Snowflake has posted another quarter of strong growth, expanding its AI ambitions with a $200 million deal to bring Anthropic’s Claude models deeper into its data platform.
Revenues in the quarter ended October 31 were $1.21 billion, a rise of 29 percent year-on-year with a $293.9 million GAAP loss, reduced by 9.4 percent from a year ago, as Snowflake manages its controlled expansion spending. It was a modest beat of Wall Street expectations with analyst Jason Ader saying that this happened: “despite a $1 million-$2 million headwind from the Amazon outage.”
CEO Sridhar Ramaswamy said: “Snowflake delivered another strong quarter … Snowflake Intelligence, our enterprise AI agent, saw the fastest adoption ramp in Snowflake history and is transforming how businesses interact with their data, delivering real-time, actionable intelligence. Combined with our strategic partnerships with the world’s leading AI model providers, clouds and application platforms, Snowflake is supercharging the entire data lifecycle with AI-driven capabilities.”
Product revenue was up 29 percent to $1.16 billion and remaining performance obligations rose 37 percent to $7.88 billion. The net revenue retention rate was 125 percent, meaning every dollar spent by customers at the start of the period measured was $1.25 at the end. A rate between 115 and 125 percent is best-in-class for high-growth SaaS businesses. The customer count increased by 559 to 12,621. Four nine-figure deals were signed in the quarter.
Financial summary
- Gross margin: 72 percent vs 71 percent a year ago
- Free cash flow: $113.6 million
- Cash, cash equivalents and restricted cash: $1.98 billion vs $2.17 billion a year ago
A characteristic of Snowflake’s business is that 78 percent of its revenues come from the Americas, primarily North America, with 16 percent in Europe, the Middle East and Africa, and 6 percent in the Asia-Pacific and Japan region.
The deal with Anthropic builds on an existing partnership, with Snowflake buying services from Anthropic for $200 million. It also has a joint global go-to-market (GTM) initiative focused on “deploying state-of-the-art AI agents on Snowflake capable of handling multi-step analysis, powered by Claude’s advanced reasoning capabilities and ability to securely handle sensitive data.” Claude becomes a key model for Snowflake’s enterprise intelligence agent, Snowflake Intelligence. We’re told thousands of Snowflake customers are processing trillions of Claude tokens per month through Snowflake Cortex AI, its fully managed GenAI service.
Ramaswamy said: “Anthropic joins a very select group of partners where we have nine-figure alignment, co-innovation at the product level, and a proven track record of executing together for customers worldwide. Together, the combined power of Snowflake and Claude is raising the bar for how enterprises deploy scalable, context-aware AI on top of their most critical business data.”
Snowflake is not, however, going all-in on Claude. Ramaswamy said in the earnings call: “A few weeks ago, we announced our partnership with Google Cloud to make the latest Gemini models available to our 12,600-plus customers within Cortex AI and Snowflake Intelligence.”
He also said that AI’s momentum “has enabled us to achieve a major milestone. $100 million in AI revenue run rate achieved one quarter earlier than anticipated.”
Snowflake said it was the second ISV ever to surpass $2 billion in transacted revenue on AWS’s Marketplace in a calendar year. Consultancy group Accenture is riding Snowflake’s enterprise growth by setting up an Accenture Snowflake Business Group (ASBG) to provide AI-driven services, expanded training and certifications, and a new global Center of Excellence. Accenture will train 5,000 of its staff on Snowflake’s services.
Next quarter’s revenue outlook is $1.1975 billion ± $2.5 million with 27 percent year-on-year growth at the mid-point. Snowflake’s full fiscal 2026 year product revenue outlook was $4.395 billion. But Ramaswamy said: “We are increasing our growth expectations for the year,” and product revenues are now predicted to be $4.446 billion, up 28 percent year-on-year.
Comment
As far as Snowflake is concerned, generative AI is real. Its customers are using large language models and agent technology with no AI bubble aspect to this. Its competitor, Databricks, would concur.
Bootnote
Product revenue is primarily derived from the consumption of compute, storage, and data transfer resources by customers on Snowflake’s platform. Remaining performance obligations (RPO) represent the amount of contracted future revenue that has not yet been recognized.
