Snowflake Inc at Goldman Sachs Communacopia & Technology Conference Summary

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

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : <_ALACRA_META_ABSTRACT>Yes. So can you share with us -- the news in the last 12 months has been a new CEO. You and Frank have been paired up on quite a few occasions. What is it like to have Sridhar? What is he doing at the company? What are the changes?

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : I'm pretty confident that I would not survive. I work hard but this conference the past week, it's just -- working hard but also it's been just very gratifying, fulfilling to see all of our companies come together on stage and having these conversations. Maybe a bit more. Is it fair to say the culture of the company is changing from sales-dominated to equally balanced between sales and engineering? I mean, how would you say --

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : He's in Tokyo as we speak, I believe?

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : Nice, excellent. So Mike, your consumption business model, I mean, any broader trends you'd like to share with us?

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : Okay. And so guidance for second half, you guys -- some of you smiled or I heard some -- Mike usually talks more about consumption trends. He's not saying anything, but I think that smile is --

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : Okay. So guidance for the second half went up, which is good. I mean, rare to see in software, a solid beat and a raise that was more than the magnitude of the beat. But some investors concluded that maybe the magnitude of the beat is slowing down and maybe there was a conclusion. Given the adverse reaction to the stock price, that there is a step down in the growth here of the company. We've all been kind of spoiled by closer to 29%, 30% type product growth, which is good, right? At the same time, you've got several new initiatives, Copilot, Cortex, Document AI. They're not in the guidance. Where could we be surprised if we are surprised?

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : There are so many things in there. You can throw that into an LLM.

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : Yes. And it's not like it's going to stay at 3%. If it could go from 0% to 3%, it's going to go from -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 12, 2024 / 4:30PM, SNOW.N - Snowflake Inc at Goldman Sachs Communacopia & Technology Conference

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : That's good to know, good to know. NER, finally, after going through a rough period because of the macro rate increases, it seems to be stabilizing. It was down a little bit, but it's down a lot less than it has been before. What's driving the stabilization, if you -- if I could indulge in using the term, stabilization?

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : NER, the net expansion rate.

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : Got it. We do have a cRPO question similar in here because it was very solid. But I know that you're involved in the products of the company. And we don't need to get super technical, but the company has a goal for massively increasing the number of new products this year to 11 to 12. It was four last year, two the year prior, and two per year the year prior to that. How is engineering keeping pace with this list?

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : So I think you touched upon this a little bit, but we have Snowpark, we have Cortex and unstructured data contributing to growth this year. Where are we -- and tell us more about your conviction since you're targeting 3%? What are the things that you're seeing from a customer activity consumption standpoint that give you the conviction that the noncore can continue to be a good driver of the business in the years to come?

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : That's great. Can we talk about Cortex? I think there was the case study of Penske Logistics and there was also a financial services call center case study that you talked about. How do you package and price Cortex? Or is it just a way to get customers to consume the platform --

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : Could there be relief when Blackwell comes up? Is that an avenue to potentially lower costs of compute?

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : You should have been here yesterday --

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : Okay. Okay. Well, since you said you're supply constrained, you should have been here yesterday morning at 7:20. Jensen Huang was up on stage and it was crazy, like overflow, overflows, overflows. And he did acknowledge the supply situation, and he said relief's on the way in Q4 --

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : Yes. Yes. It's good for software companies.

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : And what I've been talking about is, it's about time that the whole Gen AI activity percolated up from infrastructure to platforms and applications. I had not planned on asking it, but do you care for -- any thoughts there? I mean, when are we going to see just Gen AI? I think it's been so much of an infrastructure buildout, LLMs, et cetera, et cetera. And I've been of the view that this is going to amount to nothing unless platform companies like you and applications companies can start to do some useful things for end customers. How are you thinking about this, if you have thoughts?

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : Are you guys internally doing anything with Gen AI at all, just exploring use cases?

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : Migration of applications? Or --

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : Okay. From --

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : Got it. And so you're seeing some automation benefits?

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : Okay. So I'll share with you that I've asked this question of other company executives in the last three days or so. Almost everybody has some Gen AI project going on internally. And I think the example of Twilio was very particularly resonant. They've talked about how a project that originally was scheduled for three months with 100 engineers, it seemed too good to be true. But with Gen AI, they got it done in 10 seconds. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 12, 2024 / 4:30PM, SNOW.N - Snowflake Inc at Goldman Sachs Communacopia & Technology Conference And I asked the CFO immediately, so are you going to dial that into the guidance? And she said that ultimately, yes. And I looked at the CEO, and I said, so this has to have some impact on your business. He said it will be material very soon. So it kind of stood out in every company not quite to that magnitude of internal operational cost savings, but it is going to be material, is my --

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : That's amazing. Thank you for sharing that data point. Those are things that -- it's just -- because the question we get from investors, when is this thing going to be returning on the massive investment?

