Date: 2026-04-03 Quarter: Q4 FY25 (DB) = Q4 FY2026 (Snowflake), ended January 31, 2026 Reported: February 25, 2026 Market cap: ~52.4B|EV/TTMRev: 10.7x|Revenuegrowth : 30.1Stockprice: 153 (as of 2026-04-02)
Snowflake delivered a strong Q4 with revenue re-accelerating to 30.1% YoY, RPO surging 42% (second consecutive acceleration quarter), NRR stabilizing at 125%, and non-GAAP operating margin expanding to 11.0%. The leading indicator divergence — RPO +42% vs revenue +30% — is the single most important signal and argues for continued revenue re-acceleration. The quarter was better than I expected on almost every metric. What gives me pause: management refused to update AI ARR for the second consecutive quarter (a red flag when the growth narrative is AI-driven), non-GAAP gross margin compressed another 100bps, and GAAP losses remain staggering at $1.33B for the year. At ~10.7x EV/TTM revenue for a 30% grower with accelerating bookings, the risk-reward tilts positive.
Conviction: 3.5/5 — lean-positive. The RPO divergence, customer adds (+40%), and $10M+ customer growth (+56%) are too bullish to ignore. SBC and competitive concerns cap conviction.
| Criterion | Threshold | SNOW Q4 FY25 | Result |
|---|---|---|---|
| Revenue YoY growth | >30% (>40% preferred) | 30.1% | PASS (borderline) |
| Gross margin | >60% (>70% preferred) | 66.8% GAAP / 72.0% Non-GAAP | PASS |
| Revenue per quarter | >$50M | $1,284M | PASS |
| Data availability | 4+ quarters | 16 quarters | PASS |
| Share dilution | <10% annual | ~3.3% gross, ~1% net of buybacks | PASS |
| GAAP profitability trajectory | Improving or positive | Op margin: -39.2% to -24.8% (+14.4pp YoY) | PASS (improving) |
Gate: PASS
| Factor | Rating | Detail |
|---|---|---|
| Growth | Adequate | 30.1% YoY total revenue, 30.0% product revenue. At the 30% threshold, not above it. Guided +27% FY2027 (includes ~1pp Observe). Organic growth ~26%. |
| Trajectory | Accelerating | Re-accelerated from 25.8% trough (Q1) through 31.8%, 28.7%, 30.1%. RPO accelerated to +42% for second straight quarter. Net new customers +40% YoY. 10M + customers + 5671.1M vs $44.7M year-ago). |
| Margins | Mid | GAAP GM 66.8% (+0.6pp YoY). Non-GAAP GM 72.0% (-1.0pp YoY — AI workload dilution). Non-GAAP op margin 11.0% (+2.0pp YoY), 10.5% full-year (+450bps). SBC 31.4% of Q4 revenue (34.1% FY), declining. |
| Dominance | Strong | Gartner Leader. 790 Forbes G2000 customers. 13,300+ total. Largest deal in history (400M + TCV), 7nine − figurecontracts.ButDatabricksclosinggap( 3.7B ARR vs SNOW $4.7B); mindshare fell 22.5% to 16.1%. Contested leadership. |
| Valuation | Fair-to-Cheap | EV/TTM Rev 10.7x vs ~17.6x one year ago. EV/Forward Rev ~8.4x on guided FY2027. Stock 45% below 52-week high. Cheapest on own history in 3+ years. Growth-adjusted (0.36x) comparable to MDB, cheaper than DDOG, NET, PLTR. |
| Special | Present | AI product inflection: 9,100+ Cortex accounts, 2,500 Intelligence (doubled QoQ in 3 months), 4,400 Cortex Code. RPO +42% vs revenue +30% = classic bullish divergence. NRR inflection after 13-quarter decline. Investor Day catalyst June 2026. |
