Snowflake Inc

Previous wording

We generate the substantial majority of our revenue from fees charged to our customers based on the compute, storage, and data transfer resources consumed on our platform as a single, integrated offering. We do not make any one of these resources available for consumption without the others. Instead, each of compute, storage, and data transfer work together to drive consumption on our platform. For compute resources, consumption is based on the type of compute resource used and the duration of use or, for some features, the volume of data processed. For storage resources, consumption for a given customer is based on the average terabytes per month of all of such customer’s data stored in our platform. For data transfer resources, consumption is based on terabytes of data transferred, the public cloud provider used, and the region to and from which the transfer is executed.

Current wording

We generate the substantial majority of our revenue from fees charged to our customers based on the compute, storage, and data transfer resources consumed on our platform. Prior to June 2024, these three resources were consumed by our customers as a single, integrated offering. In June 2024, we made Iceberg tables generally available to our customers, enabling them to use our platform for compute services without requiring storage. As a result, starting from June 2024, customers are allowed to select compute, storage, and data transfer resources separately, at their discretion. For compute resources, consumption is based on the type of compute resource used and the duration of use or, for some features, the volume of data processed. For storage resources, consumption for a given customer is based on the average terabytes per month of all of such customer’s data stored in our platform. For data transfer resources, consumption is based on terabytes of data transferred, the public cloud provider used, and the region to and from which the transfer is executed.

Previous wording

Our go-to-market strategy is focused on acquiring new customers and driving increased use of our platform for existing customers. We primarily focus our selling efforts on large organizations and primarily sell our platform through a direct sales force, which targets technical and business leaders who are adopting a cloud strategy and leveraging data to improve their business performance. Our sales force is comprised of sales development, inside sales, and field sales personnel and is segmented by the industry, size, and region of prospective customers. Once our platform has been adopted, we focus on increasing the migration of additional customer workloads to our platform to drive increased consumption, as evidenced by our net revenue retention rate of 128% and 131% as of April 30, 2024 and January 31, 2024, respectively. See the section titled “Key Business Metrics” for a definition of net revenue retention rate.

Current wording

Our go-to-market strategy is focused on acquiring new customers and driving increased use of our platform for existing customers. We primarily focus our selling efforts on large organizations and primarily sell our platform through a direct sales force, which targets technical and business leaders who are adopting a cloud strategy and leveraging data to improve their business performance. Our sales force is comprised of sales development, inside sales, and field sales personnel and is segmented by the industry, size, and region of prospective customers. Once our platform has been adopted, we focus on increasing the migration of additional customer workloads to our platform to drive increased consumption, as evidenced by our net revenue retention rate of 127% and 131% as of July 31, 2024 and January 31, 2024, respectively. See the section titled “Key Business Metrics” for a definition of net revenue retention rate.

Previous wording

Our platform is used globally by organizations of all sizes across a broad range of industries. As of April 30, 2024, we had 9,822 total customers, increasing from 9,455 customers as of January 31, 2024. Our customer count is subject to adjustments for acquisitions, consolidations, spin-offs, and other market activity, and we present our total customer count for historical periods reflecting these adjustments. Our platform has been adopted by many of the world’s largest organizations that view Snowflake as a key strategic partner in their cloud and data transformation initiatives. As of April 30, 2024, our customers included 709 of the Forbes Global 2000, based on the 2023 Forbes Global 2000 list, and those customers contributed approximately 42% of our revenue for the three months ended April 30, 2024. Our Forbes Global 2000 customer count is subject to adjustments for annual updates to the Global 2000 list by Forbes, as well as acquisitions, consolidations, spin-offs, and other market activity with respect to such customers, and we present our Forbes Global 2000 customer count for historical periods reflecting these adjustments.

Current wording

Our platform is used globally by organizations of all sizes across a broad range of industries. As of July 31, 2024, we had 10,249 total customers, increasing from 9,424 customers as of January 31, 2024. Our customer count is subject to adjustments for acquisitions, consolidations, spin-offs, and other market activity, and we present our total customer count for historical periods reflecting these adjustments. Our platform has been adopted by many of the world’s largest organizations that view Snowflake as a key strategic partner in their cloud and data transformation initiatives. As of July 31, 2024, our customers included 736 of the Forbes Global 2000, based on the 2024 Forbes Global 2000 list, and those customers contributed approximately 42% of our revenue for the six months ended July 31, 2024. Our Forbes Global 2000 customer count is subject to adjustments for annual updates to the Global 2000 list by Forbes, as well as acquisitions, consolidations, spin-offs, and other market activity with respect to such customers, and we present our Forbes Global 2000 customer count for historical periods reflecting these adjustments.

Previous wording

Our fiscal year ends on January 31. For example, references to fiscal 2025 refer to the fiscal year ended January 31, 2025

Current wording

Our fiscal year ends on January 31. For example, references to fiscal 2025 refer to the fiscal year ending January 31, 2025.

Previous wording

Our business and financial condition have been, and may continue to be, impacted by adverse macroeconomic conditions, including inflation, higher interest rates, and fluctuations or volatility in capital markets or foreign currency exchange rates. These conditions have caused, and may continue to cause, customers to rationalize budgets, prioritize cash flow management, including through shortened contract duration, and optimize consumption, including by reducing storage through shorter data retention policies. We are continuing to monitor the actual and potential effects of general macroeconomic conditions across our business. For additional details, see the section titled “Risk Factors.”

