Snowflake Inc.

Good day and thank you for standing by. Welcome to the second quarter fiscal year 2022 Snowflake Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question and answer session. To ask a question during the session, you will need to press star and then the number 1 on your telephone keypad. If you require any further assistance, please press star zero. Thank you. Now I would like to hand the conference over to your first speaker today, Mr. Jimmy Sexton, Head of Investor Relations for Snowflake. Sir, please go ahead.

Good afternoon, and thank you for joining us on Snowflake's Q2 Fiscal 2022 Earnings Call. Joining me in Bozeman, Montana, are Frank Slootman, our Chairman and Chief Executive Officer, Mike Scarpelli, our Chief Financial Officer, and Christian Kleinerman, our Senior Vice President of Product, will be joining us for the Q&A session. During today's call, we will review our financial results for second quarter fiscal 2022 and discuss our guidance for the third quarter and full year fiscal 2022. During today's call, we will make forward-looking statements, including statements related to the expected performance of our business, future financial results, strategy, products and features, long-term growth, and overall future prospects. These statements are subject to risks and uncertainties, which could cause them to differ materially from actual results. Information concerning those risks is available in our earnings press release distributed after market closed today and in our SEC filings, including our most recently filed Form 10-Q for the fiscal quarter ended April 30, 2021, and the Form 10-Q for the quarter ended July 31, 2021 that we'll file with the SEC. We caution you to not place undue reliance on forward-looking statements and undertake no duty or obligation to update any forward-looking statements as a result of new information, future events, or changes in our expectations. We'd also like to point out that on today's call, we will report both GAAP and non-GAAP results. We use these non-GAAP financial measures internally for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. Non-GAAP financial measures are presented in addition to and not as a substitute for financial measures calculated in accordance with GAAP. To see the reconciliations of these non-GAAP financial measures, please refer to our earnings press release distributed earlier today and our investor presentation, which are both posted on investors.snowflake.com. A replay of today's call will also be posted on the website. With that, I would now like to turn the call over to Frank.

