Snowflake (SNOW) Q3 2025 Earnings Call Transcript

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Snowflake (SNOW -0.86%)
Q3 2025 Earnings Call
Nov 20, 2024, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good afternoon. Thank you for attending the Snowflake Q3 fiscal 2025 earnings conference call. My name is Matt, and I’ll be your moderator for today’s call. All lines be muted during the presentation portion of the call for an opportunity for questions and answers at the end.

[Operator instructions] I’ll now have to pass the conference over to our host, Jimmy Sexton, head of investor relations. Jimmy, please go ahead.

Jimmy Sexton — Head of Investor Relations

Good afternoon, and thank you for joining us on Snowflake’s Q3 fiscal 2025 earnings call. Joining me on the call today is Sridhar Ramaswamy, our chief executive officer; Mike Scarpelli, our chief financial officer; and Christian Kleinerman, our executive vice president of product, who will participate in the Q&A session. During today’s call, we will review our financial results for the third quarter fiscal 2025 and discuss our guidance for the fourth quarter and full year fiscal 2025. During today’s call, we will make forward-looking statements, including statements related to our business operations and financial performance.

These statements are subject to risks and uncertainties, which could cause them to differ materially from our actual results. Information concerning these risks and uncertainties is available in our earnings press release, our most recent Forms 10-K and 10-Q, and our other SEC reports. All our statements are made as of today based on information currently available to us. Except as required by law, we assume no obligation to update any such statements.

During today’s call, we will also discuss certain non-GAAP financial measures. See our investor presentation for a reconciliation of GAAP to non-GAAP measures and business metric definitions, including adoption. Earnings press release and investor presentation are available on our website at investors.snowflake.com. A replay of today’s call will also be posted on the website.

With that, I would now like to turn the call over to Sridhar.

Sridhar Ramaswamy — Chief Executive Officer

Thanks, Jimmy. And hi, everyone. Thanks for joining us today. As you’ve seen by now, we had a strong third quarter, outperforming expectations and increasing our FY ’25 product revenue guide.

More and more, it is clear that our customers believe Snowflake is the easiest and most cost effective [Technical difficulty]

Questions & Answers:

Operator

Ladies and gentlemen, please remain holding while I reconnect the speaking line. Everyone, please remain holding the call, resuming momentarily.

Jimmy Sexton — Head of Investor Relations

Welcome back. I’d now like to pass the call back over to Sridhar.

Sridhar Ramaswamy — Chief Executive Officer

Thanks, Jimmy, and hi, everyone. Thanks for joining us today. As you’ve seen by now, we had a strong third quarter, outperforming expectations and increasing our fiscal 2025 product revenue guide. More and more, it is clear that our customers believe Snowflake is the easiest and most cost effective enterprise data platform out there.

Our customers are getting tremendous value from us with many of them going all-in on Snowflake. Our product development engine continues to accelerate as we launched the same number of Tier 1 features to general availability in Q3 as we did in all of fiscal 2024. Our AI feature family, Snowflake Cortex, is showing significant adoption. And we improved our go-to-market motion across the board, and it’s having a huge impact on new product adoption.

We are firing on all cylinders. The credit goes to the entire Snowflake team, and I’m very encouraged by our progress showing up so well in the numbers. Product revenue for the quarter was $900 million, up a strong 29% year on year. Remaining performance obligations totaled $5.7 billion with year-over-year growth accelerating to 55%.

Given the strong quarter, we are again increasing our product revenue outlook for the year. In the quarter, non-GAAP operating margin improved to 6%. Having driven strong gains in product speed and revenue growth in Q3, we initiated an even more rigorous approach to cost management. We’ve been creating centralized and more efficient teams for some areas and removing redundant management layers, which enables us to make decisions faster.

And we are deploying AI to drive higher velocity while reducing overall costs. We also eliminated a number of efforts that were underperforming and not aligned with our top goals as a company. I’m particularly proud of the team for driving efficiency throughout our business. This operational rigor is now a way of life for us, enabling us to improve profitability while aggressively investing in our innovation and go-to-market engines.