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Snowflake Reports Financial Results for the Second Quarter of Fiscal 2024

  • Product revenue of $640.2 million in the second quarter, representing 37% year-over-year growth
  • 402 customers with trailing 12-month product revenue greater than $1 million
  • Net revenue retention rate of 142%
  • 639 Forbes Global 2000 customers
  • Remaining performance obligations of $3.5 billion, representing 30% year-over-year growth

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)

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.

 

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