Snowflake 2023/Q4 Earnings Call [$SNOW]

Hello and welcome to the Q4 fiscal year twenty four Snowflake Earnings Call. My name is Alex, I'll be coordinating the call today. If you'd like to ask a question at the end of the presentation, you can press start, followed by one on your telephone keypad. I'm now handed over to your host, Catherine McCracken, Senior Manager Investor Relations. Please go ahead. Good afternoon, and thank you for joining us on Snowflake's Q4 fiscal twenty twenty four earnings call.

With me in Bozeman, Montana are Sridhar Ramaswamy. our Chief Executive Officer, Frank Slutman, our Chairman, Mike Scarpelli, our Chief Financial Officer, and Christian Kleinerman, our Executive Vice President of Product, who will join us for the QA session. During today's call, we will review our financial results for the fourth quarter fiscal twenty twenty four and discuss our guidance for the first quarter and full year fiscal twenty twenty five.

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 actually. Information concerning these risks and uncertainties is available in our earnings press release, our most recent forms ten K and ten 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 to also discuss certain non-GAP financial measures, a reconciliation of gaps and non-gap measures is included in today's earnings press release.

The earnings press release and an accompanying investor and presentation are available on our website at investors.snowplake dot com. A replay of today's call will also be posted on the website. With that, I would now like to turn the follow up. Thanks, Catherine.

Welcome and good afternoon. By now you've heard the great news about Street Art becoming our next CEO. Before we get to that, I would like to highlight our fiscal twenty twenty four results. FY twenty four product revenue grew thirty eight percent year over year to reach two point six seven billion.

Non GAAP product growth margin expanded to seventy seven point eight percent. Non gap adjusted free cash flow was eight hundred and ten million, representing fifty six percent year over year growth. We continue to pair high growth with efficiency. The year began against an unsettled macroeconomic backdrop. We witnessed lackluster sentiment and customer hesitation due to lack of visibility in their businesses.

Customers preferred a wait and see posture versus leaning in to longer term contract expansions. This reversed in the second half of the year and we started seeing larger multi year commitments. Q four was an exceptionally strong booking squarter. We reported five point two billion of remaining performance obligations. representing accelerated year on year growth of forty one percent. Our international theaters outperformed the company as a whole.

We continue to see success in our effort to campaign the largest enterprises globally. We added fourteen global two thousands into quarters and eight of our top ten customers grew sequentially. Meanwhile, Snowflake has announced many new technologies that let customers mobilize AI, Streamlitz and Snowflake, Snowpark ML modeling API and Cortex ML functions are all

generally available. We also received FedRAMP high authorization on the AWS GovCloud. This enables Snowflake to protect some of the federal government's most sensitive, unclassified data.

Now, on the topic of CEO transition. I was brought to Snowflake five years ago to help the company break out and scale. I wanted to grow the business fast but not at all costs. It had to be efficient and establish a foundation for long term growth. I believe the company succeeded on that mission. The board has run a succession process that wasn't based on an arbitrary timeline, but instead

looked for an opportunity to advance the company's mission well into the future. The arrival of Sri Dai Ramaswamy through the acquisition of Neva last year represented that opportunity. Since joining us, Sheeter has been leading Snowflake's AI strategies, bringing new products and features to market at an incredible pace. You left the launch of Snowflake's Cortex. Snowflake's new fully managed service that makes AI simple and secure.

Prior to Neva, Sridhar left all of Google's advertising products during his fifteen year tenure at Google he helped grow Edwards in Google's advertising business. from one point five billion to over a hundred billion. With the onslaught generative AI, Snowflake needs a hard driving technologies.

technologist to navigate the challenges the New World represents. Feder's vision for the future and his proven ability to execute at scale made it clear to us as a board that he's the right executive at the right time. lead Snowflake. This marks my retirement from an operating role. I will re I will remain on duty as chairman of the board and look forward to working with Sridhar and the team going forward. With that, I will pass it over to Sridhar.

Thank you, Frank. I'm honored to have been chosen to lead this great company. The success Snowflake has achieved is a testament to the great customers, employees and partners who've contributed along the way. And of course, Frank has been a huge part of getting us here, which I gratefully acknowledge.

Snowflake is a once in a generation company that will revolutionize the world with its cloud data platform. This has become more true in the past year with the rapid technology innovations we have seen. Generative AI is at the forefront of my customer conversations. This drives renewed emphasis on data strategy in preparation of these new technologies.

You've heard the team say it many times there is no AI strategy without a data strategy. And this has opened a massive opportunity for Snowflake to address. Deliver on the opportunity ahead. We must have clear focus and move even faster to bring innovation on the Snowflake platform to our customers and partners. This will be my focus. I look forward to working with the team and I'm extremely excited for the opportunity. With that, I'll pass it over to Mike.

Thank you, Shreder. Q four marked a strong finish to a challenging year. Product revenue was seven hundred and thirty eight million, growing thirty three percent year over year. Similar to prior years, we experienced significant holiday impacts in December and January. Holidays make it difficult to discern meaningful consumption trends. In the quarter, younger customers led revenue growth.

