Snowflake Inc

Previous wording

Our cloud-native architecture consists of three independently scalable but logically integrated layers across compute, storage, and cloud services. The compute layer provides dedicated resources to enable users to simultaneously access common data sets for many use cases with minimal latency. The storage layer ingests massive amounts and varieties of structured, semi-structured, and unstructured data to create a unified data record. The cloud services layer intelligently optimizes each use case’s performance requirements with no administration. This architecture is built on three major public clouds across 42 regional deployments around the world. These deployments are generally interconnected to deliver the AI Data Cloud, enabling a consistent, global user experience.

Current wording

Our cloud-native architecture consists of three independently scalable but logically integrated layers across compute, storage, and cloud services. The compute layer provides dedicated resources to enable users to simultaneously access common data sets for many use cases with minimal latency. The storage layer ingests massive amounts and varieties of structured, semi-structured, and unstructured data to create a unified data record. The cloud services layer intelligently optimizes each use case’s performance requirements with no administration. This architecture is built on three major public clouds across 46 regional deployments around the world. These deployments are generally interconnected to deliver the AI Data Cloud, enabling a consistent, global user experience.

Previous 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.

Current wording

Our platform is used globally by organizations of all sizes across a broad range of industries. As of October 31, 2024, we had 10,618 total customers, increasing from 9,390 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 October 31, 2024, our customers included 754 of the Forbes Global 2000, based on the 2024 Forbes Global 2000 list, and those customers contributed approximately 43% of our revenue for the nine months ended October 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

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.

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 nine months ended October 31, 2024, we repurchased 14.8 million shares of our outstanding common stock for an aggregate purchase price of $1.9 billion, excluding transaction costs and excise tax associated with the repurchases, at a weighted-average price of $130.87 per share. All repurchases were made in open market transactions, except for the 3.6 million shares of our outstanding common stock that were repurchased for $399.6 million from purchasers of the Notes in the offering in privately negotiated transactions entered into in connection with the Notes offering at a purchase price of $112.50 per share. As of October 31, 2024, $2.0 billion remained available for future repurchases under the stock repurchase program (exclusive of transaction costs associated with repurchases). See Note 10, “Convertible Senior Notes,” and Note 12, “Equity,” 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, 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.

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 (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 existing database products or big data offerings. 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

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.

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 government and regulated industries that have heightened 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

(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.

Current wording

(2)Cash outflows for employee payroll tax items related to the net share settlement of equity awards were $81.5 million and $359.6 million for the three and nine months ended October 31, 2024, respectively, and $91.1 million and $273.8 million for the three and nine months ended October 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 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.

Current wording

(4)As of October 31, 2024, our remaining performance obligations were approximately $5.7 billion, of which we expect approximately 50% to be recognized as revenue in the twelve months ending October 31, 2025 based on historical customer consumption patterns. The weighted-average remaining life of our capacity contracts was 2.3 years as of October 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

(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.

Current wording

(2)Cash outflows for employee payroll tax items related to the net share settlement of equity awards were $81.5 million and $359.6 million for the three and nine months ended October 31, 2024, respectively, and $91.1 million and $273.8 million for the three and nine months ended October 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 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.

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 nine months ended October 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 and six months ended July 31, 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 nine months ended October 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 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.

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 each of the three and nine months ended October 31, 2024 is approximately 2.8 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.

