Snowflake(US:SNOW) Zhi Tong Cai Jing·2025-12-03 23:33Core Viewpoint - Snowflake reported better-than-expected Q3 earnings, but provided a lower-than-expected operating margin outlook, raising concerns about the profitability of its new AI tools, leading to a post-earnings stock decline [1][3]. Financial Performance - For Q3 ending October 31, Snowflake's revenue was $1.21 billion, exceeding analyst expectations of $1.18 billion. Product revenue grew 29% year-over-year to $1.16 billion, accounting for 95% of total revenue, surpassing the expected $1.14 billion [1]. - Remaining performance obligations increased by 37% to $7.88 billion, higher than the forecasted $7.23 billion. Adjusted earnings per share were $0.35, above the expected $0.31 [1]. Future Outlook - For Q4, the company expects an adjusted operating margin of approximately 7%, below the analyst average estimate of 8.5%. Product revenue is projected to be between $1.195 billion and $1.2 billion, reflecting a 27% year-over-year growth, only slightly above the average expectation of $1.19 billion [3]. - Analysts had anticipated a growth rate exceeding 30%, which may be realized in the next quarter, potentially driving stock prices higher [3]. Market Reaction - Following the earnings report, Snowflake's stock fell over 9% in after-hours trading but recovered some losses after announcing a $200 million partnership with Anthropic to integrate its Claude AI model into Snowflake's platform [3]. - Year-to-date, the stock has risen by 72% [3]. Competitive Landscape - Snowflake faces increasing competition, particularly from Databricks, which is reportedly negotiating a new funding round that could value it over $130 billion, significantly higher than Snowflake's market cap of $89.7 billion at the time of the report [4][5]. - Despite concerns about competition, some analysts believe Snowflake is well-positioned in the current software industry environment, with limited threats from Databricks [5].