Q4 2020 Snowflake Inc. Earnings Call
Right.
[music] and.
Ladies and gentlemen, thank you for standing by and welcome to the Q4 FY 'twenty, One Snowflake earnings conference call.
At this time all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session day.
I ask the question during the session you will meet the press star one on your telephone if you require any further assistance. Please press star zero.
I would now like to hand, the conference over to your Speaker today, Jimmy Sexton and head of Investor Relations. Thank you. Please go ahead Sir.
Good afternoon, and thank you for joining us on Snowflake Q4 fiscal 2021 the earnings call. Joining me are Frank Sweetman, Our chairman and Chief Executive Officer, and Mike Scarpelli, Our Chief Financial Officer. During today's call. We will review our financial results for fourth quarter fiscal 2021, and discuss our guidance for the first quarter and full year fiscal 2022.
During today's call, we will make forward looking statements, including statements related to the expected performance of our business future financial results strategy.
Cash and features long term growth and overall future prospects. These statements are subject to risks and uncertainties, which could cause them to differ materially from actual results information concerning those risks is available and our earnings press release distributed after market close today and in our SEC filings, including our most recently filed form 10-Q and the form 10.
10-K for the fiscal year ended January 31, 2021 that we will file with the SEC. We caution you to not place undue reliance on forward looking statements and undertake no duty or obligation to update any forward looking statements as a result of new information future events or changes and our expectations.
We'd also like to point out that on today's call. We will report both GAAP and non-GAAP results. 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 presented in addition to and not as.
And as a substitute for financial measures calculated in accordance with GAAP to see the reconciliations of these non-GAAP financial measures. Please refer to our earnings press release distributed earlier today, and our Investor presentation, which are posted at investors Dot Snowflake Dot com a replay of today's call will also be posted on the website.
And I would now like to turn the call over to Frank.
Thanks, Jamie and good afternoon, everybody. We finished our fiscal year with strong consumption across our customer base with 116% growth year on year to $178 million in the fourth quarter product revenue.
Remaining performance obligations of $1 3 billion grew 213% year on year, reflecting strength in sales across the board.
Coupled with this rapid growth, we saw improving operating efficiency, while on boarding over 800, new employees for the year.
On a growth is driven by long term secular trends and data science and the analytics and enabled by cloud scale computing and Snowflake cloud Native software architecture.
Look the onslaught of digital transformation data operations become the beating heart of the modern enterprise customers realize that to survive and thrive the need to step up the data game given what is now possible with technology.
The snowflake data cloud enables breakthrough data strategies capacity limitations of the thing of the past the virtually no constraints on anymore on the number of workloads that can execute at the same time against the same data.
The performance of individual workloads has increased by orders of magnitude low latency has been reduced of similar proportions. The.
The only constraint less of budgets and our customers' imagination, and we believe those boundaries of shifting quickly as well.
The social of data cloud also breaks new ground in terms of of data access which is increasingly critical for data science artificial intelligence and machine learning workloads to the.
Days of mostly in silo analytics of number two the promise of data science is to discover and mobilized data relationships that can be go interest across a broad diversion diversity of data sources and data types.
The physical boundaries between datasets dictated by technology legacies have no, meaning or significance and data science.
Science six of the world's data as the single University of as easily and seamlessly frictionlessly traversed now sort of.
It's one giant database that is the essence of the snowflake data cloud World class workload execution, coupled with practically unfiltered data access across clouds cloud regions and <unk>.
Geographies.
Blackrock the world's largest asset manager has adopted the snowflake data cloud to help make the best investment decisions for the clients Lastly.
The last week, we announced a strategic partnership to launch the Aladdin data cloud powered by Snowflake.
Now, let and clients can combine aladdin portfolio of data with non and Aladdin data to analyze faster and create custom applications and dashboards clients.
Clients will have the single control plane to make data driven decisions around portfolio management trade execution investment operations analysis and risk management.
With the Aladdin and becoming a strategic part of the Snowflake data cloud or share goal of Blackrock is to create the cutting edge industry standard for access and governing and acting on data and of unified and governance day.
The environment.
The data cloud is inspiring more new conversations with customers and prospects and at least on to a different view of the data strategies going forward.
Active data share when the relationships and the snowflake data cloud on growing by leaps and bounds.
Increasing 51% quarter on quarter.
We're seeing rapid adoption of the snowflake marketplaces wealth with consumption attributable to data for marketplace providers up 48% quarter over quarter.
The new listings growing tenex year on year to a total of 380 as of the end of the fiscal year.
Newly added to the marketplace and Q4, our data providers, such as zoom and for Western Union and force square.
And we'll continue to push the campaign the largest enterprises and the world has proven to be successful, we added 19, and fortune 500 customers and Q4, including Mastercard genuine parts of Northern Trust.
For customers choose to partner with Snowflake because of the data cloud, we still must meet customers wherever they are on their technology journey.
