Snowflake at Jefferies Public Technology Conference: Strategic Growth Insights

On Wednesday, 28 May 2025, Snowflake Inc. (NYSE:SNOW) participated in the Jefferies Public Technology Conference, providing a strategic overview that highlighted strong performance and future growth initiatives. While Snowflake reported robust Q4 results and highlighted promising partnerships, it also acknowledged challenges in timing the material impact of AI on revenue.

Key Takeaways

• Snowflake’s Q4 performance was strong, with significant deals in the financial services sector.
• The company is shifting focus towards larger enterprise customers, enhancing durability.
• AI/ML products are gaining traction, with over 5,200 weekly users, though revenue contribution is modest.
• The partnership with Microsoft Azure is strengthening, while Salesforce’s Data Cloud is not seen as a major threat.
• Snowflake plans to focus on efficient growth and improving sales and marketing productivity.

Financial Results

• Q4 Outperformance: Snowflake began the year with momentum, building on Q3 success.
• Revenue Growth: Indicated to be strong, supported by large deals.
• Free Cash Flow Margin: Achieved 20% in the quarter, influenced by Q4 booking durations.
• Product Revenue Guidance: Set at $4.3 billion for the year, reflecting 25% growth.
• Operating Margin: Guided at 8% for the year, with future improvements expected through R&D efficiencies and revenue growth.

Operational Updates

• Leadership Changes: New CRO, Mike Gannon, is expected to enhance operational focus and partnerships.
• Product Development: The Cortex suite of AI/ML products is gaining adoption, while Snowpark and Dynamic Tables have reached a $200 million run rate.
• Partnerships: The Azure partnership is described as stronger than ever, with ongoing improvements in compensation structures for Microsoft reps.

Future Outlook

• Growth Strategy: Focused on balancing growth opportunities with operating margin expansion.
• AI Potential: Acknowledged as a key area for future growth, though no specific timeframe for material revenue impact is provided.
• Summit Preview: Upcoming Snowflake Summit will feature keynotes from leadership, with a focus on AI and growth strategies.

Q&A Highlights

• Competition: Databricks is recognized as a competitor, with differentiation based on ease of use and performance.
• Acquisition Strategy: Emphasizes strong teams, differentiated technology, and appropriate pricing.
• Cloud Migrations: Continue to be driven by renewal cycles for on-premise data estates.

For a more detailed understanding, readers are encouraged to refer to the full transcript below.

Full transcript - Jefferies Public Technology Conference:

Brent Thill, Host, Jefferies: Morning, everyone. My name is Brent Thill, and I will be one of your hosts this week. Thanks again for your support of the Jefferies conference, and we’re here for you. If you need anything, reach out to us. I’m really happy to kick off with Jimmy at Snowflake.

Katherine’s here too in the front row. I asked her on stage, but she said she’s going send front row. But Jimmy’s been with Snow for six years and was with ServiceNow for seven prior to that. Tremendous experience in the industry. And Jimmy, coming off a really good quarter, maybe we just start there and your thoughts about surprised you, what maybe wasn’t a surprise, give us a sense of

Jimmy, Snowflake: Yeah. Yeah. Yeah. Yeah. So look, it was great to start the year in a position of strength.

I think everyone remembers the last twelve to fifteen months with the Shreedhar transition and all of the changes that we’ve been implementing as a team. And I think you really saw us hit our stride in q three, and being able to continue that momentum through q four was great. If we look at the actual drivers of outperformance, it was quite broad based. It wasn’t concentrated in an individual customer. We called out retail and technology being, you know, segments of strength.

I think we’re we’re hitting our stride in EMEA. And then as it relates to just different kind of hyperscalers, you’re seeing nice growth on Azure for us. But look, it was pretty steady throughout the quarter. And I think there was a moment there during the quarter, especially when we were on the road talking with investors, we’re kind of waiting to see some disruption from some of the the macro noise, and and we really couldn’t identify anything driving, you know, positively or negatively in our business. So I would say it was just a really smooth quarter on on the consumption side.

