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SNOW

Snowflake Inc.
Technology · Cloud Data Platform
Myth Meter
Is sentiment detached from reality?
Fugazi Filter
Are the numbers trustworthy?
Moat Mapper
Is the advantage durable?
Gravy Gauge
Is this revenue durable?
Insider Investigator
What are insiders telling us?
5
Lenses Applied
8
Signals Analyzed
11
Debates Resolved
7
Forecast Markets

Disclosure: As of 2026-02-10, the Runchey Research Model Trading Fund holds call options in SNOW. Per our Editorial Policy, these are classified as Event-Driven holdings and may be adjusted immediately following the relevant catalyst event. View our full Editorial Integrity & Disclosure Policy.

Material Update2026-02-25

Q4 FY2026: SBC Compression + Record Bookings Shift One Signal

Q4 FY2026 beat expectations with 30% product revenue growth, $9.77B RPO (+42%), and SBC declining from 41% to 34% with FY27 guidance at 27%. EXPECTATIONS_PRICED reclassified from STRETCHED to DEMANDING as collective execution probability improved to 22-28%. All other signals confirmed — AI revenue still undisclosed, competitive landscape unchanged.

Read the full analysis
The Central Question
"Snowflake's Q4 FY2026 showed record execution (30% revenue, 42% RPO growth, SBC declining 41%→34%→27% guided) but AI revenue remains undisclosed and Databricks has surpassed it on ARR. Is the SBC compression trajectory enough to close the narrative-reality gap?"

Snowflake is a cloud data platform with 30% product revenue growth, $9.77B in RPO (+42%), and 733 customers spending $1M+ annually. SBC declined from 41% to 34% of revenue with FY27 guidance at 27%, narrowing the GAAP/non-GAAP gap. NRR has stabilized at 125% for 4 consecutive quarters. However, AI-specific revenue remains undisclosed, Databricks has surpassed Snowflake on ARR while growing ~2x faster, and insiders have sold ~$400M+ over 18 months with zero discretionary purchases.

Executive Summary

Cross-lens roll-up assessment

Q4 FY2026 update: Snowflake delivered its strongest quarter — 30% revenue growth (beating 27% guide), $9.77B RPO (+42%), record $400M+ deal, and SBC declining from 41% to 34% (guided 27% FY27). EXPECTATIONS_PRICED reclassified from STRETCHED to DEMANDING as collective execution probability improved to 22-28%. However, all other signals held: AI revenue remains undisclosed (CFO deflected when asked), competitive landscape unchanged (Databricks/Fabric headwinds operative), SBC-adjusted FCF still negative even at FY27 guidance, and insiders show zero discretionary buying. The SBC trajectory is the most material positive development — if 27% holds, it directly addresses the single most reinforced concern across all 5 lenses.

Higher Scrutiny RequiredMEDIUM confidence

Snowflake's underlying business has genuine strengths (29% growth, $7.9B RPO, 688 $1M+ customers, diversified base). However, the convergence of five independent analytical lenses on the SBC/dilution structural concern (5/5), intensifying competitive dynamics (3/5), NRR decline at 2-3x peer rates (4/5), and complete absence of insider conviction (MISALIGNED) warrants HIGHER_SCRUTINY rather than PROCEED_WITH_CAUTION. The valuation requires simultaneous multi-dimensional success at 15-20% collective probability, and the narrative-reality gap on AI is materially wider than typically observed. De-escalation triggers: NRR stabilization above 125% for 4+ quarters, SBC below 28% of revenue sustained, AI revenue showing 50%+ QoQ growth, CEO or CFO discretionary purchases.

Key Takeaways

  • NARRATIVE_REALITY_GAP is DIVERGING -- AI represents 2.3% of product revenue ($100M ARR vs $4,446M guided total) despite management positioning Snowflake as 'center of today's AI revolution.' NRR declined 33 points (158% to 125%) contradicting the AI-drives-expansion narrative.
  • EXPECTATIONS_PRICED reclassified to DEMANDING (from STRETCHED) -- Q4 FY2026 revenue re-accelerated to 30% with RPO at $9.77B (+42%), SBC declined to 34% (guided 27% FY27), and adjusted FCF margin of 25.5% contradicted deterioration narrative. Collective execution probability revised from 15-20% to 22-28%. Valuation still requires multi-dimensional success but two of four pillars (growth, SBC) now show concrete progress.
  • ACCOUNTING_INTEGRITY is CONCERNING -- SBC of $1.5B (40.8% of revenue, 154% of OCF) creates a 38pp GAAP/non-GAAP margin gap; SBC-adjusted FCF is negative ($225M-$656M); shares outstanding increased 8.1M despite $3.25B in buybacks. Revenue recognition itself is clean and consumption-based.
  • COMPETITIVE_POSITION is CONTESTED -- Databricks surpassed Snowflake on ARR ($4.8B vs ~$4.4B) growing ~2x faster; Fabric at $2B+ ARR with 80% Fortune 500; multi-cloud neutrality narrowed to near-zero vs Databricks; Iceberg open standards undermine data gravity moat. Position sits at CONTESTED-ERODING boundary (~60/40).
  • REVENUE_DURABILITY is CONDITIONAL -- consumption-based revenue backed by $7.9B RPO and diversified across 12,600+ customers, but conditional on NRR remaining above ~115%, cloud COGS staying below ~75%, and maintaining competitive relevance against Databricks/Fabric.
  • GOVERNANCE_ALIGNMENT is MISALIGNED -- ~$400M in insider selling with zero discretionary purchases over 18 months; CEO's only purchase was contractually required per offer letter; no insider bought during two separate 20%+ pullbacks. Procedural compliance via 10b5-1 plans prevents escalation to CAPTURED.