Often the engagements begin with the migration of legacy data warehouse platforms, we have engaged and over 75 legacy migrations last year and we have identified many more for this year on the global system integration partners or Gsi's have seen the backlogs multiply and are rushing to staff trained and.
And the resources to meet the demands head on.
But while we team up with our Gsi's our strategy is to rely on our implementation partners for much of this work we were pleased to welcome Infosys to Snowflake elite partner status during the quarter.
And the Fortune 100 technology company has deployed snowflake across numerous lines of business since migrating their on premise data warehouse platform to snowflake because of the snowflake their marketing department cuts of more informed decision, making process with 20 times faster support for their customers.
For fiscal 2022, our focus of stroke turbocharged, our snowflake data club of massive workload of execution expansions and the refinements and as well as expanse of our data Federation with numerous new additions to the snowflake marketplace.
While our selling motions address some of the world's smallest as well as largest data estates and the world. We will have continued emphasis on landing and expanding and the largest enterprises and institutions not just in the Americas, but also on EMEA and Asia Pacific.
And we have announced new leadership and the latter region to accelerate the scale of the Snowflake campaign there.
A new global initiative, we began last year and are now accelerating is a vertical industry focus which is permeating, our sales and marketing alliances product and service organizations. We have long sold almost exclusively on architectural distinction, which have served us well and we will continue to do so and <unk>.
<unk> debt warranted, but on large enterprise focus has informed of the evolution to a go to market motion that is industry specific and outcome oriented.
We view this as the maturation of Snowflake and the large enterprise. We also now have so much critical mass and our targeted verticals coupled with industry specific data marketplaces debt.
The strategy will further differentiate snowflake.
We are super excited about the new year, we have the technology the talent and the organization to fully pursue our opportunity with.
With that and I will now turn the call over to Mike.
Frank Q4 was another quarter of exceptional execution and a strong finish to our first fiscal year as a publicly.
Our Q4 product revenues were $178 million, representing 116% year over year growth and the remaining performance obligations were one 3 billion.
The outperformance of consumption and spanned all verticals as we continue to see our customers deploy snowflake across their organizations are strong <unk> results continue to be driven by more and multimillion dollar deals as well as our customers' willingness to engage and multiyear contracts the one.
One 3 billion and <unk>, we expect approximately 55% to be recognized as revenue and the next 12 months as a reminder, this numbers and estimate and can fluctuate significantly due to our consumption and business model the.
The strong performance reflects snowflakes role as both a technology solution.
For a superior execution across workloads and as a strategic partner, enabling digital transformation through the data cloud, we continue to invest and growth opportunities and we are now benefiting from our maturing enterprise sales efforts and Q4, we saw the number of customers with greater than $1 million and.
Trailing 12 months product revenue increased to 77% up from 65 last quarter with 12 customers now consuming over $5 million on a trailing 12 month basis internationally, we have expanded our sales force across relevant geographies, we are seeing promising traction and these markets but remain.
And the early stages of this opportunity.
Turning to margins on a non-GAAP basis, our product gross margin was 70% up 400 basis points from last year.
<unk> cloud service agreements growing scale across regions, our enterprise success and ongoing discounting discipline, all contribute to steady gross margin improvement on.
The operating margin was negative 24% benefiting from revenue outperformance and continued <unk> savings.
Our adjusted free cash flow margin was 9% positively impacted by strong collections with Q4, being our largest bookings quarter cash inflows relating to our employee stock purchase program and the operating margin outperformance as a reminder, adjusted free cash flow excludes the impact of cash paid for <unk>.
Lawyer payroll taxes.
And employee stock transactions this quarter, we saw a $10 million impact from those items, where we will continue to focus on long term margin expansion and profitability. We do experience of free cash flow seasonality and Q1, and Q4 will continue to be our strongest free cash flow of quarters.
We are very proud of our strong free cash flow on a year over year basis, we cut our annual cash burn by 64% or $128 million or more than doubling the business.
And we have implemented operations that will help us show more profitability, while continuing to invest heavily in the business. We've ended the year and a strong cash position with approximately $5 1 billion and cash cash equivalents and short term and long term investments. This enables us to explore a number of strategic.
Initiatives, including Snowflake ventures, which has made several investments and the quarter, including data of robot hunters Noma and less work.
Our mission is to engage more organizations with the data cloud and all investments aimed to drive increased consumption of snowflake now, let's turn to our guidance and outlook.
For the first quarter of fiscal 2022, we expect product revenues between 195 and $200 million Rep.
The representing year over year growth between 92, and 96% turning to margins, we expect and on non-GAAP basis negative, 23% operating margin and we expect 289 million weighted average shares outstanding.
For the full year fiscal 2022, we expect product revenues to between one and one <unk> 2 billion.
Representing year over year growth between 81 and 84%.
Turning to profitability, we expect on a non-GAAP basis, 71% product gross margin negative, 19% operating margins and breakeven adjusted free cash flow and we expect 295 million weighted average shares outstanding.
