Financial Trends -- 7/10

Revenue re-accelerating at scale. Product revenue (the key metric for this consumption-based model) grew 29% YoY in FY2026, with FQ2 hitting +31.4% and FQ4 holding at +30.4%. FY27 guidance calls for $5.66B product revenue (+27% YoY including ~1pp from Observe acquisition). Management signed 7 nine-figure deals and one $400M+ contract in Q4.

RPO accelerating -- the strongest leading indicator. RPO grew from $5.0B to $9.8B over FY25-FY26, with YoY growth accelerating from +34% in FQ1 to +42% in FQ4. This reflects large multiyear contract signings and provides excellent forward revenue visibility. The $9.8B in RPO represents ~2x the FY26 total revenue run rate.

Operating leverage emerging. Non-GAAP operating margin expanded from 4% (FQ1 FY25) to 11% (FQ4 FY26) -- a 7-point improvement in 8 quarters. GAAP operating margins improved from -42% to -25%, a 17-point improvement driven by revenue scale outpacing SBC growth. The gap between GAAP and non-GAAP (~36 points) is almost entirely SBC. FY27 guidance targets 12.5% non-GAAP operating margin (+200bps).

FCF growing -- $884M to $1,120M (+27% YoY). FCF remains highly seasonal (Q4-heavy due to annual contract renewals), but annual generation is strong and growing. FCF margin of ~24% in FY26 significantly exceeds non-GAAP operating margin (10.5%), reflecting strong working capital dynamics. The $1.1B remaining buyback authorization is insufficient to offset SBC-driven dilution at current levels.

Healthy customer expansion across all cohorts. Total customers grew +19% YoY to 13,328 in FQ4 FY26. Customers spending >$1M TTM grew +26% YoY (580 to 733), confirming upmarket traction. NRR declined from 128% to 124% in FQ1 but stabilized at 125% for the remaining three quarters -- still healthy for a consumption-based model. Management noted NRR stabilization on the FQ4 call.

SBC is $1.6B (34% of revenue) -- the primary reason SNOW is GAAP unprofitable. SBC remains extreme, exceeding the -$1.33B GAAP net loss by a wide margin. The positive trajectory is clear: SBC as a percentage of revenue declined ~780bps from 42% (FY25) to 34% (FY26). Shares outstanding grew +3.5% YoY despite $150M in Q4 buybacks -- the $1.1B remaining buyback program is insufficient to offset SBC-driven dilution. Non-GAAP product gross margin is stable at 75-77%, with a slight 200bp compression over the 8-quarter period.

Final Score: 7.0 / 10. Excellent top-line momentum and margin expansion, penalized for substantial SBC and dilution overhang. Product revenue grew 29% at $4.5B scale with re-acceleration. RPO growth is accelerating (42% YoY), non-GAAP margins expanding (4% to 11%), and FCF growing to $1.12B. The trajectory is clearly positive -- SBC/revenue declining ~800bps/yr, GAAP operating margin improving ~15pp/yr -- but Snowflake remains years from GAAP profitability. NRR stabilized at 125% after declining from 128%.