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : Yes. Mike, another thing that I've been leaning towards the view in the last three days or so, we talk a lot about LLMs being trained on unstructured data. But what you have is precious structured data that cannot be the reason why the LLM would hallucinate, right? So have you given thought to how valuable is -- this data that's sitting in Snowflake is incredible. And if you want to train domain-specific elements, this data is going to be accurate. There's no hallucination. It's going to give you good business insights. What are we missing? The market doesn't see Snowflake that way. Snowflake is not unstructured data, the other guys have unstructured data. There's not been a discussion of how your data is going to be valuable.

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : Exactly. Are we at the point -- coming back to growth, are we at the point where the core growth is stabilizing? You have all these new products. Could they be additive to growth? Because Iceberg, Native Apps, Snowpark Container, Streamlit are all going to be -- either they're out or out very soon this year and expected to drive growth next year. So where do we get that inflection point where the core is stabilizing and then you have all these new things that could be additive to growth? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 12, 2024 / 4:30PM, SNOW.N - Snowflake Inc at Goldman Sachs Communacopia & Technology Conference

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : Yes, you talked about in the earnings conference call, your decision to accelerate sales and marketing, hiring in the second half. Tell us more. What drove that thought process? Is it the new products that are coming downstream?

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : And Sridhar is focusing on this, too?

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : So we -- the thing that I hear from investors, he's an engineer. So Frank was the operational sales-oriented leader. And there has not been any conversation with Sridhar that I've had that he did not exhibit an incredible understanding of its customers, the business results. And there's this healthy level of impatience for, let's go get this thing done, right? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 12, 2024 / 4:30PM, SNOW.N - Snowflake Inc at Goldman Sachs Communacopia & Technology Conference

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : Great. Let's talk about -- sorry to jump back and forth, this is such a good conversation with you always. It's always good to have you here. Unistore. Let's talk about Unistore. The thing that was exciting, I think, Summit 2023 if I'm not mistaken. I think it's been a theme for the past couple of Summits. You said less than 10% of customers are using Unistore, and you've got revenue contribution target for fiscal '27. Why has it taken that long and could it be even better than what we're --

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : Does everybody know what Unistore is? I don't want to go into a deep --

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : That's great, that's great. And to just round out the discussion on that, you talked about the sales incentive structure. We talked about how gathering new logos is going to be a focus. We also launched a new program at the start of the fiscal year where you're going to be shifting a certain percentage of the compensation being driven by consumption. Talk to us more about how that is playing out. Are you satisfied with where we are? How long of a room for improvement do we have for that trajectory?

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : Okay. So I promised there was an RPO question. RPO has been outpacing cRPO the last three quarters by a healthy magnitude, right? That gap only continues to widen. What's driving all of this outperformance?

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : You guys are throwing around $100 million deals like it's like a common --

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : Yes. Yes. What is driving these big commitments? I mean, I looked at the backlog, $5.2 billion. I don't think many companies of your size, if any, have that kind of backlog relative to your revenue. What's going on?

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : Have you been easing on your procurement?

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : Yes, that's great. I wanted to ask you since you brought up the vendors in pricing and procurement. Where are you in understanding how much capital you need to put in? I know you've guided to lower margins a while ago. Where are you in understanding how much investment the company needs? At what point could we start to see an abatement and recouping of returns, investments in GPUs that you put in?

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : Okay, good to know. Let's talk about Iceberg tables. How is it playing out? I know you had some thoughts on -- besides a whole bunch of other factors, Jimmy Sexton was right to correct me, he said, it's not just Iceberg, but several other factors that go into the self-induced compression to the revenue growth rate. How -- if you were to just isolate Iceberg tables out, what is the actual demand for Iceberg? And is it playing out per your plan or could it be a little bit slower or faster?

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : Got it. We just have a minute. And if there's one question, we can take one question. And if not, Mike, I just want to give you the opportunity to close the presentation by opining on what do you think is missing from an investor perspective? What are we getting wrong with our assessment of Snowflake stock? Not me. I think I have the right assessment. I'd say so.

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : No, no, not the price. Not the --

Question: Kasthuri Rangan - Goldman Sachs & Company, Inc. - Analyst : Got it. Well, on that note, can we give a round of applause for Michael Scarpelli? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 12, 2024 / 4:30PM, SNOW.N - Snowflake Inc at Goldman Sachs Communacopia & Technology Conference