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Snowflake Reports 28% Revenue Growth
SNOWSnowflake(SNOW) The Motley Fool·2025-02-26 21:40

Core Insights - Snowflake reported strong earnings for Q4 FY2025, with an EPS of 0.30,exceedinganalystexpectationsof0.30, exceeding analyst expectations of 0.18 by 66.7% [2][6] - Revenue for the quarter reached 986.8million,surpassingtheestimateof986.8 million, surpassing the estimate of 956 million, indicating operational effectiveness despite ongoing operating losses [2][6] Financial Performance - EPS (Non-GAAP) for Q4 FY2025 was 0.30,down14.30.30, down 14.3% from 0.35 in Q4 FY2024 [3] - Total revenue increased by 27.4% year-over-year from 774.7millioninQ4FY2024[3]−Productrevenuewas774.7 million in Q4 FY2024 [3] - Product revenue was 943.3 million, reflecting a 27.8% increase from 738.1millioninthepreviousyear[3]−Freecashflowforthequarterwas738.1 million in the previous year [3] - Free cash flow for the quarter was 415.4 million, up 28.0% from 324.5millioninQ4FY2024[3]BusinessModelandStrategy−Snowflakeoperatesacloud−baseddataplatformfocusingondatastorage,processing,andanalytics,benefitingfromnetworkeffectsasmoreorganizationsjoin[4]−Thecompanyemphasizesaconsumption−basedbusinessmodel,aligningrevenuegenerationwithclientusage,whichencouragesscalability[5]−Thecompanyisenhancingindustry−specificdataclouds,particularlyinHealthcareandFinancialServices,topenetratenichemarkets[8]CustomerMetrics−Thenetrevenueretentionratewas126324.5 million in Q4 FY2024 [3] Business Model and Strategy - Snowflake operates a cloud-based data platform focusing on data storage, processing, and analytics, benefiting from network effects as more organizations join [4] - The company emphasizes a consumption-based business model, aligning revenue generation with client usage, which encourages scalability [5] - The company is enhancing industry-specific data clouds, particularly in Healthcare and Financial Services, to penetrate niche markets [8] Customer Metrics - The net revenue retention rate was 126%, indicating strong customer retention, although it decreased from 131% the previous year [7] - There was a 27% increase in customers generating over 1 million in annual revenue, totaling 580 [7] Future Outlook - For Fiscal 2026, Snowflake projects product revenue to reach approximately $4.28 billion, with a target product gross profit margin of 75% and an operating income margin of 8% [10] - The company remains optimistic about future growth, focusing on managing operating losses while leveraging network effects and consumption-based pricing [11]