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Snowflake Reports Financial Results for the Third Quarter of Fiscal 2022

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  • Product revenue of $312.5 million, representing 110% year-over-year growth

  • Remaining performance obligations of $1.8 billion, representing 94% year-over-year growth

  • 5,416 total customers

  • Net revenue retention rate of 173%

  • 148 customers with trailing 12-month product revenue greater than $1 million

No-Headquarters/BOZEMAN, Mont., December 01, 2021--(BUSINESS WIRE)--Snowflake (NYSE: SNOW), the Data Cloud company, today announced financial results for its third quarter of fiscal 2022, ended October 31, 2021.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20211201006020/en/

Snowflake FY22 Q3 Earnings Infographic (Graphic: Snowflake)

Revenue for the quarter was $334.4 million, representing 110% year-over-year growth. Product revenue for the quarter was $312.5 million, representing 110% year-over-year growth. Remaining performance obligations were $1.8 billion, representing 94% year-over-year growth. Net revenue retention rate was 173% as of October 31, 2021. The company now has 5,416 total customers and 148 customers with trailing 12-month product revenue greater than $1 million. See the section titled "Key Business Metrics" for definitions of product revenue, remaining performance obligations, net revenue retention rate, total customers, and customers with trailing 12-month product revenue greater than $1 million.

"Snowflake saw momentum accelerate in Q3, with product revenue growing 110% year-on-year to $312.5 million. Continued international expansion during the quarter resulted in product revenue from the EMEA and APJ regions up 174% and 219% year-on-year, respectively," said Frank Slootman, Chairman and CEO, Snowflake. "Our vertical industry focus is an important evolution of our selling motion and Snowflake continues to see broad industry adoption."

Third Quarter Fiscal 2022 GAAP and Non-GAAP Results:

The following table summarizes our financial results for the third quarter of fiscal 2022:

Third Quarter Fiscal 2022

GAAP Results

Third Quarter Fiscal 2022

Non-GAAP Results(1)

Amount

(millions)

Year/Year

Growth

Product revenue

$312.5

110%

Amount

(millions)

Margin

Amount

(millions)

Margin

Product gross profit

$220.2

70%

$233.2

75%

Operating income (loss)

($157.3)

(47%)

$8.5

3%

Net cash provided by operating activities

$15.5

Free cash flow

$9.5

3%

Adjusted free cash flow

$21.5

6%

(1) We report non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. See the section titled "Statement Regarding Use of Non-GAAP Financial Measures" for an explanation of non-GAAP financial measures, and the table titled "GAAP to Non-GAAP Reconciliations" for a reconciliation of GAAP to non-GAAP financial measures.

Note: Fiscal year ends January 31. Numbers are rounded for presentation purposes.

Financial Outlook:

Our guidance includes GAAP and non-GAAP financial measures.

The following table summarizes our guidance for the fourth quarter of fiscal 2022:

Fourth Quarter Fiscal 2022

GAAP Guidance

Fourth Quarter Fiscal 2022

Non-GAAP Guidance(1)

Amount

(millions)

Year/Year

Growth

Product revenue

$345 - $350

94 - 96%

Margin

Operating income

1%

Amount

(millions)

Weighted-average shares used in computing net income per share attributable to common stockholders - diluted(2)

358

(1) We report non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. See the section titled "Statement Regarding Use of Non-GAAP Financial Measures" for an explanation of non-GAAP financial measures.

(2) We may have a non-GAAP net income for the fourth quarter of fiscal 2022. As a result, we are presenting the weighted-average shares used in computing net income per share attributable to common stockholders - diluted in the non-GAAP column of the table above, giving effect to all dilutive securities (stock options, restricted stock units, and employee stock purchase rights under our 2020 Employee Stock Purchase Plan). These dilutive securities would be excluded from the weighted-average shares used in computing net loss per share attributable to common stockholders - diluted if we are in a non-GAAP net loss position.

The following table summarizes our guidance for the full-year fiscal 2022:

Full-Year Fiscal 2022

GAAP Guidance

Full-Year Fiscal 2022

Non-GAAP Guidance(1)

Amount

(millions)

Year/Year

Growth

Product revenue

$1,126 - $1,131

103 - 104%

Margin

Product gross profit

74%

Operating loss

(4%)

Adjusted free cash flow

8%

Amount

(millions)

Weighted-average shares used in computing net income per share attributable to common stockholders - diluted(2)

357

(1) We report non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. See the section titled "Statement Regarding Use of Non-GAAP Financial Measures" for an explanation of non-GAAP financial measures.