| | Q1_FY22 | Q2_FY22 | Q3_FY22 | Q4_FY22 | Q1_FY23 | Q2_FY23 | Q3_FY23 | Q4_FY23 | Q1_FY24 | Q2_FY24 | Q3_FY24 | Q4_FY24 | Q1_FY25 | Q2_FY25 | Q3_FY25 | Q4_FY25 | | | Mar-22 | Jun-22 | Sep-22 | Dec-22 | Mar-23 | Jun-23 | Sep-23 | Dec-23 | Mar-24 | Jun-24 | Sep-24 | Dec-24 | Mar-25 | Jun-25 | Sep-25 | Dec-25 | |---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---| | Rev ($m) | 422 | 497 | 557 | 589 | 624 | 674 | 734 | 775 | 829 | 869 | 942 | 987 | 1,042 | 1,145 | 1,213 | 1,284 | | YoY % | -- | -- | -- | -- | 47.6 | 35.6 | 31.8 | 31.5 | 32.9 | 28.9 | 28.3 | 27.4 | 25.8 | 31.8 | 28.7 | 30.1 | | QoQ % | -- | 17.7 | 12.0 | 5.7 | 5.9 | 8.1 | 8.9 | 5.5 | 7.0 | 4.8 | 8.4 | 4.7 | 5.6 | 9.9 | 5.9 | 5.9 | | GM% [GAAP] | 65.0 | 65.2 | 65.8 | 65.1 | 66.4 | 67.6 | 68.8 | 68.8 | 67.1 | 66.8 | 65.9 | 66.2 | 66.5 | 67.5 | 67.8 | 66.8 | | OpMgn% [GAAP] | -44.7 | -41.8 | -37.0 | -40.7 | -43.8 | -42.3 | -35.5 | -35.6 | -42.1 | -40.9 | -38.8 | -39.2 | -42.9 | -29.7 | -27.2 | -24.8 | | NetMgn% [GAAP] | -39.3 | -44.8 | -36.1 | -35.2 | -36.2 | -33.7 | -29.2 | -21.9 | -38.3 | -36.5 | -34.4 | -33.2 | -41.3 | -26.0 | -24.2 | -24.1 | | EPS [GAAP] | -0.53 | -0.70 | -0.63 | -0.64 | -0.70 | -0.69 | -0.65 | -0.51 | -0.95 | -0.95 | -0.98 | -0.99 | -1.29 | -0.89 | -0.87 | -0.90 | | SBC % Rev | 40.8 | 42.1 | 41.1 | 42.6 | 42.4 | 44.5 | 40.6 | 39.4 | 40.1 | 41.0 | 38.6 | 43.4 | 36.4 | 35.3 | 34.0 | 31.4 |
| Q4_FY24 | Q4_FY25 | FY24 (full) | FY25 (full) | |
|---|---|---|---|---|
| GM% [Non-GAAP] | 73.0% | 72.0% | 73% | 72% |
| Product GM% [Non-GAAP] | 76% | 75% | 76% | 75.8% |
| OpMgn% [Non-GAAP] | 9.0% | 11.0% | 6.4% | 10.5% |
| Non-GAAP EPS (dil) | $0.30 | $0.32 | $0.83 | $1.25 |
| FCF ($m) | 415 | 765 | 884 | 1,120 |
| FCF Margin | 42.1% | 59.6% | 24.4% | 23.9% |
| Adj. FCF Margin | 42.9% | 60.9% | 26.0% | 25.5% |
Going into Q4, based on Q3 FY25 results and the trajectory through FY25:
| Metric | Prior Belief | Actual | Verdict |
|---|---|---|---|
| Total revenue | ~1, 260−1,280M (~28-30% YoY) | $1,284M (+30.1% YoY) | Beat -- re-acceleration to 30%+ confirmed |
| Product revenue | ~1, 200−1,220M | $1,226.6M (+30.0% YoY) | In line to slight beat |
| RPO | Growth ~35-38% (continuing acceleration) | $9.77B (+42% YoY) | Significantly exceeded -- 42% much stronger |
| NRR | Stabilization at 124-125% | 125% | Met -- "no decline" confirmed |
| Non-GAAP op margin | ~10-11% quarterly | 11.0% | Met -- top of range |
| Non-GAAP gross margin | ~72-73% | 72.0% | At low end -- AI dilution continuing |
| Net new customers | ~600-650 (seasonal Q4 strength) | 740 (+40% YoY) | Significantly exceeded -- record Q4 |
| $10M+ customers | ~48-52 | 56 (+56% YoY) | Exceeded -- large enterprise expansion accelerating |
| FCF | Seasonal strength, ~$500-600M | $765M (60% margin) | Significantly exceeded |
| AI adoption metrics | Growth from Q3 levels; AI ARR update | 9,100 accounts, 2,500 Intelligence, 4,400 Cortex Code | Strong adoption, but AI ARR deflected -- negative surprise |
| FY2027 guidance | ~$5.4-5.6B product rev (+24-27%) | $5,660M (+27%) | At high end -- guide may be conservative given RPO |
| SBC trajectory | Continued decline, guided ~30% | 31.4% Q4, 34.1% FY, guided 27% FY27 | On track -- most aggressive commitment yet |
Positive surprises:
RPO at +42% is the quarter's marquee number. I expected 35-38% and got 42% for the second consecutive acceleration quarter. The $400M+ largest-ever deal and 7 nine-figure contracts (vs 2 prior year) show enterprise AI commitments translating to massive multi-year obligations. RPO/TTM revenue is now 2.08x -- Snowflake has over 2 years of revenue backlog visible today. This is the strongest forward signal the company has ever produced.
