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Good afternoon. Thank you for attending today's Snowflake Inc. Q3 Fiscal Year 2026 Earnings Call. My name is Jayla, and I'll be your moderator for today. All lines will be muted in the presentation portion of the call with an opportunity for questions. At this time, I'd like to pass the conference over to our host, Catherine McCrekin. Please proceed.

Good afternoon, and thank you for joining us on Snowflake Inc.'s Q3 Fiscal 2026 Earnings Call. Joining me on the call today are Sridhar Ramaswamy, our Chief Executive Officer, and Brian Robbins, our Chief Financial Officer. During today's call, we will review our financial results for the third quarter fiscal 2026 and discuss our guidance for the fourth quarter and full year fiscal 2026. 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 GAAP to non-GAAP 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, Catherine. And hi, everyone. Thank you all for joining us today. As every company transforms to embrace the AI era, Snowflake Inc. remains at the center of today's AI revolution. We have delivered yet another strong quarter thanks to the hard work and dedication across our team, to help our customers realize value throughout their end-to-end data life cycle, and effectively harness AI's potential every step of the way. Our continued focus on operational rigor and close-knit product and go-to-market execution has helped us maintain strength across our core business and innovate rapidly to bring new capabilities to market. We are executing with urgency and focus and maintaining deep partnerships with our customers that enable us to capture the opportunity in front of us and sustain durable momentum. Product revenue in Q3 was $1,160,000,000, up 29% year over year. Remaining performance obligations totaled $7,880,000,000 with year-over-year growth accelerating to 37%. Our net revenue retention remained stable at a very healthy 125%, and we added a record 615 new customers this quarter. As we continue to deliver strong revenue growth and healthy results, we are increasing our growth expectations for the year and reiterating our margin target. As I've shared, Snowflake Inc. is on a mission to empower every enterprise to achieve its full potential through data and AI. And we are making incredible progress against that mission every day. We continue to double down on what makes Snowflake Inc. unique, delivering an AI data cloud that's truly enterprise-ready with a radical focus on our customers. Snowflake Inc. is intuitive and easy to use, seamlessly connected for collaboration, and built with the security and governance that enterprises trust as their foundation. That's why customers like Coca-Cola Consolidated, PayPal, and thousands more are transforming their businesses with Snowflake Inc. And it's why more organizations than ever are going all in on Snowflake Inc. as their foundational data and AI platform. Already, Snowflake Inc. is the cornerstone for our customers' AI strategy. In Q3, more than 7,300 accounts are using our AI capabilities every week. Just recently, Morgan Stanley named Snowflake Inc. its strategic partner of the year, recognizing how our AI data cloud is accelerating their transformation and driving AI innovation across one of the world's leading financial institutions. And with the general availability of Snowflake Intelligence, we are seeing the fastest ramp in product adoption in our company history. Already, 1,200 customers are harnessing next-generation agentic AI capabilities to drive real business impact at scale. Snowflake Intelligence is transforming how businesses interact with their data, turning natural language into real-time, actionable intelligence. For example, CS Imagine, a global SaaS platform for financial services, uses Snowflake Intelligence to build an AI agent that now handles tasks equal to eight and a half full-time employees. The agent helps users manage and query data, make faster trading and risk management decisions, and automate customer case resolution, increasing transparency across teams and with clients. And Fanatics, the global leader in sports merchandise and e-commerce, uses Snowflake Intelligence to connect billions of fan data points across shopping, collectibles, and gaming platforms for more than 100,000,000 fans worldwide. This unified data foundation helps Fanatics better understand its customers, boost sales, and grow its advertising business, powering the launch of the new Fanatics advertising audience network this year. This momentum has enabled us to achieve a major milestone: $100,000,000 in AI revenue run rate, achieved one quarter earlier than anticipated thanks to our pace of innovation, cross-functional collaboration, and early adoption among many of our marquee customers. Because we operate as a consumption-based business, this number reflects real-world enterprise usage. It's a direct signal of how customers are using our AI capabilities in production to create value today. What's more, our AI capabilities are strengthening our customer relationships and the value we deliver across every stage of the data life cycle. AI is a key driver of the strength that we see in our core business. In Q3, we landed a record number of new logos and continue to build strong momentum, with AI influencing 50% of the bookings signed this quarter. We also deepened relationships with existing customers, with 28% of all use cases deployed during the quarter incorporating AI. Being enterprise-ready is not just about innovation; it's also about reliability. When a major cloud service provider experienced an outage this quarter, our disaster recovery capability seamlessly transferred more than 300 mission-critical workloads to backup systems, ensuring business continuity for our customers when it mattered the most. Our commitment to making business-critical capabilities just work continues to resonate with our customers. And so we built on this strength by expanding not only our product capabilities but our ecosystem. This quarter alone, we announced new partnerships with Workday, Splunk, Palantir, UiPath, and more to deepen integration, enable secure and seamless data access to the systems our customers use every day, and unblock new innovations like agent-to-agent collaboration. More recently, we announced a landmark partnership with SAP to unite mission-critical business data with the Snowflake AI Data Cloud. We are already supporting customers like Astra

