Snowflake (SNOW) Beats Q3 Earnings, Guides Light for Q4

by MarketNewsData

Key Points

  • Revenue: $1.213B vs. est. $1.18B → Beat
  • Product Revenue: $1.158B (29% YoY)
  • Non-GAAP EPS: $0.35 vs. est. $0.31 → Beat
  • Net Revenue Retention: 125%
  • Customers ≥ $1M Product Revenue: 688 (up 29% YoY)
  • Remaining Performance Obligations (RPO): $7.88B (37% YoY)

Quarter Highlights

  • Total revenue grew 29% YoY, driven by broad-based consumption strength across enterprise customers.
  • Snowflake’s AI adoption accelerated: management noted “the fastest adoption ramp in Snowflake history” for Snowflake Intelligence, its new enterprise AI agent.
  • Product gross margin held at 72% GAAP / 76% non-GAAP (page 5).
  • Non-GAAP operating income rose to $131M (11% margin), up from 6% a year ago.
  • Operating cash flow reached $137.5M (11% margin), with free cash flow of $113.6M (9% margin).

EPS vs. Estimates

  • Non-GAAP EPS: $0.35
  • Analyst estimate: $0.31
    → Beat by $0.04

GAAP EPS was a loss of ($0.87)

Revenue vs. Estimates

  • Actual revenue: $1.213B
  • Estimate: $1.18B
    → Beat by ~$33M

Product revenue also exceeded expectations (actual $1.158B vs. $1.18B total consensus), consistent with analyst models.

Guidance (Q4 FY26)

From the company’s official outlook

  • Product revenue: $1.195B–$1.200B (27% YoY)
  • Non-GAAP operating margin: 7%
  • Shares outstanding (diluted): ~377M

Comparison vs. Street Estimates provided by the user:

  • Street Q4 estimates (Jan 2026): EPS $0.30, Revenue $1.24B
  • Company guide midpoint: $1.197B product revenue, below the $1.24B revenue estimate.
    → Guidance: Light on revenue vs. consensus.
    EPS guidance not provided in the press release, so no comparison is possible.

Full-Year FY26 Guidance

  • Product revenue: $4.446B (28% YoY)
  • Product gross margin: 75%
  • Non-GAAP operating margin: 9%
  • Adjusted free cash flow margin: 25%

Management Commentary

CEO Sridhar Ramaswamy:

  • Highlighted strong product revenue growth and RPO expansion.
  • Emphasized Snowflake’s role in enterprise AI strategies.
  • Noted rapid uptake of Snowflake Intelligence, transforming how customers use data and AI.

Analysis & Investor Context

  • Snowflake delivered another clean beat on revenue and EPS with stable margins.
  • RPO’s 37% growth signals durable demand and supports FY26’s 28% product revenue outlook.
  • However, Q4 revenue guidance (~$1.197B) is below the consensus estimate of $1.24B you provided — this may be viewed as conservative or a sign of moderated near-term consumption.
  • Operating margin improvement and continued AI adoption are constructive trends relative to peers like $CRWD, $DDOG, $MDB which are also benefiting from AI workloads but showing more variability in consumption patterns.

Final Line

Snowflake beat expectations on the quarter but issued revenue guidance that trails Street estimates, setting up a mixed near-term narrative despite strong AI-driven demand signals.

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