Summary
Snowflake's fiscal 2024 third quarter, ended October 31, 2023, delivered strong revenue growth but continued GAAP losses. Total revenue was $734.2 million, up 31.8% from the prior-year quarter. Gross profit reached $505.2 million, up 37.9%, and gross margin improved to 68.8%, up 3.1 percentage points. The operating loss was $260.6 million, and the loss widened 26.5% from a year earlier. Net loss was $214.3 million, and the loss widened 6.6%. Diluted EPS was -$0.65, down $0.02. Operating margin was -35.5%, up 1.5 percentage points. Operating cash flow was $120.9 million, up 52.5%. Capital expenditures were $8.75 million, up 2.8%.
The quarter's operational metrics pointed to a maturing customer base. Product revenue grew 34% year over year. Snowflake ended the quarter with 436 customers that generated more than $1 million in trailing 12-month product revenue, up 52% year over year. It had 647 Forbes Global 2000 customers, up 10%. Total customers were 8,907, up from 7,776 as of January 31, 2023. Net revenue retention rate was 135% as of October 31, 2023, down from 158% as of January 31, 2023 and 166% as of October 31, 2022. That decline suggests expansion across the existing base is slowing. Deferred revenue was $1.61 billion, up 33.8%. Remaining performance obligations were $3.70 billion, up 23.3%. Management said it expects about 57% of RPO to be recognized as revenue in the twelve months ending October 31, 2024. The weighted-average remaining life of capacity contracts was 1.8 years.
Guidance calls for product revenue of $716 million to $721 million in the fourth quarter of fiscal 2024, representing 29% to 30% growth. The company guided fourth-quarter non-GAAP operating income margin to 4%. For the full fiscal year 2024, Snowflake guided product revenue to $2,650 million, up 37%, with a non-GAAP product gross profit margin of 77%, a non-GAAP operating income margin of 7%, and a non-GAAP adjusted free cash flow margin of 27%. Full-year product revenue guidance is based on the higher end of the fourth-quarter guidance. The company also guided weighted-average diluted shares of 360 million for the fourth quarter and 361 million for the full year. Management said it expects positive net cash flows from operating activities for the fiscal year ending January 31, 2024.
Risks remain centered on the consumption model and the macro backdrop. Snowflake said customers continue to rationalize budgets, prioritize cash flow management through shortened contract durations, and optimize consumption, including by reducing storage through shorter data retention policies. The company also flagged competition, the need to attract and retain customers, the difficulty of predicting consumption, and the impact of holidays on consumption patterns. RPO is not necessarily indicative of future product revenue growth because it does not account for the timing of consumption or customers consuming more than their contracted capacity. Professional services gross margin declined. The company continued to integrate acquisitions and repurchase stock under its authorized program.
Non-GAAP measures give a more profitable view. Non-GAAP product gross profit was $547.1 million, a 78% margin. Non-GAAP operating income was $71.9 million, a 10% margin. Free cash flow was $102.3 million, a 14% margin. Adjusted free cash flow was $110.8 million, a 15% margin. These measures exclude stock-based compensation and other items. The GAAP results still reflect heavy spending on sales and marketing, research and development, and general and administrative functions.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2024 | Q2 FY2024 | QoQ | Q3 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $734.2M | $674.0M | +8.9% | $557.0M | +31.8% |
| Gross profit | $505.2M | $455.6M | +10.9% | $366.3M | +37.9% |
| Gross margin | 68.8% | 67.6% | +1.2 pp | 65.8% | +3.1 pp |
| Research & development | $332.1M | $314.0M | +5.8% | $211.4M | +57.1% |
| Sales & marketing | $355.1M | $343.3M | +3.4% | $284.5M | +24.8% |
| General & administrative | $78.7M | $83.7M | -6.0% | $76.5M | +2.9% |
| Total operating expenses | $765.8M | $741.0M | +3.3% | $572.3M | +33.8% |
| Operating income (loss) | -$260.6M | -$285.4M | +8.7% | -$206.0M | -26.5% |
| Operating margin | -35.5% | -42.3% | +6.8 pp | -37.0% | +1.5 pp |
| Net income (loss) | -$214.7M | -$227.3M | +5.6% | -$201.4M | -6.6% |
| Net margin | -29.2% | -33.7% | +4.5 pp | -36.2% | +6.9 pp |
| Diluted EPS | -$0.65 | -$0.69 | +$0.04 | -$0.63 | -$0.02 |
Risks
Adverse macroeconomic conditions are causing customers to rationalize budgets, prioritize cash flow management, and optimize consumption, including by reducing storage through shorter data retention policies and shortening committed contract durations. Net revenue retention rate decreased to 135% as of October 31, 2023 from 158% as of January 31, 2023, and revenue growth rate has slowed.
The company is investing significantly in artificial intelligence and machine learning technology, but competitors may adopt and implement AI technology faster or more successfully, potentially impairing its ability to compete. The risk factor notes the increasing prominence of new technology like artificial intelligence as a reason revenue growth could slow.
The consumption-based business model provides limited visibility into the timing of revenue recognition, and sales to large enterprises involve longer sales cycles and slower consumption growth, creating uncertainty in forecasting future results.
The company relies on AWS, Azure, and GCP for its platform, but these providers are also primary competitors and could use their control to favor competing products, provide unfavorable pricing, or exclude Snowflake from opportunities.
Intense competition for personnel, especially engineers with AI skills, and a decline in the perceived value of equity awards due to stock price decreases may hinder recruitment and retention, possibly requiring additional equity or cash compensation.
Doing business with government entities and heavily regulated industries involves complex compliance, lengthy sales cycles, bid protests, and potential termination for convenience, which could harm results if anticipated revenue increases do not materialize.
The company expects seasonality to become more pronounced, with higher orders in the fourth fiscal quarter and lower consumption during holidays, causing fluctuations in remaining performance obligations and free cash flow.
Recent acquisitions of Neeva, Mountain, and LeapYear pose integration challenges and may not achieve anticipated synergies, potentially resulting in impairment charges or dilutive issuances.
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
Forbes Global 2000 Customers
Non-GAAP Product Gross Margin
Customers with Trailing 12-Month Product Revenue Greater than $5 Million
Customers with Trailing 12-Month Product Revenue Greater than $10 Million
Non-GAAP Operating Income
Non-GAAP Gross Margin
Summary, forecast, risks and KPIs are extracted from Snowflake Inc.'s SEC filings for Q3 FY2024 (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 6, 2026.