On the booking side, I know we’ll talk about it in a little bit, but, we saw some some large deals and, you know, two north of a hundred million dollar deals in the financial services sector. And, we we gave the the call out in q four that, you know, some customers signed shorter duration deals, and we were expecting those to close in q one. And so it was great to see those close. So I would say really just strength on the bookings and consumption side across the board, which is great to see.

Brent Thill, Host, Jefferies: Anything surprising that you weren’t expecting?

Jimmy, Snowflake: I think intra period, we were waiting to see any changes in trends. I think if you go back a few years when there was some macro noise, everyone remembers we did see some negative impact as customers were tightening their belts. I think for us, what was positive intra period was looking at the profile of our customers skewing more large enterprise. And the growth curve for those customers is much smoother than our customer cohort from a few years ago. And so I wouldn’t say that it was a positive surprise, but I think we were waiting and seeing.

And we look at our consumption patterns on a per customer basis on a daily basis, and so I would say that was positive. I think if you look at our free cash flow margin in the quarter coming in at 20%, that was where we had expected that to come in. I think that wasn’t viewed as a negative from from our perspective, but if you look relative to history, you know, externally looking in, you’d probably think that could be viewed as a negative, but that was really the duration impact of the q four bookings that didn’t close. Those would have been February collections. And so now you’ll see our free cash flow be more back half seasonal, which was expected, but relative to history, a little bit lighter on the margin front.

Brent Thill, Host, Jefferies: One of the comments you made to me just was more around diversity. Last time we went through an economic down down cycle, it was it was tech heavy, and Yep. Now you’ve you’ve got diversity in in your base, and we can’t see that diversity, but maybe describe that what you’re seeing in terms of this customer base.

Jimmy, Snowflake: Yeah. So I think, you know, the digital native cohort was a popular term a few years ago. Think, like, the food delivery companies or the cryptocurrency companies. Those represented meaningful growth for us in calendar, you know, 2021. We accelerated growth sequentially in Q3 of calendar twenty twenty one driven by a lot of those customers.

They were all in the top 10 of our customers. Now if you look at our top 10 customers, they skew much more Global 2,000. Think large banks, large telcos, large health care companies. And their growth, albeit, I would say slower in their earlier years if you just look at the cohort, they have a much longer tail. And so the terminal value of those customers to us is much higher, and they have much more operational rigor on purchasing and budget than I say some of those other companies did.

And so we benefited from the massive growth of those companies, you know, a few years ago, but then they were the first to optimize because they were clearly growing inefficiently. So you can we believe, you know, make the argument that, the large North American banks are scrutinizing budget every single period, not letting that get away from themselves. And so it’s much more durable, in our opinion.

Brent Thill, Host, Jefferies: Back to the two elephants, as we call them, the $200,000,000 deals, tell Tell us what does a customer do with $100,000,000 worth of Snowflake?

Jimmy, Snowflake: Yeah. So traditional analytics, our bread and butter, those two companies are in the financial services sector, massive on prem, think data warehouse estates, and been on platform for a few years. And it’s really just a matter of time. And so the Snowflake journey with these types of companies is really start with one on prem data estate and then slowly tick those down because you have the ability to take smaller bites of the apple upfront. And so that follows with massive PS engagements over a multiyear period.

And so it’s really the traditional Snowflake data warehouse migration that’s driving those. And customers will just slowly purchase those over time because they are really cumbersome projects. And so you’ve heard Sreedhar talk a lot about a huge focus for us and for him is making those migrations more seamless, especially through the use of technology like AI. And so if we can make those easier, we think that should accelerate those migrations, which would be more revenue for us sooner.

Brent Thill, Host, Jefferies: You mentioned during the quarter you were looking for the static and you didn’t really you heard it, but you didn’t see it. And so everyone’s asking us what is inherently in your forecast, in your view? Are you embedding any Are you saying, hey, we’re not seeing this. We’re not forecasting it in our numbers? How do you

Jimmy, Snowflake: Yeah, same way we forecasted looking at usage patterns we’ve seen to date. And so whether or not it is impacting our customer base, I’d say we can’t identify anything that’s driving our customer usage positive or negative from a macro behavior, but we’re just still rolling forward what we’re seeing from the customer base today. So there isn’t some sort of plug for, I would say, like macro positive or negative.

