Snowflake Inc Earnings - Q3 2025 Analysis & Highlights
Snowflake Inc's Q3 Fiscal Year 2026 Earnings Call highlighted strong financial results, driven by growth in core business and AI, with a focus on product innovation, customer acquisition, and strategic partnerships. The company is increasing its growth expectations for the year and reiterating its margin target.
Key Financial Results
Product revenue in Q3 was $1.16 billion, up 29% year-over-year.
Remaining performance obligations totaled $7.88 billion, with year-over-year growth accelerating to 37%.
Net revenue retention remained stable at 125%.
Added a record 615 new customers this quarter.
Achieved $100 million in AI revenue run rate, one quarter earlier than anticipated.
Non-GAAP product gross margin was 75.9%.
Non-GAAP operating margin expanded more than 450 basis points year-over-year to 11%.
Non-GAAP adjusted free cash flow margin was 11%.
Repurchased 1 million shares at a weighted average price per share of $223.35, using $233 million.
Ended the quarter with $4.4 billion in cash, cash equivalents, short-term and long-term investments.
Business Segment Results
Financial services and technology verticals led growth in Q3.
Global 2000 customers now total 776, with each spending an average of $2.3 million on a trailing 12-month basis.
Capital Allocation
Used $233 million to repurchase 1 million shares in Q3.
Remaining authorization of $1.3 billion for share repurchases through March 2027.
Industry Trends and Dynamics
Every company is transforming to embrace the AI era, with Snowflake at the center of the AI revolution.
Customers are placing the AI Data Cloud at the center of their strategic initiatives.
Competitive Landscape
Snowflake is delivering an AI Data Cloud that's enterprise-ready with a focus on customers.
Snowflake is intuitive and easy to use, seamlessly connected for collaboration, and built with security and governance.
Growth Opportunities and Strategies
Focus on operational rigor and close-knit products and go-to-market execution.
Deep partnerships with customers to capture opportunities and sustain momentum.
Expanding product capabilities and ecosystem through partnerships with Workday, Splunk, Palantir, UiPath, SAP, and Anthropic.
Acquired technology behind Datometry's software migration solution and agreed to acquire Select Star.
Expanded partnership with Anthropic to bring native model availability into Snowflake and introduce a new joint go-to-market motion.
Continued relationships with major cloud providers, surpassing $2 billion in sales through AWS Marketplace.
Accenture launched a Snowflake Business Group, committing to train over 5,000 professionals on Snowflake Solutions.
Snowflake Intelligence continues to set the tone for enterprise-grade agentic AI.
Partnership with Google Cloud to make the latest Gemini models available within Cortex AI and Snowflake Intelligence.
Introduced Cortex AI for financial services, a suite of AI capabilities and partnerships.
Key capabilities like Snowflake Openflow are making it easier to bring data into Snowflake.
Financial Guidance and Outlook
For Q4, expect product revenue between $1.195 billion and $1.2 billion, representing 27% year-over-year growth.
Expect non-GAAP operating margin of 7% for Q4.
Raising FY 2026 product revenue guidance to approximately $4.446 billion, representing 28% year-over-year growth.
Reiterating FY 2026 margin targets: non-GAAP product gross margin of 75%, non-GAAP operating margin of 9%, and non-GAAP adjusted free cash flow margin of 25%.
