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 [8] - Remaining performance obligations totaled $9.77 billion, with year-over-year growth accelerating to 42% [8] - Net revenue retention was at a healthy 125% [8] - Fiscal 2026 non-GAAP operating margin reached 10.5%, expanding more than 400 basis points year-over-year [8][9] - Stock-based compensation declined from 41% of revenue in fiscal 2025 to 34% in fiscal 2026, with expectations to further decrease to 27% in fiscal 2027 [9] Business Line Data and Key Metrics Changes - The company added 2,332 net new customers this year, totaling over 13,300 customers [9] - 740 net new customers were added in Q4, up 40% year-over-year [21] - 733 customers are now spending more than $1 million on a trailing-twelve-month basis, growing 27% year-over-year [21] - A record number of customers crossed $10 million in trailing-twelve-month spend, totaling 56 customers, growing 56% year-over-year [21] 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 [20] - The AI product offerings have seen significant adoption, with over 9,100 accounts using AI by the end of the quarter [10] Company Strategy and Development Direction - The company is positioned at the center of the enterprise AI revolution, focusing on delivering a platform that combines trusted enterprise data with AI capabilities [5][6] - The acquisition of Observe is expected to unlock new expansion opportunities within the customer base and is reflected in the company's outlook [22] - The company aims to continue innovating rapidly, having launched over 430 product capabilities this year [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining growth around 27% for fiscal year 2027, driven by stable growth in the core business and contributions from AI workloads [30][24] - The company is focused on ensuring stability and ongoing excellence in its go-to-market strategy [23] - Management highlighted the transformative impact of AI on their business and customer operations, emphasizing the importance of Snowflake Intelligence and Cortex Code [31][12] Other Important Information - The company plans to host an Investor Day in conjunction with its Summit conference in June [24] - The company is working on features to provide price predictability for customers using Snowflake Intelligence, including a per-user cap [59] Q&A Session Questions and Answers Question: Durability of 27% growth guidance for fiscal year 2027 - The guidance is based on observed customer behavior and reflects high, stable growth in the core business and growing contributions from AI workloads [30] Question: Momentum with areas of the business outside of the core - Products like Snowflake Intelligence are seen as major growth drivers, with significant customer adoption [31] Question: Description of the $400 million deal and sustainable drivers for bookings - The $400 million deal was with an existing customer, indicating trust in the company's product roadmap and AI strategy [39] Question: Observability market and integration of Observe - The observability market is large, and integrating Observe is expected to provide significant value to Snowflake customers [54] Question: Managing customer consumption and potential sticker shock - The company is focused on providing predictable pricing models and ensuring that products deliver value immediately [58]