Key Tensions

  • The SBC-dilution-buyback cycle is the defining financial characteristic: the company borrows ($2.3B convertible notes) to buy back SBC-driven dilution, but net dilution persists — creating a fundamental question about who captures the value of genuine business growth
  • RPO acceleration (37% YoY) coexists with revenue deceleration (32% to 27% Q4 guide) — RPO reflects sales execution while revenue reflects consumption patterns, and the two have decoupled in FY2026
  • AI may simultaneously be a real long-term growth vector (E1), currently immaterial to financials (E3, 2.3% of revenue), and structurally margin-dilutive (cloud COGS rose 64% to 72%) — a single quarter of data is insufficient to resolve this
  • Governance procedures appear functional (PwC clean audit, effective ICFR) while insider behavior signals clear misalignment (zero conviction buying) — both observations are valid within their scope

Myth Meter

Is sentiment detached from reality?

About this lens

Key Metrics

Narrative-Reality Gap
DIVERGING
ALIGNED
DIVERGING
DISCONNECTED
INVERTED
Expectations Priced
DEMANDING
MODEST
DEMANDING
STRETCHED
IMPOSSIBLE

Key FindingsClick to expand details

Signal AssessmentsClick for full context

SignalAssessment
Narrative-Reality Gap
DIVERGING
Expectations Priced
DEMANDING

Model Debates

Cross-Lens Insights

Where Lenses Agree

  • SBC/Dilution Complex Is the Defining Structural Concern (5/5 lenses)
  • NRR Decline Signals Multiple Simultaneous Risks (4/5 lenses)
  • Competitive Position Is Actively Deteriorating (3/5 lenses)
  • Data Breach Litigation Is an Unquantifiable Tail Risk (3/5 lenses)

Where Lenses Differ

RPO_INTERPRETATION
Gravy Gauge:Protective factor for revenue durability ($7.9B, +37% YoY)
Myth Meter:Weak near-term predictor — decoupled from revenue trajectory in FY2026
Moat Mapper:Reflects sales execution, not moat health — different lifecycle stage than NRR

RPO simultaneously provides long-term contractual backlog visibility and fails as a near-term revenue predictor in a consumption-based model.

GOVERNANCE_ALIGNMENT
Fugazi Filter:MIXED — governance procedures functioning (PwC, ICFR, procedural compliance)
Insider Investigator:MISALIGNED — zero discretionary buying, ~$400M selling, CEO buy debunked

These lenses examined different governance facets. Procedures are functional; insider behavior is misaligned. Both observations are correct within their scope.

AI_GROWTH_VS_MARGIN_DILUTION
Myth Meter:Narrative runs 2-3 years ahead of reality (2.3% of revenue)
Gravy Gauge:AI workloads may structurally compress margins (COGS 64% to 72%)
Moat Mapper:$200M Anthropic partnership positions Snowflake as AI consumer, not producer

AI may simultaneously be a real long-term growth vector, currently immaterial to financials, and structurally margin-dilutive — a genuine uncertainty, not a resolvable tension.

The following publicly available documents were collected and extracted into a structured fact dossier that powered this analysis.

SEC Filing
  • Current Report (8-K) — Q4 FY2026 Earnings (2026-02-25)
  • Annual Report (10-K) — FY2025
  • Quarterly Report (10-Q) — Q3 FY2026
  • Quarterly Report (10-Q) — Q2 FY2026
  • Quarterly Report (10-Q) — Q1 FY2026
  • Quarterly Report (10-Q) — Q3 FY2025
  • Current Report (8-K) — Q3 FY2026 Earnings
  • Current Report (8-K) — Q2 FY2026 Earnings
  • Current Report (8-K) — Q1 FY2026 Earnings
  • Current Report (8-K) — Q4 FY2025 Earnings
  • Proxy Statement (DEFA14A) — 2025
Earnings Transcript
  • Q4 FY2026 Earnings Call Transcript
  • Q3 FY2026 Earnings Call Transcript (Summary)
  • Q2 FY2026 Earnings Call Transcript (Summary)
  • Q1 FY2026 Earnings Call Transcript (Summary)
Research Document
  • Bear Case Valuation Analysis
  • Competitive Landscape Analysis
  • Data Breach Litigation Summary
  • Insider Activity Analysis
  • Observe Acquisition Analysis
  • SBC Profitability Analysis