Summary
Snowflake closed fiscal 2023 with a fourth quarter that showed strong top-line growth but wider losses. Revenue for the quarter ended January 31, 2023 was $589.0 million, up 53.5% from the prior-year quarter. Gross profit rose 53.6% to $383.4 million, and gross margin was 65.1%, flat with the prior-year quarter. The company still posted an operating loss of $239.8 million, wider than the prior-year quarter's loss, and a net loss of $207.2 million, also wider. Operating cash flow was $217.3 million, up 175.4%, while capital expenditures were $5.36 million. Deferred revenue ended the quarter at $1.67 billion, up 44.5%, and remaining performance obligations were $3.70 billion, up 42.3%. On a non-GAAP basis, operating income was $32.8 million, a 6% margin, and adjusted free cash flow was $215.3 million, a 37% margin.
For the full fiscal year, revenue reached $2.07 billion, up 69.4%. Gross margin improved to 65.3%, up 2.9 percentage points. The full-year operating loss was $842.3 million, wider than the prior fiscal year, and the net loss was $796.7 million, also wider. Diluted loss per share was $2.50, wider than the prior fiscal year. Operating cash flow for the year was $545.6 million, up 395.2%, and capital expenditures were $25.1 million. The full-year operating margin was -40.8%, an improvement of 17.9 percentage points from the prior fiscal year. Non-GAAP operating income for the full year was $95.3 million, a 5% margin, and adjusted free cash flow was $520.4 million, a 25% margin.
Snowflake's customer metrics showed continued expansion but also some moderation. Net revenue retention was 158% as of January 31, 2023, down from 177% a year earlier. Total customers grew to 7,828 from 5,967. The company had 330 customers with trailing 12-month product revenue greater than $1 million, up from 184. Forbes Global 2000 customers totaled 573, up from 492. Remaining performance obligations of $3.70 billion were expected to convert about 55% to revenue in the twelve months ending January 31, 2024, with a weighted-average remaining life of 2.0 years. Management noted that newer customers are increasing consumption more slowly than more tenured ones.
Guidance points to slowing growth. For the first quarter of fiscal 2024, management guided product revenue growth of 44% to 45%. For the full fiscal year 2024, product revenue growth is expected to be 40%, with a product gross profit margin of 76%, an operating income margin of 6%, and an adjusted free cash flow margin of 25%. The company also authorized a $2.0 billion stock repurchase program that runs through March 2025. In January 2023, Snowflake amended a cloud infrastructure agreement, committing to spend at least $2.5 billion from fiscal 2024 to fiscal 2028, including $350.0 million in fiscal 2024 and $650.0 million in fiscal 2028. In February 2023, it acquired Mountain US Corporation for about $67 million in cash and LeapYear Technologies for about $59 million in cash.
Risks remain substantial. Management cited adverse macroeconomic conditions, including higher inflation, higher interest rates, and foreign currency volatility, which are causing customers to optimize consumption, rationalize budgets, and prioritize cash flow management through shorter contract duration. The company also warned that newer customers may consume at a slower pace, that efficiency improvements in storage compression and cloud infrastructure could reduce resource consumption, and that competition and pricing pressures could affect results. Snowflake depends on third-party cloud infrastructure, and its consumption-based model gives limited visibility into the timing of revenue recognition. The company also faces a large stock-based compensation burden and ongoing investments in sales and marketing and research and development.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2023 | Q3 FY2023 | QoQ | Q4 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $589.0M | $557.0M | +5.7% | $383.8M | +53.5% |
| Gross profit | $383.4M | $366.3M | +4.7% | $249.6M | +53.6% |
| Gross margin | 65.1% | 65.8% | -0.7 pp | 65.0% | +0.0 pp |
| Research & development | $242.1M | $211.4M | +14.5% | $123.1M | +96.6% |
| Sales & marketing | $303.5M | $284.5M | +6.7% | $203.3M | +49.3% |
| General & administrative | $77.5M | $76.5M | +1.4% | $75.2M | +3.1% |
| Total operating expenses | $623.1M | $572.3M | +8.9% | $401.6M | +55.1% |
| Operating income (loss) | -$239.8M | -$206.0M | -16.4% | -$152.0M | -57.7% |
| Operating margin | -40.7% | -37.0% | -3.7 pp | -39.6% | -1.1 pp |
| Net income (loss) | -$207.5M | -$201.4M | -3.0% | -$132.2M | -57.0% |
| Net margin | -35.2% | -36.2% | +0.9 pp | -34.4% | -0.8 pp |
| Diluted EPS | -$0.65 | -$0.63 | -$0.02 | -$0.44 | -$0.21 |
Risks
Adverse macroeconomic conditions including higher inflation, higher interest rates, and capital market volatility are causing customers to optimize consumption, rationalize budgets, and prioritize cash flow management, including through shortened contract duration. MD&A identifies this as an impact on business and financial condition.