Previous wording

Sales and marketing expenses consist primarily of personnel-related expenses associated with our sales and marketing staff, including salaries, benefits, bonuses, and stock-based compensation. Sales and marketing expenses also include sales commissions and draws paid to our sales force and certain referral fees paid to third parties, including amortization of deferred commissions. A portion of the sales commissions paid to the sales force is earned based on the level of the customers’ consumption of our platform, and a portion of the commissions paid to the sales force is earned upon the origination of the customer contracts. Sales commissions tied to customers’ consumption are expensed in the same period as they are earned. Sales commissions and referral fees earned upon the origination of the new customer or customer expansion contracts are deferred and then amortized over a period of benefit that we determined to be five years. As our go-to-market motion evolves, more sales personnel will be compensated based on the level of the customers’ consumption of our platform. As a result, we will defer less sales commissions, and we expect that our expenses associated with sales commissions tied to customers’ consumption will increase during the fiscal year ending January 31, 2025. Sales and marketing expenses also include advertising costs and other expenses associated with our sales, marketing and business development programs, including our user conferences, offset by proceeds from such conferences and programs. In addition, sales and marketing expenses are comprised of travel-related expenses, software and subscription services dedicated for use by our sales and marketing organizations, amortization of an acquired intangible asset, and outside services contracted for sales and marketing purposes. We expect that our sales and marketing expenses will increase in absolute dollars and continue to be our largest operating expense for the foreseeable future as we grow our business. However, we expect that our sales and marketing 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.

Current wording

Sales and marketing expenses consist primarily of personnel-related expenses associated with our sales and marketing staff, including salaries, benefits, bonuses, and stock-based compensation. Sales and marketing expenses also include sales commissions and draws paid to our sales force and certain referral fees paid to third parties, including amortization of deferred commissions. A portion of the sales commissions paid to the sales force is earned based on the level of the customers’ consumption of our platform, and a portion of the commissions paid to the sales force is earned upon the origination of the customer contracts. Sales commissions tied to customers’ consumption are expensed in the same period as they are earned. Sales commissions and referral fees earned upon the origination of the new customer or customer expansion contracts are deferred and then amortized over a period of benefit that we determined to be five years. As our go-to-market motion evolves, more sales personnel will be compensated based on the level of the customers’ consumption of our platform. As a result, we will defer less sales commissions, and we expect that our expenses associated with sales commissions tied to customers’ consumption will increase during the fiscal 2025. Sales and marketing expenses also include advertising costs and other expenses associated with our sales, marketing and business development programs, including our user conferences, offset by proceeds from such conferences and programs. In addition, sales and marketing expenses are comprised of travel-related expenses, software and subscription services dedicated for use by our sales and marketing organizations, amortization of an acquired intangible asset, and outside services contracted for sales and marketing purposes. We expect that our sales and marketing expenses will increase in absolute dollars and continue to be our largest operating expense for the foreseeable future as we grow our business. However, we expect that our sales and marketing 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.

Previous 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.

Current wording

The overall increase in stock-based compensation for the three and nine months ended October 31, 2024, compared to the three and nine months ended October 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 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.

Current wording

As of October 31, 2024, total compensation cost related to unvested awards not yet recognized was $3.8 billion, which will be recognized over a weighted-average period of 2.9 years. See Note 12, “Equity,” to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details.

Previous 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.

Current wording

Product revenue increased $201.8 million and $590.4 million for the three and nine months ended October 31, 2024, compared to the three and nine months ended October 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 October 31, 2024.

Previous 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.

Current wording

We had 542 customers with product revenue of greater than $1 million for the trailing 12 months ended October 31, 2024, an increase from 432 such customers as of October 31, 2023. Such customers represented approximately 66% and 65% of our product revenue for the trailing 12 months ended October 31, 2024 and 2023, respectively. Within these customers, we had 103 and 37 customers with product revenue of greater than $5 million and $10 million, respectively, for the trailing 12 months ended October 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 nine months ended October 31, 2024, compared to 98% and 97% for the same periods in the prior year, respectively. 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 $5.8 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.

Current wording

Professional services and other revenue increased $6.1 million and $17.5 million for the three and nine months ended October 31, 2024, compared to the three and nine months ended October 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 $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.

