Snowflake Inc. (SNOW) Q3 2023 Earnings Call Transcript

Will Power: Got it. And one more house cleaning, if I could, but sorry, housekeeping, if I could. But can you just remind us what the revenue exposure is from a contribution standpoint from that SMB segment that we have called out?

Mike Scarpelli: It’s less than 10% — it’s right around 10%.

Operator: Our next question will be from Steve Koenig from SMBC.

Steve Koenig : Great. So your ability to grow revenue 67% year-on-year in this environment speaks to very strong long-term adoption trends. But I’m wondering more on a short-term basis, if we look at quarter-on-quarter product revenue additions, I think it’s kind of gone flattish in Q3 year-on-year and may go negative next quarter. So I’m wondering, how do you think about planning your sales additions and maintaining sales productivity? I’m curious about your thought process there. That’s all I have.

Mike Scarpelli: Yes. I will say in a consumption model, quarter-over-quarter additions is not as meaningful because so much of the consumption is tied to what customers are doing at specific times in their business. And also Q4, as I said, is one that has seasonally higher number of holidays with people taking — and remember, about 70% of our revenue is tied to human interaction with our system, 30% is really driven by scheduled jobs. So that has an impact. But also, I want to remind you that a lot of the stuff we’ve been doing around hardware improvements and stuff is really hitting us in Q4.

Operator: Our final question shall be from Brent Bracelin with Piper Sandler.

Brent Bracelin : Thanks for squeezing me in here. I totally get how consumption could slow here just given some of the challenges in these verticals, obviously, recessionary headwinds. I’d be curious and more curious to hear the offset to consumption, which is expanding number of use cases. So do you have any sights or visibility into how in a recessionary environment, customers’ appetite to expand either the new departments or expand into data science. Some of our job postings data suggests that there are people aggressively hiring for Snowflake and data science scenarios. I’d love to get the view here on how quickly over the next year or two, you could see use cases drive an offset to consumption?

Christian Kleinerman : Yes. Just having visited with lots of customers during our Data Cloud world tour, we see pretty high interest on a number of new use cases, Snowpark for data engineering as well as data science, cyber security is a new workload, we see a lot of intercept from our customers. And even though it’s a little bit later when to materialize on our end, unit store and the ability to build applications in Snowflake is definitely driving a lot of interest. So the willingness to expand the use cases seems unaffected by the broader context.

Operator: That concludes today’s call. Thank you for your participation. You may now disconnect your lines.