Snowflake Q3 Earnings Beat, Shares Fall
Snowflake Q3 earnings topped estimates, but it warned of slower Q4 product-revenue growth from discounts on large deals, prompting an 8% premarket drop.
KEY TAKEAWAYS
- Q3 revenue was $1.21 billion, 29% year-over-year, topping the $1.18 billion consensus.
- Product revenue reached $1.16 billion, up 29%, with dollar-based net-revenue retention at 125%.
- Guidance warned slower Q4 product-revenue growth due to discounts, triggering an 8% premarket decline.
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Snowflake Inc. (NYSE: SNOW) reported third-quarter earnings on Dec. 3, 2025, that exceeded estimates, but shares fell in premarket trading after the company warned of slower product-revenue growth in the coming quarter due to discounts on large, long-term deals.
Revenue Growth and Customer Retention
The company said in a press release that total revenue for the quarter ended Oct. 31, 2025, reached $1.21 billion, up 29% year over year and above the consensus estimate of $1.18 billion. Product revenue also rose 29% to $1.16 billion. Snowflake reported a dollar-based net-revenue retention rate of 125% as of Oct. 31, 2025, reflecting expansion within its existing customer base. The company counted 688 customers with trailing 12-month product revenue.
Snowflake narrowed its third-quarter net loss compared with the prior year, supported by rising revenue and increased demand for its enterprise artificial-intelligence agent.
Guidance and Market Reaction
Management forecast slower product revenue growth for the fourth quarter, citing discounts on large, long-term deals as a headwind. The company did not disclose a specific growth range. Following the guidance, SNOW shares fell 8% in premarket trading on Dec. 4, 2025, at 08:06 ET. Market observers described the reaction as a "beat-and-drop" dynamic, reflecting elevated expectations tempered by the signal of near-term softness.
That guidance makes fourth-quarter product revenue growth a key near-term metric for investors to assess whether Snowflake can sustain the expansion indicated by its retention rate and the uptick in AI demand.