Current wording

Cost of product revenue increased $83.6 million and $210.4 million for the three and nine months ended October 31, 2024, compared to the three and nine months ended October 31, 2023, respectively. The increase was primarily due to an increase of $48.2 million and $123.7 million in third-party cloud infrastructure expenses (including those related to GPUs) for the three and nine months ended October 31, 2024, respectively, compared to the same periods in the prior year, as a result of increased customer consumption of our platform. Personnel-related costs and allocated overhead costs also increased $14.0 million and $32.7 million for the three and nine months ended October 31, 2024, respectively, compared to the same periods 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 existing and new employees. Additionally, amortization of capitalized internal-use software development costs and acquired developed technology intangible assets increased $11.5 million and $36.4 million for the three and nine months ended October 31, 2024, respectively, compared to the same periods in the prior year. The remaining increase in cost of product revenue for the three and nine months ended October 31, 2024 was primarily attributable to $7.7 million in costs incurred by us during the three months ended October 31, 2024 in connection with a restructuring plan for a majority-owned subsidiary.

Previous 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.

Current wording

Our product gross margin was 71% for each of the three and nine months ended October 31, 2024, compared to 74% for each of the three and nine months ended October 31, 2023, respectively. This 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, and (v) stock-based compensation.

Previous wording

Cost of professional services and other revenue increased $3.2 million and $6.0 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 costs of contracted third-party partners as a result of growth in our business.

Current wording

Cost of professional services and other revenue increased $8.3 million and $14.3 million for the three and nine months ended October 31, 2024, compared to the three and nine months ended October 31, 2023, respectively, primarily due to increased personnel-related costs and allocated overhead costs driven by increased headcount, as well as increased costs of contracted third-party partners to support the growth in our business.

Previous 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.

Current wording

Professional services and other gross margin was (37%) for each of the three months ended October 31, 2024 and 2023, and (35%) and (44%) for the nine months ended October 31, 2024 and 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 $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.

Current wording

Sales and marketing expenses increased $82.9 million and $209.5 million for the three and nine months ended October 31, 2024, compared to the three and nine months ended October 31, 2023, respectively. The increase was primarily due to an increase of $42.0 million and $92.0 million in personnel-related costs (excluding commission expenses) and allocated overhead costs for the three and nine months ended October 31, 2024, respectively, compared to the same periods 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 existing and new employees.

Previous 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.

Current wording

Research and development expenses increased $110.4 million and $367.4 million for the three and nine months ended October 31, 2024, compared to the three and nine months ended October 31, 2023, respectively. The increase was primarily due to an increase of $75.7 million and $273.0 million in personnel-related costs and allocated overhead costs for the three and nine months ended October 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 $32.5 million and $132.7 million in stock-based compensation for the three and nine months ended October 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.

Previous 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.

Current wording

The overall increase in research and development expenses for nine months ended October 31, 2024 was partially offset by impairment charges of $7.1 million recognized during the nine months ended October 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 $14.0 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.

Current wording

General and administrative expenses increased $27.6 million and $56.3 million for the three and nine months ended October 31, 2024, compared to the three and nine months ended October 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 $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.

Current wording

Interest income increased $5.8 million for the nine months ended October 31, 2024, compared to the nine months ended October 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.

Previous 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.

Current wording

Other expense, net increased $4.3 million and $35.1 million for the three and nine months ended October 31, 2024, compared to the three and nine months ended October 31, 2023, respectively, primarily due to (i) an increase in impairments recorded on our strategic investments in non-marketable equity securities, (ii) realized gains or losses recognized on our strategic investments in equity securities sold, and (iii) 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 $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.

Current wording

Our provision for income taxes was $8.4 million for the nine months ended October 31, 2024, compared to our benefit from income taxes of $6.9 million for the nine months ended October 31, 2023, primarily due to partial releases of valuation allowances from the business combinations completed during the nine months ended October 31, 2023.

Previous 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.

Current wording

As of October 31, 2024, our principal sources of liquidity were cash, cash equivalents, and short-term and long-term investments totaling $5.0 billion. Our cash equivalents and investments primarily consist of corporate notes and bonds, money market funds, U.S. government and agency securities, commercial paper, certificates of deposit, and time deposits.

Previous 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.

Current wording

As of October 31, 2024, our RPO was $5.7 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.