Thank you, Sridhar. A truly exciting time for me to be at Snowflake Inc. In Q3, we delivered strong results across revenue, bookings, and margins. Our product revenue grew 29% year over year, fueled by durable growth in our core business and continued expansion into data engineering and AI workloads. Together, these factors contributed to a stable net retention rate of 125%. Financial services and technology verticals led growth in Q3. We continue to see significant opportunity to expand within our existing customer base. Our global 2,000 customers now total 776, with each of these accounts spending on average $2,300,000 on a trailing twelve-month basis. Many of these customers are still in the early stages of their Snowflake Inc. journey, with ample room for further growth. Q3 was an excellent quarter for go-to-market execution. We achieved strong booking results, signing four nine-figure deals. This represents a record number of large deals signed in a single quarter. Our focus on new customer acquisition continues to show yield. As Sridhar mentioned, it was a record quarter for new customer wins, adding over 600 new customers. Our ability to expand with existing customers and bring new ones onto the platform underscores the strength of our business model. Equally important, we continue to operate with financial discipline, delivering healthy margins as we scale. Q3 non-GAAP product gross margin was 75.9%. Non-GAAP operating margin expanded more than 450 basis points year over year to 11%, reflecting our continued focus on driving greater efficiency across the entire company. As a reminder, we intentionally front-loaded our 11%. In Q3, we used $233,000,000 to repurchase 1,000,000 shares at a weighted average price per share of $223.35. We still have $1,300,000,000 remaining on our original authorization for $4,500,000,000 through March 2027. We ended the quarter with $4,400,000,000 in cash, cash equivalents, short-term and long-term investments. Moving now to our outlook. For Q4, we expect product revenue between $1,195,000,000 and $1,200,000,000, representing a 27% year-over-year growth. We expect a non-GAAP operating margin of 7%. We are raising our FY 2026 product revenue guidance. We now expect product revenue of approximately $4,446,000,000, representing 28% year-over-year growth. We are reiterating our FY '26 margin targets. We expect a non-GAAP product gross margin of 75%, a non-GAAP operating margin of 9%, and a non-GAAP adjusted free cash flow margin of 25%. Before moving to Q&A, I'd like to share my perspective on my first sixty days here at Snowflake Inc. Three key takeaways have truly stood out. First and foremost, I've been incredibly impressed by the caliber and energy of the Snowflake Inc. team. There's a sense of winning energy in every meeting and profound pride in their daily work. Specifically, the depth of the bench within our finance organization is exceptionally strong and ready to support our next phase of growth. Second, I prioritized spending my initial weeks meeting with customers. The customers I spoke with were fanatical about Snowflake Inc. and the transformational impact our platform has had on their business. They place the AI data cloud at the absolute center of their strategic initiatives, underscoring our essential role in their future. Finally, the velocity of our product releases and innovation engine is world-class and consistently sets us apart. Snowflake Inc. sits at the intersection of a massive market opportunity, and I could not be more excited to be part of scaling this phenomenal team and seizing the amazing growth ahead. As we look forward, my focus is on continuing to deliver efficient growth. I believe that continued alignment across our finance, go-to-market, and product teams will enable us to balance growth with disciplined execution. With that, I'll now pass the call to the operator for Q&A.

