEO Sridhar Ramaswamy attributed the strong results to the company's focus on product cohesion and ease of use, which he stated is leading to new customer acquisitions and competitive displacements[3] Third Quarter Fiscal 2025 Financial Performance In Q3 FY2025, Snowflake reported a GAAP operating loss of $365.5 million, while achieving a non-GAAP operating income of $58.9 million, primarily due to adjustments for stock-based compensation and other non-cash items Q3 FY2025 Financial Results Summary (in millions) | Metric | GAAP Result (in millions) | GAAP Margin | Non-GAAP Result (in millions) | Non-GAAP Margin | | :--- | :--- | :--- | :--- | :--- | | Product Revenue | $900.3 | N/A | N/A | N/A | | Product Gross Profit | $636.7 | 71% | $686.9 | 76% | | Operating Income (Loss) | ($365.5) | (39%) | $58.9 | 6% | | Net Cash from Operating Activities | $101.7 | 11% | N/A | N/A | | Free Cash Flow | N/A | N/A | $78.2 | 8% | | Adjusted Free Cash Flow | N/A | N/A | $86.8 | 9% | Financial Outlook Snowflake provided financial guidance for both the upcoming fourth quarter and the full fiscal year 2025, projecting continued product revenue growth on both a GAAP and non-GAAP basis Fourth Quarter Fiscal 2025 Guidance Snowflake projects fourth quarter fiscal 2025 product revenue between $906 million and $911 million, representing 23% year-over-year growth, with a non-GAAP operating margin of 4% Q4 FY2025 Guidance | Metric | Guidance (in millions) | | :--- | :--- | | Product Revenue | $906 - $911 | | Product Revenue YoY Growth | 23% | | Non-GAAP Operating Margin | 4% | | Non-GAAP Diluted Weighted-Average Shares | 372 | Full-Year Fiscal 2025 Guidance For the full fiscal year 2025, Snowflake anticipates product revenue of $3.43 billion, a 29% year-over-year increase, alongside a non-GAAP operating margin of 5% and an adjusted free cash flow margin of 26% Full-Year FY2025 Guidance | Metric | Guidance (in millions) | | :--- | :--- | | Product Revenue | $3,430 | | Product Revenue YoY Growth | 29% | | Non-GAAP Product Gross Margin | 76% | | Non-GAAP Operating Margin | 5% | | Non-GAAP Adjusted Free Cash Flow Margin | 26% | | Non-GAAP Diluted Weighted-Average Shares | 364 | - The full-year fiscal 2025 product revenue guidance is based on achieving the higher end of the fourth-quarter guidance range[10] Corporate Developments In September 2024, Snowflake completed a significant capital raise by issuing $2.3 billion in convertible senior notes, partially used for capped call transactions and common stock repurchases - Completed a private offering of $1.15 billion of 0% convertible senior notes due 2027 and $1.15 billion due 2029, with total net proceeds of approximately $2.27 billion[13] - A portion of the proceeds was used to pay $195.5 million for capped call transactions and to repurchase $399.6 million of common stock at $112.50 per share[14] Detailed Financial Statements and Reconciliations This section presents Snowflake's condensed consolidated financial statements, including statements of operations, balance sheets, and cash flows, along with detailed GAAP to non-GAAP reconciliations Condensed Consolidated Statements of Operations For the third quarter ending October 31, 2024, Snowflake's revenue increased to $942.1 million, but the GAAP operating loss widened to $365.5 million, leading to a net loss of $324.3 million Q3 Statement of Operations Summary (in millions) | Line Item | Three Months Ended Oct 31, 2024 (in millions) | Three Months Ended Oct 31, 2023 (in millions) | | :--- | :--- | :--- | | Revenue | $942.1 | $734.2 | | Gross Profit | $621.2 | $505.2 | | Total Operating Expenses | $986.7 | $765.8 | | Operating Loss | ($365.5) | ($260.6) | | Net Loss Attributable to Snowflake Inc. | ($324.3) | ($214.3) | | Net Loss Per Share | ($0.98) | ($0.65) | Condensed Consolidated Balance Sheets As of October 31, 2024, Snowflake's balance sheet showed total assets of $8.20 billion, with a significant addition of $2.27 billion in convertible senior notes and a decrease in stockholders' equity Balance Sheet Summary (in billions) | Line Item | October 31, 2024 (in billions) | January 31, 2024 (in billions) | | :--- | :--- | :--- | | Cash, cash equivalents, and investments | $4.95 | $4.76 | | Total Assets | $8.20 | $8.22 | | Convertible senior notes, net | $2.27 | $0 | | Total Liabilities | $5.27 | $3.03 | | Total Snowflake Inc. stockholders' equity | $2.93 | $5.18 | Condensed Consolidated Statements of Cash Flows For the nine months ended October 31, 2024, Snowflake generated $527.0 million in net cash from operating activities, with financing activities reflecting convertible note issuance offset by stock repurchases Cash Flow Summary - Nine Months Ended Oct 31, 2024 (in millions) | Cash Flow Activity | Amount (in millions) | | :--- | :--- | | Net cash provided by operating activities | $527.0 | | Net cash used in investing activities | ($34.2) | | Net cash used in financing activities | ($106.4) | - Key financing activities for the nine-month period included $2.3 billion in proceeds from issuing convertible notes and $1.93 billion used for stock repurchases[42] GAAP to Non-GAAP Reconciliations The reconciliation tables detail adjustments, primarily $381.4 million in stock-based compensation, that converted a GAAP operating loss of $365.5 million into a non-GAAP operating income of $58.9 million for Q3 Q3 FY2025 GAAP Operating Loss to Non-GAAP Operating Income (in millions) | Description | Amount (in millions) | | :--- | :--- | | GAAP operating loss | ($365.5) | | Stock-based compensation-related charges | $381.4 | | Amortization of acquired intangibles | $24.0 | | Expenses associated with acquisitions | $1.3 | | Restructuring charges | $17.5 | | Non-GAAP operating income | $58.9 | - Non-GAAP net income per diluted share was $0.20 for the quarter, compared to a GAAP net loss per share of ($0.98)[48] Supplementary Information This section provides additional context, including definitions of key business metrics, a statement on the use of non-GAAP financial measures, conference call details, and a cautionary note on forward-looking statements Key Business Metrics Definitions Snowflake defines its key business metrics, including Product Revenue based on consumption, Net Revenue Retention Rate tracking customer cohort revenue, and Remaining Performance Obligations representing contracted future revenue - Product Revenue: Recognized based on consumption of compute, storage, and data transfer, distinguishing it from ratable subscription models[26] - Net Revenue Retention Rate: Calculated by dividing product revenue from a customer cohort in year two by their revenue in year one of a trailing two-year period[27] - Remaining Performance Obligations (RPO): Represents contracted future revenue not yet recognized, but is not necessarily indicative of future product revenue growth due to variable consumption timing[31] Statement Regarding Use of Non-GAAP Financial Measures The company explains its use of non-GAAP financial measures as supplemental information, excluding non-cash or non-recurring items like stock-based compensation, for internal decision-making - Non-GAAP measures are reported in addition to, not as a substitute for, GAAP measures[18] - Primary adjustments to calculate non-GAAP income include excluding stock-based compensation, amortization of acquired intangibles, acquisition expenses, and restructuring charges[19] - The company also reports Free Cash Flow and Adjusted Free Cash Flow as indicators of the strength of core business operations[22][23] Conference Call and Investor Information Details for the Q3 FY2025 earnings conference call were provided, including the time, dial-in numbers, and webcast link, with a replay and investor presentation available online - The conference call was held at 3 p.m. Mountain Time on November 20, 2024[15] - A live webcast, audio replay, and an additional investor presentation are available on the Snowflake Investor Relations website[16][17] Use of Forward-Looking Statements This release includes a standard safe harbor statement cautioning that forward-looking statements are subject to significant risks and uncertainties detailed in SEC filings, and the company does not undertake to update them - The release contains forward-looking statements regarding performance, business strategy, and product adoption, including all statements under the "Financial Outlook" section[32] - Statements are subject to known and unknown risks, including general market conditions, customer consumption patterns, competition, and cybersecurity threats[33] - Investors are advised not to rely on forward-looking statements as predictions of future events and are directed to the company's SEC filings for further information on risks[34][35]