Net new customers at 740 (+40% YoY) broke records. I expected 600-650. The new logo engine is firing on all cylinders despite the consumption model's inherent sales complexity. 2,332 for the full year -- strongest year ever. This matters because new logos are the base on which future expansion compounds.
FCF of 765M(1,120M annual) demonstrates real cash economics. Q4 seasonal cash collection was exceptional. The business is now generating $1.1B+ in annual FCF, covering the $873M buyback program while still having cash left.
GAAP operating margin improved to -24.8% -- best ever. Up 14.4pp YoY. The combination of revenue scale and operating leverage (including the 200-person AI-driven RIF) is working. At this trajectory, GAAP breakeven is plausible within 3-4 years.
Negative surprises:
AI ARR non-disclosure for the second consecutive quarter. Two analysts asked directly. Both times management deflected -- Ramaswamy gave a Cortex Code qualitative narrative, Robbins pivoted to FCF mechanics. When a company stops reporting a previously disclosed metric, the most likely reason is the number doesn't look as good as the narrative. The $100M AI ARR hit "ahead of schedule" in Q3 was the last quantified update. I flag this as a meaningful credibility concern.
Non-GAAP gross margin compression continued. 73% to 72% YoY at the total level. Product gross margin 76% to 75.8% to guided 75%. Management's response was candid: AI margins are lower, growth comes first, optimization happens later. This is the right strategic call, but it means the margin profile is degrading while the narrative claims improvement.
Sequential QoQ revenue growth was flat at 5.9% for the second consecutive quarter. Despite a seasonally strong Q4 and record bookings, sequential dollar adds were $71.1M -- decent but the QoQ percentage didn't accelerate. This suggests consumption velocity isn't yet matching the bookings momentum.
| Metric | Q4_FY24 | Q4_FY25 | YoY Delta |
|---|---|---|---|
| Revenue YoY | 27.4% | 30.1% | +2.7pp |
| RPO YoY | -- | 42% | -- |
| Net New Customers | 529 | 740 | +40% |
| $10M+ Customers | 36 | 56 | +56% |
| Deferred Rev (current) | $2,580M | $3,347M | +30% |
RPO growing at 42% vs revenue at 30% is a 12pp positive divergence. In a consumption-based model, RPO represents contracted minimums -- the floor, not the ceiling. The divergence has been sustained for at least two quarters and is widening. This is a textbook bullish divergence pattern that historically precedes revenue re-acceleration.
The $10M+ customer cohort growing at 56% vs total revenue at 30% -- a 26pp divergence -- shows the largest accounts are expanding at nearly 2x the company growth rate. This concentration of growth among the highest-value customers is a strong platform signal.
NRR at 125% is stabilized after 13 quarters of decline from ~158%. CFO's "no decline" framing is encouraging. But 125% means existing customers are expanding at roughly the company's revenue growth rate -- adequate for sustaining growth, but not the expansion engine it once was. For NRR to be a positive catalyst (not just neutral), it needs to move to 130%+.