At this time, if you would like to ask a question, it is star followed by one on your telephone keypad. If for any reason you would like to remove that question, it is star followed by two. Again, to ask a question, it is star one. As a reminder, if you're using a speakerphone, please remember to pick up your headset before asking a question. All questions are limited to just one question each. Our first question comes from Sanjit Singh with the company Morgan Stanley. Sanjit, your line is now open.

Yeah. Thank you for taking the questions. I had one for Brian and one for Sridhar. Brian, first for you, when we look at the growth rates on product revenue this quarter, really attractive at 29%, it was, you know, just about a 3% beat, slightly below a 3% beat versus the midpoint of guidance. At the same time, when I look at your Q4 guide, it's probably the best sequential guide I've seen from the company in a couple of years. So I was wondering if you could help us square that. Then for Sridhar, like, really impressive in terms of getting to that $100,000,000 AI revenue run rate. You mentioned on the press release that Snowflake Intelligence is one of the fastest adopting products. So I wonder if you could give us a color on the types of customers that are taking on your AI products, some of the use cases that Snowflake Intelligence is unlocking. Also, if you could comment on kind of Cortex AI adoption. Thanks for the time.

Thanks, Sanjit. I'll answer the first part of the question on financials. We're happy with the performance this quarter. We delivered 29% year-over-year revenue growth. The quarter pretty much played out as expected. There was really only one surprise in the quarter, and that was the hyperscaler outage, which impacted our revenue by approximately $1,000,000 to $2,000,000 within the quarter. I think it's really important with the consumption model not to view quarterly beats as the best signal of the fundamentals within the business. The quarter, as you mentioned, we raised our fiscal year guidance by $51,000,000 to $4,446,000,000, and the FY guide is really the most meaningful signal. And I think the guide really reflects the underlying behavior that we see in our customer base going into the fourth quarter. Sridhar, over to you.

Yeah. Snowflake Intelligence amplifies the investments that our customers have made in putting high-quality data into Snowflake Inc. To take our own example, we created a data agent on all of the sales information that matters for my sales team. Whether it is consumption information, or the Workday hierarchy itself of who is managing whom, information about customers, their use cases, and it's been a magical unlock for several thousand people. Because things that they needed to painfully find dashboards for, they can have answered immediately. Plus, you also get the benefit that unlike a dashboard, which is a 2D representation of a pretty complex space, you can ask questions that cut across any dimension, analyze data in ways that previously were simply not possible before. And so we have a slew of customers, whether it is the USA Bobsled team, or Fanatics, or folks like ServiceNow or CS Imagine, that are using this to create data agents specialized for some areas. So anyone that is working in a particular function, for example, has all of the data that is relevant to them available from a single interface and right on their phone or, you know, or laptop computer. It is that unlock of access to this data that is driving adoption. What I can tell you is, like, whenever I have dinners with CIOs or with CEOs, we are talking about them, often they turn out to be customers. And they end up showing off Snowflake Intelligence on my phone. Usually, to show them information that we have about their company. Like how much they're spending, what use cases they have deployed, the first thing that comes from them is they want this for their own business. That's the attraction of Snowflake Intelligence, which is it puts all of the data that matters to you right at your fingertips. And unlike before, this data is not confined to analysts. This is to every single business user within a company, and that's the big unlock for us. Appreciate the thoughts, Sridhar. Thanks.

The next question comes from Kirk Materne with the company Evercore ISI. Kirk, your line is now open.

Yeah. Thanks very much, and thanks for taking the question, guys. Sridhar, I was wondering if you could just talk about the go-to-market. You guys mentioned you had a real nice quarter, and I was particularly interested in the 600 new customer wins. And I realize you all land small and then grow with your customers. But with AI coming on and Snowflake Intelligence, are you landing with more products now? Meaning, is it still landing with the core data warehouse and then expanding, or are you all able to land with multiple products at once and then grow from there? I'm just kinda curious whether your surface area is growing within some of these new customers. Very much.

