Snowflake(SNOW) - 2026 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Product revenue in Q4 grew 30% year-over-year to reach $1.23 billion [6] - Remaining performance obligations totaled $9.77 billion, with year-over-year growth accelerating to 42% [6] - Net revenue retention was at a healthy 125% [6] - Fiscal 2026 non-GAAP operating margin reached 10.5%, expanding more than 400 basis points year-over-year [6][7] - Stock-based compensation declined from 41% of revenue in fiscal 2025 to 34% in fiscal 2026, expected to further decrease to 27% in fiscal 2027 [7] Business Line Data and Key Metrics Changes - The company added 2,332 net new customers this year, bringing the total to over 13,300 [7] - 740 net new customers were added in Q4, up 40% year-over-year [18] - 733 customers are now spending more than $1 million on a trailing-twelve-month basis, growing 27% year-over-year [18] - A record number of customers crossed $10 million in trailing-twelve-month spend, totaling 56 customers, growing 56% year-over-year [18] Market Data and Key Metrics Changes - The company signed the largest deal in its history, greater than $400 million in total contract value, and signed 7 nine-figure contracts in Q4 [17] - The total number of accounts using AI increased to over 9,100, with Snowflake Intelligence scaling to over 2,500 accounts, almost doubling quarter-over-quarter [8][9] Company Strategy and Development Direction - The company is positioned at the center of the enterprise AI revolution, focusing on delivering a data foundation for enterprises across clouds and data types [4] - The acquisition of Observe is expected to unlock new expansion opportunities within the customer base and extend the company's value proposition in the $50 billion IT operations market [12][19] - The company aims to drive both growth and operating margin expansion while investing in key growth drivers [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the durability of the 27% growth forecast for fiscal year 2027, driven by stable growth in the core business and contributions from AI workloads [25][27] - The company anticipates continued strength in its core business and further growth in AI workloads, with a non-GAAP product gross margin of 75% expected for FY 2027 [22] - Management highlighted the transformative impact of AI on operations and customer workflows, emphasizing the importance of Snowflake Intelligence and Cortex Code [14][15] Other Important Information - The company launched over 430 product capabilities this year, underscoring its product velocity [11] - The partnership with OpenAI and Google Cloud is expected to enhance the company's offerings by integrating advanced AI models into its platform [13] Q&A Session Summary Question: Durability of 27% growth forecast for FY 2027 - Management indicated that the guidance is based on observed customer behavior and stable growth in the core business, with contributions from AI workloads and the Observe acquisition [27][28] Question: Momentum with areas outside the core business - Management noted that products like Snowflake Intelligence are major growth drivers, with significant customer adoption and transformative capabilities [28] Question: Details on the $400 million deal - The deal was with an existing customer and reflects the trust in Snowflake's product roadmap and AI strategy [35][36] Question: Changes in sales strategy under new leadership - Management highlighted the excitement within the sales team regarding new products and the positive influence of the new sales leadership [41] Question: Observability market and acquisition rationale - Management emphasized the importance of observability in AI and the efficiency gains offered by the Observe acquisition, which was built on Snowflake [49] Question: Managing customer consumption and pricing predictability - Management discussed the importance of predictable pricing models and plans to introduce features like per-user caps to mitigate consumption risks [54] Question: Platform usage and predictability compared to last year - Management expressed confidence in their ability to model business consumption and highlighted improvements in predictability [71][73]