These accounts are adding new workloads and migrating from legacy vendors. Financial services and retail were our largest revenue contributors and we are seeing emerging momentum from the EMEA region and technology vertical. Cup t customer optimizations return to a normal level with eight of our top ten accounts growing sequentially. We proactively engage with customers to help them optimize their snowflake usage and will continue to do so.

History has shown that optimizations expand our long term opportunity. We now have eighty three customers with trailing twelve month product revenue greater than five million dollars, up from seventy five in Q three. Q4 was an exceptional booking quarter for us. Bookings are not a leading indicator of revenue. They do signal an improving macro environment. Remaining performance obligations grew forty one percent year over year to five point two billion dollars.

Of the five point two billion in RPO We expect approximately fifty percent to be recognized as revenue in the next twelve months. We signed our largest deal ever in Q4, a five-year, two hundred and fifty million dollar contract with an existing customer. Our international territories returned to meaningful growth. outperforming expectations for the first time in a year. We made significant progress in delivering margin expansion. Non gap product margin of seventy eight percent.

was up approximately three hundred basis points year over year. Improved terms from the cloud service providers have contributed to margin expansion. Non-gap operating margin of nine percent was ahead of expectations. operating margin benefit from increased hiring scrutiny. Non-gap adjusted free cash flow margin was forty two percent.

Bookings outperformanced increased collections. We ended the quarter with four point eight billion in cash, cash equivalents in short term and long term investments. We did not repurchase any shares in Q four.

We have approximately$1.4 billion remaining under our original authorization of$2 billion. Now let's turn to Outlook. Consumption trends have improved since the beginning of last year, but have not returned to pre FY twenty four patterns. We have evolved our forecasting process to be more receptive to recent trends. For that reason, our guidance assumes similar customer behavior to fiscal twenty twenty four.

We we are forecasting increased revenue headwinds associated with product efficiency gains. tiered storage pricing, and the expectation that some of our customers will leverage iceberg tables for their storage. We are not including potential revenue benefits from these initiatives in our forecast. These changes in our assumption impact our long term guidance.

Internally, we continue to march towards ten billion in product revenue. Externally, we will not manage expectations to our previous targets. until we have more data. We are focused on executing it, FY twenty four to ensure long term durable growth. Now turning to FY twenty five guidance. For the first quarter, we expect product revenue between seven hundred and forty five and seven hundred and fifty million, representing year over year growth between twenty six and twenty seven percent.

For the first quarter, we expect non gap operating margin of three percent and three hundred and sixty six million diluted weighted average shares outstanding. For the full year we expect product revenue of approximately three point two five billion. representing twenty two percent year over gro year over year growth. We expect Snow Park to contribute three percent of product revenue. We are not including any other new products in our forecast at this time.

For the full year, we expect non GAP product gross margin of seventy six percent, non gap operating margin of six percent, non gap adjusted free cash flow margin of twenty nine percent. and diluted weighted average shares outstanding of three hundred and sixty eight million. We plan to add approximately one thousand employees this year, inclusive of MA.

expenses our forecast assumes meaningful investments in our AI initiatives. We expect approximately fifty million of GPU related costs in fiscal year twenty five. approximately$10 million flowing through cost of product revenue. For the purpose of forecasting, we are not including any incremental revenue associated with these features. We have also evolved our go-to-market motion. As we compensate more reps on a consumption quota, we will see increased commission expense.

Consumption based commissions are expensed immediately rather than amortized over a five year period. This has no impact on cash flows, but is expected to have approximately thirty million dollar impact to P and L. Lastly, I would like to acknowledge Frank's retirement. Working with Frank for the past 17 years has been an incredible learning experience, and I'm grateful for our time together. Frank's contributions to Snowflake.

to set the company up for the long term success and I look forward to being part of that journey. I've committed to Shre on the board that I will be with Snowflake for at least the next three years. Before closing, we will host our Investor Day on June fourth in San Francisco in conjunction with Data Cloud Summit. our annual users conference. If you are interested in attending, please email IR at snowflake dot com. With that operator, you can now open up the line for questions.

Thank you. As a reminder, if you'd like to ask a question, you can press star followed by one on your telephone keypad. If you'd like to remove your question, you may press star followed by two. Our first question for today comes from Mark Murphy of JP Morgan. Your line is now open. Please go ahead. Thank you very much. Um so Mike, I think we we with the understanding that bookings are not a perfect uh forward indicator of revenue.

