Summary
Snowflake reported fiscal 2022 third-quarter revenue of $334.4 million for the period ended October 31, 2021, up 109.5% from the prior-year quarter. Gross margin reached 63.9%, up 5.7 percentage points from a year earlier. Operating margin was negative 47.0%, up 59.1 percentage points from the prior-year quarter. The company still generated an operating loss of $157.27 million in the quarter, and the net loss was $154.86 million. Diluted loss per share was $0.51. Operating cash flow was $15.54 million, up 178.7% from the prior-year quarter. Capital expenditures were $2.28 million, down 86.8%.
Customer momentum remained strong. Remaining performance obligations were $1.80 billion as of October 31, 2021, up 94.0% from the prior-year quarter. Deferred revenue, current portion only, was $759.74 million, up 73.4% from a year earlier. The net revenue retention rate was 173% as of October 31, 2021. Total customers reached 5,416, up from 4,139 as of January 31, 2021. The company had 148 customers with trailing 12-month product revenue greater than $1 million, up from 65 as of October 31, 2020. Product revenue from EMEA and APJ regions rose 174% and 219% year over year, respectively. Snowflake said 223 of the Fortune 500 used its platform as of October 31, 2021, and those customers contributed approximately 27% of revenue for the nine months ended October 31, 2021. Management expects about 55% of RPO to be recognized as revenue in the twelve months ending October 31, 2022, based on historical consumption patterns.
For the first nine months of fiscal 2022, revenue was $835.55 million, up 108.1% from the prior-year period. The nine-month net loss widened to $547.80 million, and the operating loss widened to $563.01 million. Diluted loss per share for the nine months was $1.84. Gross margin for the nine months was 61.2%, up 1.0 percentage point from the prior-year period. Operating margin for the nine months was negative 67.4%, up 18.2 percentage points from the prior-year period. Operating cash flow for the nine months was $31.28 million, up 148.1% from the prior-year period. Capital expenditures for the nine months were $12.21 million, down 49.2% from the prior-year period.
Guidance points to continued product revenue growth. For the fourth quarter of fiscal 2022, Snowflake guided product revenue to $345 million to $350 million, representing 94% to 96% year-over-year growth. The fourth-quarter non-GAAP operating income margin is guided to 1%, and weighted-average diluted shares are expected to be 358 million. For full-year fiscal 2022, product revenue guidance is $1,126 million to $1,131 million, or 103% to 104% growth. Full-year non-GAAP product gross profit margin is guided to 74%, the non-GAAP operating loss margin to 4%, and adjusted free cash flow margin to 8%. Weighted-average diluted shares for the full year are guided to 357 million.
Risks center on the consumption model and cost structure. Because revenue is recognized on platform consumption, customer usage can vary and may grow more slowly than expected, which would pressure revenue and results. New software releases or hardware improvements, including better storage compression, can make the platform more efficient and reduce consumption. The company also expects its net revenue retention rate to decrease over the longer term as long-tenured customers become a larger part of the base. Competition, pricing, discounting, and international expansion all affect results. COVID-19 continues to create uncertainty, including longer sales cycles for some prospective customers and delays in professional services and training. Stock-based compensation remains significant, with $1.5 billion of unrecognized cost to be recognized over a weighted-average period of 3.1 years. Snowflake maintains a full valuation allowance against U.S. and U.K. deferred tax assets and will cease to be an emerging growth company as of January 31, 2022.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2022 | Q2 FY2022 | QoQ | Q3 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $334.4M | $272.2M | +22.9% | $159.6M | +109.5% |
| Gross profit | $213.7M | $166.1M | +28.6% | $92.9M | +129.9% |
| Gross margin | 63.9% | 61.0% | +2.9 pp | 58.2% | +5.7 pp |
| Research & development | $115.9M | $118.1M | -1.9% | $74.1M | +56.3% |
| Sales & marketing | $191.0M | $182.9M | +4.4% | $134.7M | +41.7% |
| General & administrative | $64.1M | $65.2M | -1.8% | $53.5M | +19.7% |
| Total operating expenses | $370.9M | $366.2M | +1.3% | $262.4M | +41.4% |
| Operating income (loss) | -$157.3M | -$200.1M | +21.4% | -$169.5M | +7.2% |
| Operating margin | -47.0% | -73.5% | +26.5 pp | -106.2% | +59.1 pp |
| Net income (loss) | -$154.9M | -$189.7M | +18.4% | -$168.9M | +8.3% |
| Net margin | -46.3% | -69.7% | +23.4 pp | -105.8% | +59.5 pp |
| Diluted EPS | -$0.51 | -$0.64 | +$0.13 | — | — |
Risks
The consumption-based model gives limited visibility into the timing of revenue recognition because customers control the pace of platform usage. MD&A notes product revenue rose 110% in the quarter ended October 31, 2021, but warns customers may consume more slowly than expected, causing revenue and results to fluctuate.
A substantial majority of the business runs on AWS, and AWS, Azure, and GCP are also primary competitors. These providers could bundle competing products, offer unfavorable pricing, or exclude Snowflake from opportunities, which could pressure pricing and gross margins.
Snowflake has a history of operating losses and expects costs to increase as it invests in growth rather than optimize near-term profitability. Net loss was $154.9 million for the quarter ended October 31, 2021, narrowed from $168.9 million a year earlier, but net loss widened to $547.8 million for the nine months ended October 31, 2021 from $340.2 million in the prior-year period.
Sales to large enterprises involve longer and less predictable sales cycles, complex requirements, and substantial upfront costs. COVID-19 has lengthened sales cycles for some prospective customers, which MD&A says may impact new customer acquisition and future growth rates.
Competition for cloud engineers, enterprise sales professionals, and expert support personnel is intense. Remote and hybrid work may increase competition, and volatility in the perceived value of equity awards could impair Snowflake's ability to hire, retain, and motivate key employees.
Customer accounts outside the United States generated 21% and 20% of revenue for the three and nine months ended October 31, 2021. Further geographic expansion brings regulatory, tax, currency, localization, and partner-relationship risks.
Increasing sales to federal, state, and local governments and highly regulated industries bring competitive procurement, certification, audit, bid protest, and termination-for-convenience risks. A substantial majority of government sales to date have been indirect through resellers and distributors.
Snowflake will cease to be an emerging growth company as of January 31, 2022 based on non-affiliate market value at July 31, 2021. It must then comply with Section 404 auditor attestation over internal control, which will increase public company costs and could expose material weaknesses if not completed effectively.
SaaS KPIs
All quarters →Net Revenue Retention Rate
Total Customers
Remaining Performance Obligations
Non-GAAP Operating Margin
Adjusted Free Cash Flow Margin
Free Cash Flow Margin
Adjusted Free Cash Flow
Product Revenue
Customers with Trailing 12-Month Product Revenue Greater than $1 Million
Free Cash Flow
Non-GAAP Operating Income
Summary, forecast, risks and KPIs are extracted from Snowflake Inc.'s SEC filings for Q3 FY2022 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.