Current wording

Our business and financial condition have been, and may continue to be, impacted by adverse macroeconomic conditions, including inflation, high interest rates, and fluctuations or volatility in capital markets or foreign currency exchange rates. These conditions have caused, and may continue to cause, customers to rationalize budgets, prioritize cash flow management, including through shortened contract duration, and optimize consumption, including by reducing storage through shorter data retention policies. We are continuing to monitor the actual and potential effects of general macroeconomic conditions across our business. For additional details, see the section titled “Risk Factors.”

Previous wording

In February 2023, our board of directors authorized a stock repurchase program of up to $2.0 billion of our outstanding common stock. The program is funded using our working capital and will expire in March 2025. During the three months ended April 30, 2024, we repurchased approximately 3.0 million shares of our outstanding common stock for an aggregate purchase price of $516.3 million, including transaction costs, at a weighted-average price of $173.14 per share. All repurchases were made in open market transactions (including via pre-set trading plans). As of April 30, 2024, $891.9 million remained available for future repurchases under the stock repurchase program. See Note 11, “Equity,” to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details.

Current wording

In February 2023, our board of directors authorized a stock repurchase program of up to $2.0 billion of our outstanding common stock. In August 2024, our board of directors authorized the repurchase of an additional $2.5 billion of our outstanding common stock and extended the expiration date of the stock repurchase program from March 2025 to March 2027. During the six months ended July 31, 2024, we repurchased 5.9 million shares of our outstanding common stock for an aggregate purchase price of $916.3 million, including transaction costs, at a weighted-average price of $154.30 per share. All repurchases were made in open market transactions. As of July 31, 2024, $491.9 million remained available for future repurchases under the stock repurchase program, which does not take into account the additional $2.5 billion of repurchase amount authorized in August 2024. See Note 11, “Equity,” and Note 15, “Subsequent Event,” to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details.

Previous wording

Our future success depends in large part on the market adoption of our platform, including new product functionality such as Snowpark and our artificial intelligence and machine learning technology, or AI Technology. While we see growing demand for our platform, particularly from large enterprises, many of these organizations have invested substantial technical, financial, and personnel resources in their legacy database products or big data offerings, despite their inherent limitations. In addition, many customers are attempting to rationalize budgets, prioritize cash flow management, and optimize consumption amidst macroeconomic uncertainty. In addition, customers’ use of our AI Technology is often dependent on their ability to meet evolving regulatory standards. While this makes it difficult to predict customer adoption rates and future demand, we believe that the benefits of our platform put us in a strong position to capture the significant market opportunity ahead.

Current wording

Our future success depends in large part on the market adoption of our platform, including new product functionality such as Snowpark and our artificial intelligence and machine learning technology, or AI Technology, such as Snowflake Cortex. While we see growing demand for our platform, particularly from large enterprises, many of these organizations have invested substantial technical, financial, and personnel resources in their legacy database products or big data offerings, despite their inherent limitations. In addition, customers’ use of our AI Technology is often dependent on their ability to meet evolving regulatory standards, successfully complete internal compliance reviews, and enter into mutually acceptable contractual terms. While this makes it difficult to predict customer adoption rates and future demand, we believe that the benefits of our platform put us in a strong position to capture the significant market opportunity ahead.

Previous wording

Once deployed, our customers often expand their use of our platform more broadly within the enterprise and across their ecosystem of customers and partners as they migrate more data to the public cloud, identify new use cases, and realize the benefits of our platform and the AI Data Cloud. However, because we generally recognize product revenue on consumption and not ratably over the term of the contract, we do not have visibility into the timing of revenue recognition from any particular customer. In any given period, there is a risk that customer consumption of our platform will be slower than we expect, including in response to adverse macroeconomic conditions, which may cause fluctuations in our revenue and results of operations.

Current wording

Once deployed, our customers often expand their use of our platform more broadly within the enterprise and across their ecosystem of customers and partners as they migrate more data to the public cloud, identify new use cases, and realize the benefits of our platform and the AI Data Cloud. However, because we generally recognize product revenue on consumption and not ratably over the term of the contract, we do not have visibility into the timing of revenue recognition from any particular customer. In addition, many customers are attempting to rationalize budgets, prioritize cash flow management, and optimize consumption amidst macroeconomic uncertainty. In any given period, there is a risk that customer consumption of our platform will be slower than we expect, which may cause fluctuations in our revenue and results of operations.

Previous wording

New software releases or hardware improvements, like better storage compression and cloud infrastructure processor improvements, may make our platform more efficient, enabling customers to consume fewer compute, storage, and data transfer resources to accomplish the same workloads. In addition, new product features allow customers to use our platform to provide compute services without requiring them to store data. To the extent these improvements do not result in an offsetting increase in new workloads, we may experience lower revenue. Our ability to increase usage of our platform by, and sell additional contracted capacity to, existing customers, and, in particular, large enterprise customers, will depend on a number of factors, including our customers’ satisfaction with our platform, competition, pricing, macroeconomic conditions, overall changes in our customers’ spending levels, customers’ attempts to optimize their consumption, the effectiveness of our and our partners’ efforts to help our customers realize the benefits of our platform, and the extent to which customers migrate new workloads to our platform over time, including data science, artificial intelligence, and machine learning workloads.