Um, you know, it it's hard not to notice the total bookings performance is quite spectacular and you know, even the short term uh backlog number looks good. I think um we trying to bridge from that um you know growing closer to thirty percent and then to arrive at the revenue growth in the low twenties, I understand it's mechanically more complicated than that, but um on the surface it looks like you're guiding with

a lot more conservatism uh than a year ago. And so I'm just wondering, does it feel does that part of this feel a little more uh comfortable to you or do you do you think it could take a little longer to convert bookings to consumption this year? Um I think we are definitely being more conservative this year given the consumption patterns we saw in twenty four. And as we said at our analyst day last year, we needed to see consumption patterns more in line what we saw pre twenty four.

to get to our longer term goal and as a result Um, we've decided to forecast this year based upon the consumption patterns we saw in twenty four. and as you know, we forecast based upon historical consumption of our products. There's a lot of new products coming into GA in public preview this year that we have not taken into account in our forecast and we will do so once we start to see that consumption. And so we will take this quarter by quarter for the year.

Okay. And then as as a as a quick follow up, Frank, I I wanted to thank you for for everything uh and uh and wish you all the best. And um Sridhar, um just w wanted to ask you because of your background in generative AI, do you envision any changes in the technology roadmap uh perhaps relating to snowpar?

Or perhaps your role in L LMs or uh you know, how heavily you'd steer the goats market in those areas. I'm just wondering if there's a if you would you know foresee any change in philosophy or approach. Yeah, I've had over a a hundred conversations with customers over the past year about generative AI in in particular. Uh and uh the product announcements that we've already made, things in private preview. uh including Snowflake Cartex, which is our managed AI and uh and and search layer.

combined with applications like Document AI or extracting structured data or our copilot. Uh these have been very well uh received. Document AI, for example, has hundreds of customers waiting for it to hit uh GA that are on our wait list. Uh so I would say it is a matter of uh executing to the roadmap that uh we have already laid out.

uh Cortex will hit public preview soon. Uh to Mike's point, getting this to GA, getting this in the hands of our customers and having them realize value is the top priority. I don't think of uh this as needing a new strategy.

Thank you. Our next question comes from Keith Bice of Morgan Stanley. Your line is now open. Please go ahead. Excellent, this is Theo and for Keith. Um maybe we to start off with one question on your consumption. Um I was wondering if you could give us a sense for where the consumption was softer as it is impacting your guidance. I think last quarter you gave us a good sense for

Digital natives seem to stabilize, enterprise seem to get better. So can you just kind of double click where the consumption is softening now versus your expectations and where maybe stronger? Well, as I said, the strength was in financial services and retail. We are seeing the technology vertical do well. Um and I wouldn't say it's soft. We did beef the last quarter. Um but what I would say is it's improving but it's not back to the pre twenty twenty four levels as um I mentioned.

And and that's the um we're basing we've revised our model to look at more recent history rather than going back too far in history for forecasting consumption patterns of Got it. That's very helpful. And then one more follow up on sort of the existing customer business and your net retention rate. That seemed to be on top of the bookings another KPI that is at least getting better on a rate of change uh basis.

I is there any level that you would guide us to in terms of where that net retention rate could stabilize? Um, i is that informing your guide aside from kind of the consumption you're seeing in any meaningful way? Any colour you can give us and that would be helpful too? Well, as we've said before, over time net revenue retention will um um converge with our revenue growth rate. Um and as I've said before, I'm not gonna guide to net revenue retention. Got it. Thanks.

Thank you. Our next question comes from Ramo Lensho of Barclays. Your line is now open, please go ahead. Dave, thank you. Uh um Frank, all the best uh for me as well. Uh uh question for Srida. Um if you think about the customer conversations with AI and you know, people will think differently about the data and the data platform. Can you speak a little bit about how do you see that playing out for you guys from a snowflake perspective in terms of

You know, the uh the one part that you have is like the data warehouse but also then more on the league side. Like h uh what do you see in c uh what are you here in customer conversations and how are you positioned now and what would be the push for you there? And then I have one follow up for Mike. Yeah. On uh on on Snowflake Cortex, we are implementing it as a core platform layer. Um it ships with every deployment.

Um and uh it makes AI readily accessible from from SQL so that even an analyst that's not a you know an LLM expert or a Python expert can simply write SQL for things like summarization or sentiment detection data that is already in Snowflake. Our overall aspiration here is to make AI really, really simple for our customers to use. Um and in some sense the prototypical AI application is a chat bot over a specialized corpus

um using what's called uh RAG, retrieval augmented generation. But the idea is basically you are able to say talk to your documentation or talk to the support cases that you have and get answers back. in natural language, but with things like citation, so you can actually believe um the uh answers that are coming back from you know from the chat bot. Um so both of these are ready made applications that uh our customers are excited about.

Um but I would say the big, big unlock um is being able to get at the structured data that is in Snowflake and have that be accessed by many, many more people. Um today people go through an elaborate process of getting the data ready using BI tools, going through a pretty slow cycle. Um and so uh the the thing that we are driving towards is uh, you know, creating easy ways for people to be able to talk to subsets of data, you know, like Mike to be able to talk to finance data.

um or other things like that. Um I would say that that is the thing that is truly, truly exciting um for uh for our customers. Um and with respect to where data is sitting, As you know, we support things like uh iceberg formats, it's getting more and more popular. So data interoperability is very much a thing, um and our AI products can generally

uh act on data that is sitting in cloud storage uh as well. Uh so the solutions that we are offering as part of Snowflake are broadly applicable both to data within Snowflake but also data that's sitting in cloud storage.