Hey, Kirk. Thanks for the question. Well, I think things like Snowflake Intelligence now play a key role in making the power of data come alive every single time you're pitching a new logo. One of the magic of recent advances in AI is our ability to do demos or POCs, proof of concept, that are hyper-customized for each customer. Often, we'll generate a synthetic dataset that, say, will mimic an oil producer or a pharmaceutical company and show them the art of the possible. Previously, when people, you know, got onto Snowflake Inc., it was for an abstract need. It was to make data more efficiently accessible so that it could do more analytics. Now we do the work to show them what is possible with a product like Snowflake Intelligence on top of their data. It just makes the value of the transition from previous systems onto Snowflake Inc. even more clear. And those are some of the stats that we've been sharing with you, which is AI having a helping hand. It's not the dominant thing, but definitely having a helping hand in more than in close to 50% of the new logos that we acquire. I would say it definitely opens up our aperture. On the other hand, I would add that, you know, products that are lower down the stack, products like OpenFlow, are taking off because they actually help make the other side of the data life cycle more efficient. I've used OpenFlow. It's pretty magical to be able to sync data, whether it's from an Oracle OLTP system or from Google Drive onto Snowflake Inc. I think shrewd investments like that are also helping us substantially in just what people do with us. Previously, we used to be just the analytics provider. But we can be there from soup to nuts with products starting with OpenFlow, but then things like Snowpark. Obviously, our analytics engine, then ML, and then AI. It's where this breadth of offering and the complete data offering will end up playing a larger and larger role.

Our next question comes from Brent Thill with the company Jefferies. Brent, your line is now open.

Thanks. Sridhar, good to hear the news on AI bookings influenced. I guess, many are now turning to the go-lives. And when do you expect this batch of go-lives to go up that then, you know, helps re-influence even more excitement on the platform? How do you think about the trajectory, and does that have a bigger ramification back half to '26 then as those deals go live?

Well, you're seeing it live. Right? We gave guidance for Q4. It's a pretty hefty beat and raise. And that is driven by what we see in consumption trends. As you know, we tend to be pretty disciplined about how we forecast and guide. These are based on machine learning models, unsurprisingly, that predict the future. And we are disciplined in following that. On the other hand, we track the other side, which is how many use cases are we winning, what is the time duration from a win to a technical implementation or to a go-live. And accelerating go-live will continue to be a priority, and we're using AI pretty heavily in making some of these use cases go live a whole lot faster as well. And all of these feed into the forecast and guides and the general optimism that we convey to you.

Right. And if I can just for Brian, on the topic, the $200,000,000 partnership, great to see. Is that in backlog, or what goes into backlog from that relationship?

The $200,000,000 is a buy-side that we're buying from Anthropic. And in some ways, the next question, obviously. Our confidence in being in AI drives more and more of our revenue. It is a commitment. But as you see the front side of things like the AI consumption revenue ARR that we announced, the $100,000,000 ARR, that's what gives us confidence that partnerships with Anthropic, which include Avaya, but also a broader go-to-market motion, will continue to accelerate the overall business.

The next question comes from Brad

Hey, guys. This is Dan on for Brad. Just wanted to ask maybe, Sridhar, to start. Just if you can kinda help frame the impact that migrations had to product revenue this quarter versus last quarter. I know there were some kind of unique circumstances last quarter where some positive things came together to drive a pretty strong result. But just in general, you know, I think across all of the cloud names, we've seen pretty strong momentum this year. And just as you look at kind of the visibility and pacing here that you have into that, maybe just the sustainability of what you're seeing on that side. And then maybe one for Brian just on operating margins. I think 4Q operating margin was guided maybe a couple of points below where you guided 3Q. And maybe a little down from what was implied in the guide last quarter. Anything just to unpack on op margins into Q4 for us to think about as we build our model? Thanks.

I'll start. We're super early with migrations. I think you folks heard Matt Garman say today that he thinks maybe, like, they are 15 to 20% of the way through kind of on-prem legacy migration. And that's positive news for Snowflake Inc. And I see AI. I see products like Snowflake Intelligence exert both a powerful tool because the data that's in Snowflake Inc. just became more valuable because it can be used to drive business a whole lot more effectively. But I also see AI play a big role in pushing migrations forward. In other words, making the act of migrating from legacy systems go faster. And this is where tuck-in acquisitions, the acquisition of the telemetry, which makes products that make migrations go faster, easier, are also helpful. We keep a close watch on migration through the entirety of the use case life cycle, and it is something that we are continuously looking to accelerate, bring better techniques. It's an area that I've been personally involved with throughout the year. And we continue to make very solid progress.

