GICS Sector : Technology
Snowflake Inc.provides a cloud-based data platform in the United States and internationally.The company's platform offers Data Cloud, which enables customers to consolidate data into a single source of truth to drive meaningful business insights, build data-driven applications, and share data.
Snowflake Inc.'s Q3 Fiscal Year 2026 earnings call highlighted the company's strong financial performance, with product revenue reaching $1,160,000,000, up 29% year over year. The non-GAAP product gross margin was 75.9%, and non-GAAP operating margin expanded more than 450 basis points year over year to 11%. The actual EPS came out at '0.35' relative to estimates at '0.3116', indicating a positive surprise. The company's product revenue growth is driven by its consumption model, where customers sign deals with a certain amount of slack capacity.
Publication Date: Dec -04
The company added a record 615 new customers, and remaining performance obligations totaled $7,880,000,000, with year-over-year growth accelerating to 37%. The net revenue retention rate remained stable at 125%. Sridhar Ramaswamy emphasized that AI is playing a key role in making the power of data come alive in pitches to new customers, with AI influencing more than 50% of new logo acquisitions.
The company achieved a major milestone: $100,000,000 in AI revenue run rate, achieved one quarter earlier than anticipated. Snowflake Intelligence has seen rapid adoption, with 1,200 customers harnessing next-generation agentic AI capabilities. The AI capabilities are strengthening customer relationships, and the company is seeing customers land with multiple products at once, rather than just the core data warehouse.
Given the company's growth prospects, with analysts estimating next year's revenue growth at 28.1%, the current valuation metrics appear to be pricing in a significant amount of growth. The P/S Ratio stands at 20.1, and the EV/EBITDA is -68.59. While the company's growth trajectory is promising, investors should be cautious about the valuation multiples. The ROE (%) is -54.08, and the ROIC (%) is -30.89, indicating that the company is still in a growth phase and investing heavily.
The company raised its fiscal year guidance by $51 million to $4.446 billion, representing 28% year-over-year growth. For FY 2027, the company will provide guidance on the next call, with consumption after the holiday season being the most important input for FY guidance. The hyperscaler outage impacted revenue by $1-2 million in the quarter, but the company remains confident in its go-to-market motion.
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Cloud-based data warehousing and analytics solutions are expected to grow rapidly due to increasing demand for real-time insights and scalability. Snowflake's solutions cater to various industries, driving adoption and growth.
A cloud-based data warehousing and analytics platform that enables users to store, process, and analyze large amounts of data
A platform for building, deploying, and managing data pipelines and data applications
A platform for data scientists to build, deploy, and manage machine learning models
A platform for securely sharing live data across organizations
A platform for discovering, accessing, and purchasing data from various providers
A cloud-based data visualization and exploration platform
Snowflake's cloud-based data warehousing and analytics platform is highly differentiated, making it difficult for substitutes to emerge.
While Snowflake's customers have some bargaining power due to the availability of alternative cloud-based data warehousing solutions, the company's strong brand and high switching costs mitigate this power.
Snowflake's suppliers, primarily cloud infrastructure providers like AWS and Azure, have limited bargaining power due to the company's ability to negotiate favorable terms and its diversified supplier base.
While the threat of new entrants is moderate due to the high barriers to entry in the cloud-based data warehousing market, Snowflake's strong brand and established customer base provide a competitive advantage.
The cloud-based data warehousing market is highly competitive, with established players like Amazon Redshift, Google BigQuery, and Microsoft Azure Synapse Analytics, leading to a high intensity of rivalry.
| Value | |
|---|---|
| Debt Weight | 5.27% |
| Debt Cost | 3.95% |
| Equity Weight | 94.73% |
| Equity Cost | 8.44% |
| WACC | 8.20% |
| Leverage | 5.56% |
Value: 0.7
Growth: 6.3
Quality: 8.5
Yield: 0.0
Momentum: 6.5
Volatility: 9.7
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Volatility: 3.3
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Volatility: 1.7
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Growth: 9.7
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Volatility: 4.0
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Growth: 8.8
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Value: 5.3
Growth: 0.6
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Yield: 0.0
Momentum: 8.0
Volatility: 1.7
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