Date: 2026-04-06 Quarter: Q4 FY25 (DB) = Q4 FY2026 (Snowflake), ended January 31, 2026 Reported: February 25, 2026 Price: 148.59|Marketcap: 50.9B | EV: ~$48.4B | EV/TTM Rev: 10.3x
The LAND motion that broke my thesis in 2022 has reversed spectacularly. 740 net new customers in Q4 (+40% YoY), record for any quarter, ever. RPO surging +42% — 12 percentage points above revenue growth for a second consecutive quarter. This is a textbook bullish divergence. Revenue re-accelerated to 30.1% YoY after bottoming at 25.8%. Non-GAAP operating margin expanded 450bps to 10.5%.
The problem? SBC is $1.6B/yr (34% of revenue). GAAP operating loss of $1.4B. Management deflected on AI ARR for the second straight quarter — when a company stops giving you a number, the number usually isn't as pretty as the narrative. And non-GAAP gross margins compressed 100bps to 72%.
At ~10.3x EV/TTM revenue for a 30% grower with 42% RPO growth, the stock is historically cheap for SNOW. But the SBC burden means you're paying for real growth with real dilution.
Thesis: Intact — Strengthening. Leading indicators are the strongest since the 2021 hypergrowth era.
| Q | FY22 QoQ | FY23 QoQ | FY24 QoQ | FY25 QoQ |
|---|---|---|---|---|
| Q1 | — | 5.9% | 7.0% | 5.6% |
| Q2 | 17.7% | 8.1% | 4.8% | 9.9% |
| Q3 | 12.0% | 8.9% | 8.4% | 5.9% |
| Q4 | 5.7% | 5.5% | 4.7% | 5.9% |
Q4 FY25's 5.9% QoQ is the best Q4 in three years (vs 4.7% and 5.5%). That's +1.2pp vs same quarter last year. Small? 1 percentage point QoQ annualises to roughly 4% — this matters.
Q2 FY25 at 9.9% was an outlier — best Q2 ever, by a mile. Q3 FY25 at 5.9% was weaker than Q3 FY24's 8.4%. Mixed signals sequentially, but the YoY trend is unmistakable.
| Q | FY22-23 | FY23-24 | FY24-25 |
|---|---|---|---|
| Q1 | 47.6% | 32.9% | 25.8% |
| Q2 | 35.6% | 28.9% | 31.8% |
| Q3 | 31.8% | 28.3% | 28.7% |
| Q4 | 31.5% | 27.4% | 30.1% |
| FY | 35.9% | 29.2% | 29.2% |
After decelerating from 48% to 25.8% over eight straight quarters, growth re-accelerated to 30-32% in Q2-Q4 FY25. The Q4 FY25 YoY of 30.1% vs Q4 FY24's 27.4% is a +270bps acceleration. Full-year FY25 came in at 29.2%, identical to FY24 — deceleration has halted.
| | Q1_FY22 | Q2_FY22 | Q3_FY22 | Q4_FY22 | Q1_FY23 | Q2_FY23 | Q3_FY23 | Q4_FY23 | Q1_FY24 | Q2_FY24 | Q3_FY24 | Q4_FY24 | Q1_FY25 | Q2_FY25 | Q3_FY25 | Q4_FY25 | | | Mar-22 | Jun-22 | Sep-22 | Dec-22 | Mar-23 | Jun-23 | Sep-23 | Dec-23 | Mar-24 | Jun-24 | Sep-24 | Dec-24 | Mar-25 | Jun-25 | Sep-25 | Dec-25 | |---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---| | Rev ($m) | 422 | 497 | 557 | 589 | 624 | 674 | 734 | 775 | 829 | 869 | 942 | 987 | 1,042 | 1,145 | 1,213 | 1,284 | | 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 | | 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 | | 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 | | 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 | FY25 | FY26 Guide | |
|---|---|---|---|---|---|
| GM% [GAAP] | 66.2% | 66.8% | 66.5% | 67.1% | — |
| GM% [Non-GAAP] | 73.0% | 72.0% | 73.0% | 72.0% | 75% (product) |
| OpMgn% [GAAP] | -39.2% | -24.8% | -40.1% | -30.6% | — |
| OpMgn% [Non-GAAP] | 9.0% | 11.0% | 6.4% | 10.5% | 12.5% |
| FCF Margin (FY) | 42.1% | 59.6% | 24.4% | 23.9% | 23% adj |
| SBC % Rev | 43.4% | 31.4% | 40.8% | 34.1% | 27% |
GAAP operating margin improved 14.4pp YoY — the best improvement trajectory since IPO. Non-GAAP operating leverage is real: 6% to 10.5% in one year, guided to 12.5%. The 35.8pp GAAP/Non-GAAP gap is the elephant. SBC trending in the right direction but $1.6B/yr is still staggering.