Previous wording

Our primary source of cash is payments received from our customers. Our primary uses of cash include personnel-related expenses, third-party cloud infrastructure expenses, sales and marketing expenses, overhead costs, acquisitions and strategic investments we may make from time to time, and repurchases of our common stock under our authorized stock repurchase program. As of July 31, 2024, our material cash requirements from known contractual obligations and commitments related primarily to (i) third-party cloud infrastructure agreements, (ii) operating leases for office facilities, and (iii) subscription arrangements used to facilitate our operations at the enterprise level. These agreements are enforceable and legally binding and specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the actions under the contracts. For the six months ended July 31, 2024, there were no material changes outside of the ordinary course of business in our commitments and contractual obligations disclosed in our Annual Report on Form 10-K for the fiscal year ended January 31, 2024, which was filed with the SEC on March 26, 2024. See Note 10, “Commitments and Contingencies,” to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional details.

Current wording

Our primary source of cash is payments received from our customers as well as net proceeds from the issuance of the Notes. Our primary uses of cash include personnel-related expenses, third-party cloud infrastructure expenses, sales and marketing expenses, overhead costs, acquisitions and strategic investments we may make from time to time, and repurchases of our common stock under our authorized stock repurchase program. As of October 31, 2024, our material cash requirements from known contractual obligations and commitments related primarily to (i) third-party cloud infrastructure agreements, (ii) the Notes, (iii) operating leases for office facilities, and (iv) subscription arrangements used to facilitate our operations at the enterprise level. These agreements are enforceable and legally binding and specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the actions under the contracts. Other than the issuance of the Notes during the nine months ended October 31, 2024, as described below, there were no material changes outside of the ordinary course of business in our commitments and contractual obligations disclosed in our Annual Report on Form 10-K for the fiscal year ended January 31, 2024, which was filed with the SEC on March 26, 2024. See Note 11, “Commitments and Contingencies,” to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional details.

Previous wording

In May 2024, we entered into a lease agreement for a new office facility located in the United States with a total commitment of $95.6 million, net of tenant incentives to be received. The lease commenced during the three months ended July 31, 2024, with an expiration date in fiscal 2039.

Current wording

In May 2024, we entered into a lease agreement for a new office facility located in the United States with a total commitment of $95.6 million, net of tenant incentives to be received. The lease commenced during the nine months ended October 31, 2024, with an expiration date in fiscal 2039.

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. Repurchases may be effected, from time to time, either on the open market (including via pre-set trading plans), in privately negotiated transactions, or through other transactions in accordance with applicable securities laws. The timing and amount of any repurchases will be determined by management based on an evaluation of market conditions and other factors. The program does not obligate us to acquire any particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at our discretion. 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. See Note 11, “Equity,” to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional 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. Repurchases may be effected, from time to time, either on the open market (including via pre-set trading plans), in privately negotiated transactions, or through other transactions in accordance with applicable securities laws. The timing and amount of any repurchases will be determined by management based on an evaluation of market conditions and other factors. The program does not obligate us to acquire any particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at our discretion. During the nine months ended October 31, 2024, we repurchased 14.8 million shares of our outstanding common stock for an aggregate purchase price of $1.9 billion, excluding transaction costs and excise tax associated with the repurchases, at a weighted-average price of $130.87 per share. All repurchases were made in open market transactions, except for the 3.6 million shares of our outstanding common stock that were repurchased for $399.6 million from purchasers of the Notes in the offering in privately negotiated transactions entered intoin connection with the Notes offering at a purchase price of $112.50 per share. As of October 31, 2024, $2.0 billion remained available for future repurchases under the stock repurchase program (exclusive of transaction costs associated with repurchases). See Note 10, “Convertible Senior Notes,” and Note 12, “Equity,” to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional details.