The outlook includes increased investments and are fed ramp initiatives and accelerating migration off of legacy solutions, both of which will drive enterprise customer success and in order to support our growth and initiatives. We plan on adding more than 200 net new employees during the year.
With respect to Covid, our forecast assumes that we will continue to work remotely for the foreseeable future with and increase the potential travel expenses and the back half of the year, we are benefiting from strong productivity and our current environment and we have successfully on boarded and ramped new employees since March 2020, where we anticipated and events.
We will return to the office, we do not have a specific timeline for that goal.
Before closing I'd like to note a few recent or upcoming events today, we announced that on March one 2021 are class b shareholders in accordance with our governing documents converted all of our class B common stock the class a common stock eliminating the dual class structure of our common stock and ensuring that each share.
<unk> has an equal vote.
This is operationally beneficial to the company and our shareholders. In addition, the restrictions under our IPO lockup expire on March 5th and almost all remaining share has not purchased and the private placement of our secondary transactions concurrent with our IPO will no longer be subject to the lockup agreement and lastly, we will have.
The virtual Investor day in conjunction with Snowflake Summit, our annual users conference the week of June seven.
Your interest in attending please email IR at Snowflake Dot com with that operator, you can now open up the line for questions.
Certainly.
A reminder to ask a question and you will need to press star one on your telephone to withdraw your question perhaps of the founder of cash Keith Please standby, while we compile the Q&A roster.
Your first question comes from the line of Raimo <unk> with Barclays. Your line is open.
Hey, Congrats that was the sale of amazing numbers.
The first one.
And frankly this quarter, we saw a little bit more noise around the kind of market activity I think it's probably because of your success can you see.
If you experience any changes on the competitive dynamic out there and then the follow up on Mike.
Now stable and and.
Certainly from the public cloud standpoint.
Paul.
Of course.
While there's no change there either.
If I sort of kick of global perspective on I would say that I feel that our competitive position is gradually strengthening and and just basing that on the.
And the types of interactions, we have with customers, where operating far more of a CEO level now.
And at the highest level of IDT.
So theres definitely I feel on inflection debt of this.
And that is reflected.
And the relative position of the company and marketplace, which we feel is very good.
Okay perfect. Thank you. Thank you.
And I mean, we see the progress this year and if you gave us guidance and just.
And.
The growth margin improvement, we're going to add.
And the.
And year.
Yes.
Is it more of the economy.
The tracks with the with the cloud providers or what's driving it going forward and what's left to do for you to reach the long term goals.
Thank you.
I would say the the contracts with the cloud providers started kicking in in Q3, and we had the full benefit in Q4, I don't anticipate of renegotiating our cloud contracts next year, we may be in a situation at the end of the year, but I'm not expecting that.
It's really driven by getting more scale within our existing deployments we are of a number of deployments.
We're not at scale and we see those ramping right now as an example, like Japan, Japan has been running at a negative gross margin because we just don't have very many customers, but we're starting to ramp there and that will turn around and places but also.
The larger enterprises they tend to.
By our higher edition of our bid.
The since critical yes.
Yes, those big customers require more discounting but.
Gross margin, which gives us the confidence.
That will get to those mid seventies and is that going to happen next year, but.
Steve and continued gradual improvement.
Okay.
Perfect. Thank you and progress.
Great, Thanks, and congrats as well.
Sure Frank.
Are you feeling.
For the good clip and keep up.
The demand trends out there, particularly.
And then heading into the new.
Tweaks of Youre planning that you would call out.
Yes, so on so our salespeople I think we're we're doing.
Now the organization.
Sure you know that.
Yeah.
And I forgot we separated as our U S selling organization and enterprise.
And what we call majors, which are the largest 200 or so accounts and we've really stepped up.
Of our staffing and that of our organization really the hiring of the absolute best people.
Available on the marketplace for those are all some of them really positive on that in terms of.
And what's changing on our on go to market I referenced in the prepared remarks, and I mean, our selling motions and our.
Our general posture.
And in accounts and and we find as very important debt when we interact with customers. There is always and the industry contacts from the conversation.
We're much more outcome oriented.
Mers are sometimes interested and in.
And architecture, and things of that sort and comparing workloads and and all of that.
But increasingly and when you get higher up and larger enterprises. They just want to know what it means to the business on our other people doing.
So that is of significant change and we are investing.
At every level and the organization and so starting with products.
Moving into marketing and moving into alliances as well as into sales on.
So this is this is a very serious effort that started last year and that will continue on underway. This year.
Great, Thanks, and Mike and maybe one for you nice uptick and new customers and the quarter.
And anything to call out to what's helping drive that acceleration is it.
Better productivity or more capacity or.
Is it something youre starting to see this viral network and the fact premier data sharing is that the is that something that can move the needle.
Starting to help lift the customer generation.
