Snowflake Q4 Earnings Preview: Key Metrics, AI Growth, and What Investors Should Watch

Snowflake (SNOW) is set to report its fourth-quarter earnings after the market closes on February 26. Investors are watching closely as the cloud-based data platform provider navigates an evolving competitive landscape while maintaining strong revenue growth.

Earnings and Revenue Expectations

Analysts expect Snowflake to report earnings per share of $0.18 and revenue of $956.89 million. The company has consistently delivered strong top-line growth, and expectations for this quarter remain high, with a projected revenue increase of 23.4 percent year-over-year.

Other key metrics to monitor include remaining performance obligations (RPO), a crucial indicator of future revenue, which grew 55 percent year-over-year in the previous quarter. Additionally, product revenue, which accounted for 96 percent of total revenue in the prior quarter, will be a focal point, with analysts anticipating continued strength in this segment.

Snowflake has not provided quarterly revenue guidance but has guided for full-year fiscal 2025 product revenue of $3.4 billion, implying a 29 percent year-over-year increase. The company is expected to guide conservatively for fiscal 2026, with analysts predicting an initial product revenue growth range of 21 to 22 percent before potentially accelerating as the year progresses.

Key Drivers for the Stock

Snowflake’s performance is being driven by several factors, including improving cloud consumption trends, product innovation, and growing enterprise AI adoption. Analysts have noted that Snowflake’s Snowpark and Cortex AI Search products are gaining traction, and AI workloads moving into production by mid-2025 could create additional tailwinds for consumption in the second half of fiscal 2026.

The competitive landscape also plays a significant role. While hyperscalers like Amazon Web Services, Microsoft Azure, and Google Cloud present competition, analysts see stabilization in this area. Snowflake’s ability to differentiate itself through its cloud-based data platform and AI-powered analytics tools will be a key factor in its continued growth.

Q3 Performance Recap

In the third quarter, Snowflake reported revenue of $734.2 million, a 28 percent year-over-year increase, with product revenue contributing 96 percent of the total. RPO reached $5.7 billion, up 55 percent year-over-year, providing strong visibility into future revenue.

The company’s customer base expanded significantly, reaching 10,618 customers, up 20 percent from the prior year. Notably, the number of customers generating more than 1 million in product revenue grew 25 percent year-over-year to 542. These metrics highlight Snowflake’s ability to attract and retain high-value enterprise clients.

Despite these strong results, analysts noted that Snowflake is reinvesting aggressively in research and development, which has pressured gross and operating margins. However, this investment is expected to drive long-term growth, particularly in AI-powered solutions and data analytics.

Valuation and Path to Upside

Snowflake’s valuation remains a topic of debate among investors. The company’s high price-to-earnings ratio reflects expectations for aggressive earnings growth, with forward earnings estimates suggesting a sharp decline in valuation multiples over the next few years.

For Snowflake to achieve further upside, it needs to continue demonstrating strong revenue growth, maintain high customer retention, and show progress in AI-driven product adoption. Additionally, sustained improvements in RPO and product revenue growth will be essential for justifying its premium valuation.

Analysts remain bullish on Snowflake’s long-term potential, with price targets ranging from 210 to 212, reflecting confidence in its ability to capture a growing share of the cloud-based data market. If Snowflake delivers strong results and provides a positive outlook, it could see a meaningful rally post-earnings.