Yeah. Just real quickly on the 4Q guidance. All I would say is that 4Q is a little tricky in the sense that we give the 4Q guidance and the annual guidance at the same time. And so don't read too much into that. There's nothing intended by meant to read into that.

The next question comes from Raimo Lenschow with the company Barclays. Raimo, your line is now open.

Thank you. One question, stick to that one question. Sridhar, zero copy comes up a lot in the conversation. Yeah. And, like, every vendor is now talking about, like, oh, we're doing zero copy. That helps to kind of has us play better with everyone else in the ecosystem, etcetera. Do you think that will impact you? And is it kind of does it drive more adoption? Does it impact how much you can monetize? Can you speak to that, please? Thank you.

Yeah.

Okay. Perfect. Thank you. Very clear.

The next question comes from Mark Murphy with the company JPMorgan. Mark, your line is now open.

Hey. This is Arty on for Mark Murphy. Congrats on the strong quarter and continued momentum. I know you've touched on this thing throughout the call here, but we spoke to a Fortune 150 customer recently, and they described Snowflake Inc. as the most important piece of their AI and data strategy. And explicitly stated that Snowflake Inc.'s budget is now tied to their AI budget. And they're kind of broadening their adoption of products on the Snowflake Inc. platform. So my question is, are you kind of seeing that sort of, you know, tying explicitly from customers of their Snowflake Inc. investments to the AI investment? And if so, how is this influencing the buying habits? Are they entering into larger or longer-term contracts? Are they adopting more products or just any new customer patterns you're seeing emerge? Thanks.

The strongest pattern that we have had to work hard and earn this year is to be that genuine player when it comes to enterprise AI. And no amount of talking can make you that. You need products that produce the magic. And so building on earlier products like Cortex Analyst as well as Cortex Search, Snowflake Intelligence, the agentic platform that can use these different sub-products flexibly, is the big unlock for us. And what you're also seeing is a number of our number of these customers have tried to string together agentic systems by, let's say, creating NCP servers on tables, sticking them into a foundation model, and then they realize that solutions like that don't actually work all that effectively. Part of what we provide are systems that can help them thoughtfully structure the data that then needs to be exposed to an AI agent and a careful amount of tuning that makes sure that these systems are fail-safe, that they're reliable and can actually answer the questions they're supposed to. We also work with our customers on things like unheralded, but really important things like eval, where they can judge ongoing performance that they know that they're actually making their systems better. It's a combination of all of this expertise. Yes. The partnership with the big foundation model providers to bring the best models as part of combined with our unrivaled expertise in data and modeling to help them create AI products that deliver value. And if you combine that with products like Snowflake Intelligence that now, like, are clearly valuable and useful for every business user, I think that's the narrative shift that you're seeing in a number of these companies. And the agent AI is still evolving. We have a lot more to do. That's part of the reason why I keep repeating being in the center of enterprise AI. Because we are already the holders of the most valuable data that many of these enterprises have, and then we are bringing the power of AI to get even more value from this data.

Thanks so much. Very insightful. And narrative shift, I think, a great way to describe it.

Our next question comes from Kash Rangan with the company Goldman Sachs. Kash, your line is now open.

Hey. This is Matt Martino on for Kash. Sridhar, I wanna stick with the AI topic here. The number of customers leveraging Snowflake Inc. AI is accelerating very, very quickly within the installed base, and you were able to pull forward that $100,000,000 in AI revenue. Very few of your peers have been able to do. You know, from your perspective, what about the Snowflake Inc. platform is allowing customers to really accelerate their AI journeys? And, you know, maybe secondarily, do you see the market increasingly standardizing around a smaller subset of platforms to handle all their data requirements, given your commentary about Snowflake Inc. really sitting at the center of the AI opportunity? Thanks a lot.