Well I would say there was definitely a increase in average productivity per rep and terms of the number of Caf one deals that they brought in on average.
And in terms of the data sharing I don't have any specific data on that but that is clearly a discussion point with every customer and one of the reasons why they choose to go with snowflake or it helps the decision to go with Snowflake.
But it's also the fact that we're ramping and we've been adding so many reps and we've been ramping those people.
Great well done thanks.
Thanks.
Your next question comes from the line of Patrick Colville with Deutsche Bank. Your line is open.
Okay. Thank you so much for taking the question and congrats on a.
The impressive set of numbers I, just wanted to touch on the competitive environment.
The question of arena was around competition with the cloud native vendors.
And one of the.
And legacy on Prem vendors, and perhaps some pretty impressive cloud numbers a month ago.
How the dynamics with the.
And the incumbents.
Shaping out.
Yes.
On that please.
Patrick shrank.
And I can honestly say that in my almost two year share.
Never seen the legacy provider being and.
Running in the running for.
For our go forward.
Thus the nation for the platform if you will.
On the competition.
All of US moving off of legacy platforms and the competition has been very very focused on the on the public cloud options.
What I will say is that.
And we're seeing the public cloud vendors, having significant struggles in terms of migrating successfully.
Of these legacy platforms, which of course <unk>.
And.
The relative strength to DS.
And through some of these legacy providers I think the snowflake is really the only.
Platform that has successfully and consistently and now at scale.
Moving these workloads.
And to the cloud.
Just to some degree of the legacy providers are hanging in there longer.
Because of you're not go on the Snowflake youre going to of a struggle on your hands and that's sort of my commentary on that topic.
Yes.
And can I sort of a quick follow on for Mike possible.
It seemed like and.
And in guidance is net.
One Q covenants.
No.
Sure absolutely not slowing.
Paring down as I've, just mentioned and we're going to add 200 people next year actually Q1 is a very very big on boarding quarter. It will be probably the largest quarter of the year, because we're onboarding a lot of people on the sales and marketing organization and in advance of our sales kickoff that we just had.
We are investing as quickly and well being efficient and our business as we can.
Okay. Thank you so much.
Congrats on the.
<unk> net results. Thank.
Thank you.
Your next question comes from the line of Brad Zelnick Credit Suisse. Your line is open.
Excellent and I echo the congrats as well well done guys.
I've got one for Frank and maybe one for Mike Frank can you share more about Blackrock partnership with Aladdin and cloud on the Snowflake data cloud specifically can you talk about the economics of these types of relationships and the success criteria and she used for gauging the progress and maybe as well how many partnerships like this are out there to go after.
Now theres a lot of partnerships out there.
There to go after I think thats debt announcement by itself trigger.
And a whole rash of conversations of both from the financial industry and as <unk>.
All of those other industries this whole conversation around.
Customers building their own data cloud and that's really the the center of their universe of the way day interact with their partners their customers.
Their stakeholders as a huge idea and people are seeing the opportunity.
And the potential and.
Obviously for.
Blackrock because they are the world's largest asset manager and whatever it is 'twenty one 'twenty two trillion dollars of asset.
On the management they realized that the they.
And they needed to modernize and transform.
Two weighted to <unk>.
And economic standpoint, its really no different than what we're doing and in other words, it's not a different line of business for US is the same product same business practices and <unk>.
So on but obviously these relationships are highly.
Strategic to us become they become cornerstones to the snowflake data cloud and the data of universe because of this is the induces network effect of all over the place.
And from people that need to have access to this data and provide access.
That's it.
I wanted to get their date of the most efficient way.
And I have to be snowflake customers.
Excellent that makes perfect sense and Mike maybe just to follow up with you it is free.
The net retention continues.
To be really strong.
I think best in class of anything else, we look at the as months how are they tracking.
Can you just asked differently, how do we think.
Think about the the.
The size of your.
King and informs your view of ours.
And that retention rate going forward.
Yeah. So I do expect net retention rate this year to remain north of 160 throughout the year is what we're what we see right now and.
In terms of average deal size landing and that is not changing.
And.
And I want to stress.
Yes.
It takes customers, especially if youre doing it and legacy migration.
And we start to recognize any consumption revenue from those customers because they're doing the data migration and what we find is so they consume very little and the first six months.
And consume their entire contract.
That's when most customers are doing the multi.
Year renewals once they've proven the use case on snowflake and so I haven't seen much difference other than.
And Frank came Aerie really.
And we started focusing more on enterprise customers. We are landing more of 500 customers we talked about.
And at 19 and in the quarter.
But those 19, we landed just too.
Reiterate we recognize virtually no revenue on those customers. That's all on the <unk> that will be and the next 12 months.
Awesome. Thanks, so much channel and then and stay well.
Thank you.
Your next question comes from the line of Patrick <unk> with JMP.
Loans.
Oh, great. Thank you and congratulations.
