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Snowflake Inc. (SNOW)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY25 delivered solid top-line and cash flow: revenue $986.8M (+27% YoY), product revenue $943.3M (+28% YoY), adjusted free cash flow $423.1M (43% margin) . Non-GAAP operating margin expanded to 9% vs 4% guided in Q3, a notable operational beat .
  • Key KPIs remained healthy: net revenue retention of 126%, RPO $6.9B (+33% YoY), and 580 customers with >$1M TTM product revenue; Forbes G2000 customers at 745 .
  • FY26 outlook calls for product revenue ~$4.28B (+24% YoY), ~75% product gross margin, 8% non-GAAP operating margin, and 25% adjusted FCF margin; Q1 FY26 product revenue guided to $955–$960M (+21–22% YoY) with a 5% operating margin (including SKO expenses and a leap year headwind) .
  • Potential catalyst: CFO Michael Scarpelli announced plans to retire after a successor is in place; management transition could be a focus near term, alongside accelerating AI adoption and the expanded Microsoft/OpenAI partnership in Cortex .

What Went Well and What Went Wrong

What Went Well

  • Non-GAAP operating margin and cash generation outperformed: Q4 non-GAAP operating margin rose to 9% (vs 6% in Q3) and adjusted FCF margin reached 43% on $423.1M adjusted FCF .
  • Strong demand indicators: RPO increased to $6.9B (+33% YoY), NRR remained robust at 126%, and $1M+ TTM product customers climbed to 580 .
  • AI and partnerships advancing: “We are making Cortex Agents available in Microsoft 365 Copilot and Microsoft Teams,” broadening enterprise reach for agentic AI workloads .

What Went Wrong

  • GAAP losses continue: Q4 GAAP operating loss of $(386.7)M and GAAP net loss per share of $(0.99); SBC remains material though expected to decline from ~41% to ~37% of revenue in FY26 .
  • Slight NRR downtick: Net revenue retention eased to 126% from 127% in the prior quarter, reflecting normalization even as overall expansion remains healthy .
  • Large customers purchased on-demand after exhausting capacity, creating timing noise in RPO/current billings (management views this as normal behavior for large accounts) .

Financial Results

MetricQ2 FY25Q3 FY25Q4 FY25
Revenue ($USD Millions)$868.8 $942.1 $986.8
Product Revenue ($USD Millions)$829.3 $900.3 $943.3
Professional Services & Other ($USD Millions)$39.6 $41.8 $43.5
GAAP Product Gross Margin (%)72% 71% 71%
Non-GAAP Product Gross Margin (%)76% 76% 76%
GAAP Operating Loss ($USD Millions)$(355.3) $(365.5) $(386.7)
Non-GAAP Operating Income ($USD Millions)$43.7 $58.9 $92.8
Non-GAAP Operating Margin (%)5% 6% 9%
GAAP EPS (Basic & Diluted) ($)$(0.95) $(0.98) $(0.99)
Non-GAAP EPS Diluted ($)$0.18 $0.20 $0.30
Net Cash Provided by Operating Activities ($USD Millions)$69.9 $101.7 $432.7
Free Cash Flow ($USD Millions)$58.8 $78.2 $415.4
Adjusted Free Cash Flow ($USD Millions)$66.0 $86.8 $423.1
Free Cash Flow Margin (%)7% 8% 42%
Adjusted Free Cash Flow Margin (%)8% 9% 43%

Segment/Revenue Mix

MetricQ2 FY25Q3 FY25Q4 FY25
Product Revenue ($USD Millions)$829.3 $900.3 $943.3
Professional Services & Other ($USD Millions)$39.6 $41.8 $43.5
% Product of Total Revenue95% 96% 96%

KPIs

KPIQ2 FY25Q3 FY25Q4 FY25
Net Revenue Retention (%)127% 127% 126%
Customers with TTM Product Revenue >$1M510 542 580
Forbes Global 2000 Customers736 754 745
Remaining Performance Obligations ($USD Billions)$5.2 $5.7 $6.9