Brent Thill, Host, Jefferies: Maybe go back 40,000 foot view. This is our thesis. When Sreedhar came in, it seemed like you had nailed the go to market. Maybe some of the product things needed to be tweaked. And it seems like he seems he has both skills, go to market and product.

But everyone viewed him as being more of a product individual and kind of shoring up some of those capabilities. So many ask us, where do you think you’re at now with Srihar’s arrival to now where you’re on and some of the technical aspects of where you want to be?

Jimmy, Snowflake: Yeah. I think he would call it continuous improvement. And so interestingly, last year when he came in, the, you know, the belief was that he was gonna spend a little time on go to market, a lot of time on product. I would say that, you know, if he was sitting here, he’d tell you he spent most of his time on go to market last year. I think the beautiful thing about Sreedhar is that he doesn’t have any religion on enterprise go to market because he had never managed it before.

And so this idea around accountability at a very granular level is something that he has brought to the table, which is measuring activity and productivity on a on a much shorter duration, like a weekly basis, not a quarterly basis. And so it kind of up levels the expectations that every single employee has at the company, regardless of what group they’re in. Catherine and I joke that he spends every day talking to us, to marketing, to sales, to product, and so he’s really dialed in across the entire organization. So I would say on the the go to market front, we feel we feel good. Know, Mike Gannon obviously coming on board was a change for us with Chris Degnan, you know, departing the business, and I think he’ll bring another level of rigor.

And then on the product side, I think the elevation of Vivek to run engineering, working closely with Christian, and then rolling out leads for each of our different workloads, I think we have the structure in place that will scale us to the next level. And I think a lot of that is driven by Sridhar’s identifying places where we could have improved.

Brent Thill, Host, Jefferies: There’s a lot of new products that he has been focused on. I guess if you laid out a couple of the ones that you’re most excited about.

Jimmy, Snowflake: Yeah. Yeah. So the four buckets we think of in terms of our product set is data engineering, analytics, AIML, and then apps and collaboration. You’ll hear Christian and talk about this next week at Summit. And within those, there’s a number of different features.

The Cortex suite products rolls up under AI ML. We’re super excited about that, Going from basically zero customers fifteen months ago to over 5,200 customers using that on a weekly basis is really exciting. Modest contribution from revenue, but ultimately, we believe adoption is the leading indicator for future revenue. I think the investment that we made a few years ago in fully supporting Iceberg was a big shift for us culturally. That not being a net headwind and actually being net tailwind to date since last June going GA is super positive for us and allows customers to have choice.

But then I think more tactically, data engineering is the largest revenue contributor outside of analytics. So think moving upstream in the data management lifecycle around, you know, the data transformation. So that would be the features that you’ve heard us talk about, like snow park and dynamic tables. The the contribution metric we gave in q three was $200,000,000 run rate, obviously outpacing the business, and we’ll disclose more of those metrics on a on a milestone basis. But we we want to simplify the way that we’re talking about the products with investors because I realize when we’re releasing 125 features a quarter, it’s it’s hard to keep up.

Brent Thill, Host, Jefferies: You mentioned the conference next week, which is June, and Sam Altman’s on the agenda. So everyone would love a teaser.

Jimmy, Snowflake: I don’t know what Sam’s going to say. I’m sure he and Tridar will talk about very forward leaning AI use cases. OpenAI is a great partner of ours, and I think they believe data is at the center of a lot of positive outcomes for AI, and so we’re well positioned. But I don’t have the inside track to what Sam is going to say.

Brent Thill, Host, Jefferies: Okay. No teasers. I thought I’d try. Many ask us, is Snowflake an AI story more of a traditional data story?

Jimmy, Snowflake: Yeah. Yeah, I think majority of our business is traditional data. We’re not standing still on that front either. And so we’re investing and still delivering a market leading product in core analytics. But if you’re a data company, in order to be relevant longer term, you have to have a product roadmap that supports next generation use cases, whether or not enterprises are willing to adopt them right now.

