Q1 2026 Snowflake Inc Earnings Call
Good afternoon, and thank you for attending the Snowflake in Q1 fiscal year 'twenty six earnings call. My name is Matt and I'll be the moderator for todays call all lines, we meet at the presentation portion of the call. It's an opportunity for questions and answers at the end. If you would like to ask a question. Please press star one on your telephone keypad and I'll have to pass the conference.
Jimmy: Our host Jimmy <unk> head of Investor Relations.
Jimmy: Please go ahead.
Speaker Change: Good afternoon, and thank you for joining us until Q1 fiscal 2026 earnings call. Joining me on the call today are street, a ramaswami, our Chief Executive Officer, Mike Scarpelli, Our Chief Financial Officer, and Christine <unk>, Our executive Vice President of product well participate in the Q&A.
Speaker Change: During today's call, we will review our financial results for the first quarter of fiscal 2026, and discuss our guidance for the second quarter and full year fiscal 2026.
Speaker Change: During today's call, we will make forward looking statements, including statements related to our business operations and financial performance. These statements are subject to risks and uncertainties, which could cause them to differ materially from our actual results.
Speaker Change: Information concerning these risks and uncertainties is available in our earnings press release, our most recent forms 10-K 10-Q.
Speaker Change: And other SEC reports all our statements are made as of today based on information currently available to us except as required by law, we assume no obligation to update any such statements.
Speaker Change: During today's call. We will also discuss certain non-GAAP financial measures see our investor presentation for a reconciliation of GAAP to non-GAAP measures and business metric definition, including adoption. The earnings press release and Investor presentation are available on our website at investors out sounds like Dot Com a replay of today's call will also be posted on the website with that I would now like to turn the call.
Speaker Change: Over to <unk>.
<unk>: Thanks, Jamie.
Speaker Change: Everyone.
Speaker Change: Thank you all for joining us today.
Speaker Change: We are off to a strong start to the year and I couldnt be more proud of our team.
Speaker Change: Our core business is very strong.
Speaker Change: Our product delivery remains in overdrive.
Speaker Change: Go to market engine continues to get stronger and stronger.
Speaker Change: We are in the zone and there's still an enormous opportunity ahead.
Speaker Change: Absolutely our mission is to empower.
Speaker Change: Enterprise.
Speaker Change: Full potential so data and AI.
Speaker Change: Our AI data cloud customers get more value out of their data.
Speaker Change: It is faster and remove friction from their business operations.
Speaker Change: And as I have shared in the past few quarters, we are extending that value.
Speaker Change: The data lifecycle.
Speaker Change: We remain disciplined in driving operational rigor across our business gaining greater efficiency, even as we continued to invest aggressively in growth.
Speaker Change: We are building on our strengths and executing with urgency and focus to capture the opportunities ahead and sustained durable momentum.
Speaker Change: Product revenue for Q1 was $997 million.
Speaker Change: Up a strong 26% year over year.
Speaker Change: Excluding the impact of leap year product revenue grew 28% year over year.
Speaker Change: Our growth rate was stable quarter over quarter, showing no deceleration.
Speaker Change: The remaining performance obligations totaled $6 7 billion.
Speaker Change: But year over year growth of 34%.
Speaker Change: Our net revenue retention.
Speaker Change: A very healthy 124%.
Speaker Change: I think I can see you started the year with strong revenue growth and overall very healthy results.
Speaker Change: We are increasing our growth expectations for the year.
Speaker Change: As I've shared in the past few quarters Salt Lake is obsessed with creating products cohesion to make it easier and easier for our customers to innovate faster and unlock more value from their data from ingestion.
Speaker Change: Yes.
Speaker Change: Enterprise leaders like Kendall and Jpmorgan Chase.
Speaker Change: Our business on Snowflake, because our platform is easy to use.
Speaker Change: To enable a fluid access to data wherever it's at.
Speaker Change: And trusted by companies of all sizes and industries.
Speaker Change: And we're continuing to deliver on our vision of being the end to end technology provider for our customers' danaher.
Speaker Change: We've made important progress in delivering and extensible and flexible connectivity platform, but on structure.
Speaker Change: Our structured data.
Speaker Change: Snowflake connectors, which leverages the technology from our acquisition of data volume.
Speaker Change: Enables customers the seamless connectivity and data integration with key platforms like Google drive Workday, slack Sharepoint and more.
Speaker Change: The critical data across the business.
Speaker Change: Global pharmaceutical leader Astrazeneca for example, can now analyze critical business data from systems like SAP.
Speaker Change: And Brookdale.
Speaker Change: And customers like cloud deal leverage hundreds of powerful active data sharing connections.
Speaker Change: Surely exchange data with their partners and customers driving value across.
Speaker Change: Our ecosystem.
Speaker Change: As our data engineering business continues to show strength.
Speaker Change: Our customers streamline and scale their dental pipeline.
Speaker Change: And less friction.
Speaker Change: We realized meaningful cockpit.
Speaker Change: By consolidating data and Snowflake denser, a global marketing agency managing data for numerous fortune 500 clients reduce costs by 30%.
Speaker Change: Simplified data architecture, and reduce dependence on third party.
Speaker Change: They now use snowflake did a finger to help global Brian securely combined customer data without compromising privacy, enabling more personalized marketing campaign, while reducing risk.
Speaker Change: On the analytics front, our water solutions continue to power mission critical operations for our customers.
Speaker Change: Global Technology leader Siemens is collaborating with snowflake to help manufacturers unlock new levels of operational efficiency and scale.
Speaker Change: This enables customers unify the information technology data, such as Salt Lake and management and financial data with operational technology data like data from planned for our system and industrial equipment.
Speaker Change: Leveraging mainland industrial edge, and Snowflake AI data cloud to gain better insight improve machine performance and optimize production processes across there.
Speaker Change: And then the AI reshaped the enterprise Northlake is helping our customers lead the way with add any data.
Speaker Change: Makes sense and that a leader in connected TV advertising.
Speaker Change: They leveraged snowflake connect advertisers with millions of Samsung consumers, while upholding strict privacy.
