Snowflake Inc Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Mark Murphy - JPMorgan Chase & Co - Analyst : Thank you, Mike, it's impressive to see the strength here simultaneously in both the consumption revenue and the bookings, especially given the prioritization of consumption incentives this year. I'm curious to what you might attribute that and specifically whether Iceberg Tables might have contributed or whether Snowpark might have picked up in any meaningful way. And then I have a quick follow-up.

Question: Mark Murphy - JPMorgan Chase & Co - Analyst : Great to hear. And Sridhar, I believe you had mentioned displacing the petition over and over again, and that stood out to me. I'm curious if you saw an increase in those competitive displacements during Q3 and what you think might be triggering it? Because we always hear that data sharing is unparalleled. But you had released a slew of AI-related products. And I'm also wondering if you think that, that might be swaying some of these competitive accounts over.

Question: Mark Murphy - JPMorgan Chase & Co - Analyst : Thank you very and Congrats.

Question: Keith Weiss - Morgan Stanley - Analyst : Excellent. Congratulations on a really solid quarter. Mike, a question for you just in terms of like the strength in the quarter. From your commentary, it seems like the core business, like the core data warehousing business, was really the standout in the quarter. And that's signing up and the NRR signing up. But I was hoping you could give us some kind of visibility into the ramp that you're seeing with the new AI products like Cortex. And how does that compare to what you saw with Snowpark, if we think about them at the same time in their evolution? So that's a top line question. And then also a bottom line question for you. Last quarter, we talked about sort of accelerating investments, particularly in distribution. It sounds like that's being somewhat offset by being able to find sort of redundancies or headcount reductions because we didn't really see it in the head count number, like that net addition was relatively modest. So it seems like you guys were able to kind of drive investment, but also find sort of like net to take out of head count. Is that the right way to think about it?

Question: Keith Weiss - Morgan Stanley - Analyst : Got it. That's super helpful.

Question: Kash Rangan - Goldman Sachs Group, Inc. - Analyst : Hi. Thank you very much. One for you, Sridhar, and one for Mike. Sridhar, there is a narrative, which you will definitely dispute, that the core of the Snowflake data platform, that structured data, does not really have a long runway in the world of generative AI and that also Snowflake has a lot to prove with respect to generate AI on the unstructured data. What proof points can you talk to the quarter that would invalidate that bearish view and reinforce your conviction? And one for you, Mike. With the headwinds from storage not being as much as was dialed in, should we safely assume, you're guiding to product revenue 29% for the year and take away 3 points for Snowpark Container Services, that the core is actually at a point where you can see it being stable going to next year? I know you're not giving guidance. And then we can start to think about dreaming the dream of all the new products being largely incremental to that growth rate. Thank you so much. Congratulations.

Question: Kash Rangan - Goldman Sachs Group, Inc. - Analyst : Thank you so much.

Question: Raimo Lenschow - Barclays Bank PLC - Analyst : Hey, thank you. Sridhar, can you talk a little bit about the acquisition from today? Like historically, you always said you wanted to do some ETL, but there's obviously quite a few ETL players in the market. How do you see that evolving between what you want to do, what the other players want to do? And what does it bring to Snowflake? And then I have a follow-up for Mike.

Question: Raimo Lenschow - Barclays Bank PLC - Analyst : Okay. Perfect. And then, Mike, if you look at this quarter, the much better performance, congratulations from me as well, if you think about the question that everyone is going to ask as like, is it economy or are you guys executing better? Is there any comments you can make in terms of what you're seeing in the field from just end demand getting better?

Question: Raimo Lenschow - Barclays Bank PLC - Analyst : Okay, perfect. Makes sense. Thank you.

Question: Kirk Materne - Evercore ISI - Analyst : Yeah, thanks very much. I'll echo the congratulations on a nice quarter. Sridhar, obviously, we're going to hear a lot more about autonomous agents over the next year from a lot of providers in the market. Can you just talk about what that means for consumption on Snowflake data platforms, meaning it would seem that agents are going to be heavy consumers of data. Just kind of curious about how you think about that opportunity as this becomes a little bit more of a ubiquitous sort of topic.

Question: Kirk Materne - Evercore ISI - Analyst : That's really helpful. And Mike, just a really quick one. International is obviously a big opportunity for you. How do you feel like you're positioned in sort of Europe and Asia Pac as you head into '25?

Question: Kirk Materne - Evercore ISI - Analyst : Thank you all.

Question: Brad Zelnick - Deutsche Bank AG - Analyst : Great. Thank you so much. And congrats. Really, really great to see the pace of innovation showing up in results. I wanted to ask, how are customers using Cortex and making it available in their organizations? And how much of it should we think of as driving incremental consumption versus something maybe they were already doing with conventional SQL queries? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 20, 2024 / 10:00PM, SNOW.N - Q3 2025 Snowflake Inc Earnings Call

Question: Brad Zelnick - Deutsche Bank AG - Analyst : Exciting stuff. Mike, just maybe a follow-up for you. Based on your comments on Iceberg, are you baking in less headwind for the year into the guide? And then what's the latest on how customers are thinking about the mix of where data will live?

