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Snowflake Inc. (SNOW)·Q3 2025 Earnings Summary

Executive Summary

  • Snowflake delivered a strong quarter: total revenue grew 28% year over year to $942.1M and product revenue rose 29% to $900.3M, with non-GAAP operating margin at 6% and RPO accelerating to $5.7B (+55% YoY) .
  • FY25 guidance was raised: product revenue to $3.43B (from $3.356B), non-GAAP product gross margin to 76% (from 75%), and non-GAAP operating margin to 5% (from 3%); Q4 product revenue guided to $906–$911M and 4% non-GAAP operating margin .
  • Net revenue retention stabilized at 127% and large deal momentum improved, including three $50M+ TCV deals; management highlighted minimal storage headwinds from Iceberg and strong AI product adoption (Cortex, Intelligence) .
  • Catalysts include a multi-year Anthropic partnership to bring Claude models into Cortex AI and a definitive agreement to acquire Datavolo to deepen data engineering and unstructured data ingestion capabilities .
  • Note on estimates: S&P Global consensus data was unavailable at request time; management stated “outperforming expectations,” but a formal beat/miss vs Street cannot be determined here .

What Went Well and What Went Wrong

  • What Went Well

    • Strong topline and consumption: product revenue $900.3M (+29% YoY) and RPO $5.7B (+55% YoY) drove raised FY25 guidance; CEO: “Our obsessive drive to produce product cohesion and ease of use has built Snowflake into the easiest and most cost effective enterprise data platform” .
    • AI momentum: Cortex and Snowflake Intelligence adoption accelerated; over 1,000 deployed AI/ML use cases and >3,200 accounts using AI/ML features; Anthropic partnership brings Claude models directly into Cortex AI .
    • Operating efficiency: non-GAAP operating margin reached 6% on cost rigor and team consolidation; CFO cited efficiencies in R&D and office timing; Snowpark on track to ~3% of revenue and minimal Iceberg storage headwinds .

  • What Went Wrong

    • Continued GAAP losses: GAAP net loss was $324.3M and GAAP net loss per share was $(0.98), highlighting ongoing heavy stock-based compensation and investment load .
    • Services margin drag: professional services gross margin remained negative on GAAP and low single-digit on non-GAAP, reflecting services cost structure vs revenue .
    • Near-term seasonality and estimate visibility: management flagged holiday-related Q4 consumption seasonality and did not provide NRR guidance; S&P Global consensus was unavailable, limiting formal beat/miss assessment .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$828.709 $868.823 $942.094
Product Revenue ($USD Millions)$789.587 $829.250 $900.282
GAAP Net Loss per Share ($USD)$(0.95) $(0.95) $(0.98)
Non-GAAP Diluted EPS ($USD)$0.14 $0.18 $0.20
Non-GAAP Product Gross Margin %77% 76% 76%
Non-GAAP Operating Margin %4% 5% 6%
Non-GAAP Adjusted Free Cash Flow Margin %44% 8% 9%

Segment breakdown:

MetricQ1 2025Q2 2025Q3 2025
Product Revenue ($USD Millions)$789.587 $829.250 $900.282
Professional Services & Other Revenue ($USD Millions)$39.122 $39.573 $41.812

Key KPIs:

KPIQ1 2025Q2 2025Q3 2025
Net Revenue Retention (%)128% 127% 127%
Customers with TTM Product Revenue >$1M (#)485 510 542
Forbes Global 2000 Customers (#)709 736 754
Remaining Performance Obligations ($USD Billions)$5.0 $5.2 $5.7

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Product Revenue ($USD Millions)FY 2025$3,356 $3,430 Raised
Non-GAAP Product Gross Margin %FY 202575% 76% Raised
Non-GAAP Operating Margin %FY 20253% 5% Raised
Non-GAAP Adjusted FCF Margin %FY 202526% 26% Maintained
Weighted-Average Diluted Shares (Millions)FY 2025361 364 Higher
Product Revenue ($USD Millions)Q4 2025N/A$906–$911 New
Non-GAAP Operating Margin %Q4 2025N/A4% New
Weighted-Average Diluted Shares (Millions)Q4 2025N/A372 New