Speaker Change: By unifying their data on Salt Lake sounds like drive innovation, and personalized customer experiences and accelerates the development of new AI and ml forward advertising features enabling advertisers to deliver more relevant content.
Speaker Change: On the advertising.
Speaker Change: We have an incredible product momentum.
Speaker Change: And we're continuing to innovate at lightning speed impact this quarter alone brought over 125 product capabilities to market.
Speaker Change: 3rd% increase over what we delivered in Q1 of last year.
Speaker Change: We continue to see strong adoption of open data formats.
Speaker Change: Especially truly open modern table formats like Apache iceberg.
Speaker Change: We recently announced that our customers can now leverage many snowflakes core capabilities, including data sharing security and performance optimization, using Apache iceberg, giving the EBIT more flexibility to manage and query data.
Speaker Change: Yes.
Speaker Change: When it comes to AI.
Speaker Change: Amazing to see our product.
Speaker Change: A year ago, we were just getting started now we have over 5200 dot com using our AI and machine learning on a weekly basis.
Speaker Change: Or takes AI has gone from a nascent product area to a foundational pillar of enterprise AI strategies for our customers around the world.
Speaker Change: It's accelerating clinical research for health care company unified access to information and learning automotive customer reviews into actionable insights.
Speaker Change: To help them personal life.
Speaker Change: Now the one of the world's largest food and beverage company got time is leveraging salt lake cortex to empower the employee with innovative innovative AI tool like hot.
Speaker Change: AI, they're new internal AI assistant. This initiative is designed to revolutionize internal workflows enhanced efficiency and drive AI adoption across the organization paving the way for future advancement in Asia take care.
Speaker Change: Earlier this year, we launched our next season, which is now helping customers like luminary data, a leading provider of entertainment inside.
Speaker Change: Scale, both the process under three bolt on structure.
Speaker Change: Okay.
Speaker Change: That foundation is critical for developing deploying and orchestrating the data agents driving their AI application.
Speaker Change: And no further solidified our leadership by continuing to integrate cutting edge bottles into cortex insuring.
Speaker Change: One availability of meta Lama hormone.
Speaker Change: As I shared last quarter, we announced an expanded partnership with Microsoft to host open AI models on Microsoft Azure regions.
Speaker Change: We continue to provide our customers with choice and flexibility to leverage the world's leading model.
Speaker Change: Enterprise AI applications.
Speaker Change: We also launched the first of our AI powered migration enhancements now our customers can use cortex surpassed and review issued during that migration journey, making a time intensive process much more efficient.
Speaker Change: And this is just a start of what AI can do to make migrations go pass.
Speaker Change: All of these innovations are focused on driving real value for our customers.
Speaker Change: We're making it easy to tap into structured data and making it easy to adopt and unstructured data.
Speaker Change: Helping our customers build a strong foundation to lead in the era of agent detail.
Speaker Change: Considering all of this momentum.
Speaker Change: You'll see even more from us in just a few weeks.
Speaker Change: During the first week of June we'll be joined by tens of thousands of customers partners and developers a snowflake summit.
Speaker Change: For data.
Speaker Change: Our biggest yet.
Speaker Change: <unk> reveal some truly exciting new capabilities.
Speaker Change: The market to support our customers at every stage of their data center.
Speaker Change: As we innovate.
Speaker Change: <unk> committed to scaling efficient.
Speaker Change: Under the leadership of our new Chief revenue Officer, Mike Gannon renewed focus and rigor across our go to market.
Speaker Change: We're growing our go to market operation, while maintaining our close collaboration across engineering product marketing and sales to bring products to market effectively.
Speaker Change: This ensures that we are able to deliver greater value to our existing customers, while continuing to win new work.
Speaker Change: We're also expanding our addressable market.
Speaker Change: With the launch of Snowflake public sector right.
Speaker Change: Our recent department of defense impact level provisional authorization.
Speaker Change: To deliver mission critical data and AI solutions to the National Security community.
Speaker Change: Including the United States Department of Defense military branches and industry partners.
Speaker Change: We also introduced new automotive solution as part of our AI data cloud for manufacturing.
Speaker Change: These solutions and power company like Karma, and Nissan with advanced data and AI solutions.
Speaker Change: Drive innovation and efficiency.
Speaker Change: And we're using our own AI internally to boost productivity.
Speaker Change: Our go to market team used our sales knowledge assistant powered by carpet to access insights from our sales knowledge base using natural language.
Speaker Change: With fast intuitive seamless apps like our customer 360, <unk>, they can tap into rich insight on customer consumption.
Speaker Change: I'm proud of the discipline and efficiency, we've built across the business.
Speaker Change: <unk> got a strong operational rhythm we're investing.
Speaker Change: Strategically for growth and we are laying the groundwork for scale.
Speaker Change: Mike why don't you take us through more of the financial detail. Thank you treater in Q1 product revenues grew 26% year over year to reach $997 million.
Speaker Change: <unk> mentioned, we saw no deceleration of the business when adjusting for leap day.
Speaker Change: Continue to see meaningful growth from new product offerings, both snow birds and dynamic tables outperformed expectations in Q1.
Speaker Change: Other areas of strength included technology and retail sectors Q.
Speaker Change: Q1 was a strong quarter for bookings on our last call I noted two large customers.
Speaker Change: In Q4 have elected to delay either larger renewals.
Speaker Change: Both of these accounts, sorry, 100 million dollar plus contracts in Q1, we view this variability in bookings as normal for our model.
Speaker Change: Our focus on new customer acquisitions is yielding positive results. We added 451 net new customers in Q1 growing 19% year over year.
Speaker Change: Margins in Q1, our non-GAAP product gross margin was 75, 7% our non-GAAP operating margin was 9%.
Speaker Change: 442 basis points year over year, we continue to focus on driving greater efficiency across the entire company while investing for growth.
Speaker Change: non-GAAP adjusted free cash flow margin was 20% as discussed on our last earnings call. We had several large customers purchase as they consume in Q4 this booking behavior impacts the seasonality of our free cash flow. We expect this year to be more second half weighted.
