Snowflake has announced its financial results for the third quarter of fiscal 2024, showing a strong 34 percent growth in product revenue year-on-year (YoY), reaching $698.5m.
In the quarter that ended October 31, 2023, non-GAAP adjusted free cash flow grew 70 percent YoY to $111m with the results reflecting “a strong execution in a broadly stabilizing macro environment,” Frank Slootman, chairman and CEO of Snowflake, said.
Snowflake’s customer base expanded during the quarter, with 436 customers generating more than $1m in trailing 12-month product revenue, which demonstrated a 52 percent increase from the previous year. Additionally, the company now serves 647 Forbes Global 2000 customers, showing a ten percent YoY growth.
At the same time, Snowflake reported an operating loss of $260.6m, translating to a -35 percent margin.
With a highly diverse global revenue mix in terms of industries and geographies, the firm derives an ever-larger revenue share from mainstream enterprises and institutions. This is compared to a newer crowd of digital natives who have made up many of Snowflake’s early adopters.
The CEO also explained that generative AI has been at the forefront of customer conversations, which in turn drives renewed emphasis on data strategy in preparation for these new technologies: “We said it many times: There’s no AI strategy without a data strategy. The intelligence we’re all aiming for resides in the data, hence the quality of that underpinning is critical.”
Looking ahead, Snowflake provided guidance for the fourth quarter of fiscal 2024, also increasing its full-year guidance.
For Q4, the company expects product revenue between 716m and 721m, representing YoY growth between 29 percent and 30 percent.
Mike Scarpelli, chief financial officer, said during the earnings call: “We are increasing our full-year guidance to approximately $2.65bn, representing 37 percent YoY growth. Consumption trends have improved. We are seeing stability in customer expansion patterns. Our guidance is based on observed patterns and assumes continued stability of consumption.”
For the fourth quarter, Snowflake expects an operating margin of four percent and 360m diluted weighted average shares outstanding. For the full year, it is increasing its non-GAAP product gross margin guidance, expecting 77 percent.
“We still expect a product gross margin headwind in the fourth quarter associated with new products. We are increasing our fiscal 2024 non-GAAP operating margin guidance. We now expect non-GAAP operating margin of seven percent. We are increasing our fiscal 2024 non-GAAP adjusted free cash flow margin,” the CFO added.