And so when we think about customer conversations, what are they going to do with Snowflake five, ten years out? You need to be able to speak to those use cases and be ready for when customers want to use those features. And so I would say in terms of enterprise AI, we believe we’re best in class. I mean, the Cortex family of products being able to access market leading frontier models natively in the service without data leaving the service is incredibly attractive. And I think the adoption would support that of those use cases.

But in terms of revenue contribution, no surprise, majority of that is coming from the analytics and data engineering.

Brent Thill, Host, Jefferies: And when do you think AI would be more meaningful to the business? Is it ’26, ’20 ’7? How do

Jimmy, Snowflake: you Yeah. I mean, look, we guided to 25% growth this year to, call it, dollars 4,300,000,000.0 of product revenue, majority of that being core. When the core business is growing, you know, that quickly, what does material mean? So, you know, it’s hard it’s hard to exactly say. You saw, you know, Snowpark and Dynamic Tables and Data Engineering get up to a couple hundred million dollar run rate as of last q three.

I don’t view that number as material as it should be. So I think I’m not going to make any predictions on next year, but I know that we have high aspirations for it to become material.

Brent Thill, Host, Jefferies: Just on four bill plus a rev, everyone says, Single digit margin? Come on. That’s a little pitchy. Yeah. But what I say is you’ve got the best margin upside of anyone in large cap because no one You put a lot of investments in the last year.

Jimmy, Snowflake: Yep.

Brent Thill, Host, Jefferies: Do you believe that there’s now a natural floor set where hopefully we don’t go back to the low?

Jimmy, Snowflake: Yeah. Think you’ve heard Mike and Trador talk a lot about the commitment to showing leverage. Last year, you recall taking a few points off the product gross margin line to invest in a lot of the AI infrastructure And then subsequently seeing operating margin down last year was investing ahead of the curve. The 8% guide for this year, we feel very comfortable with. And the levers where we can get more margin expansion will come from, I would say, one, R and D.

If you think about how we’ve invested in R and D historically, we’ve really built out a strong management layer. So I would say very talented, expensive employees from the likes of Google and Meta at more managerial level. If you look at where we’re hiring now on the R and D side, it’s much more early career, so less expensive and supporting that management layer. And that’s a really, really big focus for Vivek and and Christian. And then our own internal use case, you know, for AI and how we’re using some of these productivity tools.

Know, Sreedhar said it, you know, publicly many times that he thinks we’ll get a lot of leverage in that line. And then beyond that, the revenue growth supports, I would say, attractive operating income that’ll flow directly to the bottom line. So absolutely, we feel comfortable with the ability to show operating margin leverage.

Brent Thill, Host, Jefferies: We get the question, and maybe you’ll spend more time in the next week talking to this, but the growth and margin framework.

Jimmy, Snowflake: Is

Brent Thill, Host, Jefferies: there an easy way we should think about this over the next three years and how you think of it?

Jimmy, Snowflake: SPEAKER Yeah. So growth comes first, but we’re committed to efficient growth. And so if there’s opportunity, we are going to go after it. And I think, you know, that starts with sales and marketing kind of accountability, and you’ll hear Mike Gannon talk about this. Productivity has been you know, trended well for us over the last year, and you saw us bring on a lot of sales and marketing heads, you know, in in the in the first quarter of this last reported period, and that’s as a result of us seeing strong productivity and believing there’s a massive opportunity to go after.

And as we see these newer features contribute over time, we’ll continue to invest more in those resources. But I think that we can do that while still showing operating margin expansion, which is how we think about the medium to long term profile.

Brent Thill, Host, Jefferies: Just on that point on the sales team, Mike Gannon just joined the CRO in March. Every time you bring a new CRO in, everyone on our side goes, Wait, what’s he gonna do to the sales team? Is he gonna tweak it too much? We gonna have a quarter off, or things go offline for a moment and then comes back online? How do you think about

Jimmy, Snowflake: what Mike’s gonna do? So he’s spent the last couple months or I guess, yeah, he joined two months ago meeting with a lot of customers, so kind of listening and hearing. And I think he’s really happy with what he’s hearing. In terms of the actual structure, he has a really strong background in in focusing on the GSIs. I think we believe we can do a lot better on that front in having joint, you know, alignment and and, you know, goals.

