“Remaining performance obligations of $927.9 million, representing 240% year-over-year growth”
this “remaining performance obligation” is the credit customer bought yet used, this amount will not be logged as revenue, they don’t control how much business spend , so its hard to predict next quarter’s revenue, but it is important to watch this number growing sequentially
I’m not sure this is a fair characterisation both in terms of what is bought up front as credit nor that it will not be logged as revenue.
This is what prepared remarks and Q&A clarifications referring to RPO help characterise this metric as:-
Prepared Remarks:-
We also focus on the remaining performance obligations or RPO. RPO represents all the contracted revenue not yet recognized including both deferred revenue and non-cancelable contracted amounts that will be invoiced and recognized as revenue in future periods. Unlike most SaaS businesses, billings is not a meaningful metric for us because it is less correlated to product revenue due to the variability of consumption…
…Now let’s turn to our results in guidance. For Q3 product revenues were $148 million, representing 115% year-over-year growth. Our remaining performance obligation was $928 million representing 240% year-over-year growth with a weighted average life per multi-year contracts of 2.5 years. This strong performance is driven by our customer base realizing the value of our platform for their existing use cases, while also embracing the Snowflake Data Cloud vision.
As I mentioned earlier, our business model allows our customers to consume their entire contract before the end of the term, which is what we often see. We also continue to see customers willing to make more multi-year commitments with us, which is a direct result of the value our customers can create with us as we continue to scale.
Q&A
Brent Bracelin
And then Mike, just as we think about the RPO momentum this quarter, I mean, much stronger than I think we had kind of thought it would be. And I know you had the benefit of a very large contract last quarter, so what drove the acceleration and kind of new bookings this quarter and that upside in RPO?
Michael Scarpelli
As we’re moving more into large enterprises, large enterprises really want to do multi-year deals. They are not interested in having to go to procurement every year and so we saw a number of large enterprises commit to multi-year deals with us and we think that is going to be a trend that will continue. And I will say it wasn’t until this year that our sales force really started pushing more three-year deals and we’re going to continue to do that going forward in the future.
Tyler Radke
Thank you very much and congratulations on the first quarter here. I wanted to ask you a little bit about the guidance for Q4. Obviously, you saw really strong RPO growth in Q3 and I’m curious if there were any factors that had perhaps a short-term negative impact on the Q4 revenue guidance? I know oftentimes when we sign these big deals, customers through volume based discounts get effectively a lower consumption credit rate. So I’m wondering I guess it’s almost the RPO strength that you saw this quarter and the large commitments that were signed, if that had any type of negative impact on your expected growth rate for revenue in Q4?
Michael Scarpelli
No, you have to remember a lot of that RPO are new deals that we were booking. And as I said before, it takes, customers to pay, we have a lot of big on-prem migrations that are going on and until those ramp up and it could take six months plus, you don’t really see any revenue from that and so most - a lot of that won’t flow through until next fiscal year.
Regards
Ant
