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Snowflake Reports Financial Results for the Second Quarter of Fiscal 2024

2023-08-24 04:27
No-Headquarters/BOZEMAN, Mont.--(BUSINESS WIRE)--Aug 23, 2023--
Snowflake Reports Financial Results for the Second Quarter of Fiscal 2024

No-Headquarters/BOZEMAN, Mont.--(BUSINESS WIRE)--Aug 23, 2023--

Snowflake (NYSE: SNOW), the Data Cloud company, today announced financial results for its second quarter of fiscal 2024, ended July 31, 2023.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230823731800/en/

Snowflake Q2 FY24 Infographic (Graphic: Snowflake)

Revenue for the quarter was $674.0 million, representing 36% year-over-year growth. Product revenue for the quarter was $640.2 million, representing 37% year-over-year growth. The company now has 402 customers with trailing 12-month product revenue greater than $1 million and 639 Forbes Global 2000 customers, representing 62% and 17% year-over-year growth, respectively. Net revenue retention rate was 142% as of July 31, 2023. Remaining performance obligations were $3.5 billion, representing 30% year-over-year growth. Net cash provided by operating activities was $83.2 million, representing 29% year-over-year growth. See the section titled “Key Business Metrics” for definitions of product revenue, customers with trailing 12-month product revenue greater than $1 million, net revenue retention rate, Forbes Global 2000 customers, and remaining performance obligations.

“During Q2, product revenue grew 37% year-over-year to $640 million. Our non-GAAP adjusted free cash flow was $88 million, representing 50% year-over-year growth,” said Frank Slootman, Chairman and CEO, Snowflake. “Snowflake as the global epicenter of trusted enterprise data is well positioned to enable the growing interest in AI/ML. Enterprises and institutions alike are increasingly aware they cannot have an AI strategy without a data strategy.”

Second Quarter Fiscal 2024 GAAP and Non-GAAP Results:

The following table summarizes our financial results for the second quarter of fiscal 2024:

Second Quarter Fiscal 2024
GAAP Results

Second Quarter Fiscal 2024
Non-GAAP Results (1)

Amount
(millions)

Year/Year
Growth

Product revenue

$640.2

37%

Amount
(millions)

Margin

Amount
(millions)

Margin

Product gross profit

$471.2

74%

$498.8

78%

Operating income (loss)

($285.4)

(42%)

$54.2

8%

Net cash provided by operating activities

$83.2

Free cash flow

$69.0

10%

Adjusted free cash flow

$88.2

13%

(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 third quarter of fiscal 2024:

Third Quarter Fiscal 2024
GAAP Guidance

Third Quarter Fiscal 2024
Non-GAAP Guidance (1)

Amount
(millions)

Year/Year
Growth

Product revenue

$670 - $675

28 - 29%

Margin

Operating income

4%

Amount
(millions)

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

364

(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)

The potential impact of future repurchases under our existing stock repurchase program is not reflected in our guidance for weighted-average shares used in computing net income per share attributable to Snowflake Inc. common stockholders - diluted due to the uncertainty regarding, and the potential variability of, the timing and amount of repurchases.

The following table summarizes our guidance for the full-year fiscal 2024:

Full-Year Fiscal 2024
GAAP Guidance

Full-Year Fiscal 2024
Non-GAAP Guidance (1)

Amount
(millions)

Year/Year
Growth

Product revenue

$2,600

34%

Margin

Product gross profit

76%

Operating income

5%

Adjusted free cash flow

26%

Amount
(millions)

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

362

(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)

The potential impact of future repurchases under our existing stock repurchase program is not reflected in our guidance for weighted-average shares used in computing net income per share attributable to Snowflake Inc. common stockholders - diluted due to the uncertainty regarding, and the potential variability of, the timing and amount of repurchases.

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-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 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 August 23, 2023. Investors and participants may attend the call by dialing (833) 470-1428 (Access code: 898550), or if outside the United States, by dialing +1 (929) 526-1599 (Access code: 898550).

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.

