Snowflake Earnings: Ready for AI Growth
Here's our initial take on Snowflake's (NYSE: SNOW) fiscal 2025 fourth-quarter financial report.
Key Metrics
Metric | Q4 2024 | Q4 2025 | Change | vs. Expectations |
|---|---|---|---|---|
Revenue | $774.7 million | $986.8 million | 27% | Beat |
Adjusted earnings per share | $0.35 | $0.30 | -14% | Beat |
Adjusted free cash flow | $324.3 million | $423.1 million | 30% | n/a |
Net revenue retention rate | 131% | 126% | -5 pps | n/a |
Beating Expectations
Snowflake was expected to report a big decline in adjusted earnings for the final quarter of fiscal 2025 (ended Jan. 31, 2025). While adjusted EPS still declined by about 14%, that's a far better result than analysts were anticipating. Revenue also came in ahead of expectations as Snowflake maintained a healthy growth rate.
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Snowflake's net revenue retention rate, which measures how much existing customers are expanding spending, was a solid 126%, down a bit from the fourth quarter of 2024. Snowflake did particularly well with its largest customers. The company ended the quarter with 580 customers spending at least $1 million annually on its products, up 28% year over year. Snowflake's total customer count now tops 11,000.
For the first quarter of fiscal 2026, Snowflake expects to grow product revenue by 21% to 22% and produce an adjusted operating margin of 5%. For fiscal 2026, the company sees product revenue rising by 24%.
Immediate Market Reaction
Shares of Snowflake were up about 10% in early after-hours trading following the fourth-quarter report. While the bottom line did decline, the company beat expectations across the board. While the stock has gained in recent months, it went into this earnings report trading down about 59% from its all-time high, which was set in late 2021.
What to Watch
Snowflake expects its product revenue growth rate to accelerate as fiscal 2026 goes on. AI will likely be a driver of this growth as customers adopt Snowflake's platform to support AI workloads. The company expects profit margins to improve this year as well, calling for an adjusted operating margin of 8%.
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Timothy Green has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Snowflake. The Motley Fool has a disclosure policy.