Previous wording

We believe that our existing cash, cash equivalents, and short-term and long-term investments, as well as cash flows expected to be generated by our operations, will be sufficient to support our working capital and capital expenditure requirements, acquisitions and strategic investments we may make from time to time, and repurchases of our common stock under our authorized stock repurchase program, for the next 12 months and beyond. Our future capital requirements will depend on many factors, including our revenue growth rate, expenditures related to our headcount growth, the timing and the amount of cash received from customers, the expansion of sales and marketing activities, the timing and extent of spending to support development efforts, the price at which we are able to purchase public cloud capacity, our existing commitments to our third-party cloud providers, expenses associated with our international expansion, the introduction of platform enhancements, the continuing market adoption of our platform, and the volume and timing of our stock repurchases. We may continue to enter into arrangements to acquire or invest in complementary businesses, products, and technologies. We may, as a result of those arrangements or the general expansion of our business, be required to seek additional equity or debt financing. In the event that we require additional financing, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, results of operations, and financial condition.

Current wording

We believe that our existing cash, cash equivalents, and short-term and long-term investments, as well as cash flows expected to be generated by our operations, will be sufficient to support our working capital and capital expenditure requirements, convertible senior notes repayment requirements, acquisitions and strategic investments we may make from time to time, and repurchases of our common stock under our existing or any future stock repurchase program, for the next 12 months and beyond. Our future capital requirements will depend on many factors, including our revenue growth rate, expenditures related to our headcount growth, the timing and the amount of cash received from customers, the expansion of sales and marketing activities, the timing and extent of spending to support development efforts, the price at which we are able to purchase public cloud capacity, our existing commitments to our third-party cloud providers, expenses associated with our international expansion, the introduction of platform enhancements, the continuing market adoption of our platform, and the volume and timing of our stock repurchases. We may continue to enter into arrangements to acquire or invest in complementary businesses, products, and technologies. We may, as a result of those arrangements or the general expansion of our business, be required to seek additional equity or debt financing. In the event that we require additional financing, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, results of operations, and financial condition.

Previous wording

Net cash provided by operating activities mainly consists of our net loss adjusted for certain non-cash items, primarily consisting of (i) stock-based compensation, net of amounts capitalized, (ii) depreciation and amortization of property and equipment and amortization of acquired intangible assets, (iii) amortization of deferred commissions, (iv) amortization of operating lease right-of-use assets, (v) net realized and unrealized gains and losses on strategic investments in equity securities, (vi) net accretion of discounts on investments, and (vii) deferred income tax benefit or expense, and changes in operating assets and liabilities during each period.

Current wording

Net cash provided by operating activities mainly consists of our net loss adjusted for certain non-cash items, primarily consisting of (i) stock-based compensation, net of amounts capitalized, (ii) depreciation and amortization of property and equipment and amortization of acquired intangible assets, (iii) amortization of deferred commissions, (iv) amortization of operating lease right-of-use assets, (v) net realized and unrealized gains and losses on strategic investments in equity securities, (vi) net amortization (accretion) of premiums (discounts) on investments, and (vii) deferred income tax benefit or expense, and changes in operating assets and liabilities during each period.

Previous wording

For the six months ended July 31, 2024, net cash provided by operating activities was $425.3 million, consisting of our net loss of $635.6 million, adjusted for non-cash charges of $850.8 million, and net cash inflows of $210.1 million provided by changes in our operating assets and liabilities. The main drivers of the changes in operating assets and liabilities during the six months ended July 31, 2024 were (i) a $492.2 million decrease in accounts receivable due to timing of billings and collections as we have historically received a higher volume of customer orders in the fourth fiscal quarter of each year, (ii) a $91.4 million increase in accounts payable due to timing of invoices and payments, and (iii) a $33.3 million decrease in prepaid expenses and other assets primarily driven by a decrease in prepaid third-party cloud infrastructure expenses and prepaid software and subscriptions services expenses, partially offset by (a) a $349.5 million decrease in deferred revenue due to revenue recognition outpacing invoicing for prepaid capacity agreements, (b) a $36.8 million increase in deferred commissions earned upon the origination of customer contracts, and (c) a $25.3 million decrease in operating lease liabilities due to payments related to our operating lease obligations.