  • Non-GAAP Product gross profit, Operating income (loss), Net income (loss), Net income (loss) attributable to Snowflake Inc., and Net income (loss) per share attributable to Snowflake Inc. common stockholders - basic and diluted. Our non-GAAP product gross profit, operating income (loss), net income (loss), and net income (loss) attributable to Snowflake Inc. measures exclude the effect of (i) stock-based compensation-related charges, including employer payroll tax-related items on employee stock transactions, (ii) amortization of acquired intangibles, (iii) expenses associated with acquisitions and strategic investments, (iv) adjustments attributable to noncontrolling interest, and (v) the related income tax effect of these adjustments as well as the non-recurring income tax expense or benefit associated with acquisitions. Our non-GAAP net income (loss) per share attributable to Snowflake Inc. common stockholders - basic is calculated by dividing non-GAAP net income (loss) attributable to Snowflake Inc. by the weighted-average number of diluted shares of common stock outstanding during the period. Our non-GAAP net income per share attributable to Snowflake Inc. common stockholders - diluted is calculated by dividing non-GAAP net income attributable to Snowflake Inc. by the non-GAAP weighted-average number of diluted shares outstanding, giving effect to all potentially dilutive common stock equivalents (stock options, restricted stock units, and employee stock purchase rights under our 2020 Employee Stock Purchase Plan). The potential dilutive effect of outstanding restricted stock units with performance conditions not yet satisfied is included in the non-GAAP weighted-average number of diluted shares at forecasted attainment levels to the extent we believe it is probable that the performance conditions will be met. Non-GAAP net loss per share attributable to Snowflake Inc. common stockholders - diluted is the same as Non-GAAP net loss per share attributable to Snowflake Inc. common stockholders - basic as the inclusion of all potential dilutive common stock equivalents would be anti-dilutive. Amounts attributable to noncontrolling interest were not material for all periods presented. 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. 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. Cash outflows for employee payroll tax items related to the net share settlement of equity awards are included in cash flow for financing activities and, as a result, do not have an effect on the calculation of free cash flow. Free cash flow margin is calculated as 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.
  • Adjusted free cash flow. Adjusted free cash flow is defined as free cash flow plus (minus) net cash paid (received) on employer and employee payroll tax-related items on employee stock transactions. Employee payroll tax-related items on employee stock transactions 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 payroll tax-related items will enhance stockholders' ability to evaluate our free cash flow performance, including on a quarter-over-quarter basis. Adjusted free cash flow margin is calculated as 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

We monitor our key business metrics, including (i) free cash flow and (ii) the other metrics set forth below to help us evaluate our business and growth trends, establish budgets, measure the effectiveness of our sales and marketing efforts, and assess operational efficiencies. See the section titled “Statement Regarding Use of Non-GAAP Financial Measures” for the definition of free cash flow. The calculation of our key business metrics may differ from other similarly titled metrics used by other companies, securities analysts, or investors.

  • 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.
  • 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. 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. We do not include customers that consume our platform only under on-demand arrangements for purposes of determining our customer count. Our customer count is subject to adjustments for acquisitions, consolidations, spin-offs, and other market activity, and we present our customer count for historical periods reflecting these adjustments.
  • 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. 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, and we present our net revenue retention rate for historical periods reflecting these adjustments. 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.
  • Forbes Global 2000 Customers. Our Forbes Global 2000 customer count is a subset of our customer count based on the 2023 Forbes Global 2000 list. Our Forbes Global 2000 customer count is subject to adjustments for annual updates to the list by Forbes, as well as acquisitions, consolidations, spin-offs, and other market activity with respect to such customers, and we present our Forbes Global 2000 customer count for historical periods reflecting these adjustments.
  • Remaining Performance Obligations. Remaining performance obligations (RPO) represent the amount of contracted future revenue that has not yet been recognized, including (i) deferred revenue and (ii) 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. Portions of RPO that are not yet invoiced and are denominated in foreign currencies are revalued into U.S. dollars each period based on the applicable period-end exchange rates. 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 and size of renewals, the timing and size of purchases of additional capacity, average contract terms, seasonality, changes in foreign currency exchange rates, 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.