Yeah. I think to take on your second question first, I think there is a lot of complexity in the data space. I know of the number of different tools that Snowflake Inc., the company itself, has had to use to have an effective data strategy. And with things like Snowflake Intelligence and Streamlit, which we are very heavy users of, we are just able to do more with Snowflake Inc. And, again, investments like OpenFlow or even Postgres are going to expand the aperture of what we are able to tackle as the data platform.

Our next question comes from Alex

Yeah. Hey, thanks, guys, for taking the question. Maybe for either of you, Brian or Sridhar, clearly the momentum that you're describing is showing up in bookings. So I just maybe better understanding the confidence and conviction around and maybe the direction of travel for the expansion rate as we continue to see some of these go-lives and an explanation of how the consumption patterns, particularly as you start to see customers leverage the AI portfolio and the other and the multiproduct portfolio more broadly. And then, Brian, any timing elements? Last quarter, it seemed like there was a little bit more of a one-time bump or boost to product revenues from consumption from some very large deals in the quarter, but then this quarter, you also had four super large deals. So is there something where they maybe happened a little bit later last quarter, happened a little bit earlier that maybe drove that beat magnitude cadence to be a little lower?

I can start with the first one. You know, the virtuous cycle of a Snowflake Inc. customer is one in which they sign a deal. It has a certain amount of, you know, slack capacity that is built into it. That our teams then use to expand into use cases that can deliver value for customers. And to actually address a previous question that I had left unaddressed, that was the first part of the previous question, part of what drives broad adoption of AI with Snowflake Inc. is that we make it easy to do. It's not a brand new system. You don't have to resolve existing problems like governance and access control. And we have made it super easy to first build chatbots and then to build more complex agentic systems like Snowflake Intelligence, which is why some 1,200 customers are already using Snowflake Intelligence. And as we expand and deliver value, these then naturally result in more confidence, in more conviction on the part of the customer that they're getting value from Snowflake Inc. And remember, in all of this, they don't have to make any precommit towards AI. The value that they get is, like, you know, it has to be delivered by the products that they build on top of Snowflake Inc. This risk-free approach driven by our consumption model is what makes AI super attractive for our customers on top of Snowflake Inc. We make it easy to use, we don't require them to commit, and then they naturally the ones that are creating value. Then I'll just touch on the second part of your question, and I'll hand off to Brian. Large deals that we sign don't tend to have immediate impact on revenue within the quarter. If anything, as soon as the large deal is signed, they typically get a better discount. So it tends to be slightly negative with respect to revenue. But as I said, these are long-term cycles. Our customers on average sign deals with us once every two and a half to, you know, two and a half years-ish on average. It's not really directly tied to consumption within a quarter, and I would not read too much into timing constraints like that. Brian?

Yeah. Absolutely, Sridhar. You know, I guess I would emphasize that product revenue is still the leading indicator of our business, and we saw that in really the migrations and increased use case wins. We're also happy with the, you know, the developments in AI and also the data engineering workloads. We look at the consumption patterns up until today to inform our view of Q4. The quarterly beats are less indicative, especially in a consumption model. I would really look at the FY guidance as the best indication of the long-term business trends for a consumption model. Our view of the business over the last ninety days has improved, and I think you can see that in our annual raise. This is also representing the $7,900,000,000 in RPO, 37% year-over-year growth, and all the new customer adds that we talked about in the prepared remarks.

The next question comes from Patrick Colville with the company Scotiabank. Patrick, your line is now open.

Thank you for having me on. Guess, Sridhar, Brian, one for both of you, please. You know, past the $100,000,000 consumption threshold, really impressive to see that. I guess, what do you see as the next milestone? And then could you just remind us what does that $100,000,000 actually include? Is that equivalent to the Cortex suite? Or are there other products that go into that $100,000,000 of consumption that you achieved this quarter? Thank you.

