Snowflake Inc Earnings - Q4 2025 Analysis & Highlights
Snowflake reported strong Q4 FY2026 results driven by AI product adoption and customer expansion, with the company guiding for sustained 27% revenue growth in FY2027 while expanding operating margins and demonstrating operational efficiency gains through AI-powered internal initiatives.
Key Financial Results
Product revenue grew 30% year-over-year to $1.23 billion in Q4 FY2026.
Remaining performance obligations (RPO) totaled $9.77 billion with year-over-year growth accelerating to 42%.
Net revenue retention remained healthy at 125%.
FY2026 non-GAAP product gross margin was 75.8%.
FY2026 non-GAAP operating margin reached 10.5%, expanding more than 400 basis points year-over-year.
FY2026 non-GAAP adjusted free cash flow margin was 25.5%.
Stock-based compensation declined meaningfully from 41% of revenue in fiscal 2025 to 34% in fiscal 2026, with expectations to further decrease to 27% of revenue in fiscal 2027.
The company added 2,332 net new customers during the year.
Q4 sales execution was outstanding, with 740 net new customers added, up 40% year-over-year, including 15 Global 2000 organizations.
The company now has 733 customers spending more than $1 million on a trailing 12-month basis, growing 27% year-over-year.
A record number of customers crossed $10 million in trailing 12-month spend, bringing a total of 56 customers above this threshold, growing 56% year-over-year.
Business Segment Results
Snowflake Intelligence scaled from a nascent offering to an essential capability for over 2,500 accounts, almost doubling quarter-over-quarter.
More than 9,100 accounts are now using AI products, representing the largest sequential increase in accounts using AI.
Cortex Code is helping over 4,400 customers build and scale AI-powered applications and massively accelerating their ability to deploy production-grade AI.
Snowflake Openflow, now generally available, makes it easier than ever to bring in structured, unstructured, batch or streaming data into the platform.
Snowflake Postgres, now generally available, is a world-class operational database built directly onto the Snowflake platform, enabling developers to build and run production-grade transactional applications.
Capital Allocation
In Q4, the company repurchased approximately 668,000 shares at a weighted average share price of approximately $225, using $150 million.
The company has $1.1 billion remaining on its repurchase authorization and ended the quarter with $4.8 billion in cash, cash equivalents, short-term and long-term investments.
Snowflake closed the acquisition of Observe for approximately $600 million in a combination of cash and stock earlier this month.
Industry Trends and Dynamics
AI is reshaping the software landscape, redefining categories and competitive dynamics.
A clear separation is emerging between systems that demonstrate intelligence and platforms that can deploy it safely and at scale.
The winners will be the platforms that combine trusted enterprise data, governed business metrics, secure execution, and broad model choice, and make all of it easy to use.
As AI agents become central to how work gets done, the capabilities of data platforms become even more valuable because agents are only as powerful as the data they can access and the governance and security that surround it.
The observability market is a $50 billion-plus market, with AI observability in particular being a significant opportunity.
Competitive Landscape
Snowflake is positioned at the center of the enterprise AI revolution with a platform that combines trusted enterprise data, governed business metrics, secure execution, and broad model choice.
The company's competitive advantages include deep product cohesion, ease of use, seamless connectivity for collaboration, and built-in security and governance that enterprises trust.
Snowflake is uniquely positioned to become the control plane for the agentic era by providing a single enterprise-wide source of truth, governed metrics and shared business definitions, cross-cloud and cross-domain interoperability, and built-in security, auditability, and governance.
The company offers interoperability at multiple layers of the stack, including storage level, JDBC level, semantic models, and MCP servers, positioning it as a central platform for agent development.
Macroeconomic Environment
No specific macroeconomic headwinds or concerns were discussed during the earnings call. The company's guidance reflects confidence in sustained growth driven by AI adoption and customer expansion rather than macroeconomic factors.
Growth Opportunities and Strategies
Snowflake is transforming from the platform where enterprises govern and analyze their data to the platform where they build and run AI-native applications and workflows.
The company launched over 430 product capabilities this year, underscoring the strength of its product velocity.
Snowflake Intelligence and Cortex Code are meaningful steps in the company's evolution, with Cortex Code making it 4 to 10 times faster to deploy agents.
The company's service delivery team can complete customer projects up to 5 times faster, improving response accuracy by more than 25%, and compress implementation cycles from days to hours to drive 40% to 50% higher project margins.
Snowflake has built agentic capabilities that help sellers prioritize accounts, automate research, and generate personalized outreach, projected to recoup the equivalent of 90 full-time engineers of productivity this year.
The company's finance team is working on automating travel and expenses analysis, proactively curbing out-of-policy behavior, an initiative expected to drive millions in annual savings.
Landmark partnerships with SAP, Anthropic, OpenAI ($200 million expanded partnership), and Google Cloud are delivering value and expanding model choice for customers.
The acquisition of Observe extends Snowflake's value into the $50 billion IT operations market and positions the company to lead in next-generation AI-powered observability.
Financial Guidance and Outlook
For Q1 FY2027, the company expects product revenue between $1.262 billion and $1.267 billion, representing 27% year-over-year growth.
For FY2027, the company expects product revenue of approximately $5.66 billion, representing 27% year-over-year growth.
Observe is expected to contribute approximately 1 percentage point of product revenue growth in FY2027.
The company expects FY2027 non-GAAP product gross margin of 75%.
The company is guiding Q1 non-GAAP operating margin of 9% and FY2027 non-GAAP operating margin of 12.5%.
The company expects non-GAAP adjusted free cash flow margin of 23%, which includes an approximate 150 basis point headwind related to the Observe acquisition.
Bookings are expected to continue to be weighted to the fourth quarter, and next year's non-GAAP adjusted free cash flow seasonality is expected to mirror FY2026.
Hiring in FY2027 will be weighted to the first quarter, reflecting the addition of 178 employees from Observe.
The company will host an Investor Day in conjunction with its Summit Conference the week of June 1 in San Francisco.
AI Product Adoption and Customer Impact
Toyota Motor Europe is leveraging Snowflake Intelligence to revolutionize its operations by enhancing enterprise search with knowledge chatbots and streamlining contract management through Document AI, reducing AI agent deployment from months to weeks.
United Rentals is using Snowflake Intelligence to power a business intelligence agent that helps teams across more than 1,600 branches get real-time answers from their financial and operational data using natural language.
Sanofi is using AI-powered workflows built on Snowflake with partners like Elementum to replace traditional software systems for processes like software license and invoice management.
Customers are leveraging agents not just to analyze information, but to automate complex workflows and, in some cases, retiring entire categories of previously used software systems.