Frank and Mike can you double click on the migration. So why is it so hard to migrate legacy data warehouse what are the steps yet.
Sure.
And so time consuming and and what is the is about.
It looked like platform that makes it so much better suited to do it and the cloud providers.
So it's a great question. So first of all database and migrations have been hard since kind of memorial that never been easy they are and lengthy to the.
<unk> been risky.
And customers are quite leery of them as well and one of the reasons.
Debt, while we can we can analyze the data with the structures. We can analyze the code we automatically convert a lot of it usually there is no straightforward mapping of some of the data between these databases and now for example.
And you take some of the legacy flavors out there they.
Have proprietary artifacts that simply do not have of counterparts.
Both sides of the Snowflake as of completion standard NCC Quill and environment. So that means that we have to reengineer we have too.
And reason, they're structured and we have to optimize workloads.
Things of that sort the integrity of the data is absolutely everything on your side. They are getting exactly the same results that they were getting before the.
The integrity is 100% maintained.
And there is this not a matter of just.
And the strong and a big switch and hoping for the best So that's first and a little bit of color and texture and why these things are viewed as sort of a high friction and now we're good at it.
Because of our expert side of this is this is what we do and.
We have a ton of experience do on other dwell has a lot of the tooling.
That we have to support these efforts, resulting in and.
And very good results very predictable results and time wise cost wise and outcomes.
So thats why.
Alright, Thats very helpful. Thank you.
Your next question comes from the line of Brent Thill with Jefferies. Your line is open.
Thanks, Frank of lot of the customers are excited.
Journey to unstructured I'm, just curious if you could on.
And it's on on that journey and how far out on.
Our customers can have the weight what are you starting to see in terms of some of the discussions around the commitments.
From a strategy standpoint is something we absolutely have to do when you think of data sciences.
The data relationships don't just exist between like data that exists between between structured and on structure.
Structured data and Thats actually where a lot of the power is going to come from the type of signals that we can drive out of the data and I think I said last time that we're going to really substantially update the world's on where we are with that as well as demonstrate.
And our June user of events. So you should really expect the second half where youre going to the CD.
Real results of the strategy starting to become available and private previews and.
Things of that sort of.
And one of the other things that the customers keep talking through Frank.
And some of the partnerships, whether it's with tableau and salesforce or thoughts spot some of the debt.
Other interfaces that making your gain of more consumable by the mass market and we've heard some incredible stories of of <unk>.
Customers moving faster with you because of the partnership can you just bring it up the speed on what.
And what you're hearing and seeing from customers and what some of the with some of the deployments look like that youre hearing kind of common common and feedback on thanks.
Well, we have for the relationship literally with every single business intelligence.
On the a tableau is definitely the largest one.
But we also have we're going gangbusters with power bi which is the Microsoft product also and we're going to and we expect to see a lot of growth.
And that area as well.
And so.
Were those relationships are really really solid we have.
The product of our own cold snow sites, which is really not meant to be so much competitive with the likes of tableau and power bi and many of the others.
And that's really.
Our homegrown if you will embedded product really for data analysts as opposed to four and user distribution the.
And there is no doubt that snowflake mix these products absolutely, saying.
It's just the sheer scale of execution and the performance the provisioning.
No no without snowflake, it's just very difficult for these products to really have the snap the snap be dynamic performance debt users are looking for so the combination of these technology snowflake with the hold.
And the entire family of of by products.
Products up to very very important to the to deliver of goods sort of the end result of the customer.
Thanks, Brian.
Your next question comes from the line of Kash Rangan with Goldman Sachs. Your line is open.
Hey, guys. Thank you very much congratulations on a superb quarter.
Two questions Frank one for you.
You talked about how the decisions are increasingly being made by the sea level not the just the CIO, but CEO level can you talk about how they are looking at snowflake in relation to the digital transformation initiatives generally here.
And experience employee experience, that's fairly digital and the campus to connect the dots what are your CEO of customers see your thinking and rigor.
Snowflake and us nothing specifically and as I've said.
The digital transformation.
Maybe I'll just stop of that.
Yes.
So the.
The the angle there taking is one of digital transformation.
And it organizations are typically focused on what we call modernization of their kick and existing workloads.
And they want to move them from the on premise environment to the cloud.
But essentially take advantage of the utility model and all of that was fundamentally running the same workloads.
On the platform like Snowflake.
And you get to two business people and CEO of Theyre looking for new angles, and Theyre looking for transformation not just not just modernization. So it's often very easy to.
The two determine and and these conversations what are what are the people on.
After doing things differently and looking for advantage and digital transformation plays the plays a big role and what that means here and just.
And that.
And they are looking to drive signals out of their data the trying to do.
To define data relationships.
Through.
Through data models that data and can take advantage of and the once I can describe the date of relationship I can't predict it to the mic uneven.
Prescriptions out of the as well and things are going to enter and digital lights out.
