Snowflake’s third quarter results outpaced Wall Street’s revenue and profit expectations, but the market responded negatively, reflecting concerns about the sustainability of recent growth trends. Management attributed the quarter’s performance to strong enterprise adoption of AI-driven offerings, particularly the rapid uptake of Snowflake Intelligence, and highlighted robust new customer additions. CEO Sridhar Ramaswamy emphasized that AI accounted for a significant portion of bookings, with 28% of all use cases deployed in the quarter incorporating AI. He also acknowledged that a hyperscaler outage affected revenue slightly, but maintained that the company’s core business remained resilient and operationally disciplined.
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Snowflake (SNOW) Q3 CY2025 Highlights:
- Revenue: $1.21 billion vs analyst estimates of $1.19 billion (28.7% year-on-year growth, 2.4% beat)
- Adjusted EPS: $0.35 vs analyst estimates of $0.31 (12.5% beat)
- Adjusted Operating Income: $131.3 million vs analyst estimates of $108.2 million (10.8% margin, 21.3% beat)
- Product Revenue Guidance for Q4 CY2025 is $1.20 billion at the midpoint
- Operating Margin: -27.2%, up from -38.8% in the same quarter last year
- Customers: 688 customers paying more than $1 million annually
- Net Revenue Retention Rate: 125%, in line with the previous quarter
- Billings: $1.37 billion at quarter end, up 28% year on year
- Market Capitalization: $76.17 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Snowflake’s Q3 Earnings Call
- Sanjit Singh (Morgan Stanley) questioned the sustainability of product revenue growth and the factors behind raised guidance. CFO Brian Robbins explained that the full-year outlook reflects stable customer behavior, with only minor revenue impact from a hyperscaler outage.
- Kirk Materne (Evercore ISI) asked if Snowflake is landing more often with multiple products. CEO Sridhar Ramaswamy said AI is now central to new customer pitches, with tailored demos helping expand initial deals.
- Brent Thill (Jefferies) inquired about the timing of AI project go-lives and their impact on future consumption. Ramaswamy highlighted that accelerating go-lives is a key priority, supported by AI-driven implementation tools.
- Raimo Lenschow (Barclays) brought up the impact of zero-copy data sharing agreements. Ramaswamy responded that such agreements make data collaboration smoother and reinforce Snowflake’s role as a unified data platform.
- Alex Zukin (Wolfe Research) asked about expansion rates and whether large deals create immediate revenue impact. Ramaswamy clarified that large deals do not boost immediate revenue but create long-term growth opportunities.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will closely monitor (1) the pace of AI feature adoption across Snowflake’s customer base, (2) the effectiveness of new migration tools and technology acquisitions in accelerating legacy workload transitions, and (3) the impact of major partnerships—particularly with SAP, Anthropic, and global systems integrators—on new business wins. The trajectory of non-GAAP operating margins amid continued investment in innovation will also be a key signpost for sustained profitable growth.
Snowflake currently trades at $222.55, down from $266.19 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free for active Edge members).
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