Snowflake reported Q4 FY2026 product revenue of $1.23B (+30% YoY), beating the 27% guidance, with RPO surging to $9.77B (+42% YoY) on record bookings including a $400M+ deal and 7 nine-figure contracts. Stock-based compensation declined from 41% to 34% of revenue, with FY2027 guidance at 27%—approaching the 28% de-escalation threshold that all five lenses identified as the defining structural concern. Our committee re-evaluated eight signal classifications. Result: 1 signal reclassified, 7 confirmed. Thesis shifts to price-at-value.
The Numbers
Signal Reclassified
What DEMANDING means: The valuation still embeds above-average execution assumptions, but two of four required dimensions (growth and SBC compression) are now showing concrete progress. AI monetization and competitive defense remain unproven—keeping the assessment at DEMANDING rather than MODEST.
Seven Signals Confirmed
Profitability gap narrowing (SBC 41%→34%→27%) but AI gap maintained or widened. CFO explicitly deflected when asked about AI ARR. 9,100 AI accounts are activity metrics, not revenue. Net effect: offsetting.
SBC trajectory positive but 27% is guidance, not actuals. Absolute SBC dollars flat at ~$1.5B—improvement is ratio-driven. SBC-adjusted FCF remains negative even in FY27 (~-$230M). De-escalation plausible within 2-3 quarters.
CONTESTED-ERODING boundary improved from ~60/40 to ~65/35. Record RPO and $10M+ customers (+56% YoY) show deepening enterprise commitment. But no new competitive data—Databricks and Fabric headwinds remain fully operative.
Closest to DURABLE boundary yet. NRR at 125% for 4 quarters but de-escalation trigger requires "above 125%"—AT threshold, not over. All 5 conditional factors trending favorably simultaneously.
Cannot assess without Form 4 data. Q4 beat eliminates "prescient selling" pathway, but the absence of insider buying after strong results is more conspicuous, not less. If now is not the time to buy, when?
The SBC Trajectory: Most Material Development
SBC as a percentage of revenue: 41% (FY2025) → 34% (FY2026) → 27% (FY2027 guided). This was the single most reinforced concern across all five lenses—every lens independently flagged it. The trajectory is structural: a 200-person RIF in Q4 with only 37 net headcount adds, combined with AI-driven productivity gains. CEO Ramaswamy stated "AI has really changed the framework for investing in growth. It's no longer tied to headcount."
Prediction Markets Update
One market resolved, six updated with new predictions:
FY2027 guided at 27% (above 25%). Models predicted 59% YES—Brier score 0.35 (poor). Key miss: overestimated guide-and-raise conservatism.
| Market | Old | New | Shift |
|---|---|---|---|
| SBC below 35%? | 54% | 90% | +36pp |
| Cloud COGS >70%? | 60% | 68% | +8pp |
| $1M+ customer decel? | 42% | 28% | -14pp |
| NRR below 120%? | 37% | 24% | -13pp |
| AI ARR doubles? | 38% | 30% | -8pp |
| Insider purchase? | 19% | 17% | -2pp |
Thesis Classification: Price-Above-Value → Price-At-Value
At $165.90, Snowflake appears to trade near fair value. The strongest remaining bear cases—AI narrative gap (30% probability of $200M ARR) and margin-dilutive COGS (68% probability)—prevent a price-below-value classification, while the operational improvements prevent continued price-above-value. See the full thesis assessment for the complete market synthesis.
What the Earnings Didn't Answer
- AI revenue: The CFO was directly asked by Alex Zukin for an AI ARR update and deflected. The $100M ARR from Q3 remains the last disclosed figure. For a company positioning itself as "center of the enterprise AI revolution," non-disclosure when adoption metrics are accelerating (9,100 accounts) is itself a signal.
- Competitive landscape: No new data on Databricks ($4.8B ARR, growing ~2x faster) or Microsoft Fabric ($2B+ ARR, 80% Fortune 500). The competitive CONTESTED assessment relies entirely on pre-Q4 data.
- Insider buying: Zero discretionary purchases for 18+ months. Need Form 4 review to check if CEO or new CFO Robins bought during the Jan-Feb pullback to ~$165.
- Gross margin trajectory: Product GM guided 75% (down from 75.8%). Confirms AI workloads are margin-dilutive but the compression is manageable, not catastrophic.
Posture: HIGHER_SCRUTINY (Maintained)
This was Snowflake's strongest quarter across multiple dimensions—record bookings, revenue beat, SBC compression, and operating leverage. The EXPECTATIONS_PRICED improvement from STRETCHED to DEMANDING is meaningful. But 7 of 8 signals with concerns remain unchanged, AI revenue is still a black box, competitive dynamics are unresolved, and insiders show zero conviction with personal capital. The posture moves closer to the PROCEED_WITH_CAUTION boundary but doesn't cross it. Next catalysts: Q1 FY2027 actuals (May 2026) to verify SBC below 28%, and Databricks S-1 (expected H2 2026) to clarify the competitive picture.
Analysis produced by multi-model committee (Claude Opus + Claude Sonnet) across 5 analytical lenses. Updated based on Q4 FY2026 earnings call (2026-02-25). Previous analysis from 2026-02-07 remains the baseline. This is educational content for research purposes and does not constitute financial advice.