Analyst(s): Nick Patience
Publication Date: February 28, 2025
Snowflake’s Q4 FY 2025 earnings highlight how the company’s strategic AI investments and expanding product portfolio have resulted in strong 28% revenue growth. The company successfully positions itself as a central platform in the enterprise AI data ecosystem while maintaining healthy margins and customer retention.
What is Covered in this Article:
- Snowflake’s Q4 FY 2025 financial results
- Record revenue performance and customer retention metrics
- Strong momentum in AI and data engineering initiatives
- Expanded strategic partnerships with Microsoft and other AI leaders
- CFO transition announcement and outlook for FY 2026
- Snowflake’s positioning in the expanding data and AI market
The News: Snowflake (NYSE: SNOW) announced financial results for its fourth quarter and full year of fiscal 2025, which ended January 31, 2025. The company reported $986.8 million in revenue for the quarter, a 27 percent increase from the previous year. Product revenue, which Snowflake believes best reflects its underlying performance as it excludes professional services, was $943.3 million in the quarter, representing a 28% year-over-year growth. Remaining performance obligations – the amount of contracted future revenue that has not yet been recognized – totaled $6.9 billion with a year-over-year increase of 33%. The company maintained a strong net revenue retention rate of 126%. On a GAAP basis, operating losses were $386.7 million, up from $275.5 million in the year-ago quarter, and net losses were $335.7 million. Snowflake’s non-GAAP operating margin increased to 9%, and its non-GAAP adjusted free cash flow margin was 43%. Notably, CFO Mike Scarpelli announced plans to retire once a successor is in place.
Snowflake Q4 FY25 Shows Strong Momentum in Core Business and AI Initiatives
Analyst Take: Snowflake’s Core Business Shows Remarkable Strength
Snowflake’s Q4 results demonstrate its continued strength in its core business, with product revenue growing at 28% year-over-year to $943 million. For the full fiscal year 2025, product revenue grew 30% to $3.5 billion, showing the company’s ability to maintain robust growth at scale. The 126% net revenue retention rate indicates strong adoption and expansion among existing customers, a critical growth driver for enterprise software companies. This metric suggests Snowflake continues to add significant value to its customer base, enabling it to find new use cases for the platform.
AI Investments Begin Paying Dividends
Snowflake’s strategic investments in AI are increasingly contributing to its growth story. The company has positioned its Cortex AI portfolio as a comprehensive solution for enterprises looking to leverage AI with their data assets. CEO Sridhar Ramaswamy, a year into his role, highlighted during the earnings call that more than 4,000 customers are now using Snowflake’s AI and ML technology on a weekly basis.
The company’s expanded partnership with Microsoft is particularly noteworthy, bringing OpenAI’s models into Cortex and making Snowflake the only cloud-based data platform to host both Anthropic’s and OpenAI’s leading models.
Product Innovation Accelerating
A key highlight from the earnings call was Snowflake’s accelerated pace of product innovation. The company delivered over 400 product capabilities to the market in FY25, more than double the amount launched last year. Particularly interesting is the company’s approach to Apache Iceberg, which Snowflake now views as a tailwind rather than a potential threat. By embracing open data formats like Iceberg, Snowflake is expanding its addressable market by making it easier for organizations to work with data regardless of where it resides. This alignment with open standards is paying off, with management noting that Iceberg adoption is already generating material revenue.
Outlook Points to Continued Growth
Looking ahead to FY26, Snowflake provided guidance for approximately $4.28 billion in product revenue, representing 24% year-over-year growth. While Q1 guidance was slightly more conservative at 21-22% growth (partly due to leap year timing), management expressed confidence that new product features will contribute to accelerated growth in the year’s second half.
The company also expects to continue expanding its operating margins, forecasting a non-GAAP operating margin of 8% for the full year, up from 6% in FY25. This demonstrates Snowflake’s ability to balance growth investments with operational efficiency.
Leadership Transition Ahead
One significant announcement was CFO Mike Scarpelli’s plan to retire once a successor is in place. Scarpelli, who joined Snowflake in 2019, has been instrumental in the company’s growth and public market journey. CEO Ramaswamy expressed confidence in the company’s trajectory and thanked Scarpelli for his partnership over the past year. This transition marks another step in Snowflake’s evolution since former CEO Frank Slootman’s retirement a year ago.
Competitive Positioning Strengthens
Snowflake continues to strengthen its competitive position in the data cloud market. The company highlighted its differentiation through ease of use, cost-effectiveness, and ability to break down data silos. Management claimed that many customers see over 50% cost savings by migrating to Snowflake from other providers.
Furthermore, Snowflake’s data-sharing capabilities are becoming a key differentiator, with customers like Stripe, NTT, and Braze each having active data-sharing connections with over 160 partner and customer organizations. This network effect increases customer switching costs, creating a moat around Snowflake’s business.
In Summary
Snowflake’s Q4 results demonstrate the company’s strong execution under Ramaswamy’s leadership. With accelerating product innovation, strategic AI investments, and improving operational efficiency, Snowflake appears well-positioned to capitalize on the growing enterprise demand for unified data and AI platforms. While the upcoming CFO transition introduces some uncertainty, the company’s robust customer metrics and product momentum suggest a positive outlook for FY26.
Read the full press release here.
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
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Author Information
Nick Patience is VP and Practice Lead for AI Platforms at The Futurum Group. Nick is a thought leader on AI development, deployment, and adoption - an area he has researched for 25 years. Before Futurum, Nick was a Managing Analyst with S&P Global Market Intelligence, responsible for 451 Research’s coverage of Data, AI, Analytics, Information Security, and Risk. Nick became part of S&P Global through its 2019 acquisition of 451 Research, a pioneering analyst firm that Nick co-founded in 1999. He is a sought-after speaker and advisor, known for his expertise in the drivers of AI adoption, industry use cases, and the infrastructure behind its development and deployment. Nick also spent three years as a product marketing lead at Recommind (now part of OpenText), a machine learning-driven eDiscovery software company. Nick is based in London.
