Executive Summary
Snowflake Inc (SNOW) showcased impressive performance in Q1 2025 with a product revenue growth of 34% year-over-year, reaching $790 million. This growth trajectory is driven by strong demand for its data platform, especially with the integration of AI technologies. Management emphasized the importance of customer engagement and innovative product delivery within their growth strategy. Despite facing challenges like rising operational costs, particularly related to GPU investments for AI initiatives, Snowflake remains well-positioned due to its strong cash reserves and a growing customer base. Looking ahead, the company forecasts a product revenue range of $805 million to $810 million for Q2 2025 and expects to increase its annual revenue outlook, indicating strong momentum in a competitive market.
Key Performance Indicators
QoQ: -26.52% | YoY:-27.57%
QoQ: -87.18% | YoY:-40.49%
QoQ: -86.27% | YoY:-35.71%
Key Insights
**Revenue**: $828.7 million, up 34% YoY.
**Gross Profit**: $556.2 million, with a gross margin of 65.7%.
**Operating Income**: -$348.6 million, reflecting continued investment in growth strategies, particularly in AI.
**Net Income**: -$317.0 million, driven by increased operating expenses and R&D investment.
**Cash Flow**: Net cash provided by operating activities totaled $355.5 million with a free cash flow of $331.5 million.
**Liquidity Ratios**: Current ratio of 1.67 and quick r...
Financial Highlights
Revenue: $828.7 million, up 34% YoY.
Gross Profit: $556.2 million, with a gross margin of 65.7%.
Operating Income: -$348.6 million, reflecting continued investment in growth strategies, particularly in AI.
Net Income: -$317.0 million, driven by increased operating expenses and R&D investment.
Cash Flow: Net cash provided by operating activities totaled $355.5 million with a free cash flow of $331.5 million.
Liquidity Ratios: Current ratio of 1.67 and quick ratio of 1.67 reflect strong liquidity position.
Management stated that the strong inter-quarter performance of $790 million was supported by substantial growth from existing and new customers, specifically noting significant contributions from larger Global 2000 firms, which have indicated increased consumption patterns with their core offerings.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
828.71M |
32.89% |
6.97% |
| Gross Profit |
556.19M |
34.29% |
4.37% |
| Operating Income |
-348.57M |
-27.57% |
-26.52% |
| Net Income |
-316.99M |
-40.49% |
-87.18% |
| EPS |
-0.95 |
-35.71% |
-86.27% |
Key Financial Ratios
operatingProfitMargin
-41.9%
operatingCashFlowPerShare
$1.07
freeCashFlowPerShare
$0.99
priceEarningsRatio
-40.83
Management Commentary
Strategy:
- "We are critical in helping our customers run their businesses." - Sridhar Ramaswamy, CEO.
- Sridhar emphasized a focus on customer feedback and driving innovation within product offerings, particularly in AI.
Financial Performance:
- "Despite the operational challenges, we have ended Q1 with $4.5 billion in cash and investments..." - Mike Scarpelli, CFO.
- Management noted that Seven of the top 10 customers grew in revenue quarter-over-quarter, reflecting a stable customer retention and expansion strategy.
"The combination of our incredibly strong data cloud, now powerfully boosted by AI, is the strength and story of Snowflake."
â Sridhar Ramaswamy
"Given the strong quarter, we are increasing our product revenue outlook for the year."
â Mike Scarpelli
Forward Guidance
Management has increased FY 2025 product revenue guidance to approximately $3.3 billion, indicating a 24% growth YoY. For Q2 2025, expected product revenue is projected between $805 million and $810 million. Management highlighted the importance of successfully marketing Snowpark and Cortex, new products contributing to future growth. The anticipated increase in AI-related revenues from Cortex will be monitored closely to assess impact on the revenue outlook. Investors should focus on the successful execution of new product rollouts and associated upticks in customer usage.