(2) We may have a non-GAAP net income for full-year fiscal 2022. As a result, we are presenting the weighted-average shares used in computing net income per share attributable to common stockholders - diluted in the non-GAAP column of the table above, giving effect to all dilutive securities (stock options, restricted stock units, and employee stock purchase rights under our 2020 Employee Stock Purchase Plan). These dilutive securities would be excluded from the weighted-average shares used in computing net loss per share attributable to common stockholders - diluted if we are in a non-GAAP net loss position.

A reconciliation of non-GAAP guidance measures to corresponding GAAP guidance measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, expenses that may be incurred in the future. Stock-based compensation expense-related charges, including employer payroll tax-related items on employee stock transactions, are impacted by the timing of employee stock transactions, the future fair market value of our common stock, and our future hiring and retention needs, all of which are difficult to predict and subject to constant change. We have provided a reconciliation of GAAP to non-GAAP financial measures in the financial statement tables for our historical non-GAAP financial results included in this press release. Our fiscal year ends January 31, and numbers are rounded for presentation purposes.

Conference Call Details

We will host a conference call today, beginning at 3 p.m. Mountain Time on December 1, 2021. Investors and participants can register for the call in advance by visiting http://www.directeventreg.com/registration/event/2278651. After registering, a confirmation will be sent via email, including dial-in details and unique conference call access codes required for call entry.

The call will also be webcast live on the Snowflake Investor Relations website.

An audio replay of the conference call and webcast will be available two hours after its completion and will be accessible for 30 days on the Snowflake Investor Relations website.

Investor Presentation Details

An investor presentation providing additional information and analysis can be found at https://investors.snowflake.com.

Statement Regarding Use of Non‑GAAP Financial Measures

We report the following non-GAAP financial measures, which have not been prepared in accordance with generally accepted accounting principles in the United States (GAAP), in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

  • Product gross profit, Operating income (loss), and Net income (loss). Our non-GAAP product gross profit, operating income (loss), and net income (loss) measures exclude the effect of stock-based compensation expense-related charges, including employer payroll tax-related items on employee stock transactions, amortization of acquired intangibles, expenses associated with acquisitions and strategic investments, and the related income tax effect of these adjustments. We believe the presentation of operating results that exclude these non-cash or non-recurring items provides useful supplemental information to investors and facilitates the analysis of our operating results and comparison of operating results across reporting periods.

  • Free cash flow and Adjusted free cash flow. Free cash flow is defined as net cash provided by (used in) operating activities reduced by purchases of property and equipment and capitalized internal-use software development costs. Adjusted free cash flow is defined as free cash flow plus (minus) net cash paid (received) on payroll tax-related items on employee stock transactions. Prior to the fiscal quarter ended April 30, 2021, adjusted free cash flow was defined as free cash flow plus cash paid on only employer payroll tax-related items on employee stock transactions. Starting with the fiscal quarter ended April 30, 2021, adjusted free cash flow is defined to also exclude the effects of employee payroll tax-related items on employee stock transactions, which are generally pass-through transactions that are expected to have a net zero impact on free cash flow over time, but that may impact free cash flow in any given fiscal quarter due to differences between the time that we receive funds from our employees and the time we remit those funds to applicable tax authorities. We believe that excluding the effects of these employee payroll tax-related items will enhance stockholders' ability to evaluate our free cash flow performance, including on a quarter-over-quarter basis. The impact of excluding employee payroll tax-related items on employee stock transactions from our definition of adjusted free cash flow was not significant for any prior periods. As a result, we have not restated adjusted free cash flow measures for any periods prior to the quarter ended April 30, 2021. Free cash flow margin and adjusted free cash flow margin are calculated as free cash flow or adjusted free cash flow as a percentage of revenue. We believe these measures provide useful supplemental information to investors because they are indicators of the strength and performance of our core business operations.

We use these non-GAAP financial measures internally for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. Our presentation of non-GAAP financial measures may not be comparable to similar measures used by other companies. We encourage investors to carefully consider our results under GAAP, as well as our supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand our business. Please see the tables included at the end of this release for the reconciliation of GAAP to non-GAAP results.