Current wording

New software releases or hardware improvements, like better storage compression and cloud infrastructure processor improvements, may make our platform more efficient, enabling customers to consume fewer compute, storage, and data transfer resources to accomplish the same workloads. In addition, new product features allow customers to use our platform for compute services without requiring storage. To the extent these improvements do not result in an offsetting increase in new workloads, we may experience lower revenue. Our ability to increase usage of our platform by, and sell additional contracted capacity to, existing customers, and, in particular, large enterprise customers, will depend on a number of factors, including our customers’ satisfaction with our platform, competition, pricing, macroeconomic conditions, overall changes in our customers’ spending levels, customers’ attempts to optimize their consumption, our customers’ confidence in the security of our platform, our ability to maintain our reputation as a trustworthy vendor, the effectiveness of our and our partners’ efforts to help our customers realize the benefits of our platform, and the extent to which customers migrate new workloads to our platform over time, including data science, artificial intelligence, and machine learning workloads.

Previous wording

We believe there is a substantial opportunity to further grow our customer base by continuing to make significant investments in sales and marketing and brand awareness. Our ability to attract new customers will depend on a number of factors, including the productivity of our sales organization, competitive dynamics in our target markets, changes in our customers’ spending and platform consumption in response to market uncertainty, and our ability to build and maintain partner relationships, including with global system integrators, resellers, technology partners, and third-party providers of native applications on the Snowflake Marketplace. While our platform is built for organizations of all sizes, we focus our selling efforts on large enterprise customers, customers with vast amounts of data, and customers requiring industry-specific solutions. We may not achieve anticipated revenue growth if we are unable to attract, hire, develop, integrate, and retain talented and effective sales personnel; if our sales personnel are unable to achieve desired productivity levels in a reasonable period of time and maintain productivity; or if our sales and marketing programs are not effective.

Current wording

We believe there is a substantial opportunity to further grow our customer base by continuing to make significant investments in sales and marketing and brand awareness. Our ability to attract new customers will depend on a number of factors, including the productivity of our sales organization, competitive dynamics in our target markets, changes in our customers’ spending and platform consumption in response to market uncertainty, our ability to mitigate reputational damage following cybersecurity threat activity directed at our customers, and our ability to build and maintain partner relationships, including with global system integrators, resellers, technology partners, and third-party providers of native applications on the Snowflake Marketplace. While our platform is built for organizations of all sizes, we focus our selling efforts on large enterprise customers, customers with vast amounts of data, and customers requiring industry-specific solutions. We may not achieve anticipated revenue growth if we are unable to attract, hire, develop, integrate, and retain talented and effective sales personnel; if our sales personnel are unable to achieve desired productivity levels in a reasonable period of time and maintain productivity; or if our sales and marketing programs are not effective.

Previous wording

We are focused on our long-term revenue potential, and believe our market opportunity is large. We will continue to invest significantly in research and development to improve our platform, including in the areas of data science, artificial intelligence, and machine learning. In addition, we are focused on expanding our business both domestically and internationally. As part of these efforts, we are investing in meeting the needs of organizations in geographies and specialized industries that have heightened data requirements, including with respect to data localization, privacy, and security. We intend to continue to invest heavily to grow our business to take advantage of our expansive market opportunity, while also focusing on cash flow and long-term profitability.

Current wording

We are focused on our long-term revenue potential, and believe our market opportunity is large. We will continue to invest significantly in research and development to improve our platform, including in the areas of data science, artificial intelligence, and machine learning. In addition, we are focused on expanding our business both domestically and internationally. As part of these efforts, we are investing in meeting the needs of organizations in geographies and specialized and regulated industries that have heightened data requirements, including with respect to data localization, privacy, and security. We intend to continue to invest heavily to grow our business to take advantage of our expansive market opportunity, while also focusing on cash flow and long-term profitability.

Previous wording

(1)Includes net cash paid on payroll tax-related items on employee stock transactions as follows (in millions):

Current wording

(1)Includes net cash paid (received) on payroll tax-related items on employee stock transactions as follows (in millions):

Previous wording

(2)Cash outflows for employee payroll tax items related to the net share settlement of equity awards, which were $174.6 million and $84.4 million for the three months ended April 30, 2024 and 2023, respectively, are included in cash flow for financing activities and, as a result, do not have an effect on the calculation of non-GAAP free cash flow. See the section titled “Free Cash Flow” for a reconciliation of non-GAAP free cash flow to the most directly comparable financial measure calculated in accordance with GAAP.

Current wording

(2)Cash outflows for employee payroll tax items related to the net share settlement of equity awards were $103.5 million and $278.1 million for the three and six months ended July 31, 2024, respectively, and $98.3 million and $182.7 million for the three and six months ended July 31, 2023, respectively. These amounts are included in cash flow for financing activities and, as a result, do not have an effect on the calculation of non-GAAP free cash flow. See the section titled “Free Cash Flow” for a reconciliation of non-GAAP free cash flow to the most directly comparable financial measure calculated in accordance with GAAP.

Previous wording

(4)As of April 30, 2024, our remaining performance obligations were approximately $5.0 billion, of which we expect approximately 51% to be recognized as revenue in the twelve months ending April 30, 2025 based on historical customer consumption patterns. The weighted-average remaining life of our capacity contracts was 2.1 years as of April 30, 2024. However, the amount and timing of revenue recognition are generally dependent upon customers’ future consumption, which is inherently variable at our customers’ discretion and can extend beyond the original contract term in cases where customers are permitted to roll over unused capacity to future periods, generally upon the purchase of additional capacity at renewal. In addition, our historical customer consumption patterns are not necessarily indicative of future results.