Non-GAAP GM compression from 73% to 72% is a headwind. AI workloads carry lower margins. Management was explicit: "We will do what is right to drive growth, balance at the op margin level." Product GM guided to 75% for FY27 (was 75.8% FY26). This is the right strategic call but it means the structural margin profile is degrading.
| FY24 | FY25 | |
|---|---|---|
| FCF ($m) | $884 | $1,120 |
| FCF Margin | 24.4% | 23.9% |
| Q4 FCF ($m) | $415 | $765 |
| Share Repurchases | — | $873.5m |
| Remaining Auth. | — | $1.1B |
FCF of $1.12B covers the 873Mbuybackwithroomtospare.Q4seasonalconcentration( > 60600M), net cash is $2.5B — plenty of runway.
This is where SNOW gets interesting. The leading indicator divergence is the single most important thing in this dataset.
| Metric | Q4_FY24 | Q4_FY25 | YoY |
|---|---|---|---|
| Revenue | $987m | $1,284m | +30% |
| RPO | $6,900m | $9,770m | +42% |
| Deferred Rev (current) | $2,580m | $3,347m | +30% |
| Net New Customers | 529 | 740 | +40% |
| $1M+ Customers | 577 | 733 | +27% |
| $10M+ Customers | 36 | 56 | +56% |
| NRR | ~131% | 125% | — |
RPO +42% vs Revenue +30% = 12pp positive divergence.
In a consumption model, RPO represents contracted minimums — the floor, not the ceiling. The gap has been sustained for two consecutive quarters and appears to be widening. RPO/TTM revenue is now 2.08x — over two years of revenue backlog visible today. This is a classic bullish divergence pattern.
**10M + customers + 56400M TCV. The whales are going all-in.
Net new customers +40% — and this is the one that matters most to me personally. In January 2022, I wrote that Snowflake's LAND motion had "downright taken a dive" and I wanted to be "out long before" it flowed through to revenue. I was right — growth decelerated from 48% to 26% over the next 8 quarters. But 740 net new customers in Q4, strongest quarter ever, +40% YoY, 2,332 for the full year — the LAND motion has completely reversed. The thesis I broke on is no longer valid.
NRR at 125% — stabilized after 13 quarters of decline from ~158%. CFO explicitly stated "no decline." This is adequate, not exceptional. At 125%, existing customer expansion runs at roughly the company's revenue growth rate. For NRR to become a positive catalyst, it needs to move to 130%+. But the bleeding has stopped. That's enough for now.
| Metric | Q4 FY25 |
|---|---|
| Total accounts using Snowflake AI | 9,100+ |
| Snowflake Intelligence accounts | ~2,500 (doubled QoQ from ~1,300) |
| Cortex Code customers | 4,400 |
The adoption metrics are impressive — Intelligence doubled in 3 months, Cortex Code at 4,400 customers since GA in Q4. CEO called Cortex Code a "real game changer" and "massive accelerant" — 20+ mentions on the call.
But here's what bothers me: Management disclosed $100M AI ARR in Q3, then refused to update it twice on the Q4 call. Morgan Stanley asked. Wolfe asked. Both got redirected to qualitative narrative or FCF mechanics. When a company stops quantifying a metric they previously volunteered, I get suspicious. The most likely explanation is the number isn't growing as fast as the narrative implies.
I'm giving management a one-quarter pass on this because:
But if AI ARR still isn't disclosed at Investor Day, the yellow flag turns red.
Management tone: Emphatic. "Promise is real." "Long runway of durable high growth." Cortex Code is "transformational." This is confident language backed by record numbers. Not bluster.
Key unprompted disclosures (bullish signal):
Guidance philosophy: CFO Robbins explicitly called the methodology "very conservative" and said a "0.5% deviation is significant." CEO added "we think there is a lot of upside." Guidance methodology is unchanged and based solely on historical consumption — Cortex Code is explicitly not modeled. This is sandbagging. Bullish setup.
Red flag: Competitors not named once on the call. Management was dismissive: "winners = single source of truth + governance + model choice." Databricks is at ~$3.7B ARR growing faster, mindshare dropped from 22.5% to 16.1%. The dismissiveness concerns me when the competitive gap is closing.
| Metric | Current | 1Y Ago (est.) | Assessment |
|---|---|---|---|
| EV/TTM Revenue | 10.3x | ~17.6x | Cheap vs own history |
| EV/Run-rate Revenue | 9.4x | — | Attractive |
| EV/Forward Rev (FY27 ~$5.9B) | 8.2x | — | Attractive for 27% guided growth |
| P/FCF (FY actual) | 45.4x | ~60x+ | Rich but compressing |
| Non-GAAP P/E (TTM) | ~109x | ~200x+ | Still expensive |
| Rule of 40 | 54.0 | — | Well above threshold |
Growth-adjusted comparison:
| Company | Rev Growth | EV/Rev | Growth-Adj (EV/Rev / Growth) | Non-GAAP OpMgn |
|---|---|---|---|---|
| SNOW | 30% | 10.3x | 0.34x | 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 is the cheapest growth name in this peer set on a growth-adjusted basis. The discount reflects the GAAP loss profile and SBC burden — and rightly so. But if the SBC trajectory holds (34% to 27% to eventual low-20s) and operating margins expand to 15%+, the multiple gap to peers should narrow.