Use of Forward-Looking Statements

This release and the accompanying oral presentation contain 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.” Words such as “guidance,” “outlook,” “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “plan,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” “shall,” and variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. 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; general market and business conditions, downturns, or uncertainty, including higher inflation, higher interest rates, and fluctuations or volatility in capital markets or foreign currency exchange rates; our ability to attract and retain customers; the extent to which customers continue to optimize consumption, including by reducing storage through shorter data retention policies; the extent to which customers continue to rationalize budgets and prioritize cash flow management, including through shortened contract durations; our ability to develop new products and services and enhance existing products and services; our ability to respond rapidly to emerging technology trends, including the use of artificial intelligence; our ability to execute on our business strategy, including our strategy related to the Data Cloud and Snowpark; our ability to increase and predict customer consumption of our platform, particularly in light of the impact of holidays on customer consumption patterns; 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 April 30, 2023 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 July 31, 2023.

Moreover, we operate in a very competitive and rapidly changing environment, and new risks may emerge from time to time. It is not possible to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor(s) may cause actual results or outcomes to differ materially from those contained in any forward-looking statements we may make. As a result of these risks, uncertainties, assumptions, and other factors, you should not rely on any forward-looking statements as predictions of future events. 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, power data applications, and execute diverse AI/ML and 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 639 of the 2023 Forbes Global 2000 (G2K) as of July 31, 2023, 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 per share data)

(unaudited)

Three Months Ended July 31,

Six Months Ended July 31,

2023

2022

2023

2022

Revenue

$

674,018

$

497,248

$

1,297,617

$

919,619

Cost of revenue

218,392

173,232

427,806

321,162

Gross profit

455,626

324,016

869,811

598,457

Operating expenses:

Sales and marketing

343,288

274,645

674,846

518,557

Research and development

313,996

183,748

591,408

334,546

General and administrative

83,749

73,355

162,202

141,852

Total operating expenses

741,033

531,748

1,428,456

994,955

Operating loss

(285,407

)

(207,732

)

(558,645

)

(396,498

)

Interest income

50,280

11,692

93,411

16,451

Other income (expense), net

4,086

(22,920

)

1,524

(31,401

)

Loss before income taxes

(231,041

)

(218,960

)

(463,710

)

(411,448

)

Provision for (benefit from) income taxes

(3,721

)

3,846

(10,326

)

(22,848

)

Net loss

(227,320

)

(222,806

)

(453,384

)

(388,600

)

Less: net loss attributable to noncontrolling interest

(453

)

(890

)

Net loss attributable to Snowflake Inc.

$

(226,867

)

$

(222,806

)

$

(452,494

)

$

(388,600

)

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

$

(0.69

)

$

(0.70

)

$

(1.39

)

$

(1.23

)

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

327,335

318,356

325,772

316,392

Snowflake Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

July 31, 2023

January 31, 2023

Assets

Current assets:

Cash and cash equivalents

$

755,192

$

939,902

Short-term investments

2,996,941

3,067,966

Accounts receivable, net

406,404

715,821

Deferred commissions, current

71,969

67,901

Prepaid expenses and other current assets

174,445

193,100

Total current assets

4,404,951

4,984,690

Long-term investments

1,100,748

1,073,023

Property and equipment, net

193,823

160,823

Operating lease right-of-use assets

262,229

231,266

Goodwill

774,300

657,370

Intangible assets, net

346,101

186,013

Deferred commissions, non-current

146,358

145,286

Other assets

281,306

283,851

Total assets

$

7,509,816

$

7,722,322

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$

41,248

$

23,672

Accrued expenses and other current liabilities

315,133

269,069

Operating lease liabilities, current

33,846

27,301

Deferred revenue, current

1,523,085

1,673,475

Total current liabilities

1,913,312

1,993,517

Operating lease liabilities, non-current

263,006

224,357

Deferred revenue, non-current

12,477

11,463

Other liabilities

22,794

24,370

Snowflake Inc. stockholders’ equity

5,286,938

5,456,436

Noncontrolling interest

11,289

12,179

Total liabilities and stockholders’ equity

$

7,509,816

$

7,722,322

Snowflake Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Three Months Ended July 31,

