Snowflake Inc.

Good afternoon and thank you for attending today's Snowflake Q3 fiscal 2023 earnings conference call. My name is Austin and I will be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you'd like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to our host, Jimmy Sexton, head of investor relations with Snowflake. Jimmy, please go ahead.

Good afternoon, and thank you for joining us on Snowflake's Q3 fiscal 2023 earnings call. With 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, who will join us for the Q&A session. During today's call, we will review our financial results for the third quarter, fiscal 2023, discuss our guidance for the fourth quarter and full year fiscal 2023, and discuss our fiscal 2024 outlook. 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 July 31, 2022, and the Form 10-Q for the quarter ended October 31, 2022, that we will 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 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 posted at 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. Snowflake continues to drive strong growth at scale, coupled with strength in unit economics, operating profit, and free cash flow. While we acknowledge a weakening global macro context, we remain resilient in terms of our results. We believe this resilience reflects the importance of data strategy in modern enterprises and institutions. Data is becoming deeply ingrained in how global enterprises think, act, decide, and strategize. Relying on anecdotal observations will increasingly take a backseat to data-driven operations. The company is reporting $523 million in product revenue, growing 67% year-on-year. Our remaining performance obligations, or RPO, grew 66% year-on-year to $3 billion. On a non-GAAP basis, product growth margin came in at 75%, operating margin at 8%, and adjusted free cash flow margin at 12%. Snowflake's data cloud strongly resonates in large enterprises and institutions. The idea of getting your data siloed again in a public cloud environment Stack holds limited appeal. Data Cloud maximizes the power and promise of data science and artificial intelligence, a high priority in the modern enterprise. In the quarter, we added 28 Global 2000 customers. Product revenue from the Global 2000 outpaced the company as a whole, growing 14% quarter over quarter. Global 2000 customers now represent over 40% of revenue. Our mission is the Data Cloud, the single data universe across geographies, data sources, compute clouds, and cloud regions. A single point of inquiry, analytics, and intelligence. Maximum enablement of data sciences, analytics, and intelligence. Today, Snowflake operates across 37 regional deployments. Year over year, we've expanded our footprint by more than 30%. Customers are embracing this vision. 22% of customers have at least one stabilized up from 17% a year ago. Sixty-six percent of customers with over one million in trailing 12-month product revenue have at least one stable edge. Snowflake's marketplace listings grew 11 percent quarter over quarter, now with more than 1,700 data listings. Our strategy is a global data-sharing network coupled with unlimited workload enablement. Work needs to find its way to the data instead of the historical habit of moving data to the work. Much of the work and announcements you've seen from Snowflake in recent years reflect our progress in and across the workload spectrum, from data engineering to data warehousing to data science to data applications and transaction processing. We recently announced the general availability of Python for Snowpark. This is foundational for many workloads and user types. Global 2000 customers, Charger Communications, EDF Energy, and Norden Trust have adopted Snowflake for Python. Earlier next year, We will offer native Streamlit integration in private preview. With Streamlit, we're helping developers and data engineers build applications in Snowflake. Since acquisition, the Streamlit community has grown more than 60%, and now has approximately 70,000 developers. We're enabling data science workloads with Snowpark optimized warehouses, now in public preview. Optimized warehouses represent the step function improvement for compute-intensive workloads and allow customers to bring ML training into Snowflake. In Q3, we hosted our Data Cloud World Tour, which brought our product announcements to a global audience. We traveled to 18 cities across 12 countries and reached over 12,000 attendees. In November, we hosted our annual developer conference, Build. Our virtual kickoff had over 4,000 attendees, and local breakouts are scheduled in 16 cities across 10 countries. Aside from world-class scale performance and economics, Snowflake differentiates with a relentless focus on enterprise-grade high-trust implementation, where security and compliance capabilities enable the largest enterprises and institutions worldwide to deploy Snowflake for the most critical use cases and applications. Privacy and compliance, of course, have become far greater challenges in recent years and created new challenges in data operations. For example, our data cleanroom operations, which originated in the world of advertising, are now spreading to other vertical industries. Snowflake continues to deepen and strengthen its industry orientation. We expect to understand our customer challenges, solve their problems, and speak their language. Leading industries for Snowflake are financial services, advertising media and entertainment, followed by retail and consumer packaged goods, technology, and healthcare and life sciences. In Q3, product revenue from the financial services industry grew 13% quarter over quarter. For financial services clients, the Depository Trust and Clearing Corporation, or DTCC, recently announced their use of Snowflake Marketplace. Providing clearing and settlement services, DTCC has access to a vast amount of training data. DTCC allows clients to engage with this data through Snowflake to better understand market liquidity and investor sentiment. During the quarter at advertising week, we announced our investment in OpenAP, the advanced advertising company. This will accelerate the development of the OpenAP Data Hub, which is a new cross-publisher and cross-platform cleanroom solution for the television industry, followed by Snowflake. The addition of Snowflake validates the commitment Fox, NBCUniversal, Paramount, and Warner Brothers' discovery have made to transforming the TV app industry. We are aware of the weakening macroeconomy. Customer behavior informs our outlook and investment approach. In Q3, we demonstrated our ability to execute through different economic environments. Our focus remains on revenue growth balanced with free cash flow generation. We are well positioned to drive efficient and durable growth, which Mike will discuss further. The opportunity we have is massive and will take years to unfold. For that, I will turn the call over to Mike.