Current wording

(4)As of July 31, 2024, our remaining performance obligations were approximately $5.2 billion, of which we expect approximately 50% to be recognized as revenue in the twelve months ending July 31, 2025 based on historical customer consumption patterns. The weighted-average remaining life of our capacity contracts was 2.2 years as of July 31, 2024. However, the amount and timing of revenue recognition are generally dependent upon customers’ future consumption, which is inherently variable at our customers’ discretion and can extend beyond the original contract term in cases where customers are permitted to roll over unused capacity to future periods, generally upon the purchase of additional capacity at renewal. In addition, our historical customer consumption patterns are not necessarily indicative of future results.

Previous wording

Product revenue is a key metric for us because we recognize revenue based on platform consumption, which is inherently variable at our customers’ discretion, and not based on the amount and duration of contract terms. Product revenue is primarily derived from the consumption of compute, storage, and data transfer resources, which are consumed by customers on our platform as a single, integrated offering. Customers have the flexibility to consume more than their contracted capacity during the contract term and may have the ability to roll over unused capacity to future periods, generally upon the purchase of additional capacity at renewal. Our consumption-based business model distinguishes us from subscription-based software companies that generally recognize revenue ratably over the contract term and may not permit rollover. Because customers have flexibility in the timing of their consumption, which can exceed their contracted capacity or extend beyond the original contract term in many cases, the amount of product revenue recognized in a given period is an important indicator of customer satisfaction and the value derived from our platform. While customer use of our platform in any period is not necessarily indicative of future use, we estimate future revenue using predictive models based on customers’ historical usage to plan and determine financial forecasts. Product revenue excludes our professional services and other revenue, which has been less than 10% of revenue for each of the periods presented.

Current wording

Product revenue is a key metric for us because we recognize revenue based on platform consumption, which is inherently variable at our customers’ discretion, and not based on the amount and duration of contract terms. Product revenue is primarily derived from the consumption of compute, storage, and data transfer resources by customers on our platform. Customers have the flexibility to consume more than their contracted capacity during the contract term and may have the ability to roll over unused capacity to future periods, generally upon the purchase of additional capacity at renewal. Our consumption-based business model distinguishes us from subscription-based software companies that generally recognize revenue ratably over the contract term and may not permit rollover. Because customers have flexibility in the timing of their consumption, which can exceed their contracted capacity or extend beyond the original contract term in many cases, the amount of product revenue recognized in a given period is an important indicator of customer satisfaction and the value derived from our platform. While customer use of our platform in any period is not necessarily indicative of future use, we estimate future revenue using predictive models based on customers’ historical usage to plan and determine financial forecasts. Product revenue excludes our professional services and other revenue, which has been less than 10% of revenue for each of the periods presented.

Previous wording

(2)Cash outflows for employee payroll tax items related to the net share settlement of equity awards, which were $174.6 million and $84.4 million for the three months ended April 30, 2024 and 2023, respectively, are included in cash flow for financing activities and, as a result, do not have an effect on the calculation of free cash flow.

Current wording

(2)Cash outflows for employee payroll tax items related to the net share settlement of equity awards were $103.5 million and $278.1 million for the three and six months ended July 31, 2024, respectively, and $98.3 million and $182.7 million for the three and six months ended July 31, 2023, respectively. These amounts are included in cash flow for financing activities and, as a result, do not have an effect on the calculation of free cash flow.

Previous wording

We deliver our platform over the internet as a service. Customers choose to consume our platform under either capacity arrangements, in which they commit to a certain amount of consumption at specified prices, or under on-demand arrangements, in which we charge for use of our platform monthly in arrears. Under capacity arrangements, from which a majority of our revenue is derived, we typically bill our customers annually in advance of their consumption. However, in future periods, we expect to see an increase in capacity contracts providing for quarterly upfront billings and monthly in arrears billings as our customers increasingly want to align consumption and timing of payments. Revenue from on-demand arrangements typically relates to customers with lower usage levels or overage consumption beyond a customer’s contracted usage amount or following the expiration of a customer’s contract. Revenue from on-demand arrangements represented approximately 2% of our revenue for the three months ended April 30, 2024 and 2023, respectively.

Current wording

We deliver our platform over the internet as a service. Customers choose to consume our platform under either capacity arrangements, in which they commit to a certain amount of consumption at specified prices, or under on-demand arrangements, in which we charge for use of our platform monthly in arrears. Under capacity arrangements, from which a majority of our revenue is derived, we typically bill our customers annually in advance of their consumption. However, in future periods, we expect to see an increase in capacity contracts providing for quarterly upfront billings and monthly in arrears billings as our customers increasingly want to align consumption and timing of payments. Revenue from on-demand arrangements typically relates to customers with lower usage levels or overage consumption beyond a customer’s contracted usage amount under a capacity contract or following the expiration of a customer’s capacity contract. Revenue from on-demand arrangements represented approximately 2% of our revenue for each of the three and six months ended July 31, 2024 and 2023.

Previous wording

We recognize revenue as customers consume compute, storage, and data transfer resources under either of these arrangements. In limited instances, customers pay an annual deployment fee to gain access to a dedicated instance of a virtual private deployment. We recognize the deployment fee ratably over the contract term. Such deployment revenue represented less than 1% of our revenue for each of the three months ended April 30, 2024 and 2023.