Guidance Changes

MetricPeriodPrevious GuidanceCurrent/ActualChange
Product Revenue ($USD Millions)Q4 FY25$906–$911 $943.3 Beat
Non-GAAP Operating Margin (%)Q4 FY254% 9% Beat
Product Revenue ($USD Billions)FY25~$3.430 $3.462 Beat
Product Revenue ($USD Millions)Q1 FY26N/A$955–$960; +21–22% YoY Introduced
Non-GAAP Operating Margin (%)Q1 FY26N/A5% (includes ~$15M SKO) Introduced
Product Revenue ($USD Billions)FY26N/A~$4.280; +24% YoY Introduced
Product Gross Margin (%)FY26N/A~75% Introduced
Non-GAAP Operating Margin (%)FY26N/A8% Introduced
Adjusted Free Cash Flow Margin (%)FY26N/A25% Introduced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
AI/Cortex adoption & agents>1,000 deployed AI/ML use cases; 3,200+ accounts using AI features (Q3); Cortex Search/Analyst momentum; Notebooks ramp (Q2/Q3) Cortex Agents, expanded Microsoft partnership (OpenAI inside Cortex), Agents in M365 Copilot/Teams; 4,000+ weekly AI/ML users Accelerating
Iceberg/open data formats~400–500 accounts using Iceberg; storage ~11% of revenue; minimal headwinds (Q2/Q3) Iceberg increasingly a tailwind unlocking new workloads; storage ~11% reiterated Improving tailwind
Consumption dynamics & large customersStable consumption; two top-10 customers on monthly commitments (Q3) Several large customers ran out of capacity and purchased as they consumed (normal behavior) Stable with timing noise
Sales execution & incentivesShift toward consumption incentives and new workload prosecution (Q2/Q3) Sales comp adds bookings quota; specialist teams; colleges for ML expertise Maturing process
Macro/seasonalitySecurity headlines minimal impact (Q2); holiday/seasonality noted (Q3) Q1 has leap-year headwind (-1 business day); SKO costs (~$15M) Headwinds managed
Regional trendsEMEA strength (Q4 commentary), APJ growth (Q3) EMEA highlighted again; Japan strong Positive
SBC & marginsGPU rentals pressuring margins; FY25 product GM ~76% (Q3) FY26 SBC expected ~37% of revenue (from ~41%); FY26 product GM ~75%, op margin 8% Efficiency improving

Management Commentary

  • CEO: “We delivered another strong quarter… Today, Snowflake is the most consequential data and AI company in the world.”
  • CEO on AI strategy: “Our North Star is to deliver the world's best end-to-end data platform powered by AI… product deliveries in overdrive” .
  • CFO: “Q4 non-GAAP operating margin of 9% outperformed expectations… We expect Q1 product revenue between $955M and $960M… FY26 product revenue ~$4.28B, non-GAAP operating margin 8%, adjusted FCF margin 25%” .
  • Product EVP: Strong interest in open data (Iceberg) and bidirectional integrations; working with SAP and hyperscalers to foster interoperability .

Q&A Highlights

  • Capacity/consumption timing: Large customers that exhausted commitments chose on-demand purchasing rather than early renewal; management expects new commitments in coming months .
  • Iceberg is a tailwind: Opening access to broader data estates with minimal storage headwinds; unlocking net-new workloads .
  • Sales comp change: Variable comp remains principally revenue-driven, but reps now also carry a bookings quota to balance growth quality .
  • Leap year and SKO: Q1 FY26 growth comps impacted by one less business day; ~$15M SKO expense in Q1 margin outlook .
  • Microsoft/OpenAI partnership: Models available within Snowflake’s security perimeter; aim to enable world-class applications without data leaving Snowflake .

Estimates Context

  • Wall Street consensus from S&P Global was unavailable at time of analysis; therefore, comparisons to consensus EPS/revenue estimates cannot be presented. We benchmarked performance versus company guidance instead (Q4 product revenue and margin beats; FY25 product revenue beat) .

Key Takeaways for Investors

  • Q4 beat vs prior guidance on product revenue and non-GAAP margin; strong cash generation supports durability of the consumption model .
  • FY26 guide implies re-acceleration in H2 on new products (Cortex, data engineering), with margin expansion and lower SBC intensity, improving quality of earnings .
  • AI catalysts: Cortex Agents and Microsoft Copilot/Teams integration position Snowflake to drive agentic workloads at scale within enterprise guardrails .
  • Iceberg momentum is a positive mix shift—expands accessible data and drives new workloads, while storage exposure (~11% of revenue) remains stable to slightly offset .
  • Watch near-term seasonality and events: Q1 leap-year headwind and SKO costs; expect margin normalization consistent with guidance .
  • Demand indicators healthy: RPO +33% YoY; $1M+ customer cohort expanding; NRR mid-120s suggests continued expansion despite normalization .
  • Management transition: CFO retirement plan introduces governance focus; continuity supported by explicit transition plan and robust FY26 framework .