Key Business Metrics

  • Product Revenue. Product revenue is a key metric for us because we recognize revenue based on platform consumption, which is inherently variable at our customers’ discretion, and not based on the amount and duration of contract terms. Product revenue is primarily derived from the consumption of compute, storage, and data transfer resources, which are consumed by customers on our platform as a single, integrated offering. Customers have the flexibility to consume more than their contracted capacity during the contract term and may have the ability to roll over unused capacity to future periods, generally upon the purchase of additional capacity at renewal. Our consumption-based business model distinguishes us from subscription-based software companies that generally recognize revenue ratably over the contract term and may not permit rollover. Because customers have flexibility in the timing of their consumption, which can exceed their contracted capacity or extend beyond the original contract term in many cases, the amount of product revenue recognized in a given period is an important indicator of customer satisfaction and the value derived from our platform. Product revenue excludes our professional services and other revenue.

  • Remaining Performance Obligations. Remaining performance obligations (RPO) represent the amount of contracted future revenue that has not yet been recognized, including both deferred revenue and non-cancelable contracted amounts that will be invoiced and recognized as revenue in future periods. RPO excludes performance obligations from on-demand arrangements and certain time and materials contracts that are billed in arrears. RPO is not necessarily indicative of future product revenue growth because it does not account for the timing of customers’ consumption or their consumption of more than their contracted capacity. Moreover, RPO is influenced by a number of factors, including the timing of renewals, the timing of purchases of additional capacity, average contract terms, seasonality, and the extent to which customers are permitted to roll over unused capacity to future periods, generally upon the purchase of additional capacity at renewal.

  • Total Customers. We count the total number of customers at the end of each period. For purposes of determining our customer count, we treat each customer account, including accounts for end-customers under a reseller arrangement, that has at least one corresponding capacity contract as a unique customer, and a single organization with multiple divisions, segments, or subsidiaries may be counted as multiple customers. For purposes of determining our customer count, we do not include customers that consume our platform only under on-demand arrangements. Our customer count is subject to adjustments for acquisitions, consolidations, spin-offs, and other market activity.

  • Net Revenue Retention Rate. To calculate net revenue retention rate, we first specify a measurement period consisting of the trailing two years from our current period end. Next, we define as our measurement cohort the population of customers under capacity contracts that used our platform at any point in the first month of the first year of the measurement period. Starting with the fiscal quarter ended October 31, 2021, the cohorts used to calculate net revenue retention rate include end-customers under a reseller arrangement. We then calculate our net revenue retention rate as the quotient obtained by dividing our product revenue from this cohort in the second year of the measurement period by our product revenue from this cohort in the first year of the measurement period. Any customer in the cohort that did not use our platform in the second year remains in the calculation and contributes zero product revenue in the second year. Our net revenue retention rate is subject to adjustments for acquisitions, consolidations, spin-offs, and other market activity. Since we will continue to attribute the historical product revenue to the consolidated contract, consolidation of capacity contracts within a customer’s organization typically will not impact our net revenue retention rate unless one of those customers was not a customer at any point in the first month of the first year of the measurement period.

  • Customers with Trailing 12-Month Product Revenue Greater than $1 Million. To calculate the number of customers with trailing 12-month product revenue greater than $1 million, we count the number of customers under capacity arrangements that contributed more than $1 million in product revenue in the trailing 12 months. Our customer count is subject to adjustments for acquisitions, consolidations, spin-offs, and other market activity.

Use of Forward‑Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding our performance, including but not limited to statements in the section titled "Financial Outlook." The forward-looking statements contained in this release and the accompanying oral presentation are subject to known and unknown risks, uncertainties, assumptions, and other factors that may cause actual results or outcomes to be materially different from any future results or outcomes expressed or implied by the forward-looking statements. These risks, uncertainties, assumptions, and other factors include, but are not limited to, those related to our business and financial performance, the effects of COVID-19 or other public health crises on our business, results of operations, and financial condition, our ability to attract and retain customers, our ability to develop new products and services and enhance existing products and services, our ability to respond rapidly to emerging technology trends, our ability to execute on our business strategy, including our strategy related to the Data Cloud, our ability to increase and predict customer consumption of our platform, our ability to compete effectively, and our ability to manage growth.