Thanks, Jimmy. Good afternoon, everybody. We saw continued momentum in Q2 with 103% year-on-year growth to $255 million in product revenues, reflecting strength in Snowflake consumption. Remaining performance obligations grew to $1.5 billion in the getting strength in sales. For the first half of fiscal 2022, total revenues were $501 million, up 107% year-on-year. As the net revenue retention rate reached 169%, we also saw non-GAAP product gross margin and operating margin efficiency improve to 73.6% and negative 8%, respectively. Adjusted free cash flow was positive for the third quarter in a row. As we approach the $1 billion mark in annual revenues, we continue to add customers at a robust pace, adding 458 net new customers up from 397 in Q2 of last year. With a focus on the largest organizations, our Fortune 500 count totaled 212, increasing by 18 in the quarter. We are addressing the largest enterprises globally with a vertical industry approach. We see these investments yield strong results. In Q2, financial services, customer product revenue grew more than 100% year-on-year, representing the largest contribution, while healthcare customer product revenue grew nearly 200%. We have engaged in targeted industry events for these verticals and will continue to go to market with tailored business outcomes. We're pleased with our geographical expansion outside the United States. The product revenue from EMEA and Asia Pacific outstripping the company's growth as a whole, growing 185% and 170% year-on-year, respectively. One of our largest new customers signed into corner came from Asia Pacific. During Q2, we had key enterprise wins, including Alliance Bernstein, Constellation Brands, and Lithia Motors. Following milestones we think are worthy of note. In Q2, we announced public preview availability in all AWS regions of Snowpark, our new developer experience. Snowpark enables developers to work in their preferred programming language and formats, including Java and Scala. Snowpark is designed to make building complex data pipelines and applications easy and allow developers to interact with Snowflake directly without having to extract data, maximizing governance. The Snowpark Accelerator program has over 50 partners enrolled to bring their capabilities and innovations across data science, data engineering, and security to Snowpark. In the future, Snowpark will add support for Python and expand to Azure and Google Cloud regions. Python is the most widely used programming language for machine learning and data science generally. We also launched Powered by Snowflake in June to help companies build, operate, and grow applications in the data cloud. Powered by Snowflake is designed to accelerate the delivery of differentiated applications on Snowflake by supporting developers across all stages of the application journey in Snowflake's data cloud. Today, there are over 80 Powered By partners, including founding members, BlackRock, Adobe, Lacework, Observe, and Oplones. Increasingly, application providers are enabling their apps to operate directly against their customer's Snowflake accounts, meaning no data needs to be copied or replicated, simplifying data governance while accelerating the network effect of the data cloud. We also continue to deliver new capabilities to strengthen data governance for our customers. During the quarter, we made row access policies generally available. Data governance features are typically the broadest and fastest adopted feature across our customer base. Snowflake's increasing focus on vertical industries is leading to more and deeper discussions with customers globally. The Snowflake team is organized around the following core articles. They are... financial services, healthcare and life sciences, retail and CPG, advertising and media, entertainment, technology, public sector, education, and manufacturing. This vertical industry focus will continue to intensify and expand over time. One example of our vertical approach is the advertising industry, which is facing new regulations and increasing pressure to strengthen consumer privacy. Advertisers want to compete in a market dominated by the walled gardens. The Snowflake Data Cloud is empowering large media companies, technology providers, and marketers to collaborate with their data assets across the ecosystem. Snowflake's data cleanroom solution can enable companies to share and join data without copying or moving their data assets. Snowflake's data cloud powers these data cleanrooms with transparency and privacy controls for customers like Disney and NBCUniversal. Each customer is creating their own data network within the Snowflake data cloud for their advertising businesses. Snowflake continues to deliver performance and optimization improvements throughout our platform, from improving storage efficiencies, lower ingestion latencies, to faster query performance across different workloads. Performance improvements bring not only timelier insights, but improve the economics of our platform for our customers. Finally, data cloud adoption is growing rapidly. The data cloud is the sum of all data networking relationships that are active at any point in time. We tracked these data relationships through what we call edges. We added over 450 customers in the quarter and continued to expand the number of customers with stable edges. At the end of the quarter, 16% of our customers had stable edges in place with external smoke leg accounts compared to 15% last quarter. The total number of these stable edges grew more than 20% quarter over quarter. This growth is fueled by the content on our marketplace, which saw listings grow 32% quarter over quarter. The data cloud enables our customers to enrich their data, gain more effective analytical insight, and do so faster and more cost-effectively. Strategically, Snowflake is emerging as a highly secure, compliant, global, and efficient data network in the infrastructure across the major public cloud domains. The combination of world-class data workload execution with cloud application development, cross-cloud operations, data and data application marketplaces, as well as plant monetization is what makes Snowflake stand out. During the quarter, we hosted our annual Snowflake Summit to share our data cloud strategy, platform optimizations, feature enhancements, and vertical industry use cases. Over 60,000 folks registered for the three-day event. We had four industry executive sessions and more than 60 customer sessions. Snowflake was launched in preview with over 50 partners supporting the Snowpark Accelerator program. We announced Overlay Analytics as the winner of the first Snowflake Startup Challenge. In Q3, we will be hosting events, including the Snowflake Financial Services Data Summit across the Americas, Europe, and Asia-Pacific. where we'll be sharing more of how Snowflake is connecting the entire financial services ecosystem. Snowflake is a sponsor of Adweek, where we will discuss our enhanced advertising media and entertainment offerings. And finally, Snowflake is holding our Build event for technical executives, including CTOs, VPs of engineering, data scientists, data engineers, and application developers. In closing, our results demonstrate high-quality, durable growth coupled with improving efficiency, and we're looking forward to executing the second half of the year. With that, I will now turn the call over to Mike.