Current wording

We recognize revenue as customers consume compute, storage, and data transfer resources under either of these arrangements. In limited instances, customers pay an annual deployment fee to gain access to a dedicated instance of a virtual private deployment. We recognize the deployment fee ratably over the contract term. Such deployment revenue represented less than 1% of our revenue for each of the three and six months ended July 31, 2024 and 2023.

Previous wording

Our customer contracts for capacity typically have a term of one to four years. The weighted-average term of capacity contracts entered into during the three months ended April 30, 2024 is approximately 2.5 years. To the extent our customers enter into such contracts and either consume our platform in excess of their capacity commitments or continue to use our platform after expiration of the contract term, they are charged for their incremental consumption. In many cases, our customer contracts permit customers to roll over any unused capacity to a subsequent order, generally upon the purchase of additional capacity. For those customers who do not have a capacity arrangement, our on-demand arrangements generally have a monthly stated contract term and can be terminated at any time by either the customer or us.

Current wording

Our customer contracts for capacity typically have a term of one to four years. The weighted-average term of capacity contracts entered into during the three and six months ended July 31, 2024 is 3.1 years and 2.9 years, respectively. To the extent our customers enter into such contracts and either consume our platform in excess of their capacity commitments or continue to use our platform after expiration of the contract term, they are charged for their incremental consumption. In many cases, our customer contracts permit customers to roll over any unused capacity to a subsequent order, generally upon the purchase of additional capacity. For those customers who do not have a capacity arrangement, our on-demand arrangements generally have a monthly stated contract term and can be terminated at any time by either the customer or us.

Previous wording

We generate the substantial majority of our revenue from fees charged to our customers based on the compute, storage, and data transfer resources consumed on our platform as a single, integrated offering. For compute resources, consumption fees are based on the type of compute resource used and the duration of use or, for some features, the volume of data processed. For storage resources, consumption fees are based on the average terabytes per month of all of the customer’s data stored in our platform. For data transfer resources, consumption fees are based on terabytes of data transferred, the public cloud provider used, and the region to and from which the transfer is executed.

Current wording

We generate the substantial majority of our revenue from fees charged to our customers based on the compute, storage, and data transfer resources consumed on our platform. Prior to June 2024, these three resources were consumed by our customers as a single, integrated offering. In June 2024, we made Iceberg tables generally available to our customers, enabling them to use our platform for compute services without requiring storage. As a result, starting from June 2024, customers are allowed to select compute, storage, and data transfer resources separately, at their discretion. For compute resources, consumption is based on the type of compute resource used and the duration of use or, for some features, the volume of data processed. For storage resources, consumption for a given customer is based on the average terabytes per month of all of such customer’s data stored in our platform. For data transfer resources, consumption is based on terabytes of data transferred, the public cloud provider used, and the region to and from which the transfer is executed.

Previous wording

Cost of product revenue. Cost of product revenue consists primarily of (i) third-party cloud infrastructure expenses incurred in connection with our customers’ use of our platform and the deployment and maintenance of our platform on public clouds, including different regional deployments, and (ii) personnel-related costs associated with customer support and maintaining service availability and security of our platform, including salaries, benefits, bonuses, and stock-based compensation. We periodically receive credits from third-party cloud providers that are recorded as a reduction to the third-party cloud infrastructure expenses. Cost of product revenue also includes amortization of capitalized internal-use software development costs, amortization of acquired intangible assets, and expenses associated with software and subscription services dedicated for use by our customer support team and our engineering team responsible for maintaining our platform.

Current wording

Cost of product revenue. Cost of product revenue consists primarily of (i) third-party cloud infrastructure expenses, including those related to graphics processing units (GPUs), incurred in connection with our customers’ use of our platform and the deployment and maintenance of our platform on public clouds, including different regional deployments, and (ii) personnel-related costs associated with customer support and maintaining service availability and security of our platform, including salaries, benefits, bonuses, and stock-based compensation. We periodically receive credits from third-party cloud providers that are recorded as a reduction to the third-party cloud infrastructure expenses. Cost of product revenue also includes amortization of capitalized internal-use software development costs, amortization of acquired intangible assets, and expenses associated with software and subscription services dedicated for use by our customer support team and our engineering team responsible for maintaining our platform.

Previous wording

Research and development expenses consist primarily of personnel-related expenses associated with our research and development staff, including salaries, benefits, bonuses, and stock-based compensation. Research and development expenses also include contractor or professional services fees, third-party cloud infrastructure expenses incurred in developing our platform (including with respect to graphics processing units, or GPUs, to develop AI Technology), amortization of acquired intangible assets, and software and subscription services dedicated for use by our research and development organization. We expect that our research and development expenses will increase in absolute dollars as our business grows, particularly as we incur additional costs related to continued investments in our platform. However, we expect that our research and development expenses will decrease as a percentage of our revenue over time, although the percentage may fluctuate from period to period depending on the timing and the extent of these expenses. In addition, research and development expenses that qualify as internal-use software development costs are capitalized, the amount of which may fluctuate significantly from period to period.