Speaker Change: In Q1, we used $491 million to repurchase three 2 million shares at an average weighted price per share of $152 63.
Speaker Change: We still have $1 5 billion remaining on our authorization through March 2027.
Speaker Change: We ended the quarter with $4 $9 billion in cash cash equivalents short term and long term investments now.
Speaker Change: Now moving to our outlook we.
Speaker Change: We expect Q2 product revenue between 1.035, and $1.0 billion to $4 billion, representing 25% year over year growth.
Speaker Change: We expect Q2, non-GAAP operating margin of 8%.
Speaker Change: FY 'twenty six we are increasing our revenue guidance to $4 $3 $55 billion representing.
Speaker Change: Representing 25% year over year growth.
Speaker Change: As always we forecast based on observed customer behavior.
Speaker Change: We expect non-GAAP gross product gross margin approximately 75% non-GAAP operating margin of 8% non-GAAP adjusted free cash flow margin of 25%.
Speaker Change: Finally, we will host our Investor day on June 3rd in San Francisco in conjunction with Snowflake Summit's, if you're interested in attending please email IRR.
Speaker Change: <unk> Dot com.
Speaker Change: Before opening up the lines for questions I just wanted to update you my transition as mentioned on the Q4 conference call last quarter. We are in the process of interviewing many great candidates and we will make an announcement in the future. When you have more firm details to share with that operator, you can now open up the line for questions.
Speaker Change: If you would like to ask a question. Please press star followed by one on your telephone keypad, if any reason you'd like to removed a question. Please press star followed by two.
Speaker Change: Again to ask a question press Star one as a reminder, if youre using a speakerphone. Please remember to pick up your handset before asking a question, we'll pause briefly as questions registered.
Speaker Change: First question is from the line of Keith Weiss with Morgan Stanley. Your line is now open.
Speaker Change: Thank you this is Sandra Zhang for Keith Weiss and congrats on the outstanding Q1 since I wanted to talk about some of the 10 lines of business, particularly around consumption as it progressed through the quarter.
Speaker Change: How with consumption sort of exiting the quarter and through through the month of May. That's my first question that I had a follow up.
Speaker Change: As you know we don't comment on consumption.
Speaker Change: In the quarter overall Q1 consumption was.
Speaker Change: It was very strong coming up coming out of the holiday period.
Speaker Change: And you see that in.
Speaker Change: Our results of course, Q1 had one less day compared to Q1 last year, but overall, we feel very good about bird consumption I don't see Sanjay we just gave guidance for the quarter and that's based upon the customer behaviors, we're seeing through today.
Speaker Change: Yes, and that Q2 guide was very strong so I think there's a lot to take away from there and then on the product front you mentioned about.
Speaker Change: The adoption of cortex, continuing to build I was wondering to see what are sort of the monetization trends associated with cortex into to what extent our customers.
Speaker Change: Making commitments associated with.
With our cortex, and mine and driving that into their sort of overall consumption of snowflake.
Sanjay: Yeah, I would split that into a few parts Sanjay one is.
Speaker Change: It is very very clear.
Speaker Change: People invest in snowflake people invest in data system.
Speaker Change: Not just for what they used to be able to do before we just things like analytics and machine learning, but increasingly for what they will be able to do today and in the future.
Speaker Change: And part of what I tell our customers is that by working with us by bringing data into into snowflake.
Speaker Change: They're making their data they are making their processes.
Speaker Change: <unk> added four.
Speaker Change: And we've taken a very measured approach to how we have had our customers use AI.
Speaker Change: As you know, we don't sell AI separately, it's not a SKU customers are not signing up for it.
Speaker Change: Contracts won so it's on the existing spend.
Speaker Change: Focus a lot on use cases that deliver value today.
Speaker Change: Talked about some of these examples it's everything from being able.
Speaker Change: To create chatbot on documents like we have created our own internal enablement. Our agreements is created for all of the <unk>.
Speaker Change: Emmanuel.
Speaker Change: $150 in devices.
Speaker Change: Putting business data directly into the hands of end users without needing Animas R. B.
Speaker Change: In in the mid <unk>.
Speaker Change: We are beginning to see compound systems get adopted that you bring in more than one data source that can disaggregate between the kinds of questions that the user has.
Speaker Change: Our monthly SaaS flows you take data from one source and use that to answer a question or two follow ups from from other.
Speaker Change: It's very graduated from that from that from that perspective, but the overall point that I want to make is that done.
Speaker Change: Every.
Speaker Change: User of data every CDO, including our own now realizes that their data strategy, especially one with snowflake is a direct unlocked or whatever theyre going to do with AI. Both today and several years down the road. So in that sense I think the roadmaster emerging it's not too AI separately.
Speaker Change: On the side.
Speaker Change: It is more up invest and snowflake to get your data hub in gear and realize value from AI as you go along.
Speaker Change: I appreciate the thoughts.
Speaker Change: Thank you for your question.
Speaker Change: The next question is from the line of Kirk <unk> with Evercore ISI. Your line is open.
Kirk: Yes, thanks for thanks, very much and congrats on a nice start to the year.
Kirk: Sure I was wondering if you could just dive in a little bit on the comment around snow Park and dynamic tables outperforming I was just curious.
Kirk: And I'm sure it's a bit of both how much is just the product maturation in the sort of the readiness for customers to take those on versus some of the things you guys have done on the go to market side over the last year in terms of enablement and sales enablement with those products. Thanks.
Kirk: Good question.
Kirk: Surely going to be clearly, it's going to be at both you need you need great products that drive utility.
Kirk: And in <unk>.
Kirk: Addition to those features that you mentioned, so far and dynamic table I would say that our investments in things like iceberg also vastly increase the scope of the kinds of things that our customers can do with the data and similarly Snowflake connectors is then going to make more and more data available pardon me.
Kirk: Data engineering as well as <unk>.
Krishna: And this is why Krishna and I stress the end to end data lifecycle, a lot and so our motto often is that we want to be there from ingestion insight when it comes to when it comes to data.