Okay, perfect. Thank you. And then Mike, uh uh quick question for you. On the gross margin side, uh uh you know, congrats on the amazing improvement there. Uh is that was that did I understand you correctly, is that just one hyperscaler where the contract terms kind of got improved? Uh and is that something that you we could kind of hope for for others or is the level now the level thank you.

So as a reminder, we did AWS and um Azure before our investor day last year. We just did our Google contract um last quarter as well. So all three of those contracts now and those are where we are running in those three clouds are current and I don't expect any changes to those terms in any meaningful way in the short term. Perfect. That answered that. Thank you. Thank you. Our next question comes from Kirg Matern from Evercore. The line is now open. Please go ahead.

Oh yeah, thanks very much. And and Frank, congrats on a a great run at Snowflake and before. Um you know, Mike, maybe for you, you know, every year you've told us that you'd always uh include uh technology advancements that you pass back to your customers and your guidance, it seems like there's a higher level of conservatism around that, just given the the lack of visibility on that.

Can you try to uh I guess qualitatively give us some idea of how much bigger a headwind that is than than prior years, uh just to go along with some of the conservatism around consumption trends? Um it's a it's about a six point to six point three percent impact this year. Um and but coupled with that too in the revenue we rolled out

in Q four tiered storage pricing. So our s the amount of um revenue associated with storage is coming down. But on top of that, we do expect a number of our large customers are going to adopt Iceberg format. and move their data out of Snowflake where we lose that storage revenue and also the compute revenue associated with moving that data into Snowflake.

n we do expect though there'll be more workloads that will move to us, but until we see that incremental revenue on workloads, um we're not gonna we're not gonna forecast that. Um I will say l last year we saw a sixty two percent increase

in the number of jobs running on Snowflake year over year with a corresponding thirty three percent increase in revenue. And that's because we continue to show our customers that we become cheaper and cheaper to them every year. And when we do that It opens up new workload opportunities for us and we'll continue to do that. Okay. That's great. I'll leave you there. Sri Dar, congrats on the new position. Thanks, guys.

Thank you. Our next question for today comes from Brent Hill of Jefferies. Your line's now open. Please go ahead. Thanks. Um M Mike, I I just wanna reconcile, you know, a really good RPO close acceleration and Q four And then how how you marry that with the guide, I think there's a lot of questions about the acceleration you saw and perhaps why why that may not flow through uh into next year. Well, I would say we signed a lot of large multi year deals.

in Q four. I mentioned the one that was a five year two hundred and fifty million dollar deal. There is and so what customers what that really shows is the commitment customers are making to Snowflake. And from a customer's perspective, as long as they use that those credits up within their contract period, they're fine. There is a lot of pent up demand for a lot of our new products that are coming out.

Um Sridhar talked about Document AI, but we have a lot of customers that want Cortex and Snowpark container services. So I think it's going to be more backend loaded this year and until we see that um um um consumption by our customers it's hard to forecast that. So stay tuned. Okay, and in Mike, just on on linearity in Q four, I I I know the holidays were the holidays, but um, you know, did did you did you see things bounce back similar to what you've seen historically in Q fours or?

Uh was there anything unique uh closing out closing out the uh the quarter? Um are you talking from a revenue or are you talking a bookings? Bo bookings was very strong in January. Um I would say from a revenue consumption pattern, I think there was a little bit more of a prolonged holiday that went into mid January.

Um coming out of January consumption's good, but once again, and through today, but it's more in line with twenty twenty four consumption versus the pre twenty um four consumption patterns. Okay, great, thank you.

Thank you. Our next question comes from Alex Zukin of Wolf Research. Your line is out open. Please go ahead. Hey guys, this is Alan on. Uh Mike, uh just as a follow up about consumption in the quarter, I'd love to maybe get a comparison on February. I know we got a day left, but maybe how this month shaped out compared to February of last year, and then I got a quick follow-up.

And that's from a consumption perspective. The consumption is tracking where we are and I just gave guidance for the quarter. So I don't know what else you want me to tell you. Okay. Um and as a a follow-up, I guess, you know, you talked about some of the free cash flow impact. from the go to market change around pushing consumption more. Is there any way we should be thinking about maybe the top line impacts as a result of that with the guy? Thanks.

What I was talking about with cash flow was the switch in the comp plan from paying people on consumption versus the booking. And it doesn't really change the free ca the cash flow associated because we're still doing the payments the same. Um and it has a thirty million dollar P and L impact but no cash flow impact is what I was referring to. And obviously one of the reasons why we switched to

paying reps more on consumption is because we want reps to be driving revenue more rather than bookings necessarily. And our reps are heavily compensated on two things this year. You have Approximately 35% of our reps are focused just on initial new customers. 55% are just paid on existing customers with driving consumption, identifying new workloads within customers.