Question: Brad Zelnick - Deutsche Bank AG - Analyst : Thanks for making that clear. Thanks for taking my questions.

Question: Brent Thill - Jefferies LLC - Analyst : Thanks. Sridhar, just on federal, you mentioned New Zealand powering many of their agencies. How would you characterize where you're at in the federal journey? And given what's just happened in the last month, there's been a lot of concern about efficiency in the federal government. Can you just give us your thoughts about what's going to happen here over the next couple of years? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 20, 2024 / 10:00PM, SNOW.N - Q3 2025 Snowflake Inc Earnings Call

Question: Brent Thill - Jefferies LLC - Analyst : Thanks Mike. And just for you, Mike, on the big deals, you mentioned three deals over $50 million. I think you're coming up and competing for a $250 million deal last Q4. Can you just talk about what you're seeing in these bigger transactions? Are you seeing more transactions that are smaller? Are you seeing some of these bigger elephants starting to roam again? How would you characterize what you're seeing in the pipe for Q4?

Question: Brent Thill - Jefferies LLC - Analyst : Great, thanks.

Question: Matthew Calitri - Needham & Company LLC - Analyst : Thanks guys. This is Matt Calitri on for Mike Cikos over at Needham. This is the healthiest quarter-over-quarter addition to RPO and CRPO during an October quarter, stretching back over multiple years and potentially a record 3Q for the company. Can you help us think about what drove the strong growth? And did the two top 10 customers Mike alluded to being on monthly commitments last quarter, signing new commitments during the quarter?

Question: Matthew Calitri - Needham & Company LLC - Analyst : That's great to hear. And then the trend in sequential customer additions remains mixed. Given the go-to-market changes, when do you expect to begin to start showing an inflection here? Is that more of an FY26 event? Or how are you thinking about that?

Question: Matthew Calitri - Needham & Company LLC - Analyst : Awesome. Thanks so much guys.

Question: Michael Turrin - Wells Fargo Securities LLC - Analyst : Hey, thanks very much. I appreciate you taking the questions. Maybe on the expansion rates holding stable here, I want to ask about that metric just in context with the go-to-market shift towards consumption. And maybe you could just help give us some context around how that consumption focus may be impacting the trajectory we're seeing on expansion rates, if there are common places you're seeing work across customers and if you're starting to hit a point where you're feeling comfortable that retention rates are starting to hit a baseline.

Question: Michael Turrin - Wells Fargo Securities LLC - Analyst : Okay. That's still helpful commentary. And then just a follow-up on one of the comments around the offsets to storage headwinds. I was just hoping you could help us think through the sequencing of those. Is that something that can immediately help offset any storage headwinds tied to Iceberg? Or is that something that over time, the customer profile, the spend profile, helps adjust for those things? Is there just a sequence of events we should all be mindful of there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 20, 2024 / 10:00PM, SNOW.N - Q3 2025 Snowflake Inc Earnings Call

Question: Michael Turrin - Wells Fargo Securities LLC - Analyst : Yeah, sounds great. Thanks very much.

Question: Aleksandr Zukin - Wolfe Research LLC - Analyst : Hey guys. So maybe taking another stab at the Iceberg question. I guess maybe, Sridhar, in terms of what you're seeing with some of the kind of first-mover customers that are seeing an opportunity with Snowflake to kind of attack a much broader data estate, what are you seeing in terms of that data volume uplift, kind of that put and take from storage to incremental services that you're able to unlock?

Question: Aleksandr Zukin - Wolfe Research LLC - Analyst : Perfect. And then maybe just a follow-up, Mike, for you. Can you maybe talk through some of the sales changes, whether in terms of performance management, in terms of should we be thinking about any incremental conservatism as we look at our models for next year versus what seems to be an improving budget backdrop spending environment potentially going into next year with some of your largest verticals like finserv and tech? And maybe anything we should take into account as we look at our models for next year?

Question: Aleksandr Zukin - Wolfe Research LLC - Analyst : Perfect. Thank you guys. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 20, 2024 / 10:00PM, SNOW.N - Q3 2025 Snowflake Inc Earnings Call

Question: Bradley Sills - BofA Securities - Analyst : Great. Thank you so much. A question for you, Sridhar. I couldn't help but notice some of the comments you made on the strength you're seeing with AWS. I'd love to get an update from you on kind of where the incremental focus has been on with the big hyperscaler partners and go-to-market. It seems to be having a real positive impact.

Question: Bradley Sills - BofA Securities - Analyst : That's great to hear. And then one for you, Mike, if I could. You've said in the past that the strength you're seeing this year, new signings of new workloads and things like Snowpark and Cortex are going to lead to some consumption ramp heading into next year. Would just love to get an update from you on how you see that ramp heading into next year, just given it sounds like you're seeing some real positive momentum on the new product side.