Q3 2025 Summary
Published Feb 7, 2025, 7:58 PM UTC- The company's core business is demonstrating strong growth with stable Net Revenue Retention (NRR) at 127%, indicating customer satisfaction and consistent revenue growth. Management feels "really good about next year" and has built "a good muscle in our sales organization" to identify new workloads for future growth.
- New products like Snowpark and Iceberg Tables are gaining traction and contributing to revenue, with Snowpark on track to be 3% of product revenue. Features like Dynamic Tables and Cortex AI are "starting to take off" and are expected to drive future consumption and revenue growth.
- International expansion is strong, with the company "positioned very well going into Europe," focusing more on the mid-market, and seeing "strong growth in Japan," as well as growth in India, Korea, Australia, and New Zealand, paving the way for future international growth.
- Sequential customer additions remain mixed, and the company expects a significant inflection in net new customers to occur more in fiscal 2026, suggesting potential near-term limitations in customer growth.
- Reliance on renewals and expansions from existing customers for large deals indicates that growth may be concentrated among existing clients rather than new business, which could limit growth if expansion rates decline. ,
- Uncertainty around the future impact of new product initiatives, such as Cortex AI and Snowpark, which are still in early stages and may not contribute significantly to revenue growth as expected. , ,
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +28% from $734.2M to $942.1M | Strong product consumption and expansion of Snowflake’s customer base drove revenue growth, with larger enterprises increasing usage and new products (including AI-focused solutions) contributing to adoption. Ongoing net revenue retention also helped sustain growth, despite more intense market competition. |
Cost of Goods Sold (COGS) | +40% from $228.9M to $320.9M | Higher third-party cloud infrastructure expenses fueled by greater customer consumption and increased complexity of workloads led to a larger cost base. This includes rising GPU costs and overhead for AI workloads, mirroring trends seen in previous quarters. |
Research & Development Expense | +33% from $332.1M to $442.4M | Increased headcount and stock-based compensation pushed R&D costs higher, as Snowflake continued to invest in product innovation—particularly around AI and data sharing. This follows the pattern of expanding engineering teams and third-party cloud costs for development. |
Operating Loss | 40% deeper from $(260.6)M to $(365.5)M | Operating expenses grew faster than revenue, driven by sales & marketing expansion and higher R&D outlays. Though revenue rose, it did not offset the jump in infrastructure and personnel costs, contributing to a widened operating loss, consistent with trends in previous quarters. |
Net Loss | +51% from $(214.3)M to $(324.3)M | Elevated operating costs—particularly in R&D and sales & marketing—combined with continuing stock-based compensation to push net losses higher. While total revenue growth was strong, heavy investment in AI capabilities and broader platform enhancements increased overall expense levels. |
Share Repurchases | +154% from $400M to $1.016B | Snowflake expanded its repurchase authorization (adding $2.5B and extending the program’s timeline), leveraging free cash flow to manage dilution and enhance shareholder value. This significant increase in buybacks is consistent with the board’s stated strategy to opportunistically repurchase shares. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Product Revenue | Q4 2025 | no prior guidance | $906M – $911M, 23% YoY growth | no prior guidance |
Product Revenue | FY 2025 | $3.356B, 26% YoY growth | $3.43B, 29% YoY growth | raised |
Non-GAAP Product Gross Margin | FY 2025 | 75% | 76% | raised |
Non-GAAP Operating Margin | FY 2025 | 5% | 5% | no change |
Non-GAAP Adjusted Free Cash Flow Margin | FY 2025 | 26% | 26% | no change |
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Core Business Strength
Q: How is the core data warehousing business performing?
A: The core data warehousing and data engineering business is performing very well, showing strong and stable growth. The business remains very stable heading into next year, with net revenue retention remaining at 127% over the last two quarters. -
Impact of AI Products
Q: How are new AI products like Cortex contributing?
A: New AI products like Cortex are starting to take off, though still in the early stages. Cortex is contributing to revenue growth, and we are optimistic about its future impact based on current trends. Snowpark continues to track as expected, contributing 3% of revenue for the year and growing nicely year-over-year. -
Position in Generative AI
Q: How is Snowflake positioned in generative AI?
A: We are seeing strong interest and deployment of our AI products, with over 1,000 deployed use cases. Our core analytics business has a long runway, as companies continue to integrate data into their operations. Investments in companies like Datavolo are enabling us to bring more data into Snowflake, enhancing our AI capabilities. -
Acquisition of Datavolo
Q: How does the Datavolo acquisition impact Snowflake?
A: The acquisition of Datavolo brings over 100 different connectors out of the box, enabling us to bring in data from various sources. It enhances our data engineering capabilities and allows us to act on all of our customers' data, not just the gold data used for analytics. -
Large Deals and Renewals
Q: Are you seeing more large transactions?
A: We continue to work on large deals, including renewals with existing customers that include growth. Q4 is expected to be a strong bookings quarter as usual, with a number of large deals in the pipeline. -
Federal Government Business
Q: What is Snowflake's outlook in the federal sector?
A: While the U.S. federal space is currently a very small part of our business, we see significant upside over the next couple of years. Recent developments, such as the acquisition of Night Shift, position us better in the federal market, and efficiency concerns in government may drive demand for our solutions.