Lightspeed so it's it's.
The digital transformation is the big thing you can think of things like really improving the efficiency and yields on marketing and sales outreach on improving service experiences.
And obviously very very very high scale, and very very high position and very very high economy on these type of processes compared to what the historically.
I've done the data cloud is central to these conversations one of the things that we drive very hard as that and future data operations are going to be very much dominated by the data really moving and in orbit and were in other words data is flowing between partners and all kinds of stakeholders and people on it.
Able to not just analyzed data and silos with very.
Loosely address data and really across the really a very broad orbit.
And includes their own data, but then the external data sources of data from partners, social media and Iot structured on structured that's really where the people out looking for significant advantage from where they historically have been.
Got it and I can answer that Scott.
The customers what are the problems.
Pushing you into the could open up new opportunities on the.
Thank you so much.
Sure.
Our biggest customers what are the opportunities of pushing us into.
And the opportunities that are central to the conversations with our bigger customers are data cloud oriented that means of establishing data and networking relationships not just internally, but especially externally I mean, we're well on our way on our journey.
Disclose some of the.
Some of the growth rates and our prepared remarks, but that conversation is front and center and with every single customer everybody is trying to figure out.
Historically, we have share data through Apis and through file transfer of processes cutting and replicating. It has been an enormous struggle the opportunity with snowflake is to make this zero latency zero friction completely seamless so and there's an enormous game changer too.
People are used to and and what the status quo.
Super Thank you.
Your next question comes from the line of Brad Reback with Stifel. Your line is open.
Great. Thanks, very much Frank early and the call you talked about the.
The limit the limit listen it's the nature of the of the product set.
And that it's only limited by the the customer's imagination, how do you help those clients manage budgeting and shoes, given the usage that the rack up on the system very quickly.
Yes, good question and certainly the topic that we discuss off on the big change and paradigm is the historically.
And on premise data centers people will have to manage capacity and now they don't manage capacity anymore, but the need to manage consumption and.
That's the new tank.
And for everybody, but for the for most of the people that are in the public cloud.
Have gotten used to the notion of consumption of obviously because of the applies equally to do the infrastructure clouds.
We do a lot we have full blown chargeback capabilities. So that the consumers are of compute and all of our service and really accountable for what they do and don't do we of Heartland as we of soft limits. We have notifications we of dashboards. So theres a lot of ways to do this but at the at the same time.
The stairs.
People are really.
And so motivated and inspired by the capabilities that they have now I'll sometimes.
Net a little bit.
The other control in terms of the amount of processing.
And that they were planning to do.
Very very bullish and situations I mean, we've been bottled up.
Iteratively for generations and now there is the situation where there is no upper limit to how much you can do.
And that's.
And thats intoxicated quite honestly and.
We also see organizations really getting used to.
Managing consumption and and how much do we really want to allow because oftentimes. They are very compelling business reasons, why they do need to consume the.
Services as opposed to the just looking at the amount of spend.
So.
And it's manageable, but it's a new discipline, and it's and new mindset that everybody needs to get their head around and we provide the infrastructure and governance capabilities to do that.
Great. Thanks very much.
Sure.
Your next.
Question comes from the line of Brent <unk> with Piper Sandler Your line is open.
Sure.
Good afternoon, and thanks for taking the question one quick one for you Mike and then follow up for Frank the.
Dollar value of new contract signings.
And in Q4 exceeded all of US all of last year and so my question is is there some seasonality of that drove that or is this just improving sales productivity walk me through the drivers there of.
The RPM of momentum you saw on Q4, and then one quick follow up.
So number of things, obviously, you're always going to get seasonality because thats the bookings.
Number and obviously salespeople and Q4 are going to try to maximize their acceleration there into but it's also a function of the number of reps that we have and our ramped up.
And it's also a function of the fact that we're getting into larger customers as well too and it's not just the larger new customers its existing large customers with big renewals, because we're growing within those customers and the multi year component of those.
Customers as I mentioned earlier, most initial what we call cap one customers are.
Quarter and to be one year contracts and as the renewal and the follow on that tends to be the multi year once they prove and the use cases, that's not always the case, that's just what we've been seeing historically I do expect as we.
Become a larger company and we'll see more and more of those capacity of one customer sign up for multiyear deals day, one as well.
Got it helpful color there and then the Frank we've heard internal use case for data sharing inside of the corporation has the.
Potentially become and believe the killer App here you have some great stats on data marketplace, which is really around sharing data externally but.
Do you have any color for us around internal use cases for data sharing or are you seeing any sort of material changes and customer interest for internal data sharing and use cases.
And the interesting thing is in the most of the data sharing is actually externally.
Not the internally and one of the reasons is.
And as I look of some of our larger customers.
We maintain a single copy of all of the data and the allow all of the debt.
The operating functions and departments and business units to execute clusters against a single copy of the data so they're sharing data effectively and because they are having on <unk>.