And we realize that, you know, get into the largest enterprises and be meaningful in the largest enterprises, you need to have a, you know, a stronger presence, not only, like, with us, with them, but also with their investment in their in their Snowflake practices. So so I he’s highlighted that. You’ll hear him talk next week a lot about kind of the owning the entire customer journey end to end from, you know, sourcing all the way to to the customer support. And so I think, look, his his the difference between he and Chris is, you know, Chris got us to where we are, and Chris knew every deal, you know, very detail oriented, you know, kind of just through the the ranks of growing with Snowflake, that was his personality. Mike is bringing much more of an operational focus to how you enable, how you structure, you know, different go to market, you know, territories, and then how you partner, in the field.

And so we’re looking forward to that, and I think people will be very impressed when they hear from him next week.

Brent Thill, Host, Jefferies: Just speaking of partnerships, you talked about the Microsoft partnership. You’re working with others. Just give us a sense of what’s happening, what’s new.

Jimmy, Snowflake: Yeah. On Azure, I would say the partnership, Christian, Mike, and Tridar have said this, it’s never been better. We’re working with them on making that relationship even closer. I think everyone understands that if you want Microsoft to play nicer with you, their reps need to get fairly compensated for selling your product, whether that’s through their marketplace or direct, and so we’re working on that. I think us becoming a larger customer of theirs with bigger commits will help that over time as a larger percentage of our business is on Azure.

But then we’ve announced the integrations with Cortex and accessing SharePoint and Teams and all of those features definitely benefit the relationship longer term. AWS is still 70 plus percent of Snowflake’s business. Azure is the fastest growing at low 20s and then the balance being GCP at three. And so I think we view Azure as a very important partner for us longer term.

Brent Thill, Host, Jefferies: There’s a new kid on the block called Salesforce, and they have this little thing called Data Cloud. Everyone asked us. It was interesting because Databricks said less about you and said, well, we’re really going after Salesforce because they’re trying to take our workloads, they’re easy to fight. We can beat them. What do you think about what Salesforce is doing with Data Cloud?

Jimmy, Snowflake: Yeah. We’re a close partner of Salesforce. We’re also a close partner of Informatica. Ultimately, customers choose where data goes. And so fortunately for us, Snowflake is a destination that customers want to put their data because they want to combine that data with all sorts of other data, whether that’s Workday data or ServiceNow data or AWS data.

And so that’s not a trend that we see changing. But clearly, Salesforce has big aspirations with the data cloud, and we hear a lot about it in practice in the field. It’s not something that we see competitively when we look at our competitive opportunities. It’s still very traditional for us. But I completely understand why Salesforce is doing what they’re doing.

Any

Brent Thill, Host, Jefferies: questions from the audience? We can take a few from the room. I know there’s Fred’s got to have a question. I can keep going. Yes, sir?

Expand the Databricks Snowflake back and forth.

Jimmy, Snowflake: Yeah. Databricks was a partner, you know, for a very long time. They played more upstream in the ETL space before data landed in Snowflake. Both of us have been encroaching on each other’s territory. They started on the left side of the data management life cycle.

We started on the the right. And so we released our Snowpark product a few years ago. They released their SQL product a few years ago. And so we are now, I would say, going after a lot of the same business in our existing accounts. We have a ton of customer overlap.

In practice, if you look at our largest customers and their largest customers, we we coexist, and that’s clear, through the growth rates in each of those accounts for both of us. But longer term, we’re we’re absolutely becoming more competitive. I think our, you know, key differentiators are, you know, the fact that we’re, you know, highly performant and and very easy to use. And so historically, they have addressed a much more technical audience, and we’ve addressed a less technical audience, and so that’s kind of been our differentiator as well as performance. And so, look, we hear about them a lot.

They’re clearly growing very quickly. We’re clearly growing very quickly, but I think all data management vendors, you’re hearing us say very similar things on being a single pane of glass.