Kirk: Having said that we acquired.
Kirk: In addition to my amazing leaders in sales.
Kirk: That are in charge of driving these more specialized market.
Kirk: Not everybody in the Snowflake sales team is going to become an expert on what AI products.
Kirk: The latest advancement in Salt Lake connectors out of the box.
Kirk: We have a specialist motion that is that is very targeted that identify the highest value use cases that our customers have pioneered implementations are them. So that they can be used as a template to be debated in other places that increasingly with our GSI partners and so you need to be able.
Kirk: To do both you need great products that create value, but then our go to market team that can enunciate the value and do the hard work of both establishing the flagship customers and then driving sales across the sales teams.
Kirk: Great. Thank you all seen a couple of weeks.
Kirk: Thank you for your question.
Speaker Change: Next question is from the line of Raimo <unk> with Barclays. Your line is now open.
Speaker Change: Perfect.
Speaker Change: If you're looking at small park and adoption there how do you see this playing out at the moment and maybe more in the future in terms of like going wall to wall with one vendor versus kind of having different pockets of data that is sitting in Europe system versus kind of our systems.
Speaker Change: What are you seeing there at the moment and how do you think that will evolve.
Speaker Change: First of all I think one of the things.
Speaker Change: Is making us successful snowflake as a company is our acknowledgment and willingness to work with customers that have complex data ecosystem, it's always going to be just actually true.
Speaker Change: They're all on from legacy systems, and most large customers.
Speaker Change: Our large data sets that are sitting in and cloud storage.
Speaker Change: I think what is unique about the moment is that customers are.
Speaker Change: A little unhappy about meeting consist together many different tools in order to achieve even relatively simple thing. If you think about it. If you wanted if you in your company wanted to build a chatbot on a carpet sitting in sharepoint and <unk>.
Speaker Change: Rather painful.
Speaker Change: For a different tool in order to produce and at the end of it you won't even have governance right because you have to go to <unk>.
Speaker Change: We want to be able to do for cases like that is has no play connectors pointed the checkpoint repository and if there is any augmentation or.
Speaker Change: The transformation of the data that is needed.
Kirk: You get that done for example, with no part and then you create an index.
Kirk: Our tech search and hook it up to hook it up to a chatbot.
Kirk: I think we will continue to see a specialist players.
Kirk: Exist and we partner with them and we value our partnership with them, but there are also a number of use cases.
Kirk: Right are effectively like ease of use and consolidation and that's the thing that we are leaning in.
Chris Hum: And I think to add Chris Hum.
Speaker Change: Yes, there is a very quickly the other investment that we've made around iceberg, which also creates a which of our customers that have an open architecture and be able to mix and match technologies as they see fit.
Chris Hum: Okay.
Speaker Change: Yeah, Okay, perfect and then one quick one for Mike.
Speaker Change: Obviously, you've reached very good opportunistic on the share buyback side. This quarter, how do you think about that.
Chris Hum: Attraction and therefore, the rest of the year so.
Chris Hum: I was wondering if you can look better thank you.
Chris Hum: We will continue to evaluate share buyback on a quarterly basis.
Chris Hum: No plans right now.
Chris Hum: We've been more opportunistic in terms of the buyback, but we do fully anticipate between now and 2027, we will utilize that.
Chris Hum: Okay. Thank you.
Chris Hum: Thank you for your question.
Speaker Change: The next question is from the line of Karl Keirstead with UBS. Your line is now open.
Karl Keirstead: Okay, great. Thanks, Mike in the comments from you and treat our there was really no mention of <unk>.
Speaker Change: Macro per se.
Speaker Change: No evidenced in the numbers that you guys really saw much pressure you certainly did back in 2022 2023 and I'm just curious curious Mike how you would draw a contrast as at that.
Speaker Change: Lot of the post Covid optimization efforts are now largely behind you.
Speaker Change: Like just in a better place in terms of the product portfolio or maybe just the degree of macro pressure. The wobbly NES. We've all seen in the last couple of months. It's just not as severe as you had to deal with and that post COVID-19 downturn. Some contrasts might be helpful. Thank you. Thank you.
Speaker Change: I would say coming out of Covid I think it was very different.
Speaker Change: That environment, we've had a lot of.
Chris Hum: <unk> native well funded start ups that were spending crazy and werent really focused on costs as much our customer base.
Chris Hum: We evolved into.
Chris Hum: Some of the largest companies in the world that are much more mature that are much more cost focus and I am not seeing any big optimization plan within our customers like what we saw coming out of Covid with those but I will remind you our customers are constantly optimizing that.
Chris Hum: A little bit, but they are always looking to.
Chris Hum: Do things more efficiently and that will continue I would say in terms of the macro right now.
Chris Hum: We have not seen the impact of anything that the current.
Chris Hum: News on tariffs and other things today.
Chris Hum: I think if we would have seen that we would've sought in the new number of new customers. We had a great new customer add and we had great additions to our apio with confidence and that shows the confidence our customers have on making big bets with snowflake.
Chris Hum: Small.
Chris Hum: Yes.
Speaker Change: Ed is that this is something that our sales team practices as well, which is to make sure as whenever a use case gets implemented but they actually take the trouble to tidy things up and make sure that things are optimized because our sales team has gone through 2022, and 2023 that inefficient spend.
Speaker Change: From customers inevitably leads to a contraction later anyway, and we are better off making sure that it is always efficient spend.
Speaker Change: Okay, Thanks, and maybe as a follow up to Mike Mike.
Speaker Change: Flake have any exposure to any.
Speaker Change: The larger AI native said on the margin might have given you a little extra.
Speaker Change: This quarter.
Speaker Change: Nothing extraordinary we.
Speaker Change: We do have a number.
Speaker Change: Companies are customers, but none of them are they're all less than 1% of our.
Speaker Change: Revenue.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you for your question next question is from the line of Mark Murphy with Jpmorgan. Your line is now open.
Speaker Change: Yes, congrats on the great execution Mike.
Speaker Change: Even if we were expecting a strong start to the year in terms of the hiring.