You have about ten percent that are in a hybrid, a mix of new customers and consumption. And those are more in emerging territories or territories where maybe the installed base of customers isn't as high.

Thank you. Our next question comes from Brent Braclin of Pip S Handler. Your line is now open, please go ahead. Thank you. Good afternoon. Uh Frank, I'll uh well wish you're here in retirement. I'll forever remember your working with you on the first IPO and uh the last one here. It's been an amazing seventeen year journey. Mike, uh glad to uh know you'll be with us for another three years. My question here is for Sheradar, as we think about driving more AI workloads to the Snowflake platform

What's the tip of the spear going forward? Is it Cortex? Is it Snowpark? Help us understand what you're focused on accelerating AI workloads to s to Snowflake. Yeah, when it comes to AI, as I was outlining, um first of all simplifying it. uh so that it is easy for our customers to use. We uh we have Cortex. is the very first thing. And a lot of things that you and I, like, you know, analysts do with text now become so much easier

uh to do with language models of uh different different sizes. Um but I would say the uh the applications that truly drive customer excitement that there is incredible demand for um are on the document AI side. um and on the co pilot offerings. They're different, um, but they use the same underlying technologies. Document AI is about extracting uh structured information from unstructured documents like PDFs that every enterprise Um has boatloads on. Um and then on the other side, um, co pilot.

uh finally makes real the possibility of like being able to just talk to your data, ask questions in natural uh natural language. um and for that to get translated underneath uh to SQL, for that SQL to be run against uh against Snowflake, um and for you to get back, you know, get back a tabular answer and then soon visualizations as well. It's that kind of fluid access.

um that customers are really, really excited by. And what you get from Snowflake is that this comes out of the box. This is very easy. You can build a streamlit app with it. Uh and so it avoids all of the complicated exfiltration of data using other tools, needing to stitch things together as an IT project in order to get something done.

Um and that's the power of our platform where we know the data, we know the schema, we know all the previous queries that have been run against it and are therefore able to create a uh a very effective co pilot solution. So hopefully that gives you a flavor um for the kinds of con conversations that we've been having with customers and what they're looking forward to.

Very helpful there. And and then Mike, if I just look at the guide on a per customer basis. it does look like consumption per customer could be slower this year than than last year. What's the delta there? Is is the primary delta the assumption that tiered storage uh uh pricing and iceberg uh will put more pressure on consumption growth? Uh is that the primary delta or is there something else I'm missing?

No, there's a lot of new uh performance enhancements being rolled out on our software this year that are going to have an impact. There's also uh Well, I'll tell you, but I really don't want to because I know you're gonna ask a lot of questions. Um we're also rolling out the ARM chip and the Azure. It's not as big as uh AWS has an impact that will um impact that as well too. Um and clearly we do expect customers will begin to adopt um iceberg table format. Popular. Thank you.

Thank you. Our next question comes from uh Cash Rangan from Goldman Sachs. Your line is now open. Please go ahead. Thank you very much. Um Mike, one for you and one for you, Sweether. Uh Mike. How much of the conservatism is due to the uh the transition at the CDMOS level and one for you three though, congratulations. What are the biggest uh challenges and opportunities facing Snowflake in your opinion? Thank you so much once again.

Um I don't know how to answer that question, Cash, but what I would say is I'd like to set the company up to be successful throughout the year as we progress with Shridar coming on board. Yeah. And uh uh to answer your question, uh uh Yeah, uh to answer your question, Kash, um as you know, uh like Frank, our founder um have built uh Snowflake to be the trusted, efficient and cost effective platform uh for enterprises. So I'm standing on the shoulder of giants to take us to the next chapter.

Um and we already have a pretty ambitious plan, for example, uh to be able to write applications on top of Snowflake um and those underlying technologies, native applications, container services. are rolling out to GA uh this year. Um and then I would add what um uh is unique about this moment in technology, of course, is AI and its power uh to democratize access to enterprise uh to enterprise data. Um I think this uh

sort of dramatically changes our understanding and notions of what an application is, how things can be stitched together. Um I think it is it is that. uh a data platform combined with applications um with AI powering things like interoperability um that I think is the biggest opportunity in front of us. Um and we have a ton of investments, as you said, many of them are coming to GA. Um, getting them out quickly and driving adoption um is easily my highest uh you know, highest priority.

Uh and uh you know, and in terms of challenges, some of these were deep platform surgeries. Unistore, uh, as you folks know, uh is an incredibly ambitious project that uh has never been done before. Um and but it will it it it will roll out. So I think you're going to see us realize a lot of benefits of the investments that we've been making in the core technology platform over the over over the last two years.

Uh but as you know, AI is also moving at lightning speed. Um we have an amazing team that's at work on it. Um but I think there's just lots more disruption to the software landscape to come. Um and that's why acting with speed and urgency is especially important for us. Awesome. Excited to be on this journey with you, Sridhar. Congratulations. And thank you, Mike. Thank you, Kos.