Snowflake recognizes revenue on consumption, giving less visibility than subscription models, and newer customers are increasing consumption at a slower pace than more tenured customers. Net revenue retention rate decreased to 158% as of January 31, 2023 from 177% as of January 31, 2022.
AWS, Azure, and GCP are both key infrastructure providers and primary competitors, and a substantial majority of Snowflake's business runs on AWS. These providers could bundle competing products, offer unfavorable pricing, or use their cloud control to disadvantage Snowflake.
Snowflake depends on AWS, Azure, and GCP, and in January 2023 amended one cloud infrastructure agreement to commit at least $2.5 billion from fiscal 2024 to fiscal 2028. Failure to meet the minimum purchase commitment requires paying the difference, which could negatively affect results of operations.
Recent stock price decreases and continued market volatility may reduce the actual or perceived value of employee equity awards, harming recruitment and retention. Snowflake may need to issue additional equity or increase cash compensation, which could negatively impact results and be dilutive.
Snowflake completed the $650.8 million Streamlit acquisition and $174.7 million Applica acquisition in fiscal 2023, and acquired Mountain and LeapYear in February 2023. Integration challenges, failure to achieve synergies, or impairment charges could harm results.
In February 2023 the board authorized a new stock repurchase program of up to $2.0 billion expiring March 2025. The program may not enhance long-term stockholder value, reduces cash available for other uses, and could be suspended or discontinued.
Sales to U.S. federal, state, local, and foreign governments and heavily regulated organizations involve certifications, competitive procurement, bid protests, audits, and complex compliance obligations. Failure to satisfy these requirements could restrict sales or lead to penalties and debarment.
Sales to large enterprise customers involve longer and less predictable cycles, greater upfront costs, and demands for implementation services and pricing discounts. Consumption growth from large enterprises has historically taken longer than from smaller enterprises.
Snowflake historically receives a higher volume of orders in the fourth fiscal quarter, with sequential RPO growth highest in that quarter. This seasonality is expected to become more pronounced as the company targets large enterprise customers.
Changes in tax laws, including the Inflation Reduction Act's 15% minimum tax on certain large corporations and 1% excise tax on share repurchases, could increase tax obligations. As of January 31, 2023, U.S. federal NOL carryforwards were $5.8 billion, with utilization subject to an 80% taxable income limit and ownership change limitations.
Snowflake must continue to innovate in response to changing customer needs, including use of artificial intelligence and machine learning, and expand governance and data sharing capabilities. Failure to keep pace with new technologies or regulations could adversely affect business and results.
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
Forbes Global 2000 Customers
Free Cash Flow
Customers with Trailing 12-Month Product Revenue > $1 Million
Customers with Trailing 12-Month Product Revenue > $10 Million
Customers with Trailing 12-Month Product Revenue > $5 Million
Summary, forecast, risks and KPIs are extracted from Snowflake Inc.'s SEC filings for Q4 FY2023 (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.