Speaker Change: Sales and marketing I don't think we would have pictured vis.
Speaker Change: Many hires it's a very big number can you speak to that dynamic and just whether are you hiring into a pipeline that is strengthening around core taxes snow park or some other opportunity that would see opening up.
Speaker Change: What I would say Mark is just our.
Speaker Change: Yes.
Speaker Change: <unk>.
Speaker Change: Everything that we're seeing in sounds like and as you know Q1 is always our biggest hiring from a sales and marketing perspective, because we try to get those people on board at the beginning of the year or two so they can be part of sales kickoff and Oliver sales enablement that we do with the employees at the beginning of the year.
Speaker Change: New features and stuff so.
Speaker Change: I wouldn't.
Speaker Change: Read that much other than the confidence we see in our business.
Speaker Change: As you know we talked about we're still re.
Speaker Change: Looking for operational excellence and we are constantly looking at productivity of people.
Speaker Change: We will add people and we will stop adding it.
Speaker Change: Our activity payoff with those people.
Schrader: Okay understood and then Schrader can you speak to the federal government opportunity because you had touched on it in your comments.
Schrader: Do you think that there is just going to run through this initial process of eliminating wasteful spend and then.
Schrader: Maybe pivot back towards issuing some new rfps.
Schrader: And then you've got the right certifications I'm just curious if you think some agencies might be moving off of legacy on Prem.
Schrader: Data warehouses, and maybe moving some of that on the Snowflake a little later in the year.
Schrader: This is an active topic of conversation with <unk>.
Schrader: <unk> departments in the government.
Schrader: I think.
Schrader: Other than D. C. A few weeks ago, but a number of folks and that is both an increasing awareness.
Schrader: What they can do the fact that we have.
Schrader: Variable operation lower head figures prominently and there's also a little bit.
Schrader: You changed are they are very much focused on how do we make sure that our data infrastructure is run efficiently Theres also a desire for things like Cross Department.
Schrader: Sharing of data because that just need some more efficiency, we will have more to Martin Martin.
Schrader: Say on this on this topic and Mike our new CFO certainly.
Schrader: Actively looking at this.
Schrader: We are optimistic and hopefully we'll have more to say about this in the coming quarters.
Speaker Change: Thank you.
Speaker Change: Thank you for your question.
Speaker Change: Next question is from the line of Kash Rangan with Goldman Sachs. Your line is now open.
Speaker Change: Alright. Thank you very much its really heartening to see the positive shift in the narrative strategic positioning and the execution.
Speaker Change: And handling of everything so.
Speaker Change: Good to see that two things.
Speaker Change: Although youre approaching $4 billion run rate.
Speaker Change: And growing 26, 27% as marketable.
Speaker Change: If I could take the liberty of poking at.
Speaker Change: So one is good not many companies you've increased that number.
Speaker Change: If they reach you have scale, but.
Speaker Change: You.
Speaker Change: Had 135 new products launched.
Scarpelli: Quarter end Scarpelli, we'll be quick to point out that.
Scarpelli: Mexico is more of a 24 month trailing metric, which I completely appreciate it.
Scarpelli: And why shouldn't be.
Scarpelli: Be better given the Dana effective new product production and landing customers at a record pace and to Mike's point.
Scarpelli: Yield of enterprise customers.
Scarpelli: Higher quality, you've got AI, which didn't exist in 2022.
Scarpelli: Volatility, which should play to your advantage.
Scarpelli: Anything on that front and anything that you would use zero could do two landed number as good as it is even higher and I have a very quick follow up question. Thank you so much.
Scarpelli: What I would say on that is a number of our newer customers that are not in that cohort are contributing to our growth beyond the end of ours.
Scarpelli: There was one of our large customers that grew so much last year and this year. They are still doing very well, but they didn't grow as much this year.
Scarpelli: And that's really the dynamics as those newer customers coupled with that one.
Scarpelli: Once again over time.
Scarpelli: <unk> and revenue growth rate will converge as we become a more mature company.
Speaker Change: Got it and maybe one for you. Thank you Mike good to hear your voice one for you.
Speaker Change: When you look at what's happening with the Hyperscale guys, Microsoft 70 talk about.
Speaker Change: Five rig yesterday.
Speaker Change: On and build.
Speaker Change: Certainly seem to be making a lot of progress.
Speaker Change: The idea of data fabric at scale truly open enabled AI architecture is the thing that's not lost on the big guys.
Speaker Change: Or does it need snowflake and what is going to be the one or two or three things. The snowflake Stockholm will do better. So you can build your vision towards being 10 plus billion dollar revenue company. That's currently thank you.
Speaker Change: Okay.
Speaker Change: Just like in the Hyperscale.
Speaker Change: Permeable.
Speaker Change: Amazing both from an engineering execution and business perspective.
Speaker Change: But.
Speaker Change: They also work with Entropic on opening because they are the best among the best model makers in the world.
Speaker Change: Similarly, we are very uniquely positioned in terms of being the excellent data platform that.
Speaker Change: Sure.
Speaker Change: We've also learned how cooperating really leads to a better outcome, whether it is AWS.
Speaker Change: Which is our biggest partner.
Speaker Change: More and more.
Speaker Change: Sure.
Speaker Change: There are many customers that azure plus not as just a better outcome on everybody that is involved.
Speaker Change: We have deep partnerships between between the team I think it was six seven months ago that we announced for example that hopefully you could read tables that are in one way and we are also actively talking to them about <unk> being the data layer, while our snowflake that's at the bottom you also.
Speaker Change: Collaborate with them at the time that we have things like cortex analysts and cortex agents.
Speaker Change: The available as component and often co pilot for example, do you have any mistakes this approach.
Speaker Change: Finding customers for example, who are on <unk>.
Speaker Change: A modernization.
Speaker Change: Routine or who want to get value AI value from data and figure out how we can work how we can work together, yes, there is competition, but I think that our more cases than not.
Speaker Change: Very very effectively working together and it's on the uptick, especially with Usher.
Speaker Change: That'll be huge thank you so much.