And a single copy of the data right.
You don't have to take advantage of all of our data exchanges and data sharing because they are literally.
Moving on the same copy of the data and that's probably the reason why we sort of have two modes of sharing.
One is really tightly coupled where everybody sits on the same data and the other one is the more loosely coupled one of which is through our data sharing architecture and customers can actually mix and match the defense and their culture and and how much day, they want to of custody of their own data and.
And things of that sort of sort.
And that drives where they land on that.
And the architecturally the tightest model that we have is where there is one company as of the data for the entire enterprise and anybody that that once the process against that data they fire of their own warehouses and their own clusters and they run their own workloads and.
That's an extremely successful model for force Snowflake and our customers.
Yes.
Okay. Thank you.
Your next question comes from the line of gains of times with Canaccord Genuity. Your line is open.
Hey, Thanks, guys.
All of the losses that congrats on really impressive numbers.
Just wanted some striking the right is there any way to think about.
The dollar spent with Cara data on one of the legacy VW vendors turns into <unk>.
X amount of spend with Snowflake and I don't know if you can think about it that way, but I, sometimes get investors, saying hey.
Sarah data would be getting a little less than 3 billion and revenue and.
And I realize they're not the only share and donate on and I realize this is not only replacement, but it gets at the question of like how big can snowflake really get any any any thoughts to help us kind of frame that question.
Yes, the interesting thing and as debt.
A lot of the Terra data migration and we have done customers are telling us.
Spending half the money and we're doing 10 times the amount of work and that may not be like Q1, and here, but obviously, that's a hell of a deal for them.
And what's really expanding the marketplace is that historically there had been fixed capacity limits on how much of work you could do and those are gone on there.
And.
On the Snowflake platform you can run as many of our close concurrently and you can provision and those individual workloads.
And as much as you need to.
So all of the settlement of like Hey, I don't have to wait in line for 242 of M slot to run my little job.
Everything runs concurrently as much as you can possibly and.
Imagine that you want to do obviously there is of financial consequence to.
Running a ton of workloads, but there's no operational limit on that.
What that does is it's really starts inspire people to do thanks to and never entertain because there was not a possibility.
For them to to ever do that so we're sort of interest in this period, while we're unleashing all of this imagination.
Well as all of the backlog that has already existed at the.
And that people are just rushing towards now and because data is the driver of digital transformation. It is really the signals that fuel digital processes.
It's just very very core comp.
Component to how enterprises are evolving.
And then just market can get we've been told by a number of our customers that we're just we're the second largest line item in their budget behind the public clouds and that may come as the shaft to sun, but I'm, telling you that that's not going to be out of the ordinary going forward based on what we're seeing.
Perfect. Thank you guys.
Your next question comes from the line of Mark Murphy with Jpmorgan. Your line is open.
Thank you Frank at the data cloud summit, and while I had mentioned the goal to.
Try to reduce the end to end date of latency by 10 times from where it is today.
Pretty amazing Golar I was wondering if you could walk us through how long you think that might take and what types of new opportunities that could open up.
Maybe sort of more complex analysis of larger AI models, and so forth inside of the snowflake.
Yes, probably should bring the new oriented.
Let him answer the question.
One of the areas that we are investing and where we have extraordinary talent that we of attractions of the company is where are our event driven architectures.
As of today.
Or are you of that latency of sort of the second 10 minutes right that you want to drive that down.
Two seconds and dramatically sub second you start to open up use cases that are just very different other really not approachable by a platform approach today, they really require very single purpose of.
Optimizations and you.
And think about.
Electronic trading and all of these things.
On the latency has to be.
Approaching zero debt.
Debt obviously.
And that's it requires tremendous optimization.
On our part and we are working on that because we see that as a very very critical part of the.
The ongoing evolution of digital transformation and now we're doing a lot of stuff debt. This.
And what our capabilities of our today are totally adequate.
But we are foreseeing, a world, where and gives us been offset by or we have to become much much faster.
And then what we've done so far and sort of certainly we have that room up we know how to do it. So again. The this is going to expand the marketplace and places where.
These technologies have historically have not been.
Thank you and as a quick follow up Mike.
Sounds like Youre, moving upmarket and engaging with more and large enterprise and its pretty rapidly are you seeing a higher mix of the snowflake usage on Microsoft Microsoft Azure or should we should we pencil and AWS sticking around.
I think it's been 80% to 85% of the use of it do you think it would hang in there for this fiscal year.
I think AWS will continue to be our largest cloud for quite some time, but we are definitely seeing a lot of.
Large enterprise customers choosing to go with Microsoft, but there as I mentioned the revenue is the lagging when we book the deal. So it's going to be for the second half of the year and even in 2020, our fiscal 2023, I think youre going to see.
Measure kick up as a percentage, but we still think AWS will remain our number one and cloud partner.
Thank you and congrats.
Your next question comes from the line of Tyler Radke with Citi Your loans.