Current wording

For the nine months ended October 31, 2024, net cash provided by operating activities was $527.0 million, consisting of our net loss of $963.5 million, adjusted for non-cash charges of $1.3 billion, and net cash inflows of $188.8 million provided by changes in our operating assets and liabilities, net of the effects of business combinations. The main drivers of the changes in operating assets and liabilities during the nine months ended October 31, 2024 were (i) a $328.7 million decrease in accounts receivable due to timing of billings and collections as we have historically received a higher volume of customer orders in the fourth fiscal quarter of each year, (ii) a $102.7 million increase in accounts payable due to timing of invoices and payments, (iii) a $42.5 million decrease in prepaid expenses and other assets primarily driven by a decrease in prepaid third-party cloud infrastructure expenses and prepaid software and subscriptions services expenses, and (iv) a $38.7 million increase in accrued expenses and other liabilities primarily due to the timing of accruals and payments, partially offset by (a) a $226.7 million decrease in deferred revenue due to revenue recognition outpacing invoicing for prepaid capacity agreements, (b) a $62.8 million increase in deferred commissions earned upon the origination of customer contracts, and (c) a $34.3 million decrease in operating lease liabilities due to payments related to our operating lease obligations.

Previous wording

For the six months ended July 31, 2023, net cash provided by operating activities was $382.6 million, consisting of our net loss of $453.4 million, adjusted for non-cash charges of $641.2 million, and net cash inflows of $194.8 million provided by changes in our operating assets and liabilities, net of the effects of business combinations.

Current wording

For the nine months ended October 31, 2023, net cash provided by operating activities was $503.5 million, consisting of our net loss of $668.1 million, adjusted for non-cash charges of $992.1 million, and net cash inflows of $179.5 million provided by changes in our operating assets and liabilities, net of the effects of business combinations.

Previous wording

Net cash provided by operating activities increased $42.7 million for the six months ended July 31, 2024, compared to the six months ended July 31, 2023, primarily due to an increase of $406.4 million in cash collected from customers resulting from increased sales. This was partially offset by increased expenditures due to an increase in headcount and growth in our business. We expect to continue to generate positive net cash flows from operating activities for the fiscal year ending January 31, 2025.

Current wording

Net cash provided by operating activities increased $23.5 million for the nine months ended October 31, 2024, compared to the nine months ended October 31, 2023, primarily due to an increase of $607.5 million in cash collected from customers resulting from increased sales. This was partially offset by increased expenditures due to an increase in headcount and growth in our business. We expect to continue to generate positive net cash flows from operating activities for the fiscal 2025.

Previous wording

Net cash provided by investing activities for the six months ended July 31, 2024 was $232.9 million, primarily driven by proceeds of $277.5 million from net sales, maturities and redemptions of investments, partially offset by $21.6 million in purchases of property and equipment to support our office facilities, and, to a lesser extent, capitalized internal-use software development costs, and cash paid for a business combination.

Current wording

Net cash used in investing activities for the nine months ended October 31, 2024 was $34.2 million, primarily driven by an aggregate of $75.6 million in cash paid for (i) purchases of property and equipment to support our office facilities, (ii) capitalized internal-use software development costs, and (iii) business combinations, net of cash acquired, partially offset by proceeds of $42.1 million from net sales, maturities and redemptions of investments.

Previous wording

Net cash used in investing activities for the six months ended July 31, 2023 was $261.2 million, primarily driven by an aggregate of $264.6 million in cash paid for business combinations, net of cash, cash equivalents, and restricted cash acquired, and, to a lesser extent, purchases of intangible assets, capitalized internal-use software development costs, and purchases of property and equipment to support our office facilities, partially offset by proceeds of $61.4 million from net sales, maturities and redemptions of investments.

Current wording

Net cash provided by investing activities for the nine months ended October 31, 2023 was $309.7 million, primarily driven by proceeds of $667.1 million from net sales, maturities and redemptions of investments, partially offset by an aggregate of $279.5 million in cash paid for business combinations, net of cash, cash equivalents, and restricted cash acquired, and to a lesser extent, purchases of intangible assets, capitalized internal-use software development costs, and purchases of property and equipment to support our office facilities.