Further information on these and additional risks, uncertainties, and other factors that could cause actual outcomes and results to differ materially from those included in or contemplated by the forward-looking statements contained in this release are included under the caption "Risk Factors" and elsewhere in our Form 10-Q for the fiscal quarter ended July 31, 2021 and other filings and reports we make with the Securities and Exchange Commission from time to time, including our Form 10-Q that will be filed for the fiscal quarter ended October 31, 2021.

Moreover, we operate in a very competitive and rapidly changing environment, and new risks may emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results or outcomes to differ materially from those contained in any forward-looking statements we may make. Forward-looking statements speak only as of the date the statements are made and are based on information available to us at the time those statements are made and/or management's good faith belief as of that time with respect to future events. Except as required by law, we undertake no obligation, and do not intend, to update these forward-looking statements, to review or confirm analysts’ expectations, or to provide interim reports or updates on the progress of the current financial quarter.

About Snowflake

Snowflake enables every organization to mobilize their data with Snowflake's Data Cloud. Customers use the Data Cloud to unite siloed data, discover and securely share data, and execute diverse analytic workloads. Wherever data or users live, Snowflake delivers a single data experience that spans multiple clouds and geographies. Thousands of customers across many industries, including 223 of the 2021 Fortune 500 as of October 31, 2021, use Snowflake Data Cloud to power their businesses. Learn more at snowflake.com.

Source: Snowflake Inc.

Snowflake Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

(unaudited)

Three Months Ended October 31,

Nine Months Ended October 31,

2021

2020

2021

2020

Revenue

$

334,441

$

159,624

$

835,553

$

401,584

Cost of revenue

120,786

66,681

324,253

159,684

Gross profit

213,655

92,943

511,300

241,900

Operating expenses:

Sales and marketing

190,971

134,727

540,678

325,267

Research and development

115,900

74,138

343,783

143,949

General and administrative

64,055

53,532

189,846

116,224

Total operating expenses

370,926

262,397

1,074,307

585,440

Operating loss

(157,271

)

(169,454

)

(563,007

)

(343,540

)

Interest income

1,985

1,517

6,787

5,654

Other income (expense), net

1,609

(519

)

9,867

(1,561

)

Loss before income taxes

(153,677

)

(168,456

)

(546,353

)

(339,447

)

Provision for income taxes

1,179

433

1,442

720

Net loss

$

(154,856

)

$

(168,889

)

$

(547,795

)

$

(340,167

)

Net loss per share attributable to common stockholders - basic and diluted

$

(0.51

)

$

(1.01

)

$

(1.84

)

$

(3.63

)

Weighted-average shares used in computing net loss per share attributable to common stockholders - basic and diluted

303,006,685

166,868,200

297,435,637

93,763,599

Snowflake Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

October 31, 2021

January 31, 2021

Assets

Current assets:

Cash and cash equivalents

$

935,217

$

820,177

Short-term investments

2,955,613

3,087,887

Accounts receivable, net

254,243

294,017

Deferred commissions, current

42,896

32,371

Prepaid expenses and other current assets

120,288

66,200

Total current assets

4,308,257

4,300,652

Long-term investments

1,211,858

1,165,275

Property and equipment, net

94,377

68,968

Operating lease right-of-use assets

184,057

186,818

Goodwill

8,449

8,449

Intangible assets, net

26,167

16,091

Deferred commissions, non-current

101,551

86,164

Other assets

228,755

89,322

Total assets

$

6,163,471

$

5,921,739

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$

10,559

$

5,647

Accrued expenses and other current liabilities

163,238

125,315

Operating lease liabilities, current

25,194

19,650

Deferred revenue, current

759,744

638,652

Total current liabilities

958,735

789,264

Operating lease liabilities, non-current

178,697

184,887

Deferred revenue, non-current

7,132

4,194

Other liabilities

12,225

6,923

Stockholders’ equity

5,006,682

4,936,471

Total liabilities and stockholders’ equity

$

6,163,471

$

5,921,739

Snowflake Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Three Months Ended October 31,

Nine Months Ended October 31,

2021

2020

2021

2020

Cash flows from operating activities:

Net loss

$

(154,856

)

$

(168,889

)

$

(547,795

)

$

(340,167

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization

5,518

2,849

15,586

6,611

Non-cash operating lease costs

8,855

8,503

25,895

24,840

Amortization of deferred commissions

9,667

7,167

26,824

21,233

Stock-based compensation, net of amounts capitalized

144,387

119,141

459,392

157,790

Net amortization of premiums on investments

11,587

891

36,938

1,117

Unrealized gains on strategic investments in equity securities

(455

)

