Snowflake Primer

Snowflake reports Wednesday.

What should we be looking for?

First, as with any $SNOW report, when the report is first released, REMEMBER the big number they tout is NOT overall revenue. It is a SUBSET of revenue (Product Revenue). This is very confusing for many many MANY investors (including myself when I first started following their reports) as I see it misinterpreted EVERYWHERE immediately after the release. This often leads to a big drop right away until people realize it is in fact NOT overall revenue. Ok, on to what to expect…

We have NEVER seen a company like this. I see a lot of people saying they’re overvalued, I ask what they SHOULD be valued at, but nobody has answered… Its easy to say “OVERVALUED”, especially in THIS market
Last Q:
Rev 102% YoY, 15% QoQ
FCF Margin 27% (9% a year ago)

REMEMBER, they told us to expect slower revenue as processing improvements will TEMPORARIALLY limit revenue. THIS IS GOOD. It will drive more workloads; with the Teradata workloads being the icing on the cake. 3-6 month lead time in additional workloads.

Expect this quarter to have a FULL quarter of lower than usual revenue but to expect the impact to be lower over the next few quarters. Based on their past guidance & beats, my model indicates YoY growth between 86% & 99% with 93% being the average.

Forward indicators to watch include >1M customer growth. Last 2 quarters added more than previous 4 COMBINED! Also, watch RPO but YoY here more important to observe than QoQ. QoQ tends to dip this quarter.


RPO on a QoQ basis can suggest problems that don’t exist. Last summer many sold out of SNOW fearing slowing growth because of the RPO growth, which more than recovered the next Quarter. Just restating this as it was a source of much unnecessary angst last year.


A few important points made by Peter Offringa… (Thank you Peter Offringa for your great blog!)which I think are important to keep in mind before SNOW report Q1 – these points helped me to dial back on my expectations for Q1 a bit:

We can expect that Q1 revenue will be impacted by the platform optimizations by at least 10M (as opposed to the $2M from Q4).

There are ‘3’ less days in Q1 than in the other quarters, and this will negatively affect the QoQ growth. So don’t be surprised in QoQ revenue growth is less than usual.

NRR will likely decrease in Q1. NRR is dependent on the increase in spend from existing customers, then it would be impacted by the platform efficiency roll-out. “…management shared that they don’t expect NRR to remain above 170%.”

Good luck to all SNOW investors for next weeks ER!