Thank you. Our next question comes from Patrick Colville of Scotiabank. Your lines now open. Please go ahead. All right, thank you for taking my question. Um I mean under Frank's leadership, Snowflake's undoubtedly been a bit of a rocket ship. So uh Frank, I wanna ask you why leave now and then Sri Dhar, I can ask you on as well, you know, looking forward to you being in charge.

exciting next steps. And how are you thinking about your strategy for Snowflake and changes you want to make now that you're in the CEO position? I've got a quick fall off, that's right. Yeah. Um the important thing that I uh I tried to highlight in the prepared remarks was that we haven't run succession as a time based process and I said, Well I ask now it's not a timing issue. It is, you know, do we have the person

that uh we think is going to be an incredible win for the company, you know, going forward. And that's not you you you can't dictate that or mandate that that it's just based on opportunities that will or will not uh present themselves. So

Uh we feel incredibly fortunate that we cross paths with Street Art through the acquisition um of of NEVA. Um, you know, if I think of myself not just as a former CEO of Snowflake, but also as an individual shareholder in Snowflake, this is the move I wanna make uh at this time. And uh, you know, um I I I cannot tell you uh as an investor how strongly you should feel

you know, about uh succession. This is not about just about changing of the guard. This is also about positioning the company uh really, really well for the challenges that are that are coming at us. Yeah. And just adding on to what uh you know Frank said uh just now. Uh our short term goals are very clear. As I said, we have a a slew of product enhancements in everything from you know like transactional systems like Unit Store to interoperable storage.

um to uh making applications on top of our data cloud possible with native applications and container services and of course AI on on top of that. Uh so I think the short term um and the need to react pretty quickly uh to a to a very uh quicksilver AI landscape um is what I'm going to be focused on. But I would almost say that uh you know that actually translates um pretty well into a longer term strategy. Our belief is that a cloud that starts with data at the center

combined with our product philosophy of creating a tightly integrated, easy to use product is the long term winning strategy. Yes, there are going to be details that are different. uh you know, which are the applications that uh um we are going to be developing, what are ones that we are going to be doing in partnership Um but that combination of the data cloud applications built on top of it with AI as an orchestrator is actually a a pretty solid long term strategy as well.

Of course, as I said, we have to be adaptive because the world of AI and its capabilities are changing by the month. Uh and so we have to be receptive to that kind of change. But I feel very good about the path that we have set out for ourselves. um in how effective it's going to be both in the short term and the long term.

Terrific. Thank you, Frank and and and Srida. Um Mike, can I just one quick one for you? You gave the guidance about three points of product revenue um will be from Snow Park in one Q.

Uh, thanks for that colour. For the year. I guess my question is when for the year, okay. Fiscal twenty five. Okay, when might um Snow Park hockey stick, you know, that that it's been a product you guys have been talking about and invested pretty heavily in um it's it's it's m you know seeing terrific momentum, but can we expect a hockey stick at some point? Yeah, anything's possible. What I would say is we did about

mid thirty million in revenue, I think thirty five, thirty six million in revenue last year associated with Snow Park. Um clearly what I'm saying three percent is gonna be just under a hundred million, ninety five million or so this year. Um I think that is pretty phenomenal growth. Um and if we can get it to grow faster, we obviously will. All right, keep up the good work. Thank you.

Thank you. Our next question comes from Brad Seals of Bank of America. Brad, your line is now open. Please go ahead. Hi, um, thank you for taking the question. This is Carly on for Brad. Um, I guess first question just want to ask on uh your guide for the full year, fiscal year twenty five, I think you assumed, uh, you know, number of large customer going to adapt icebergs. table so um some expectation on data uh moving out of

of like uh losing some storage revenue and some compute revenue there. Can you just double click on that why some of the existing large customers are going to choose iceberg table rather than their original? A lot a lot of big customers want to have open file formats.

um and to give them the options. And by the way, this is not necessarily customers moving all of their storage out of day out of Snowflake, but a lot of the growth in their storage will be put into iceberg tables is what we we think is going to happen. Um so you're just not going to see the growth associated with the storage in many of those customers. As a reminder, about ten to eleven percent of our overall revenue is associated with storage. Audit. Okay. And then just a follow up on uh

On that I guess on the it's like encouraging to know, you know, three percent of the contribution will be from Snow Park. Um and then at the same time you guys are expecting some headwinds from um iceberg and also the tier storage pricing. Can you just quantify for us, you know, what's the um like heck means for the storage pricing in the iceberg table? For the project for the full year. Well it's built into our guidance.

I'm I'm not gonna break them out all separately. Um I would say the performance improvements which have nothing to do with that are around six point two, six point three percent. Audit, okay. Um and then I think you said the consumption's going to be um like similar to fiscal or twenty-four. We're forecasting consumption patterns similar to what we saw in twenty-four. Okay, thank you.