Non-GAAP GM compressed from 73% to 72% YoY. Product GM from 76% to 75.8% (FY), guided 75%. If AI workloads grow to 20-30% of revenue over the next 2-3 years, and they carry materially lower margins, total GM could compress to 68-70%. Management has been transparent about this trade-off. The key question is whether the operating margin lever (12.5% guided FY27, up from 10.5%) can offset gross margin headwinds.
| Metric | Current | 1Y Ago (est.) | Peer Median | Assessment |
|---|---|---|---|---|
| EV/TTM Revenue | 10.7x | ~17.6x | ~12-15x (DDOG, NET) | Cheap vs own history and peers |
| EV/TTM Gross Profit (GAAP) | 15.9x | ~26x | -- | Reasonable for growth rate |
| EV/TTM FCF | 44.6x | ~60x+ | -- | Rich on trailing; ~37x on FY2027 guide |
| Non-GAAP P/E (TTM) | ~122x | ~200x+ | -- | Rich but compressing fast |
| EV/Forward Revenue (FY27) | ~8.4x | -- | -- | Attractive for 27% guided growth |
| Market cap | $52.4B | ~$67B | Databricks ~$62B+ (private) | SNOW now cheaper than private Databricks |
Growth-adjusted comparison:
| Company | Rev Growth | EV/Rev | Growth-Adjusted | Non-GAAP OpMgn |
|---|---|---|---|---|
| SNOW | 30% | 10.7x | 0.36x | 10.5% |
| DDOG | ~28% | ~12x | 0.43x | ~27% |
| MDB | ~22% | ~8x | 0.36x | ~18% |
| PLTR | ~36% | ~35x | 0.97x | ~40% |
| NET | ~28% | ~15x | 0.54x | ~12% |
SNOW trades at the cheapest growth-adjusted EV/Revenue in its peer group, on par with MDB. The discount reflects GAAP losses, SBC, and competitive concerns. If RPO-driven re-acceleration materializes and the SBC trajectory holds, the multiple gap to peers should narrow.
Rule of 40: Revenue YoY growth (30.1%) + FCF margin (23.9% full-year) = 54.0. Well above 40.
Secular trend: Enterprise data + AI convergence. Snowflake rides the shift from standalone data warehousing to integrated AI application platforms. The "agentic AI" wave (Snowflake Intelligence, Cortex Code) positions the company at the intersection of data governance and AI deployment.
Platform assessment: Platform, not point solution. Product portfolio spans: core analytics, data engineering (OpenFlow), AI/ML (Cortex suite), agentic AI (Intelligence, Cortex Code), transactional databases (Snowflake Postgres), observability (Observe), and data marketplace. 430+ new capabilities in FY2026. Platform extensibility is strong.
TAM penetration: Under 1% of $500B+ estimated TAM. Not TAM-constrained. Observe acquisition opens $50B+ IT operations market.
Key dynamic: Cortex Code accelerates development on the platform (10x faster pipelines), driving more data into Snowflake, creating more AI workloads, driving more consumption. This flywheel is the thesis. Whether it produces a measurable revenue inflection in FY2027 is the central question.
SBC remains the elephant. 1.6BinFY2026(341.6B on ~$5.9B revenue. The 35.8pp GAAP/non-GAAP operating margin gap is among the widest in enterprise software. Until this narrows below 20pp, GAAP profitability is distant.
Databricks competitive convergence. Growing faster, commanding higher valuation premium, perceived as AI-native. Mindshare decline (22.5% to 16.1%) is the early signal.
Non-GAAP gross margin compression may accelerate. AI workloads carry lower margins. If AI becomes 20-30% of revenue within 2-3 years, GM could compress to 68-70%. Management has explicitly prioritized growth over margin optimization.
AI ARR non-disclosure is a red flag. Management disclosed $100M AI ARR in Q3, then deflected twice on the Q4 call. Until they resume disclosure, this is a trust debit.
December 2025 outage + culture concerns. 13-hour, 10-region outage from a backwards-incompatible schema update. Combined with deteriorating employee sentiment (3.8/5, declining), operational discipline risk under new leadership.
Q1 FY2027 earnings (May 2026). First test of 1, 262−1,267M product revenue guide. Given RPO at +42% and management's "lot of upside" commentary, a beat would establish cadence.
Investor Day (week of June 1, 2026). Multi-year financial targets, AI monetization framework. Could be significant re-rating event if long-term targets exceed consensus.
NRR inflection above 125%. If AI expansion pushes NRR to 128-130%+, it signals a new expansion cycle not priced into estimates.
AI ARR resumption. When management resumes quantifying AI revenue, the number validates or deflates the narrative.
SBC normalization. FY2026 at 34%, guided 27% in FY2027. Each step toward GAAP profitability opens the stock to wider investor base.
Analysis: Atlas | Date: 2026-04-03 | Type: Earnings Review Q4 FY25 | No position held.