Speaker Change: Thank you for your question. Our next question is from the line of Matthew Hedberg with RBC. Your line is now open.
Speaker Change: Hey, guys. This is Mike Richardson on for Matt. Thanks for taking the question and congrats on the results here.
Speaker Change: You've clearly made great progress on the product front here, but I'm just curious how you feel about the maturity of the go to market motion to support.
Speaker Change: AI developments that's it for me thanks.
Speaker Change: I'm actually even more pleased with how we've been able to seize the AI opportunity I've spoken to you folks previously.
Speaker Change: We created what we then called AI in Asia, which for a group of solution engineers that were deeply worse with our AI products that could be very close to our sales teams from around the globe.
Speaker Change: And just the excitement that our sales team feels about AI, but more importantly, the ability to drive AI use cases that scale to both Fitch division, but also Ron poc's part of them win them and get them into production.
Speaker Change: That's been a pretty remarkable transformation.
Speaker Change: And.
Speaker Change: We are now in the process of making this kind of specialized knowledge available to more and more.
Speaker Change: The sales team I think it is this combination of specialist team that know more about our sophisticated area like AI again doing the initial work, but having more off the team participate in it that's been hugely positive for us and we apply similar techniques and data engineering dealt with data engineering.
Speaker Change: I'd say, it's much closer to the knowledge and skill set off more of our sellers in some sense. It is it's more natural to them, but <unk> is doing exceptionally well and we have assembled a team of both especially with sellers and AI, but also especially the technical experts.
Speaker Change: <unk> are driving change across the whole sales organization that combined with an increasing understanding of what it takes to drive great use cases in general not just in AI and data engineering, but also across other areas like analytics really head of a new era of data driven go.
Speaker Change: Market, which I'm very very happy about.
Speaker Change: Thank you for your question next question is from the line of Brad Zelnick with Deutsche Bank. Your line is now open.
Brad Zelnick: Great. Thanks, so much and congrats on a good start to the year treat or as we think I just want to follow up on Kirks question as we think about snow park adoption from here beyond capturing maybe the spark jobs, where data was moving off platform can you talk about success that youre seeing in penetrating more of the Meteor data science use cases and any anecdotal evidence.
Speaker Change: That youre, winning over the data science crowd and maybe the impact that notebooks are having would be great. Thanks.
Speaker Change: Yeah, I'll start the answer Christian Christian can add on.
Speaker Change: Our notebooks are doing very well several thousand customers are actively actively using them.
Speaker Change: And that is increasing ability for example to train larger and larger machine learning model as you folks know.
Speaker Change: Like the World has made enormous amount of progress on the basis.
Speaker Change: Machine learning, even though all the hot <unk>.
Speaker Change: Occupancy these days, but when it comes to many many interesting use cases for example next best action prediction.
Speaker Change: The lifestyle Hilton do.
Speaker Change: Or.
Speaker Change: How to route guests to the next stride, which customers like Disney do these are all things that we have gained increasing market share at all.
Speaker Change: <unk> continue to expand we continue to add product capabilities for training bigger better faster.
Speaker Change: <unk>.
Speaker Change: On machines running in and container services. These tend to be more technical in terms of the.
Speaker Change: The kind of people that are involved the implementations that happen, but definitely appealing to the developers data scientists.
Speaker Change: That sort of product led motion.
Speaker Change: Something that is going on pretty well.
Speaker Change: Yes, well.
Speaker Change: So part of it is is a collection of library, some capability that our customers through a variety of activities. We see lots of people leveraging it for unstructured data processing, which is a core part of what we're doing is as Richard said, we're making more unstructured data available to customers, so snow Bart or expect.
Speaker Change: <unk> structure and Cigna doing traditional ml.
Speaker Change: Such a data as a company's please proceed.
Speaker Change: Thank you and maybe just a quick follow up Mike guidance implies a robust ramp through the remainder of the year and I think we all see the pace of innovation excited for.
Speaker Change: Whats the comment summit, but what if anything would you call out that underpins your confidence things, we might not be thinking about or any key assumptions worth calling out. Thank you.
Speaker Change: I would just say as I said guidance is based upon the observed behavior, we see within our customers coupled with we spend a lot of time, we have for the last five quarters, now and really identifying new workloads going to production and we have a pretty good visibility.
Speaker Change: Of those and we're very close with our customers and we know we're doing migrations or are moving nicely, we announced where we've made snow converge available to all of our customers and partners and we're seeing an uptick in the amount of usage around that and that's what gives us the confidence.
Speaker Change: And the guidance that we gave.
Speaker Change: Great to hear thanks again.
Brent Thill: Thank you for your question next question is from the line of Brent Thill with Jefferies. Your line is now open.
Brent Thill: So again on for Brent Thill, Thanks for taking the question.
Speaker Change: With features like cortex analyst cortex agents that can help users to rate.
Speaker Change: Mortgage inquiries are you seeing more query optimization as cortex, AI adoption picks up and what's been a net impact on usage. So far in terms of that new inquiries and Corey optimization.
Brent Thill: Things like cortex onto this.
Brent Thill: If anything the.
Brent Thill: And users on et cetera.
Brent Thill: Writing the frightening seek liquidity.
Speaker Change: Use the semantic model to aid in beginning of the intent of the user credit and then onto generates equal prominence.
Brent Thill: Certainly they've made available copilot like features both.
Brent Thill: What we call worksheet, such as other people people are Python, but also inside notebook.
Brent Thill: With you I think there's a huge amount of innovation that is coming there some of which you will show.
Speaker Change: At summit.
Speaker Change: Bob on people being able to write code now.
Speaker Change: Modern developer platforms like cursor.
Speaker Change: Rich.
Speaker Change: Copilot, and others, which can massively increased productivity in terms of the volume liquidity that can be written as well as the amount of work that can be done while we don't have concrete measurements. All this leads to X percent more liquidity.
Speaker Change: We are very happy about being able to help our customers study faster, our rightful faster and be able to debug it faster as well.