The $100,000,000 is primarily the product suite, but it's the whole stack. It is Cortex AI and AI SQL. It's accessible from SQL also as a REST API. And then the products that stack up on top of that, Cortex Search and Cortex Analyst, which are our unstructured and structured data products respectively. And then Snowflake Intelligence, which builds on these building blocks to provide an agentic solution for, you know, for data products. That's roughly the suite. In terms of the next milestone, I think much broader adoption of Snowflake Intelligence is certainly what we are driving. There is no reason for us to not have every single dataset that is in Snowflake Inc. be AI-ready. You're already seeing this play out in the collaboration space where instead of sharing a dataset, you can in fact share an agent on top of that dataset so that the recipient on the other side can straight out just start asking business questions off of this data without needing to build dashboards and so on. Obviously, in many situations, this data flows through programmatically and will be combined with other data. But my point is making all data in Snowflake Inc. AI consumable and making the act of making that AI consumable is something that we will be honestly spending a lot of time on. But the second and the third-order impact that I alluded to earlier, the pull-push analogy that I used, I think that's where the impact is going to be a lot more profound. I think migrating from legacy systems, bringing data into Snowflake Inc. using products like OpenFlow, or being able to write data engineering workloads using our coding agents, all of those are going to get accelerated. I think that's where you're going to see, like, tremendous value that our customers can realize. Tremendous potential for us as a business.

The next question comes from Brad Reback with the company Stifel. Brad, your line is now open.

Sridhar, the results are very impressive. The booking is super great. The op margin, obviously, downticked on the first half sales and marketing. As we look forward into next year and beyond, how do you think about balancing the huge opportunity in front of you and the ability to drive margin expansion? Thanks.

Oh, I think we live in fortunate times where this is not an either-or. We clearly invested pretty heavily in our sales and marketing teams in the first two quarters because we saw tremendous opportunity. And what we are going through now is a maturation of the folks that are here, and we expect them to aid us substantially. But we are also invested equally heavily in how do we make sure that we upscale our own labor force, whether it is engineers or solution engineers. We've rolled out coding agents for the I talked earlier about how we wanna make it super easy for every single rep, every single solution engineer to be able to do custom demos, custom POCs, for our customers. Obviously, we have a big services team as well. Making them AI native is a big transformation. So the way we look at next year is, yes, we will continue to invest in the business, but I think there are also substantial gains to be had in just how efficient we are as a company. And I think of this as an either-or. We have had pretty healthy expansions in things like operating margin, but also things like SBC year over year, and we will continue to press hard on those things.

Yeah. I'll just echo what Sridhar said. You know, we can do both. It's not one or the other. Obviously, it's a really big market, and we've delivered growth, and we'll continue to do innovations in our product, you know, to drive that revenue growth, but we'll do that responsibly.

Our next question comes from Mike Cikos with the company Needham. Mike, your line is now open.

Great. Thanks for taking the questions, guys, and, Brian, congratulations again on the new role of CFO over at Snowflake Inc. Forward to working together here. My question comes back to think there's been a couple of different attempts throughout this call at understanding frankly, the magnitude of the product revenue upside relative to the prior quarter. Where to be frank, last quarter was more significant, but I really I attributed it to I felt that you guys positioned it this last quarter really saw some very large customer migrations, which is outside your control. And so the question is when we think about the increased confidence you're talking about for the year, the traction for data engineering and AI, is it fair to think that 3Q here was just a strong execution quarter, but maybe a more normalized return to typical migration activity? And then secondarily, just while we have everyone on the phone here, Brian, we'd love to get your thoughts on whether the guidance philosophy has changed at all at the margin. And thanks again from my side, and we appreciate the questions.

Yeah. Let's start with the first one. We've consistently told all of you that we view a 3% beat as a very good beat. And anytime we do much better than that, we go back. Obviously, the ML models recalibrate. And we calibrate ourselves back to the 3% beat. So and there is also natural variability in a consumption business. Because this is literally the agglomeration of 12,000 plus enterprises deciding what they want to do with their data futures. And so I view the Q3 beat as actually still a very solid beat at some two and a half percent. And, yes, the Q2 beat, and we are upfront with you about it, had some large migrations that also had one-time activities. But we also have cautioned to you that large migrations are lumpy and not all that easy to predict. And that's roughly where we are. And as we look at things like Q4, we approach it the exact same way. We do the best job that we can of trying to figure out where we are going to land. And use pretty much the same guidance philosophy as we have before. Brian?