Six Months Ended July 31,

2023

2022

2023

2022

Cash flows from operating activities:

Net loss

$

(227,320

)

$

(222,806

)

$

(453,384

)

$

(388,600

)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

29,284

16,172

52,447

26,113

Non-cash operating lease costs

12,784

11,148

25,653

21,239

Amortization of deferred commissions

18,181

13,770

35,853

26,971

Stock-based compensation, net of amounts capitalized

299,722

209,181

564,231

381,674

Net amortization (accretion) of premiums (discounts) on investments

(17,661

)

4,678

(32,992

)

12,876

Net unrealized losses (gains) on strategic investments in equity securities

(5,309

)

23,173

(2,895

)

32,032

Deferred income tax

(4,026

)

(12,894

)

(26,664

)

Other

1,834

313

11,812

2,074

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

Accounts receivable

(53,050

)

(27,087

)

309,843

239,569

Deferred commissions

(24,552

)

(23,188

)

(40,992

)

(39,906

)

Prepaid expenses and other assets

41,389

29,358

46,916

(28,177

)

Accounts payable

20,562

2,067

17,469

6,225

Accrued expenses and other liabilities

35,648

24,672

27,106

10,455

Operating lease liabilities

(5,260

)

(9,810

)

(16,023

)

(18,186

)

Deferred revenue

(39,035

)

12,792

(149,515

)

(8,649

)

Net cash provided by operating activities

83,191

64,433

382,635

249,046

Cash flows from investing activities:

Purchases of property and equipment

(6,298

)

(3,848

)

(13,268

)

(11,261

)

Capitalized internal-use software development costs

(7,874

)

(6,736

)

(17,215

)

(11,540

)

Cash paid for business combinations, net of cash, cash equivalents, and restricted cash acquired

(141,459

)

(264,571

)

(177,925

)

Purchases of intangible assets

(27,480

)

(700

)

(27,480

)

(700

)

Purchases of investments

(688,678

)

(1,027,966

)

(1,725,964

)

(1,925,257

)

Sales of investments

1,614

32,958

7,266

43,932

Maturities and redemptions of investments

971,217

809,845

1,780,061

1,696,512

Net cash provided by (used in) investing activities

101,042

(196,447

)

(261,171

)

(386,239

)

Cash flows from financing activities:

Proceeds from exercise of stock options

16,149

8,520

31,519

23,796

Proceeds from issuance of common stock under employee stock purchase plan

37,065

26,094

Taxes paid related to net share settlement of equity awards

(98,311

)

(30,893

)

(182,710

)

(84,109

)

Repurchases of common stock

(191,694

)

Net cash used in financing activities

(82,162

)

(22,373

)

(305,820

)

(34,219

)

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

470

(2,290

)

1,005

(7,388

)

Net increase (decrease) in cash, cash equivalents, and restricted cash

102,541

(156,677

)

(183,351

)

(178,800

)

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

670,839

1,080,411

956,731

1,102,534

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

$

773,380

$

923,734

$

773,380

$

923,734

Snowflake Inc.

GAAP to Non-GAAP Reconciliations

(in thousands, except per share data and percentages)

(unaudited)

Three Months Ended July 31,

Six Months Ended July 31,

2023

2022

2023

2022

Amount

Amount as a % of Revenue

Amount

Amount as a % of Revenue

Amount

Amount as a % of Revenue

Amount

Amount as a % of Revenue

Revenue:

Product revenue

$

640,209

95%

$

466,268

94%

$

1,230,281

95%

$

860,702

94%

Professional services and other revenue

33,809

5%

30,980

6%

67,336

5%

58,917

6%

Revenue

$

674,018

100%

$

497,248

100%

$

1,297,617

100%

$

919,619

100%

Year-over-year growth

36

%

83

%

41

%

84

%

Cost of revenue:

GAAP cost of product revenue

$

169,046

25%

$

131,606

27%

$

328,424

25%

$

243,017

27%

Less: stock-based compensation-related charges

(19,738

)

(15,122

)

(38,538

)

(28,263

)

Less: amortization of acquired intangibles

(7,877

)

(566

)

(12,458

)

(1,133

)

Non-GAAP cost of product revenue

$

141,431

21%

$

115,918

23%

$

277,428

21%

$

213,621

23%

GAAP cost of professional services and other revenue

$

49,346

7%

$

41,626

8%

$

99,382

8%

$

78,145

8%

Less: stock-based compensation-related charges

(15,511

)

(12,572

)

(30,431

)

(24,321

)

Less: amortization of acquired intangibles

(1,662

)

(3,108

)

Non-GAAP cost of professional services and other revenue

$

32,173

5%

$

29,054

6%

$

65,843

5%

$

53,824

6%

GAAP cost of revenue

$

218,392

32%

$

173,232

35%

$

427,806

33%

$

321,162

35%

Less: stock-based compensation-related charges

(35,249

)

(27,694

)

(68,969

)

(52,584

)

Less: amortization of acquired intangibles

(9,539

)

(566

)

(15,566

)

(1,133

)

Non-GAAP cost of revenue

$

173,604

26%

$

144,972

29%

$

343,271

26%

$

267,445

29%

Gross profit (loss):

GAAP product gross profit

$

471,163

74%

$

334,662

72%

$

901,857

73%

$

617,685

72%

Add: stock-based compensation-related charges

19,738

15,122

38,538

28,263

Add: amortization of acquired intangibles

7,877

566

12,458

1,133

Non-GAAP product gross profit

$

498,778

78%

$

350,350

75%

$

952,853

77%

$

647,081

75%

GAAP professional services and other revenue gross loss

$

(15,537

)

(46%)

$

(10,646

)

(34%)

$

(32,046

)

(48%)

$

(19,228

)

(33%)

Add: stock-based compensation-related charges

15,511

12,572

30,431

24,321

Add: amortization of acquired intangibles

1,662

3,108

Non-GAAP professional services and other revenue gross profit

$

1,636

5%

$

1,926

6%

$

1,493

2%

$

5,093

9%

GAAP gross profit

$

455,626

68%

$

324,016

65%

$

869,811

67%

$

598,457

65%

Add: stock-based compensation-related charges

35,249

27,694

68,969

52,584

Add: amortization of acquired intangibles

9,539

566

15,566

1,133

Non-GAAP gross profit

$

500,414

74%

$

352,276

71%

$

954,346

74%

$

652,174

71%

Gross margin:

GAAP product gross margin

74

%

72

%

73

%

72

%

Add: stock-based compensation-related charges as a % of product revenue

3

%

3

%

3

%

3

%

Add: amortization of acquired intangibles as a % of product revenue

1

%

%

1

%

%

Non-GAAP product gross margin

78

%

75

%

77

%

75

%

GAAP professional services and other revenue gross margin

(46

%)

(34

%)

(48

%)

(33

%)

Add: stock-based compensation-related charges as a % of professional services and other revenue

46

%

40

%

45

%

42

%

Add: amortization of acquired intangibles as a % of professional services and other revenue

5

%

%

5

%

%

Non-GAAP professional services and other revenue gross margin

5

%

6

%

2

%

9

%

GAAP gross margin

68

%

65

%

67

%

65

%

Add: stock-based compensation-related charges as a % of revenue

5

%

6

%

6

%

6

%

Add: amortization of acquired intangibles as a % of revenue

1

%

%

1

%

%

Non-GAAP gross margin

74

%

71

%

74

%

71

%

Operating expenses:

GAAP sales and marketing expense

$

343,288

51%

$

274,645

55%

$

674,846

52%

$

518,557

57%

Less: stock-based compensation-related charges

(84,822

)

(62,173

)

(164,447

)

(119,797

)

Less: amortization of acquired intangibles

(7,553

)

(7,555

)

(14,860

)

(10,101

)