Notes: Diluted share guidance reflects if-converted impact of 0% convertible senior notes (approx. 20M shares in Q4; ~7M for FY from issuance date), and excludes potential future buybacks; capped calls expected to reduce dilution under certain circumstances, but no anti-dilutive impact in periods presented .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q1)Current Period (Q3)Trend
AI/technology initiativesQ1: AI products generally available; strong customer interest . Q2: early traction of new AI products .Anthropic multi-year partnership; Cortex adoption; >1,000 deployed AI/ML use cases; >3,200 accounts using AI/ML; Snowflake Intelligence and Cortex Analyst highlighted Strengthening adoption and ecosystem expansion
Product performance & multiproduct adoptionQ2: Snowpark tracking to ~3% of revenue .Snowpark well on track to ~3% of revenue; Unistore GA; Dynamic Tables and Notebooks ramping Expanding multi-product usage
Storage/Iceberg & interoperabilityQ2 forward-looking commentary acknowledged Iceberg/tiered storage pricing impacts .~500 accounts adopting Iceberg; storage ~11% of consumption; minimal storage headwinds; positive net new workloads via Iceberg/Open Catalog/Polaris Positive net-new workload offset
Bookings and large dealsNot specified in Q1/Q2 press releases.3 deals ≥$50M TCV; expecting momentum to continue; strong Q4 bookings typical Improving large-deal volume
Regional trendsNot specified in Q1/Q2 press releases.Europe mid-market focus; APJ strong (Japan standout); Australia/NZ good markets Broadening international footprint
Regulatory/public sectorNot specified in Q1/Q2 press releases.Federal opportunity: small base today; certifications in place; Night Shift acquisition to strengthen federal positioning Building public sector capabilities

Management Commentary

  • CEO Sridhar Ramaswamy: “Snowflake delivered a strong third quarter, with product revenue of $900 million, up 29% year-over-year, and remaining performance obligations of $5.7 billion, with year-over-year growth accelerating to 55%... Our obsessive drive to produce product cohesion and ease of use has built Snowflake into the easiest and most cost effective enterprise data platform” .
  • CEO on AI strategy: “Our AI feature family Snowflake Cortex is showing significant adoption… Unistore and internal marketplace [GA]… Snowflake Intelligence, a platform to create data agents” .
  • CFO Michael Scarpelli: “Non-GAAP product gross margin of 76% stabilized sequentially. Non-GAAP operating margin of 6% exceeded our guidance… For the fourth quarter, we expect product revenue between $906 million and $911 million… We now expect full year product revenue of approximately $3.43 billion” .
  • CFO on capital structure: Issued $1.15B 0% notes due 2027 and $1.15B 0% notes due 2029; YTD buybacks of $1.9B for 14.8M shares; $5B in cash and investments . 8-K details ~$2.27B net proceeds, capped calls ($195.5M), and concurrent stock repurchases ($399.6M at $112.50/share) .

Q&A Highlights

  • Iceberg/storage impact: Minimal storage headwinds; ~500 accounts adopting Iceberg; data engineering features (Snowpark, Dynamic Tables, connectors) expected to more than offset storage revenue pressure; Iceberg enabling net-new workloads on open formats .
  • AI adoption and consumption: Cortex Search/Analyst democratize data; agents expected to drive deeper workflow integration; focus on ease, efficiency, and trust; strong text analytics use cases expanding to image/audio/video .
  • Bookings/large deals: Three $50M+ TCV deals signed; expectation of strong Q4 bookings with renewals that include growth .
  • NRR/consumption: NRR holding stable at 127%; consumption-focused GTM building backlog of workloads; holiday seasonality acknowledged for Q4 .
  • International/federal: Europe mid-market and APJ expansion (Japan strong); federal a small base today but viewed as upside; recent Night Shift acquisition to aid federal positioning .

Estimates Context

  • S&P Global consensus estimates were unavailable at request time due to data access limits; therefore, a formal beat/miss vs Street consensus cannot be provided here. Values would ordinarily be retrieved from S&P Global. Management stated the quarter “outperforming expectations” and raised FY25 guidance, but this cannot be equated to a Street beat without consensus figures .

Key Takeaways for Investors

  • FY25 guidance raised across product revenue and key non-GAAP margins; sequential operating margin improvement to 6% signals emerging leverage while investing in AI and data engineering .
  • AI strategy is gaining real traction: Anthropic partnership embeds Claude models in Cortex AI; >1,000 AI/ML use cases and >3,200 accounts indicate broadening adoption and potential for incremental consumption .
  • Iceberg/Open Catalog/Polaris reduce lock-in and expand Snowflake’s addressable data estate; current evidence points to minimal storage headwinds and net-new workloads that can drive compute consumption .
  • Bookings quality improving (three $50M+ TCV deals), and RPO growth (+55% YoY) provides forward visibility; watch Q4 seasonality and large renewal cadence for near-term setup .
  • Capital flexibility remains strong: ~$5B cash/investments, convert issuance, and remaining buyback authorization ($2B) can support share count management and M&A (e.g., Datavolo) .
  • Non-GAAP adjustments are material (stock-based comp, amortization, restructuring), driving a GAAP loss; focus on non-GAAP margin trajectory and FCF conversion to assess durability .
  • Tactical trade: Near-term catalysts include Q4 guide execution, AI product updates, and large-deal closures; medium-term thesis centers on AI-enabled multiproduct adoption, open data interoperability, and operating leverage ramp .