Current wording

Research and development expenses consist primarily of personnel-related expenses associated with our research and development staff, including salaries, benefits, bonuses, and stock-based compensation. Research and development expenses also include contractor or professional services fees, third-party cloud infrastructure expenses incurred in developing our platform (including with respect to GPUs to develop AI Technology), amortization of acquired intangible assets, and software and subscription services dedicated for use by our research and development organization. We expect that our research and development expenses will increase in absolute dollars as our business grows, particularly as we incur additional costs related to continued investments in our platform. However, we expect that our research and development expenses will decrease as a percentage of our revenue over time, although the percentage may fluctuate from period to period depending on the timing and the extent of these expenses. In addition, research and development expenses that qualify as internal-use software development costs are capitalized, the amount of which may fluctuate significantly from period to period.

Previous wording

The increase in stock-based compensation for the three months ended April 30, 2024, compared to the three months ended April 30, 2023, was primarily attributable to additional equity awards granted to new and existing employees, partially offset by the effects of equity awards that became fully vested.

Current wording

The overall increase in stock-based compensation for the three and six months ended July 31, 2024, compared to the three and six months ended July 31, 2023, was primarily attributable to additional equity awards granted to new and existing employees, partially offset by the effects of equity awards that became fully vested or forfeited.

Previous wording

As of April 30, 2024, total compensation cost related to unvested awards not yet recognized was $3.6 billion, which will be recognized over a weighted-average period of 3.0 years. See Note 11, “Equity,” to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details.

Current wording

As of July 31, 2024, total compensation cost related to unvested awards not yet recognized was $3.4 billion, which will be recognized over a weighted-average period of 2.9 years. See Note 11, “Equity,” to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details.

Previous wording

Comparison of the Three Months Ended April 30, 2024 and 2023

Current wording

Comparison of the Three and Six Months Ended July 31, 2024 and 2023

Previous wording

Product revenue increased $199.5 million for the three months ended April 30, 2024, compared to the three months ended April 30, 2023, primarily due to increased consumption of our platform by existing customers, as evidenced by our net revenue retention rate of 128% as of April 30, 2024.

Current wording

Product revenue increased $189.0 million and $388.6 million for the three and six months ended July 31, 2024, compared to the three and six months ended July 31, 2023, respectively, primarily due to increased consumption of our platform by existing customers, as evidenced by our net revenue retention rate of 127% as of July 31, 2024.

Previous wording

We had 485 customers with product revenue of greater than $1 million for the trailing 12 months ended April 30, 2024, an increase from 373 customers as of April 30, 2023. Such customers represented approximately 65% and 64% of our product revenue for the trailing 12 months ended April 30, 2024 and 2023, respectively. Within these customers, we had 85 and 31 customers with product revenue of greater than $5 million and $10 million, respectively, for the trailing 12 months ended April 30, 2024. The substantial majority of our revenue was derived from existing customers under capacity arrangements, which represented approximately 98% of our revenue for each of the three months ended April 30, 2024 and 2023. The remainder was derived from on-demand arrangements and new customers under capacity arrangements. The preceding historical metrics reflect any adjustments for acquisitions, consolidations, spin-offs, and other market activity. For purposes of determining revenue derived from (i) customers with trailing 12-month product revenue greater than $1 million, (ii) new customers, and (iii) existing customers, we treat each customer account, including accounts for end-customers under a reseller arrangement, that has at least one corresponding capacity contract as a unique customer, and a single organization with multiple divisions, segments, or subsidiaries may be counted as multiple customers.

Current wording

We had 510 customers with product revenue of greater than $1 million for the trailing 12 months ended July 31, 2024, an increase from 399 such customers as of July 31, 2023. Such customers represented approximately 65% and 64% of our product revenue for the trailing 12 months ended July 31, 2024 and 2023, respectively. Within these customers, we had 93 and 36 customers with product revenue of greater than $5 million and $10 million, respectively, for the trailing 12 months ended July 31, 2024. The substantial majority of our revenue was derived from existing customers under capacity arrangements, which represented approximately 98% of our revenue for each of the three and six months ended July 31, 2024 and 2023. The remainder was derived from on-demand arrangements and new customers under capacity arrangements. The preceding historical metrics reflect any adjustments for acquisitions, consolidations, spin-offs, and other market activity. For purposes of determining revenue derived from (i) customers with trailing 12-month product revenue greater than $1 million, (ii) new customers, and (iii) existing customers, we treat each customer account, including accounts for end-customers under a reseller arrangement, that has at least one corresponding capacity contract as a unique customer, and a single organization with multiple divisions, segments, or subsidiaries may be counted as multiple customers.

Previous wording

Professional services and other revenue increased $5.6 million for the three months ended April 30, 2024, compared to the three months ended April 30, 2023, as we continued to expand our professional services organization to help our customers further realize the benefits of our platform.

Current wording

Professional services and other revenue increased $5.8 million and $11.4 million for the three and six months ended July 31, 2024, compared to the three and six months ended July 31, 2023, respectively, as we continued to expand our professional services organization to help our customers further realize the benefits of our platform.

Previous wording

Cost of product revenue increased $60.3 million for the three months ended April 30, 2024, compared to the three months ended April 30, 2023, primarily due to an increase of $34.9 million in third-party cloud infrastructure expenses as a result of increased customer consumption of our platform. Personnel-related costs and allocated overhead costs also increased $8.9 million for the three months ended April 30, 2024, compared to the same period in the prior year, as a result of increased headcount and overall costs to support the growth in our business, and increased stock-based compensation primarily related to additional equity awards granted to new and existing employees. The remaining increase in cost of product revenue was primarily driven by an increase of $13.0 million in amortization of capitalized internal-use software development costs and acquired developed technology intangible assets for the three months ended April 30, 2024, compared to the same period in the prior year.