Non-GAAP sales and marketing expense

$

250,913

37%

$

204,917

41%

$

495,539

38%

$

388,659

43%

GAAP research and development expense

$

313,996

47%

$

183,748

37%

$

591,408

46%

$

334,546

36%

Less: stock-based compensation-related charges

(166,258

)

(97,839

)

(312,886

)

(173,623

)

Less: amortization of acquired intangibles

(3,254

)

(1,759

)

(5,078

)

(3,525

)

Non-GAAP research and development expense

$

144,484

21%

$

84,150

17%

$

273,444

21%

$

157,398

17%

GAAP general and administrative expense

$

83,749

12%

$

73,355

15%

$

162,202

12%

$

141,852

15%

Less: stock-based compensation-related charges

(27,912

)

(26,576

)

(55,560

)

(51,519

)

Less: amortization of acquired intangibles

(451

)

(417

)

(887

)

(829

)

Less: expenses associated with acquisitions and strategic investments

(4,569

)

(614

)

(7,198

)

(2,523

)

Non-GAAP general and administrative expense

$

50,817

8%

$

45,748

9%

$

98,557

8%

$

86,981

9%

GAAP total operating expense

$

741,033

110%

$

531,748

107%

$

1,428,456

110%

$

994,955

108%

Less: stock-based compensation-related charges

(278,992

)

(186,588

)

(532,893

)

(344,939

)

Less: amortization of acquired intangibles

(11,258

)

(9,731

)

(20,825

)

(14,455

)

Less: expenses associated with acquisitions and strategic investments

(4,569

)

(614

)

(7,198

)

(2,523

)

Non-GAAP total operating expense

$

446,214

66%

$

334,815

67%

$

867,540

67%

$

633,038

69%

Operating income (loss):

GAAP operating loss

$

(285,407

)

(42%)

$

(207,732

)

(42%)

$

(558,645

)

(43%)

$

(396,498

)

(43%)

Add: stock-based compensation-related charges (1)

314,241

214,282

601,862

397,523

Add: amortization of acquired intangibles

20,797

10,297

36,391

15,588

Add: expenses associated with acquisitions and strategic investments

4,569

614

7,198

2,523

Non-GAAP operating income

$

54,200

8%

$

17,461

4%

$

86,806

7%

$

19,136

2%

Operating margin:

GAAP operating margin

(42

%)

(42

%)

(43

%)

(43

%)

Add: stock-based compensation-related charges as a % of revenue

46

%

44

%

46

%

43

%

Add: amortization of acquired intangibles as a % of revenue

3

%

2

%

3

%

2

%

Add: expenses associated with acquisitions and strategic investments as a % of revenue

1

%

%

1

%

%

Non-GAAP operating margin

8

%

4

%

7

%

2

%

Net income (loss):

GAAP net loss

$

(227,320

)

(34%)

$

(222,806

)

(45%)

$

(453,384

)

(35%)

$

(388,600

)

(42%)

Add: stock-based compensation-related charges (1)

314,241

214,282

601,862

397,523

Add: amortization of acquired intangibles

20,797

10,297

36,391

15,588

Add: expenses associated with acquisitions and strategic investments

4,569

614

7,198

2,523

Income tax expenses effect related to the above adjustments

(31,947

)

2,226

(57,578

)

(23,936

)

Non-GAAP net income

$

80,340

12%

$

4,613

1%

$

134,489

10%

$

3,098

—%

Net income (loss) attributable to Snowflake Inc.:

GAAP net loss attributable to Snowflake Inc.

$

(226,867

)

(34%)

$

(222,806

)

(45%)

$

(452,494

)

(35%)

$

(388,600

)

(42%)

Add: stock-based compensation-related charges (1)

314,241

214,282

601,862

397,523

Add: amortization of acquired intangibles

20,797

10,297

36,391

15,588

Add: expenses associated with acquisitions and strategic investments

4,569

614

7,198

2,523

Income tax expenses effect related to the above adjustments

(31,947

)

2,226

(57,578

)

(23,936

)

Adjustments attributable to noncontrolling interest, net of tax

(50

)

(110

)

Non-GAAP net income attributable to Snowflake Inc.

