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 [6] - Remaining performance obligations totaled $7.88 billion, with year-over-year growth accelerating to 37% [7] - Net revenue retention remained stable at a very healthy 125% [7] - Non-GAAP product gross margins were 75.9% [22] - Non-GAAP operating margin expanded more than 450 basis points year-over-year to 11% [22] - For Q4, product revenue is expected between $1.195 and $1.2 billion, representing a 27% year-over-year growth [23] - FY26 product revenue guidance raised to approximately $4.446 billion, representing 28% year-over-year growth [23] Business Line Data and Key Metrics Changes - Financial services and technology verticals led growth in Q3 [21] - 28% of all use cases deployed during the quarter incorporated AI [10] - Over 7,300 accounts are using AI capabilities weekly [8] - 1,200 customers are harnessing next-generation agentic AI capabilities [8] Market Data and Key Metrics Changes - Snowflake surpassed $2 billion in sales through AWS Marketplace in a single calendar year [18] - The company added a record 615 new customers in Q3 [7] - The annual world tour saw over 40,000 participants, a 40% year-on-year increase [12] Company Strategy and Development Direction - Snowflake aims to empower enterprises through data and AI, focusing on operational rigor and product innovation [5] - The company is expanding partnerships with major players like SAP, Workday, and Google Cloud to enhance data integration and AI capabilities [12][15] - The introduction of Snowflake Intelligence is a key part of the strategy to enhance customer engagement and drive AI adoption [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to maintain growth momentum and operational efficiency [19] - The focus remains on delivering efficient growth while balancing investments in sales and marketing [25][90] - Management highlighted the importance of AI in driving customer relationships and expanding the value delivered across the data lifecycle [10] Other Important Information - The company achieved a major milestone of $100 million in AI revenue run rate, one quarter earlier than anticipated [10] - Snowflake's operational rhythm remains strong, with a commitment to long-term growth and efficiency [19] 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 [31] - The FY guidance reflects underlying customer behavior and is considered a more meaningful signal than quarterly beats [31] Question: Customer adoption of AI products - Management highlighted that Snowflake Intelligence is unlocking significant value for customers, with many using it to create specialized data agents [34] Question: Go-to-market strategy and customer acquisition - Management indicated that Snowflake Intelligence plays a key role in customer acquisition, allowing for hyper-customized demos [41] Question: Impact of migrations on product revenue - Management stated that they are still early in the migration process, with AI helping to accelerate these migrations [50] Question: Zero Copy agreements and their impact - Management explained that Zero Copy agreements facilitate data sharing and collaboration, enhancing customer value [56] Question: Tying Snowflake budget to AI investments - Management confirmed that many customers are integrating Snowflake into their AI strategies, leading to larger contracts and broader product adoption [61] Question: Future milestones and AI consumption - Management indicated that broader adoption of Snowflake Intelligence is a key milestone, with a focus on making all data AI-ready [81]