Speaker Change: We are saying in this calls in other forums that our preference our our goal is to make sure that customers are optimized all the time I think none of us like the go and spend money and been optimized and go up and down. So we put a lot of effort in technology. Some of the cortex. Examples that you have are part of that.
Speaker Change: But we're being sized constant size governance insights all of it is part of how we help consumers be better optimized states all along.
Speaker Change: Thank you for your question next question is from the line of Patrick Colville with Scotiabank. Your line is now open.
Patrick Colville: Alright. Thank you so much for taking my question I guess someone wants a street or loss.
Speaker Change: Last year, the Arctic LLM was launched.
Speaker Change: My question is how important.
Speaker Change: First Party foundation models to Snowflake strategy as of today or is there like a slight pivot more to kind of partnering with third Party Foundation models.
Speaker Change: I've said this before I think the business of training truly large foundation Marvel.
Patrick Colville: Has gotten to be a very expensive proposition.
Patrick Colville: We have an amazing team of AI researchers.
Patrick Colville: We tend to focus more on things like both training.
Patrick Colville: We have published a blog for example, about how we can be much more efficient like much more correct.
Patrick Colville: Generating sequel queries by using both training techniques. This makes cortex analyst better.
Patrick Colville: I think at least for now.
Patrick Colville: US training, let's call. It on peer foundation model is not something that we are actively looking at.
Patrick Colville: The research team continues to do amazing work as I said in both training, but also in areas like influence optimization, which has a huge impact on latency. It has a huge impact on margins in AI. So we continue to have a robust presence in the area, but we work with partners.
Patrick Colville: That is a big partner, we've got a day one launch partner following the Lama called model, but.
Patrick Colville: That came on we actively collaborate.
Patrick Colville: With Entropic with open AI myths.
Patrick Colville: Mr Old breaker lots of module providers. The one fun thing I'll add is that in that area.
Patrick Colville: And bidding model.
Patrick Colville: These are small unsung heroes, but they are the models that essentially produce fingerprint of documents that you want the index of our Chatbot. For example, we have robust embedding models.
Patrick Colville: We have that we have open source you have to be opportunistic about when we can create value because we simply can't afford to spend billions of dollars that it takes to be a frontier research lab today.
Speaker Change: Crystal clear. Thank you sure Don can I, just squeeze in a follow on for Mike.
Patrick Colville: I mean, the bottom line is clearly less of a focus when youre growing the top line 26%.
Patrick Colville: The possibility to reaccelerate in the back half of the fiscal year.
Patrick Colville: <unk> operating margin was strong.
Patrick Colville: Nonetheless, the fiscal year margin was left unchanged as was the fiscal year free cash flow margin target. So I guess what were the puts and takes there as to why leave those targets unchanged.
Patrick Colville: Well, what I would say is in Q2 is when we ever user events and that's a very expensive event summit that we operate.
Patrick Colville: <unk> has an impact on our operating margin in Q2, and that's factored in and we will just continue to revise our forecast for the year on a quarterly basis going forward.
Patrick Colville: I actually think that we are being pretty thoughtful when it comes to expanding our operating margin of 4% in Q1 last year, it's 9% Q1 this year.
Patrick Colville: This is part of the benefit of practicing what we preach around AI.
Patrick Colville: And a lot of time figuring out how engineers can be more productivity, how we can get more work done.
Patrick Colville: Similarly in the sales team, we want to automate many of the tasks that our sales team doesn't like to do any of them. So that they can be more productive in front of sellers.
Patrick Colville: We feel that we are in quite.
Patrick Colville: Quite a bit of a goldilocks moment that we can continue to grow revenue very strongly.
Patrick Colville: While continuing to be very efficient when it comes to operating margin and free cash flow.
Speaker Change: Thank you for your question next question is from the line of Alex <unk> with Wolfe Research. Your line is now open.
Alex: Hey, guys. Thanks for taking my question.
Speaker Change: Maybe just.
Speaker Change: The high level, one first for you or Mike I guess.
Speaker Change: Again, it seems like what we're seeing what we're hearing from you is the demand environment is really unchanged untouched by all the macro headlines youre seeing new product adoption.
Speaker Change: Expectations. So maybe just the first one are you seeing a change like this is being driven by any kind of identifiable AI tailwind you're seeing a change with how customers are either investing in their AI stack with snowflake or building agents, specifically, they're building more on data rather than just focusing on the models.
Speaker Change: Maybe just help us understand and conceptualize the AI tailwind or your place within these AI budgets that a lot of your large customers clearly are making those bets.
Speaker Change: As I was saying earlier, I think more and more people have internalized that to.
Speaker Change: To be good at your data needs to be in here and what we have done on our side is to create the product whether it's a semantic model that.
Speaker Change: Close to the data usable by anyone mind, you not just by Snowflake, but also products like cortex analysts that can actually unlock the value of that data both by immediate use like a chatbot on a specific dataset, but much more importantly argues in an agent take brooksville.
Speaker Change: And more of our conversation can now focus on what creates value from a business perspective.
Speaker Change: AIG personal play rather than being the additional thing that we do in some ways becomes the natural end state.
Speaker Change: What investing well in data on me and of course, we are using AI ourselves both within the company, but also in different aspects of the product we talked about co generation of notebooks being accelerated.
Speaker Change: Accelerated by cursor like experiences.
Speaker Change: On the other hand, we made snow convert our conversion to free so that anyone could use them and they are bringing agent take workflow intestinal convert so that people can do things like testing with synthetic data or sooner than what they would have done in a traditional waterfall style migration I'd say, it's a combination.
Speaker Change: All of these trends.
Speaker Change: Our driving snowflake forward.
Speaker Change: Excellent and then maybe just as a follow up.
Speaker Change: Maybe share for you or for Christian Theres been a lot of excitement there was a sense around the gen two and particularly the performance improvements that your customers are seeing I guess.
Speaker Change: Maybe just touch on or is this.
Speaker Change: We are leading to unlocking new use cases around the capabilities introduced or how should we think about the potential for some of these new functions as they percolate in the platform.
Christian Theres: Yes Christian here.