Yeah. Thanks, Sridhar. Just to echo what Sridhar said as well. The quarterly variability is not the right way to evaluate the consumption model. Companies that do migrations, they don't do those due to our quarterly earnings calls. They basically we snap the chalk line and, you know, where they're at and their migrations are at. And so we really point you to the full-year guide. And based on the behavior that we've seen up to the earnings call, we have the confidence to raise our full-year guide to $51,000,000. To 28% annual growth year over year. Just from a guidance philosophy perspective, there's a number of things I did when I first joined, but one of the things that they were spent a lot of time with the team that wrote all the AI models that does the forecast on a daily business of our revenue. Super impressive team, very detailed, and I can assure you that there'll be no change to the guidance philosophy.

The next question comes from Matt Hedberg with the company RBC. Matt, your line is now open.

Great. Thanks for taking my question. Just a quick one for Sridhar. The $100,000,000 AI run rate is super impressive. Wondering if you could give us just a rough sense for how quickly that's growing, and then maybe more of a detailed question. On the heels of crunchy data, curious if you can comment about just now that you've had more time, how customers are thinking about that long-term balance of OLTP and OLAP within Snowflake Inc.?

Yeah. You know, as I said, AI revenue is predominantly driven by the Cortex product suite, including Snowflake Intelligence. This is among the fastest products to get adopted by our customers. Because as I said, the value is very, very clear as soon as someone uses Snowflake Intelligence. So we expect this to continue to grow quite well. We don't really want to guide to it or hint at that right now. With respect to crunchy data, it will take us a couple of more months to get the product into GA. But all of the early conversations that we have is that customers are very welcoming of Postgres support within Snowflake Inc. They view Snowflake Inc. as an incredibly robust and reliable data platform. And for many kinds of applications, having them be hosted as part of the overall Snowflake Inc. deployment makes perfect sense for these folks. For what it's worth, Unistore, which is our HTAP product, is also doing well. It addresses a different segment of the transactional data space. And we will continue to have both of these. But I think bringing Postgres to market will be an important step forward for us, especially for things like agentic solutions that need an OLTP store to function effectively. So there are a number of those kinds of use cases that we are actively working with our customers on.

Our last question comes from Tyler Radke with the company Citi. Tyler, your line is now open.

Thank you. Thank you. Thank you. Very much for squeezing me in. I'm really impressed with the, you know, roughly a $1,000,000,000 of RPO bookings in the quarter. Was hoping you could talk a little bit about the $3.09 figure deals that we added in the quarter. How are those structured from a duration perspective, and are you expected to see significant growth in those deals? In other words, are they large expansions? And then just to follow-up for you, Brian. Anything we should be thinking about as it relates to FY 2027, whether it's headwinds or tailwinds in the model, I know you're not giving guidance, but just as we think about meat products, optimization headwinds, anything we'd call out? Thank you very much.

Well, as a matter of fact, Tyler, we had $4.09 figure deals this quarter. All of these folks are customers that are spending significantly with Snowflake Inc. and are very positive about additional value that they can bring. But, you know, bookings are an indicator of how much a customer thinks they're going to spend in the coming years. Product revenue is the best indicator of how our collective customers are going to be spending on Snowflake Inc. next quarter. And so that's the thing that I would look at. Brian, you wanna take the last question?

Yeah. Tyler, as you mentioned, we'll guide to FY '27 on our next call. But, you know, what's really important is consumption after the holiday season is the most important input for FY guidance for next year. And so we'll need to see the consumption behavior unfold in January, February, that will give us better visibility to deliver that on our next earnings call.

At this time, I'd like to pass the conference back over to our host, Sridhar, for closing remarks.

Thank you, everyone. Snowflake Inc. remains at the center of today's enterprise AI revolution. And we at Snowflake Inc. are focused on empowering our customers throughout the end-to-end life cycle for data. This is an incredibly exciting time for the company as we continue to reimagine what's possible with AI and push the boundaries of innovation to lead in this new era. We continue to execute strongly as evidenced by our product revenue growth and strong outlook for the remainder of fiscal 2026, and we see a long runway of durable high growth and continued margin expansion ahead. Thank you all.