Thank you. Our next question comes from Matt Hedberg of RBC. Your line is now open, please go ahead. Great. Thanks for taking my questions, guys. Um And I guess uh following up on the Snow Park conversation, it feels like um thirty five million going to a hundred million is like you said, Mike, that is good growth. Could you talk a little bit more about sort of uh you know, what the customer feedback has been? It feels like

pipeline, it's feel like every check you do, snow parks in the conversation. So maybe just double click on you know what that uh you know customer feedback has been and and you know how encouraged you are with uh the pipeline growth there.

Yes, hi, Christian here. The the the feedback has has been a very strongly positive. What we hear more often is better economics and better performance, but probably more important, more simplicity into how data doesn't have to be moved between systems and it's just a an integrated solution.

Some of the enhancement that you see apply not only to data engineering, but also to traditional machine learning, which we see an increasing number of use cases also being deployed. So the sentiment is very positive.

Got it. Thanks. And Mike, maybe just one other just to double click on on the guidance philosophy. You said consumption patterns from twenty four is what's influencing your twenty five guide. I'm curious, but it feels like consumption has improved as twenty four progressed. Are are you sort of weighting it more towards like what you saw in the first half of the year?

Or or or more sort of like some of the better trends you saw in the second half or just just maybe uh double clicking on a little bit on on you know kind of what those fiscal twenty four assumptions think'cause it feels like things have gotten better as as the year progressed. I I would say it's more the average of twenty four and which we saw stability happen in th in our customer base. Um I'm not forecasting any type of recovery inside there. Got it. Thanks, guys.

Thank you. Our next question comes from Tyler Radke of City. Your lines are open, please go ahead. Yeah, thanks for taking the question. And I wanted to direct this question uh at Sridhar and maybe Christian can jump in, but just as we think about the product roadmap for FY twenty five. You know, you talked a little bit about Unistore, container services, Cortex. Can you just provide an update?

on when you expect these products to go GA, what you're seeing in terms of, you know, customer momentum, any any customer statistics you can call out. And then how do you just kinda think about the the maturity of these products, Sridhar, now that you've you've um had had time to look at the uh you know, the the progress of these, are are you still expecting these to be uh contributors uh by year end. Thank you.

Um I'll I'll give a brief initial answer and then have Christian take over from that. Um one of the things that uh uh the Snowflake team is very, very good at doing uh is making sure that everything that we ship is tightly integrated with everything else where there is uh you know there's just uh fluid interoperability between our various features and that it's also rock solid. Um I think that that that culture of uh integrated and well built features is a uh is a hallmark of uh Snowflake.

Um of course in areas like AI, which is moving at lightning speed, we want a stable infrastructure, but we also need to be flexible enough. um whether it's new models that we put inside Cortex or other functionality that we need to develop on on top of it. Um but a lot of the core investments that the team has made to allow for this kind of extensibility is what is coming in handy for us in terms of being able to ship things with um with speed.

I'll hand it off to Christian to talk about when he uh expects different things to hit GS. Yeah so so as as both Srida and Mike mentioned, we we expect a number of meaningful GA milestones this fiscal year. Uh starting with with genera generative AI.

Core text will be in public review very soon and we expect it to be generally available on and around the summit timeframe. And as Sri said, we we expect all sorts of interesting use cases of generative AI coming to the data and preserving privacy and and and security. Yeah, Snowpur Container Service is is already in public review in AWS.

And we expect it to be generally available in that same time frame, give or take a a a couple of months from from summit, and is the ultimate extensibility capability for bringing computation into snowflake. Iceberg tables is already on public review. across all three clouds and will be generally available again also in the s data cloud summit timeframe.

Unistore, which enables combining transactional and analytical capabilities in single applications, went very recently into public preview in AWS. and will be in generally generally available in the second half of the year. And native apps, which is how we

accelerate time to value for both partners and customers is currently uh GA on AWS and Azure and we're continuing to round up the enhancement. So this is imminent and we expect uh uh a strong showing of uh product capabilities at the data cloud summit. Great. Thanks. And follow up for Mike, just in terms of what you've seen so far in in February, and I know you're you're talking about FY twenty five consumption assumptions consistent with with a year ago, but

Have you seen February trends um improve relative to January? Is does February feel similar to February a year ago or is it is it closer to the strong growth that you saw in consumption um, you know, towards the the end of last year? Well, I just guided for February um well for the quarter and that reflects the consumption trends we've been seeing through yesterday. So um I would say it's m more in line with what we saw coming out last year um throughout on average for the year. Thank you.

Thank you. Our next question comes from Mike Sikos of Nidamenko. Your line is now open. Please go ahead. Hey, thanks for getting me on here guys. And I I did just wanna follow up. I guess one of the dominant messages from management, if I just go back a quarter ago, um really seemed to be this theme about the growing use of unstructured data by your customers.

And it I I don't know if it's just my read here, but it feels like it's a more muted message today. Maybe I'm missing something. But can you just put some finer points here as far as the trends that Snowflake's seeing, specifically around unstructured data in Q four. Uh and then I did have a follow up. A great question here. The the momentum that that we shared in the last quarter has carried forward on to this quarter. So that there's no uh change in pace or interest.