Current wording

Cost of product revenue increased $66.5 million and $126.8 million for the three and six months ended July 31, 2024, compared to the three and six months ended July 31, 2023, respectively. The increase was primarily due to an increase of $40.6 million and $75.5 million in third-party cloud infrastructure expenses (including those related to GPUs) for the three and six months ended July 31, 2024, respectively, compared to the same periods in the prior year, as a result of increased customer consumption of our platform. Amortization of capitalized internal-use software development costs and acquired developed technology intangible assets also increased $11.9 million and $24.9 million for the three and six months ended July 31, 2024, respectively, compared to the same periods in the prior year. The remaining increase in cost of product revenue was primarily driven by an increase of $9.8 million and $18.7 million in personnel-related costs and allocated overhead costs for the three and six months ended July 31, 2024, respectively, compared to the same periods in the prior year.

Previous wording

Our product gross margin was 72% for the three months ended April 30, 2024, compared to 73% for the three months ended April 30, 2023. This slight decline is primarily attributable to newly launched product capabilities and features that have not yet reached economies of scale. We expect our product gross margin to fluctuate from period to period due to a number of factors, including, but not limited to: (i) fluctuations in the mix and timing of customers’ consumption, which is inherently variable at our customers’ discretion, (ii) whether or not a customer contracts with us through public cloud marketplaces, (iii) our pricing model and discounting practices, (iv) the extent of our investments in new product capabilities, features, and operations, such as investments in AI Technology and performance improvements that may make our platform or the underlying cloud infrastructure more efficient, (v) stock-based compensation, and (vi) amortization of capitalized internal-use software developed costs and acquired intangible assets.

Current wording

Our product gross margin was 72% for each of the three and six months ended July 31, 2024, compared to 74% and 73% for the three and six months ended July 31, 2023, respectively. This slight decline is primarily attributable to newly launched product capabilities and features that have not yet reached economies of scale. We expect our product gross margin to fluctuate from period to period due to a number of factors, including, but not limited to: (i) fluctuations in the mix and timing of customers’ consumption, which is inherently variable at our customers’ discretion, (ii) whether or not a customer contracts with us through public cloud marketplaces, (iii) our pricing model and discounting practices, (iv) the extent of our investments in new product capabilities, features, and operations, such as investments in AI Technology and performance improvements that may make our platform or the underlying cloud infrastructure more efficient, (v) stock-based compensation, and (vi) amortization of capitalized internal-use software developed costs and acquired intangible assets.

Previous wording

Professional services and other gross margin was (35%) for the three months ended April 30, 2024, compared to (49%) for the three months ended April 30, 2023. We do not believe the year-over-year changes in professional services and other gross margins are meaningful given that our professional services and other revenue represents a small percentage of our revenue.

Current wording

Professional services and other gross margin was (33%) and (34%) for the three and six months ended July 31, 2024, respectively, compared to (46%) and (48%) for the three and six months ended July 31, 2023, respectively. We do not believe the year-over-year changes in professional services and other gross margins are meaningful given that our professional services and other revenue represents a small percentage of our revenue.

Previous wording

Sales and marketing expenses increased $69.3 million for the three months ended April 30, 2024, compared to the three months ended April 30, 2023, primarily due to an increase of $27.5 million in personnel-related costs (excluding commission expenses) and allocated overhead costs, as a result of increased headcount, stock based compensation, and overall costs to support the growth in our business. Expenses associated with sales commissions and draws paid to our sales force and certain referral fees paid to third parties, including amortization of deferred commissions, also increased $17.6 million for the three months ended April 30, 2024, compared to the same period in the prior year, primarily attributable to sales commissions tied to customers’ consumption.

Current wording

Sales and marketing expenses increased $57.3 million and $126.6 million for the three and six months ended July 31, 2024, compared to the three and six months ended July 31, 2023, respectively. The increase was primarily driven by an increase of $25.2 million and $42.9 million in expenses associated with sales commissions and draws paid to our sales force and certain referral fees paid to third parties (including amortization of deferred commissions) for the three and six months ended July 31, 2024, respectively, compared to the same periods in the prior year, primarily attributable to sales commissions tied to customers’ consumption. Personnel-related costs (excluding commission expenses) and allocated overhead costs increased $22.5 million and $50.0 million for the three and six months ended July 31, 2024, respectively, compared to the same periods in the prior year, as a result of increased headcount, stock-based compensation, and overall costs to support the growth in our business.

Previous wording

Research and development expenses increased $133.4 million for the three months ended April 30, 2024, compared to the three months ended April 30, 2023, primarily due to an increase of $108.8 million in personnel-related costs and allocated overhead costs, as a result of increased stock-based compensation, headcount, and overall costs to support the growth in our business. The increase in personnel-related costs included a $58.3 million increase in stock-based compensation, primarily related to additional equity awards granted to new and existing employees, partially offset by the effects of equity awards that became fully vested. Third-party cloud infrastructure expenses incurred in developing our platform (including with respect to GPUs to develop AI Technology) also increased $24.1 million for the three months ended April 30, 2024, compared to the same period in the prior year.

