Snowflake(SNOW) - 2026 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Product revenue in Q3 was $1.16 billion, up 29% year-over-year [4] - Remaining performance obligations totaled $7.88 billion, with year-over-year growth accelerating to 37% [5] - Net revenue retention remained stable at 125% [5] - Non-GAAP product gross margins were 75.9% [21] - Non-GAAP operating margin expanded more than 450 basis points year-over-year to 11% [21] - For Q4, product revenue is expected between $1.195 and $1.2 billion, representing 27% year-over-year growth [22] - FY26 product revenue guidance raised to approximately $4.446 billion, representing 28% year-over-year growth [22] Business Line Data and Key Metrics Changes - Financial services and technology verticals led growth in Q3 [20] - 28% of all use cases deployed during the quarter incorporated AI [10] - More than 7,300 accounts are using AI capabilities weekly [6] - 1,200 customers are utilizing Snowflake Intelligence for AI capabilities [7] Market Data and Key Metrics Changes - The company added a record 615 new customers in Q3 [5] - The annual world tour saw over 40,000 participants, a 40% year-on-year increase [11] - The annual Build Developer Summit had a 43% increase in attendance year-over-year [11] Company Strategy and Development Direction - Snowflake aims to empower enterprises through data and AI, focusing on operational rigor and product innovation [4] - The company is expanding partnerships with major players like SAP and Google Cloud to enhance data integration and AI capabilities [11][13] - The introduction of Snowflake Intelligence is a key part of the strategy to enhance customer engagement and drive AI adoption [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to maintain growth momentum and operational efficiency [18] - The company is focused on deepening customer relationships and expanding its product offerings [16] - Management highlighted the importance of AI in driving customer value and business growth [9][10] Other Important Information - The company achieved a milestone of $100 million in AI revenue run rate, one quarter earlier than anticipated [9] - The company is committed to maintaining a strong operational rhythm while investing for long-term growth [18] Q&A Session Summary Question: Growth rates on product revenue and Q4 guidance - Management noted that Q3 revenue growth was strong, with a slight impact from a hyperscaler outage [28] Question: Customer adoption of AI products - Management highlighted that Snowflake Intelligence is being adopted across various industries, enhancing data accessibility for business users [30] Question: Go-to-market strategy and new customer wins - Management indicated that AI capabilities are playing a significant role in acquiring new customers and expanding existing relationships [35] Question: Impact of migrations on product revenue - Management stated that migrations are still in early stages, with significant opportunities for growth [43] Question: Zero Copy agreements and their impact - Management explained that Zero Copy agreements facilitate smoother data sharing and collaboration, enhancing customer value [48] Question: Tying Snowflake investments to AI budgets - Management confirmed that many customers are aligning their Snowflake budgets with their AI initiatives, leading to larger contracts [50] Question: Accelerating AI journeys and market standardization - Management emphasized that Snowflake's platform is designed to simplify AI adoption, making it attractive for customers [55]