Brent Thill, Host, Jefferies: Just on that question, they haven’t been afraid of doing billion dollar deals. I think they’ve nicked off three in the last three years. Why not get more aggressive and roll in some of these smaller AI stories up? They’ve been more aggressive. Maybe who knows if it’s working, but

Jimmy, Snowflake: Yeah, yeah, yeah. I think we have a very high bar for what we would acquire. It needs to be a very strong team. It needs to have, you know, very differentiated, you know, I would say, you know, proprietary technology, and it needs to accelerate our product road map, and it needs to fit the right price. And so I think we’re very thoughtful in how we want to approach inorganic growth, and it needs to check a lot of boxes.

And so that’s kind of our process. And so we’ll continue to go down that path. But yeah, it needs to make sense on a lot of different fronts for us.

Brent Thill, Host, Jefferies: Okay, great. Cloud migrations, obviously, a huge top of funnel for you. So I’ve talked a lot about that picking up in the enterprise in the last earnings call. Is the driver of that AI is the carrot? Is it a lot of the big on premise states, SAP, VMware, Oracle are finally starting to move?

What what do you see as the biggest tailwinds for that?

Jimmy, Snowflake: Yeah. Interesting. We we’ve tracked a lot of this commentary over the years, and sometimes it’s correlated to us. Sometimes it’s not. It’s kind of very it’s been very steady for us over the last five years regardless of quarter, and unfortunately, we’re at the mercy of a lot of renewal cycles for on prem data states.

And so like the example that I gave on the hundred plus million one of the hundred plus million dollar deals, they’ve been on the platform. It’ll be four years in the fall. Know, they signed an 8 figure PS engagement, you know, at the end of last year to take down more on prem data estates as they came up for renewal. And that isn’t just the Teradata’s of the world, that’s also the Hadoop environments. And so that’s why we benefit.

It’s hard to convince someone to start a migration and double pay for a long period of time unless that renewal is on the horizon.

Brent Thill, Host, Jefferies: Just in terms of next week for investors, anything you’re hosting a mini day, maybe recap what’s happening. We’re doing a partner dinner at your favorite restaurant, Spruce. If anyone wants to come look me up. We gotta

Jimmy, Snowflake: I might be there.

Brent Thill, Host, Jefferies: He’s now with GSI. So

Jimmy, Snowflake: for next week, the keynote’s Tuesday morning. You’ll hear at our event. It’s one to three in the afternoon on Tuesday. It’s gonna be a couple hours. You’ll hear from Sreedhar.

You’ll hear from Christian, and then you’ll hear from Mike Gannon, our our CRO. You know, we’ve been messaging to everyone that, you know, Mike has a family obligation, so Scarpelli, so so he he’s not gonna be there, and so we’re not gonna have a financial section. We feel like we need to host that event once we get through a CFO transition and have someone identified to kind of bless that more longer term outlook, and so don’t expect much from the finance section. But you’ll hear how we view the data management life cycle and where we play and how we view that, you know, playing out longer term. Yeah.

I think that they have a very strong foothold in in, you know, the go to market, you know, office. I think we see a lot more data in Snowflake outside of go to market as well. And so when you think about a performant market leading analytics product, that’s something we’ve been developing for thirteen years and invest a ton behind. In terms of the technical pillars of that, everyone or most people know about our data sharing capabilities and how you can access third party data without actually moving it across cloud, across regions. So all these different pillars that we’ve been working on for a very long period of time incentivize customers to put all types of data in Snowflake and enrich it and then run analytics on it.

And so it’s not that we don’t think what Salesforce is doing is interesting. It’s just not something that we’re seeing our customers choose us or them.

Brent Thill, Host, Jefferies: I’ll give you a real time view. Jefferies has Snowflake, Databricks, and Salesforce. And Salesforce is not going to be the landing spot for AI. Snow and the other partners will. So because of all of our data lives in so many different systems, it’s better populated in these systems to then do the work on top.

That’s our strategy internally. We’re not moving to agent force and others. Jimmy, thanks so much for joining.

Jimmy, Snowflake: Thanks for having me, Brent.

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