Snowflake reported Q3 FY2024 earnings

Here is how this quarter went versus my prior expectations:

  • Reported Fiscal Q3 2024 on 11/29/23.
  • Product revenue expectation: $692M (8.2% QoQ, 32% YoY), assuming a 3.0% beat.

—> They managed $698.5M (9.1% QoQ, 33.6% YoY), beating their guide by 4% and significantly exceeding my expectation.

  • Q4 new product revenue guide: $727M (5% QoQ, 31% YoY) which I would interpret as $747M (8% QoQ, 35% YoY) and expecting constant QoQ growth.

—> They guided for $718.5M (2.9% QoQ, 29.4% YoY) at the midpoint, quite a bit below my expectation.

  • I would like to see a NRR around 135%.

—> They got 135%

  • I would like to see RPO around $3.7b.

—> They got $3.7b

  • I would like to see total customer growth greater or equal to 4% QoQ and $1M+ customer growth greater than 7.5% QoQ.

—> total customers grew 4.4% and $1M+ customers grew 8.7%, exceeding my expectations.


  1. Q3 total customer growth has a seasonal headwind, where QoQ growth dropped in every year from Q2 to Q3 in the previous four years. That’s why I would have been happy with 4% growth in Q3, even though they managed 4.9% growth in Q2.
  2. $1M+ customers are the most important for future revenue growth (closest correlation)
  3. Global 2000 growth took a breather this Q, but was relatively strong in Q2; small numbers; very lumpy. Also shows some weakness when looking at TTM. On the other hand, this metric will also have to start showing first signs of slowing down at some point (and probably already is) as there are only 2000 companies and they already have 647 of them. So less worrisome, but something to continue to watch.
  • I would like to see market place listings growth around 10%.

—> They grew 8.5%, so less than I expected.

  • I would like to see greater than one stable edge customer growth greater or equal to 9%.

—> They grew 12.5%, so more than I expected.

  • I would like to see an operating income margin around 10%, a net margin around 14% and a free cash flow margin around 15%.

—> These came in at 10%, 12% and 15%, in-line with my expectations.

Overall, I would say very well done, especially the product revenue growth of 9.1% QoQ this quarter was a highlight. Combine that with strong large customer growth numbers and a nice RPO increase, I am very optimistic about the future. However, I was very surprised by the relatively low Q4 guide. There was some mention in the call about Thanksgiving holiday weakness and end-of-year holidays expected weakness, but do they really expect this to have such a large impact? Even if they can beat their guide again by 4% they would decelerate to 7% QoQ growth in Q4. That after having just posted 9.1% and quoting improving consumption trends. Somehow this doesn’t add up for me …

The only other thing I can think of is their delayed impact of customer growth on revenue. They used to quote it around 9 months for new customers to ramp. And 3 quarters ago is when their customer growth dropped to below 5% QoQ for the first time. Unless there is something else wrong, I think though this should just be a short term bump in the road for Snowflake.

So my question to the board:

What do you guys make of this “low” Q4 guide? Ultra-cautious low-ball or bigger-than-I-thought-holiday-impact or just a temporary, delayed impact from lower customer growth 9 months ago or something else wrong?

Thanks a lot,



Q4 is seasonally Snowflake’s weakest quarter due to holidays and vacations. Q4 for them is Nov, Dec, Jan. Includes Thanksgiving, Christmas, New Year’s and many people taking extra PTO around the holidays.

Compare Q4 to previous Q4’s. The guide indicates better performance from last year, meaning a great chance for YoY ACCELERATION, not deceleration.

See my chart below. I’m thinking somewhere in the 32-35% YoY from 31.8% this past quarter.


I no longer track as closely, but remember SNOW having holiday slowness on consumption in past and so I’d expect that would be easy to confirm.

Edit: Finallyfoolin beat me to it… Got caught watching football.



At first glance it might look overly conservative, but consider that last year they grew Q4 product revenue sequentially at 6.2%, slowing from 12.1% in Q3. Assuming a standard beat, they’ll grow closer to 7% sequentially this quarter, reducing the decay further since Q3 sequential growth was 9.1%.

Or putting it simpler, they’re projecting this quarter to be almost synonymous to 2021, where they added ~$47M in product revenue after adding ~$58M the previous quarter.



Or even more simply, consumption based revenue takes a hit during the holidays and that’s a seasonal reality that more traditional subscription models do not experience.