Current wording

Research and development expenses increased $123.7 million and $257.0 million for the three and six months ended July 31, 2024, compared to the three and six months ended July 31, 2023, respectively. The increase was primarily due to an increase of $88.6 million and $197.4 million in personnel-related costs and allocated overhead costs for the three and six months ended July 31, 2024, respectively, compared to the same periods in the prior year, as a result of increased stock-based compensation, headcount, and overall costs to support the growth in our business. The increase in personnel-related costs included an increase of $41.9 million and $100.2 million in stock-based compensation for the three and six months ended July 31, 2024, respectively, compared to the same periods in the prior year, primarily related to additional equity awards granted to new and existing employees, partially offset by the effects of equity awards that became fully vested or forfeited. Third-party cloud infrastructure expenses incurred in developing our platform (including with respect to GPUs to develop AI Technology) also increased $26.7 million and $50.8 million for the three and six months ended July 31, 2024, respectively, compared to the same periods in the prior year.

Previous wording

The overall increase in research and development expenses was partially offset by impairment charges of $7.1 million recognized during the three months ended April 30, 2023. These impairment charges were related to our capitalized internal-use software development costs previously included in construction in progress that were no longer probable of being completed.

Current wording

The overall increase in research and development expenses for the six months ended July 31, 2024 was partially offset by impairment charges of $7.1 million recognized during the six months ended July 31, 2023. These impairment charges were related to our capitalized internal-use software development costs previously included in construction in progress that were no longer probable of being completed.

Previous wording

General and administrative expenses increased $14.7 million for the three months ended April 30, 2024, compared to the three months ended April 30, 2023, primarily due to an increase in personnel-related costs and allocated overhead costs, as a result of increased headcount and overall costs to support the growth in our business.

Current wording

General and administrative expenses increased $14.0 million and $28.7 million for the three and six months ended July 31, 2024, compared to the three and six months ended July 31, 2023, respectively, primarily due to an increase in personnel-related costs and allocated overhead costs, as a result of increased stock-based compensation, headcount and overall costs to support the growth in our business.

Previous wording

Interest income increased $11.6 million for the three months ended April 30, 2024, compared to the three months ended April 30, 2023, primarily due to higher yields on our cash equivalents and investments in available-for-sale marketable debt securities as a result of increased interest rates. See Note 4, “Cash Equivalents and Investments,” to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details on our cash equivalents and investments.

Current wording

Interest income increased $10.6 million for the six months ended July 31, 2024, compared to the six months ended July 31, 2023, primarily due to higher yields on our cash equivalents and investments in available-for-sale marketable debt securities as a result of increased interest rates. See Note 4, “Cash Equivalents and Investments,” to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details on our cash equivalents and investments.

Previous wording

Other expense, net increased $18.7 million for the three months ended April 30, 2024, compared to the three months ended April 30, 2023, primarily due to impairments recorded on our strategic investments in non-marketable equity securities. See Note 5, “Fair Value Measurements,” to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details on our strategic investments.

Current wording

Other income (expense), net decreased $12.0 million and 30.8 million for the three and six months ended July 31, 2024, compared to the three and six months ended July 31, 2023, respectively, primarily due to (i) an increase in impairments recorded on our strategic investments in non-marketable equity securities, and (ii) changes in net unrealized gains or losses on our strategic investments in marketable equity securities. See Note 5, “Fair Value Measurements,” to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details on our strategic investments.

Previous wording

Our provision for income taxes was $2.7 million for the three months ended April 30, 2024, compared to our benefit from income taxes of $6.6 million for the three months ended April 30, 2023, primarily due to partial releases of valuation allowances from the business combinations completed during the three months ended April 30, 2023.

Current wording

Our provision for income taxes was $3.8 million and $6.5 million for the three and six months ended July 31, 2024, respectively, compared to our benefit from income taxes of $3.7 million and $10.3 million for the three and six months ended July 31, 2023, respectively, primarily due to partial releases of valuation allowances from the business combinations completed during the three and six months ended July 31, 2023.

Previous wording

As of April 30, 2024, our principal sources of liquidity were cash, cash equivalents, and short-term and long-term investments totaling $4.5 billion. Our cash equivalents and investments primarily consist of corporate notes and bonds, U.S. government and agency securities, commercial paper, money market funds, certificates of deposit, and time deposits.

Current wording

As of July 31, 2024, our principal sources of liquidity were cash, cash equivalents, and short-term and long-term investments totaling $3.9 billion. Our cash equivalents and investments primarily consist of corporate notes and bonds, U.S. government and agency securities, money market funds, commercial paper, certificates of deposit, and time deposits.

Previous wording

As of April 30, 2024, our RPO was $5.0 billion. Our RPO represents the amount of contracted future revenue that has not yet been recognized, including (i) deferred revenue and (ii) non-cancelable contracted amounts that will be invoiced and recognized as revenue in future periods, but that are not recorded on the balance sheet. Portions of RPO that are not yet invoiced and are denominated in foreign currencies are revalued into U.S. dollars each period based on the applicable period-end exchange rates.

Current wording

As of July 31, 2024, our RPO was $5.2 billion. Our RPO represents the amount of contracted future revenue that has not yet been recognized, including (i) deferred revenue and (ii) non-cancelable contracted amounts that will be invoiced and recognized as revenue in future periods, but that are not recorded on the balance sheet. Portions of RPO that are not yet invoiced and are denominated in foreign currencies are revalued into U.S. dollars each period based on the applicable period-end exchange rates.