Housekeeping:
- My detailed Zscaler Earnings Review can be found here.
- Salesforce and MongoDB earnings reviews will come tomorrow.
- Snowflake 101 (intro to the business) can be found here.
- 31 other earnings reviews to read from this season.
Table of Contents
a. Key Points
- Strong beats across the board.
- AI products are materially helping growth.
- M&A expands market positioning.
- Pace of innovation keeps accelerating.
b. Demand
- Beat revenue estimates by 4.9%.
- Its 29.5% 2-year revenue compounded annual growth rate (CAGR) compares to 28.5% last quarter and 28.4% 2 quarters ago.
- Beat product revenue estimate by 4.7% & beat guidance by 5.2%.
- Beat 125% net revenue retention (NRR) rate by 1 point.
- Remaining performance obligation (RPO) missed estimates by 2.4%. This is because SNOW is seeing growing interest in customers renewing during Q4, which means more backlog growth will come during that quarter than during previous years.
- Despite this, RPO growth accelerated from 34% Y/Y last year to 38% Y/Y this year.
c. Profits & Margins
- Beat EBIT estimates by 38% & beat 9% EBIT margin guidance by 3 points.
- This was related to revenue outperformance, slower hiring and some modest R&D cost leverage.
- SNOW added 190 people this quarter (173 from acquiring Observe).
- Beat $0.32 EPS estimates by $0.07.
- Beat FCF estimates by 8.2%.