Hey, Thanks, very much for taking my questions and appreciate the stats on.
On data sharing.
Wanted to ask you about that the.
The strength, there and I wanted to see if thats, helping you accelerate the win of new logos and if youre able to land with that use case and maybe of customer aware.
You hadn't been successful before and then as I think about that going forward I mean do you think.
Data sharing to get to a point, where you start breaking out that revenue over time. Thank you.
Well.
I am certainly hoping that we will break out the revenue over time, but obviously.
And we're not there and we are in it.
We don't know when that will be but youll be the first to know what I will tell you the.
The data cloud conversation is so highly differentiated that even in the accounts that are completely gone.
Eliminated bye bye incumbents.
And that has reopened some of the conversation and we've seen that over and over and over and so it's.
We love it because it's just the conversation goes from.
And just modernizing existing workloads fragrance of the cloud doing poc's benchmarking to all of the sudden we're talking about complete innovation and transformation.
And that's.
That's that's inspiring for the customer and obviously, it's great for grid for Snowflake.
I will just add to that Tyler that I don't anticipate breaking out data sharing revenue anytime because it will be difficult and the reason I say that is because.
And the whole data sharing is going to drive people to use snowflake, because theyre going to have to consume their data, but thats just the piece of their data, but they will then do is to everything on snowflake, where they're pulling their own data sources from other places. So it is all co mingled together at the end of the day, what data sharing doses of drive stickiness and it drives consumption.
Got it I think Frank that and I hope step around the disclosure of that.
Is that the accounts.
Yeah.
Just a follow up.
And Youre thinking about this year and curious how your assumptions are on on close rates and.
What are you putting into the forecast relative to last year as you think about the macro environment. Thank you.
I would just say we gave guidance for next year and Youre going to continue to see growth next year and we feel very good about what we're seeing right now and we're not really seeing any impact on the macro and our business at all.
Thank you.
Your next question comes from the line of Mark <unk> with Morgan Stanley. Your line is open.
Hi, Mark on the on for Keith Thanks for taking my question and congrats on the strong quarter I guess, just one for me.
But with the evolution of the go to market or vertical specific solutions.
The better penetrate large customers like is there anything to call out in terms of the potential impact on the pace of large deals on our execution more broadly and then I guess generally what verticals are next out there and of financial services.
Yes.
In terms of verticals.
Media.
Media and Tech are huge financial services healthcare life Sciences public sector and on the whole the whole <unk> platform and going on and the software companies data applications.
And so there's.
And then we have.
The retail consumer packaged goods.
The very important vertical for US also so we have a lot of concurrent activity going on.
Most of that is really related to our customers understanding who else is on snowflake inside of our vertical Howard and using it.
Are the use cases and what are the outcomes how are they doing it.
And for us to be very very proficient and then also in terms of.
What are the data marketplace and data cloud context, and that vertical and there were some of the data sources are they using on the outside of are they providing data are the consuming data from the outside so those debt those are really the the conversation that were shifting towards and what are they getting out of it in terms of business benefit and outcomes and it's <unk>.
Very very specific.
<unk> of our business. So this is a considerable shift because on the past there was always workload comparisons POC.
Benchmarks.
Fast as is and just job running versus the square it.
And now we're at a level, where we're really fully engaged on the top of the house and the business itself. So it's the.
It's a very great for us because of the selling motion while theres nothing wrong with this this brings another level of strength to our outreach.
Great. Thank you.
Your final question comes from the line of Andrew Nowinski with D. A Davidson your line is open.
Great. Thank you for squeezing me in so I just wanted to start with a question on the $1 million.
Are more customers really strong growth again, this quarter and I know that the trailing 12 month calculation side I would assume.
Some of that is coming from your existing customers versus new customers, but I'm. Just wondering if you could provide any more color on maybe around whats the whats driving that.
Well I would say, 100% of that is coming from existing old customers.
And because as I said any customer we signed up and the current last fiscal year. It takes them six plus months to ramp those significant customers. So it's.
It's really coming from our existing customers and we have a number of other customers that are on the cusp of that so we think we'll continue to see that growth and millions of dollars plus trailing 12 month revenue customers.
Going into next year.
That's great. Thanks, Mike and then.
Maybe just a quick follow up on your guidance Q.
Q1, certainly looks.
Coming off of a great Q4.
Q1 looked a little bit.
The lower than expected, but then on the annual outlook was fantastic across the board across all metrics. It looks like youre expecting somewhat more of a stronger back half of the year and I'm. Just wondering if you could provide any more color on kind of assumptions for Q1 near term versus the back half of the year, Yes, I don't think Thats correct Andrew Q.
One is actually a very strong guide relative to where consensus is.
And.
And.
And we're seeing strength into.
Q1 on our business.
And I think the guidance for the full year is prudent given this is the start of the fiscal year.
Okay very good thanks, Mike.
Okay.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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