Snowflake Reports Solid EPS Growth Amid Slowing Revenue Pace

Sustained innovation at Snowflake Inc. has driven its stock performance with robust Q4 earnings. However, slowing growth in revenues and net retention trends raises caution. Professional investors should weigh the balance of upside potential against competitive pressures.

Date: 12-04-2025

AI Rating: 7

Overview of Company Performance
Snowflake Inc. has showcased strong performance metrics, notably in terms of earnings per share (EPS) and revenue growth. For fiscal Q4 2025, Snowflake reported an EPS of 30 cents, surpassing consensus estimates by 12 cents. This can be viewed as a strong indicator of the company’s ability to generate profit relative to its share count. Moreover, revenues increased 28% year-over-year to $986.8 million, which also exceeded the expectations set by analysts (consensus estimates of $956.89 million).

Revenue Growth and Client Base Expansion
The company’s revenue growth remains impressive, reflecting its strategic focus on the high-demand areas of AI integration and data management. Snowflake's remaining performance obligations (RPO) also grew by 33% YOY, indicating a solid pipeline of future revenue and affirming the increasing demand for its services. Additionally, Snowflake had 580 clients spending over $1 million annually, a 27% increase year-over-year, therefore emphasizing strong customer retention and expansion.

Profit Margins and Free Cash Flow
The company reported a non-GAAP product gross profit margin of 76%. However, the operating margin decreased to 9%, highlighting the increased costs associated with maintaining such a high level of innovation. The adjusted free cash flow was reported at $423.51 million, which is satisfactory and demonstrates that Snowflake is generating significant cash from operations that could be reinvested into the business to fuel further growth.

Concerns About Growth Rate and Market Position
Despite the positive financial indicators, the rate of growth appears to be slowing. The net retention rate fell sequentially to 126% from 131% in previous quarters. This suggests that while existing customers are spending more, the momentum of new customer acquisitions may not be keeping pace. The fiscal 2026 guidance forecasts a revenue increase of 24% YOY, which is lower than the recently reported figures. Analysts have noted that the stock has experienced a pullback of 25.53% from its April highs, possibly indicating market sentiment is factoring in these growth concerns.

Final Thoughts
While Snowflake continues to position itself strongly within the data cloud sector—gaining customers from competitors like Oracle—the investor community should remain vigilant about ongoing growth trajectories and competitive dynamics. Balancing the positive indicators against the emerging slowing growth will be essential for making informed investment decisions.

Stocks: SNOW NVDA MSFT T HON ORCL