$

80,743

12%

$

4,613

1%

$

135,269

10%

$

3,098

—%

Net income (loss) per share attributable to Snowflake Inc. common stockholders - basic and diluted:

GAAP net loss per share attributable to Snowflake Inc. common stockholders - basic and diluted

$

(0.69

)

$

(0.70

)

$

(1.39

)

$

(1.23

)

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

327,335

318,356

325,772

316,392

Non-GAAP net income per share attributable to Snowflake Inc. common stockholders - basic

$

0.25

$

0.01

$

0.41

$

0.01

Weighted-average shares used in computing non-GAAP net income per share attributable to Snowflake Inc. common stockholders - basic

327,335

318,356

325,772

316,392

Non-GAAP net income per share attributable to Snowflake Inc. common stockholders - diluted

$

0.22

$

0.01

$

0.37

$

0.01

Non-GAAP weighted-average shares used in computing non-GAAP net income per share attributable to Snowflake Inc. common stockholders - diluted (2)

363,033

358,404

361,697

358,568

Free cash flow and adjusted free cash flow:

GAAP net cash provided by operating activities

$

83,191

12%

$

64,433

13%

$

382,635

29%

$

249,046

27%

Less: purchases of property and equipment

(6,298

)

(3,848

)

(13,268

)

(11,261

)

Less: capitalized internal-use software development costs

(7,874

)

(6,736

)

(17,215

)

(11,540

)

Non-GAAP free cash flow

69,019

10%

53,849

11%

352,152

27%

226,245

25%

Add: net cash paid on payroll tax-related items on employee stock transactions (3)

19,138

4,796

22,923

13,841

Non-GAAP adjusted free cash flow

$

88,157

13%

$

58,645

12%

$

375,075

29%

$

240,086

26%

Non-GAAP free cash flow margin

10

%

11

%

27

%

25

%

Non-GAAP adjusted free cash flow margin

13

%

12

%

29

%

26

%

(1)

Stock-based compensation-related charges included employer payroll tax-related expenses on employee stock transactions of approximately $12.4 million and $28.3 million for the three and six months ended July 31, 2023, respectively, and $3.9 million and $14.1 million for the three and six months ended July 31, 2022, respectively.

(2)

For the periods in which we had non-GAAP net income, the non-GAAP weighted-average shares used in computing non-GAAP net income per share attributable to Snowflake Inc. common stockholders - diluted included the effect of all potentially dilutive common stock equivalents (stock options, restricted stock units, and employee stock purchase rights under our 2020 Employee Stock Purchase Plan). The potential dilutive effect of outstanding restricted stock units with performance conditions not yet satisfied is included in the non-GAAP weighted-average number of diluted shares at forecasted attainment levels to the extent we believe it is probable that the performance conditions will be met. These potentially dilutive securities were excluded from the weighted-average shares used in computing non-GAAP net loss per share attributable to Snowflake Inc. common stockholders - diluted when we were in a non-GAAP net loss position.

(3)

The amounts for the three and six months ended July 31, 2023 do not include employee payroll taxes of $98.3 million and $182.7 million, respectively, and the amounts for the three and six months ended July 31, 2022 do not include employee payroll taxes of $30.9 million and $84.1 million, respectively, related to net share settlement of employee restricted stock units, which were reflected as cash outflows for financing activities.

View source version on businesswire.com:https://www.businesswire.com/news/home/20230823731800/en/

CONTACT: Investor Contact

Jimmy Sexton

IR@snowflake.com

Press Contact

Eszter Szikora

Press@snowflake.com

KEYWORD: UNITED STATES NORTH AMERICA CANADA MONTANA

INDUSTRY KEYWORD: DATA MANAGEMENT SECURITY TECHNOLOGY SOFTWARE NETWORKS INTERNET

SOURCE: Snowflake Inc.

Copyright Business Wire 2023.

PUB: 08/23/2023 04:05 PM/DISC: 08/23/2023 04:05 PM

http://www.businesswire.com/news/home/20230823731800/en