(8,515

)

Other

(247

)

24

2,535

4,073

Changes in operating assets and liabilities, net of effect of business combinations:

Accounts receivable

(16,754

)

(17,908

)

39,142

9,221

Deferred commissions

(18,961

)

(12,995

)

(52,892

)

(27,261

)

Prepaid expenses and other assets

(42,710

)

(28,028

)

(112,798

)

(29,480

)

Accounts payable

869

(963

)

4,591

(3,806

)

Accrued expenses and other liabilities

19,386

11,484

43,106

22,477

Operating lease liabilities

(8,766

)

(6,014

)

(24,758

)

(23,418

)

Deferred revenue

58,018

64,984

124,030

111,739

Net cash provided by (used in) operating activities

15,538

(19,754

)

31,281

(65,031

)

Cash flows from investing activities:

Purchases of property and equipment

(2,282

)

(17,270

)

(12,209

)

(24,018

)

Capitalized internal-use software development costs

(3,788

)

(844

)

(8,612

)

(4,014

)

Cash paid for business combinations, net of cash acquired

(6,035

)

Purchases of intangible assets

(11,182

)

(6,184

)

Purchases of investments

(1,053,763

)

(622,385

)

(3,042,396

)

(1,235,020

)

Sales of investments

14,691

25,195

407,003

28,705

Maturities and redemptions of investments

1,216,206

181,669

2,610,429

371,528

Net cash provided by (used in) investing activities

171,064

(433,635

)

(56,967

)

(875,038

)

Cash flows from financing activities:

Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs

478,573

Proceeds from initial public offering and private placements, net of underwriting discounts and other offering costs (net of reimbursement received from the underwriters)

4,244,620

4,242,284

Proceeds from early exercised stock options

159

Proceeds from exercise of stock options

24,579

10,364

90,444

31,100

Proceeds from issuance of common stock under the employee stock purchase plan

25,829

52,227

Proceeds from repayments of a nonrecourse promissory note

2,090

Repurchases of early exercised stock options

(30

)

Payments of deferred purchase consideration for business combinations

(564

)

(1,164

)

Net cash provided by financing activities

50,408

4,254,420

142,671

4,753,012

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

(194

)

21

Net increase in cash, cash equivalents, and restricted cash

236,816

3,801,031

117,006

3,812,943

Cash, cash equivalents, and restricted cash at beginning of period

715,383

153,888

835,193

141,976

Cash, cash equivalents, and restricted cash at end of period

$

952,199

$

3,954,919

$

952,199

$

3,954,919

Snowflake Inc.

GAAP to Non-GAAP Reconciliations

(in thousands, except percentages)

(unaudited)

Three Months Ended October 31, 2021

GAAP amounts

GAAP amounts as a % of revenue

Stock-based compensation expense-related charges(1)

Amortization of acquired intangibles

Expenses associated with acquisitions and strategic investments

Non-GAAP amounts

Non-GAAP amounts as a % of revenue

Revenue:

Product revenue

$

312,458

93

%

Professional services and other revenue

21,983

7

%

Revenue

334,441

100

%

Year over Year % Growth

110

%

Cost of revenue:

Cost of product revenue

92,292

28

%

$

(12,419

)

$

(567

)

$

$

79,306

24

%

Cost of professional services and other revenue

28,494

8

%

(9,908

)

18,586

5

%

Total cost of revenue

120,786

36

%

(22,327

)

(567

)

97,892

29

%

Gross profit (loss):

Product gross profit

220,166

12,419

567

233,152

Professional services and other gross profit (loss)

(6,511

)

9,908

3,397

Total gross profit

213,655

64

%

22,327

567

236,549

71

%

Product gross margin

70

%

5

%

%

%

75

%

Professional services and other gross margin

(30

%)

45

%

%

%

15

%

Total gross margin

64

%

7

%

%

%

71

%

Operating expenses:

Sales and marketing

190,971

57

%

(54,098

)

136,873

40

%

Research and development

115,900

35

%

(59,693

)

(944

)

55,263

17

%

General and administrative

64,055

19

%

(27,668

)

(411

)

(35

35,941

11

%

Total operating expenses

370,926

111

%

(141,459

)

(1,355

)

(35

)

228,077

68

%

Operating income (loss)

...