Run-rate P/S of 9.4x for a 30% grower with accelerating RPO and expanding operating margins — I'd be comfortable entering here if I were building a position. The stock is 47% below its 52-week high. The market has priced in all the bears' concerns and then some.
My prior view (2022): I was bearish on SNOW because the LAND motion was deteriorating — customers added per S&M employee declining sharply, both QoQ and YoY. I wrote: "Their LAND motion, the key first step of a land and expand model for a successful software company has been stuttering of late and has downright taken a dive." I wanted out before the deceleration hit revenue.
Updated view (2026): The LAND motion has reversed completely. 740 net new customers in Q4 (+40% YoY), 2,332 for the full year (record). The company is adding customers at a faster rate than during the hypergrowth era, just at a much larger scale. Meanwhile the EXPAND motion, which was the strength back then (NRR 168%), has normalized to 125% — adequate but no longer the growth engine. The growth model has flipped: it's now LAND-driven rather than EXPAND-driven, with RPO divergence suggesting the EXPAND motion is about to re-accelerate through AI workloads.
| Metric | Prior Expectation | Actual | Surprise |
|---|---|---|---|
| Revenue YoY | ~28-30% | 30.1% | Slight positive |
| RPO growth | ~35-38% | +42% | Significant beat |
| Net new customers | ~600-650 | 740 (+40%) | Record, big beat |
| $10M+ customers | ~48-52 | 56 (+56%) | Major acceleration |
| NRR | 124-125% | 125% | In line |
| Non-GAAP op margin | 10-11% | 11.0% | Top of range |
| Non-GAAP GM | 72-73% | 72.0% | Low end — AI dilution |
| AI ARR update | Expected quantification | Deflected twice | Negative surprise |
| FCF | ~$500-600M (Q4) | $765M | Significant beat |
SBC is the elephant. 1.6B/yr.341.6B on ~$5.9B revenue. The GAAP/Non-GAAP operating margin gap is 35.8pp. Shareholders are paying for this growth through dilution, not just from the income statement. Net dilution ~1%/yr after buybacks — manageable but the absolute SBC number is among the highest in enterprise software.
Databricks competitive convergence. ~$3.7B ARR growing faster. Commands ~2x private valuation premium. Perceived as AI-native. Mindshare decline from 22.5% to 16.1%. The market may be pricing Databricks as the secular winner. Snowflake's management won't even name them on the call — that level of dismissiveness concerns me.
Non-GAAP GM compression may accelerate. AI workloads carry lower margins. 73% to 72%, guided 75% product (vs 76% prior). If AI becomes 20-30% of revenue, total GM could compress to 68-70%. The op margin lever has to more than offset this.
AI ARR non-disclosure. Two quarters of deflection. Until management resumes quantifying, this is a trust deficit. The best case is they're saving it for Investor Day. The worst case is the number is underwhelming relative to the narrative.
December 2025 outage. 13 hours, 10 regions, backwards-incompatible schema update. Second incident in a week. Engineering discipline question under new leadership. No visible churn impact yet — but monitor NRR next quarter.
Q1 FY2027 earnings (May 2026). First test of 1, 262−1,267M product revenue guide. RPO at +42% and "lot of upside" commentary make a beat highly probable.
Investor Day (week of June 1, 2026). Multi-year targets, AI monetization framework. This is the catalyst. If management provides a credible AI revenue trajectory and raises long-term margin targets, the stock re-rates.
NRR inflection above 125%. If AI expansion pushes NRR to 128-130%+, the EXPAND motion reignites. Combined with the already-strong LAND motion, that's a powerful double engine.
AI ARR resumption. When/if management puts a number on AI revenue contribution, it either validates or deflates the narrative. Clarity is the catalyst.
SBC normalization. 34% to guided 27%. Each step toward GAAP profitability opens the stock to value investors.
Thesis: Intact — Strengthening.
The core thesis is that Snowflake is a re-accelerating enterprise data platform at the intersection of the AI workload explosion, trading at a historically cheap multiple because the market is anchored on GAAP losses and competitive concerns. The leading indicators — RPO +42%, net new customers +40%, $10M+ customers +56% — are the strongest forward signals the company has produced since the hypergrowth era. NRR has bottomed. Operating leverage is emerging.
What needs to happen next quarter:
Action: This is a watchlist position. I don't currently hold SNOW. The leading indicator divergence is compelling enough to build a position if the price stays below $155. I'd want 3-5% initially, with room to add on Q1 beat + Investor Day clarity.
-wsm (No position in SNOW)