And and if anything, the the document AI that that Sweet I mentioned earlier in the call where we have hundreds of customers lined up to be able to levy this technology is all about extracting value and signal from unstructured uh documents. So Uh the the fact that it was not mentioned is is not uh anything that should be read into it, is still uh a topic of high interest in uh among many of our customers.

Got it. And and I know that you guys have these assumptions as well in the guidance around uh the potential headwinds from some of your larger customers adopting or or moving data to uh icebergs. maybe to pour us through that a little bit, can you talk about

what you've seen thus far as far as customers' behavior, or are they already doing this with iceberg or is it just an assumption that you guys have? I'm I'm I'm trying to get a sense as far as the behavior customers have exhibited as well as how much you guys are are peppering into your guidance today when we think about that headwind as well as the rollout of tiered storage.

Yeah. Iceberg's not G A yet, so customers are not going to roll that into production until it's GA. And we do think it'll be a gradual process of if they're going to move data out. But as soon as it's GA, new data can go into iceberg table. And we don't expect that to be GA until sometime around June timeframe. Okay. And so just to put a finer point on that though, the the headwind we're expecting from Iceberg, this is this is theoretical. You have not seen that behavior from customers just yet.

Correct. It is what we are expecting. I know the tiered the new toward tiered storage pricing that we rolled out, we're seeing that today. And I'll let Christian add some to that as well too. Yeah, I I would add that for many of our large customers, we have been in touch on their plans for adoption on iceberg. So some of what you see in in our guidance has factored in those Terrific. Thank you.

Thank you. Our next question comes from Michael Turin of Wales Fargo. Your line is now open. Please go ahead. Hey, thanks. I appreciate you taking the question. Maybe one on hiring. I think you mentioned a thousand net new heads you're expecting to add in the coming year. Um, how are you balancing adding to R and D given all the new product efforts and and AI interest with bringing on sales capacity if if the market does start start to turn?

And on the Fed ramp high authorization, any commentary around that, what that could open up and if that's an area of potential investment as well. Thank you. Uh I I I would say um a lot of our expensive hiring is in the R and D area and there will continue to be more in the AI, M L space. Um these engineers are very expensive.

Um with that said, we're still adding in the sales organization and if we see an uptick in um new customers and um consumption patterns with our customers, we can easily dial that up. like we've dialed back our hiring in the past, but we are not going to sacrifice on R and D Got it. Thanks. Thank you. Our next question comes from Derek Wood of T D Coen. Your line is now open. Please go ahead.

Thanks. Um Mike, the most most other cloud consumption vendors are talking about stabilizing growth. You guys are still modeling pretty sharp um deceleration over the next year or so.

This certainly sticks out and and may bring about questions on maybe company specific challenges So first are there are there any notable customer or workload losses that can be weighing on growth this year and generally how how are you feeling about sales productivity and competitive win rates in in the current environment?

Absolutely no big competitive losses or workloads moving off that I'm aware of. This is all related to our model where a lot of the performance improvements that we have in our software get direct go directly to the customer and that's why I was pointing out you saw there was a sixty two percent year over year growth in jobs on a daily basis run on Snowflake versus only a thirty three percent revenue growth.

Um and we know there's a lot of performance improvements coming into um play this year, coupled with iceberg, coupled with tiered storage price, and that we rolled out. And I was able to roll out the tiered storage pricing because we were getting much better pricing out of the cloud vendors to us.

Yeah, okay. Um it it it would be interesting to kind of see what the growth rates on just the workloads related to compute is relative to the storage drag. Maybe that's something um you could give but just um How do you feel about ultimately kind of getting back to thirty percent growth longer term and kinda what's the top one or two critical things that need to d take place to get you there?

I would say the biggest thing is is the uptick in consumption associated with all the new um um enhancements we have in our product and particular what we could see coming out of Cortex, what we could see coming out of part container services and ultimately the um the what we could see in native app development on our platform. Okay, thank you. Thank you. Our next question comes from Gray Powell of Btig. Your lines now open, please go ahead.

Okay, great. Thank you for taking the question. Um, I just had a quick follow up on Snowpark. I I think you called out Snowpark at a seventy million annual run date, uh run run rate uh one day back in December. Um, I know that was just sort of like a one day statistic. Um, but I'm just trying to think through that. I mean the the the guide of three percent of revenue for fiscal twenty five, that's like, you know, ninety five a hundred million.

I I guess it just seems kind of conservative given that Snow Park was or that consumption on Snow Park was growing forty five percent quarter over quarter last quarter. Um just just how should we think about the the level of conservatism on that, you know, assumption within your guidance? Well what I'm saying is we're guiding it to be three percent of product revenue this year and you can infer what you want from the guidance. Well right then, uh thank you very much.

Diolch. Diolch. Diolch. Diolch. Diolch. Diolch.