Christian Theres: Best way to think about Gen. Two is our latest and greatest compute environment.
Speaker Change: We've done is we've combined.
Speaker Change: The latest hardware instances that we can get from the cloud providers, which are often faster, but also more expensive.
Speaker Change: A good number of software optimizations and improvements that we have.
Speaker Change: And at the end of the day.
Speaker Change: As part of our.
Speaker Change: Eternal ongoing promise to customers, who always delivered the best price performance in the market. Some of the benchmarks that we have on Gen. Two our belief phenomenon right I think both to snowflake say a year ago, but also to many other competitive platforms are there so think of it is.
Speaker Change: Price performance, which continued to correlate with time to insight and thank the value and it's a material step forward.
Speaker Change: Perfect. Thank you guys congrats.
Speaker Change: Thank you for your question. The next question is from the line of Joel Fishbein with truth.
Speaker Change: Yes.
Speaker Change: Thanks for taking the question Mike You mentioned earlier on the call you had the strongest new logo quarter, which was fantastic.
Speaker Change: Just a question around that are you seeing is it.
Speaker Change: As a result of better stronger execution and strategic focus are you seeing a more favorable win rates in competitive environment and just as a follow up to that is of those two more $200 million deals can you just tell us which verticals that we're in.
Speaker Change: So on the $100 million deals they were both in the financial services vertical.
Speaker Change: And what I would say on the.
Speaker Change: Number of new customers. This is not the result of something we put in place. This quarter, we started last year, which really breaking out an acquisition team that is just focused on new logos.
Speaker Change: We're seeing the benefits of the groundwork that we've put in place last year and we're pleased with the results I think we have a very good leader there and we're replicating what we're doing in North America, and EMEA as well too so.
Speaker Change: We're pleased with the number of new.
Speaker Change: Logos that we've added it's a big focus of ours.
Speaker Change: Thank you.
Speaker Change: Thank you for your question next.
Speaker Change: The next question is from the line of Brad Reback with Stifel. Your line is open.
Speaker Change: Okay.
Speaker Change: Thanks, very much last quarter, Mike you talked about some changes to the sales force comp plan as it related to.
Speaker Change: Bookings.
Speaker Change: And commence not just consumption, maybe an update on how thats tracking if that had any impact on the strong bookings in the quarter.
Speaker Change: Yes.
Speaker Change: Obviously.
Speaker Change: It has helped but the real strong bookings for those two big deals that we knew were going to come in.
Speaker Change: I would say I think in general our sales people are happy with having a bookings component, but still the principal driver as consumption revenue and as a reminder, we paid on bookings a six last year. So it's not like we weren't doing it last year, we just are giving them a quota now.
Speaker Change: For bookings as well too.
Speaker Change: Thank you.
Speaker Change: I'm going to take some time to see the real fruits of that change whether that worked or not but I'm pleased for Q1, I think we had very solid Q1.
Speaker Change: It definitely helped.
Speaker Change: That's great and then just a quick one getting.
Speaker Change: The weeds, a little bit Capex was up a bunch.
Speaker Change: To a fairly high number was there one time items here or is this.
Speaker Change: The new level.
Speaker Change: No. The Capex is really associated with our new headquarters in San Mateo.
Speaker Change: I spoke about previously we signed a new lease in our Menlo Park office and there was a fair bit of Capex that went into that as well as in Bellevue.
Speaker Change: I talked about that before too that really that just opened this week that office and there was a fair bit of Capex that went into that as well too I'm not expecting any major office build outs. The next couple of years actually now.
Speaker Change: Perfect. Thank you.
Speaker Change: Thank you for your question.
Speaker Change: Next question is from the line of Tyler Radke with Citi. Your line is now open.
Speaker Change: Yes, thanks for taking the question here.
Speaker Change: Mike you talked about some strength in technology customers in the quarter I was wondering if you could double click on that and what are you seeing specifically among kind of larger AI native customers in terms of their consumption.
Speaker Change: That's good but as I called out before we have a number of companies.
Speaker Change: Companies and that is still less than 1% of our opinion.
Speaker Change: Okay.
Speaker Change: Okay, Great and then.
Speaker Change: Follow up question I had was for <unk>.
Speaker Change: We recently saw data bricks acquire neon, which was a company that snowflake ventures had invested in and I'm. Just curious we get an update on your strategy.
Speaker Change: Around Uni store and just sort of your view on the positioning versus some of these server less post crest databases that are out there in the market.
Speaker Change: We believe the transactional system.
Speaker Change: This is why we got to work on units or one five years ago. It is strong the product is doing very well.
Speaker Change: Posed to us as a standard is nothing to be SASSA and adopted it's adopted widely but we are pretty happy with what we have invested.
Speaker Change: In terms of transactional sourced so far and we will continue to invest in that area because its a very natural addition to what Peter.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you for your question.
Speaker Change: There are no additional questions waiting at this time, so I'll pass the call back to treat or for any closing remarks.
Speaker Change: Thank you.
Speaker Change: Closing.
Speaker Change: Snowflake is at the center of today's Enterprise AI Revolution.
Speaker Change: Our focus on making snowflake easy to use.
Speaker Change: Connected to enable fluid access to data wherever it suits.
Speaker Change: And trusted by the enterprise grade performance is what makes us differentiated.
Speaker Change: And beloved by our customers.
Speaker Change: And we are committed to supporting them through that end to end data journey from inception to enzyme.
Speaker Change: Our product revenue growth and strong outlook for FY 'twenty six demonstrate our continued ability to execute at scale.
Speaker Change: Our pace of innovation, coupled with our ability to bring products to market quickly.
Speaker Change: Is driving hydro and we are committed to maintaining that momentum.
Speaker Change: We believe multi long term profile is one that showcases durable high growth and continued margin expansion.
Speaker Change: It's an exciting time for our company and I look forward to sharing more of our progress in the quarters ahead.
Speaker Change: Thank you all for joining us.
Speaker Change: That concludes the call. Thank you for joining you may now disconnect your lines.
Speaker Change: [music].