Snowflake Inc.

Good afternoon. Thank you for attending today's Snowflake Q2 and fiscal year 2025 earnings call. My name is Cole, and I'll be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I'd now like to pass the call over to Jimmy Sexton, head of investor relations. Please go ahead.

Good afternoon, and thank you for joining us on Snowflake's Q2 fiscal 2025 earnings call. Joining me on the call today is Sridhar Swamy, our Chief Executive Officer, Mike Scarpelli, our Chief Financial Officer, and Christian Kleinerman, our Executive Vice President of Product, who will participate in the Q&A session. During today's call, we will review our financial results for the second quarter fiscal 2025 and discuss our guidance for the third quarter and full year fiscal 2025. During today's call, we will make forward-looking statements, including statements related to our business operations and financial performance. These statements are subject to risks and uncertainties, which could cause them to differ materially from our actual results. Information concerning these risks and uncertainties is available in our earnings press release, our most recent forms 10-K and 10-Q, and our other SEC reports. All our statements are made as of today based on information currently available to us. Except as required by law, we assume no obligation to update any such statements. During today's call, we will also discuss certain non-GAAP financial measures, see our investor presentation for a reconciliation of gap to non-gap measures and business metric definitions, including adoption. The earnings press release and investor presentation are available on our website 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 Sridhar.

Thanks, Jimmy. And hi, everyone. Thanks for joining us today. As you've seen by now, we had another strong quarter, speeding guidance, and increasing our FY25 product revenue expectations. I'm really proud of the team and how we accelerated our innovation pipeline. And our product delivery momentum continues to be really strong. In the first half of this year alone, we brought as much product to market as we did all of last year. We're making Snowflake the best cloud for computation, collaboration, and applications on all data And we are leveraging the power of AI to make all of these easier to create, maintain, and use. This is what our team is aligned around. And I can tell you, our customers are adopting our new capabilities at an incredible pace. As I said last quarter, I have three key areas I'm personally focused on. Listening to and learning from our customers. Fueling innovation and product delivery. Driving execution and alignment within our go-to-market team. And in Q2, we delivered on all fronts, which you can see in our results. Product revenue for the quarter was $829 million, up 30% year over year. Remaining performance obligations totaled $5.2 billion, with year over year growth accelerating to 48%. Given the strong quarter, we are increasing our product revenue outlook for the year. Companies like Capital One, NBCU, Petco, Pfizer, Snapchat, and Western Union are all relying on Snowflake to help them fuel their businesses. I'm really encouraged by the strength of our core business and the rapid progress we have made on the AI front. I'm very optimistic about where we are going and the opportunities we have in front of us to deliver for our customers. In fact, the more I'm with our customers, the more I appreciate just how critical we are to their business and how much they're counting on us to be their trusted advisor in their AI data journey. Nothing brings to life how strong and trusted a relationship is than when you go through challenges together. We obviously had some rough headlines in the quarter as some of our customers dealt with a cybersecurity threat. As extensively reported, the issue wasn't on the Snowflake side. After multiple investigations by internal and external cybersecurity experts, we found no evidence that our platform was breached or compromised. However, we understand that when it comes to cybersecurity, we are all in it together. My one ask of all businesses around the world, whether they are a Snowflake customer or not, is to enable and enforce multi-factor authentication in your organization and ensure that you have network policies are as strong as possible. Two things we at Snowflake have supported since 2016. There are a lot of bright spots in the quarter, none more than the time I spent with over 100 customers, many of them on my travels to the UK, Germany, Canada, and across the US. And of course, at Snowflake Summit in June. The affinity for our product is incredible, and the consistent theme I hear from the C-suite across industries and geographies is that Snowflake is delivering ease, efficiency, and reliability to their business. And so much of this came to life at Snowflake Summit. We had 15,000 on-site attendees, up 28% year-on-year, with customers and partners from around the world. We hosted our first ever Developer's Day with over 3,000 attendees. the energy was simply incredible. And if you were there, you experienced a lot of our innovation and product momentum where we brought to life Cortex AI and announced Iceberg being generally available, both of which have gained a lot of traction already with customers. Penske Logistics, a leading provider of transportation and warehousing solutions, has developed a variety of innovative use cases involving Cortex AI. In one example, Penske plans to use Cortex to consume various performance metrics related to its transportation business. Cortex analyses will help provide feedback to Penske's operations managers with the goal of improving performance and enhancing truck driver retention. Also, one of the largest financial services companies is using Cortex AI to analyze unstructured text data. running sentiment analysis on call center transcripts to improve their customer support expedience. Twilio segments reverse ETL integrates with Snowflake's Cortex AI and enables Twilio customers to derive insights from their unstructured data to improve the customer journey. And Iceberg is providing one of the largest consumer services and hospitality companies with a more flexible and interoperable deployment model enabling them to accelerate their migration to the cloud. Iceberg is enabling us to play offense and address a larger data footprint. Many of our largest customers have indicated they will now leverage Snowflake for more of their workloads as a result of this functionality. More than 400 accounts are using Iceberg as of the end of Q2. I told you last quarter that product delivery is one of our highest priorities, and in Q2, We made nine net new product announcements and brought more than 15 product capabilities to general availability to the market. That's what we call progress. We're also seeing broad adoption of our products across our customer base. As of the end of Q2, more than 2,500 accounts were using Snowflake AI on a weekly basis. We expect this adoption to continue to increase and revenue contribution to follow. Our notebooks offering is also seeing great traction in public preview with more than 1,600 accounts using that feature. This is critical to engage with data scientists and will unlock new opportunities that we previously did not address. We are in the early innings of this opportunity and will continue to bring new features to market. Cortex Search and Cortex Analyst are expected to be generally available in Q3. We are continuing to responsibly invest in AI and machine learning to deliver enterprise AI that is easy, efficient, and most of all, trusted. It's great to have so much momentum on the product front. It's fueling our incredible go-to-market team, which, as you know, is one of our biggest advantages. To wrap things up, our innovation engine and product delivery are in overdrive. The combination of our platform and the network effect of collaboration As well as the innovation we are working on in AI, it snowflakes future and creates a huge opportunity ahead. We have a lot of work to do, but it's in our hands to deliver and take advantage of it.