Snowflake Inc. Q3 FY2023 Earnings Call

Good afternoon, and thank you for attending today's Snowflake Q3 Fiscal 2023 Earnings Conference Call. My name is Austin, and I will be your moderator for today. I would now like to pass the conference over to our host, Jimmy Sexton, Head of Investor Relations with Snowflake. Jimmy, please go ahead.

Good afternoon, and thank you for joining us on Snowflake's Q3 fiscal 2023 earnings call. With me and both in Montana are Frank Slootman, our Chairman and Chief Executive Officer; Mike Scarpelli, our Chief Financial Officer; and Christian Kleinerman, our Senior Vice President of Products, who will join us for the Q&A session. During today's call, we will review our financial results for the third quarter fiscal 2023, discuss our guidance for the fourth quarter and full year fiscal 2023 and discuss our fiscal 2024 outlook. During today's call, we will make forward-looking statements including statements related to the expected performance of our business, future financial results, strategy, products and features, long-term growth and overall future prospects. These statements are subject to risks and uncertainties, which could cause them to differ materially from actual results. Information concerning those risks is available in our earnings press release distributed after market close today and in our SEC filings, including our most recently filed Form 10-Q for the fiscal quarter ended July 31, 2022, and the Form 10-Q for the quarter ended October 31, 2022, that we will file with the SEC. We caution you to not place undue reliance on forward-looking statements and undertake no duty or obligation to update any forward-looking statements as a result of new information, future events or changes in our expectations. We'd also like to point out on today's call, we will report both GAAP and non-GAAP results. We use these non-GAAP financial measures internally for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. Non-GAAP financial measures are presented in addition to and not as a substitute for financial measures calculated in accordance with GAAP. To see the reconciliations of these non-GAAP financial measures, please refer to our earnings press release distributed earlier today in our investor presentation, which are posted at investors.snowflake.com. A replay of today's call will also be posted on the website. With that, I would now like to turn the call over to Frank.

Thanks, Jimmy, and good afternoon, everybody. Snowflake continues to drive strong growth at scale, coupled with strengthened unit economics, operating profit and free cash flow. While we acknowledge the weakening global macro context, we remain resilient in terms of our results. We believe this resilience reflects the importance of data strategy in modern enterprises and institutions. Data is becoming deeply ingrained in how global enterprises think, act, decide, and strategize. Relying on anecdotal observations will increasingly take a back seat to data-driven operations. The company is reporting $523 million in product revenue, growing 67% year-on-year. Our remaining performance obligations, or RPO, grew 66% year-on-year to $3 billion. On a non-GAAP basis, product gross margin came in at 75%, operating margin at 8%, and adjusted free cash flow margin at 12%. Snowflake's Data Cloud strongly resonates in large enterprises and institutions. The idea of getting your data siloed again in the public cloud stack holds limited appeal. Data Cloud maximizes the power and promise of data science and artificial intelligence, a high priority in the modern enterprise. In the quarter, we added 28 Global 2000 customers. Product revenue from the Global 2000 outpaced the company as a whole, growing 14% quarter-over-quarter. Global 2000 customers now represent over 40% of revenue. Our mission is the Data Cloud, a single data universe across geographies, data sources, compute clouds and cloud regions, a single point of inquiry, analytics and intelligence, maximum enablement of data sciences, analytics, and intelligence. Today, Snowflake operates across 37 regional deployments. Year-over-year, we've expanded our footprint by more than 30%. Customers are embracing this vision. 22% of customers have at least one stable edge, up from 17% a year ago. 66% of customers with over $1 million in trailing 12-month product revenue have at least one stable edge. Snowflake's marketplace listings grew 11% quarter-over-quarter, now with more than 1,700 data listings. Our strategy is a global data sharing network, coupled with unlimited workload enablement. Work needs to find its way to the data instead of the historical habit of moving data to the work. Much of the work in the announcements you've seen from Snowflake in recent years reflects our progress in and across the workload spectrum from data engineering to data warehousing to data science to data applications and transaction processing. We recently announced the general availability of Python for Snowpark. This is foundational for many workloads and user types. Global 2000 customers, Charter Communications, EDF Energy and Northern Trust have adopted Snowflake for Python. Earlier next year, we will offer native Streamlit integration in private preview. With Streamlit, we're helping developers and data engineers build applications in Snowflake. Since acquisition, the Streamlit community has grown more than 60% and now has approximately 70,000 developers. We're enabling data science workloads with Snowpark optimized warehouses, now in public preview. Optimized warehouses represent a step function improvement for compute-intensive workloads and allow customers to bring ML training into Snowflake. In Q3, we hosted our Data Cloud World Tour, which brought our product announcements to a global audience. We traveled to 18 cities across 12 countries and reached over 12,000 attendees. In November, we hosted our Annual Developer Conference BUILD, a virtual kickoff with over 4,000 attendees and local breakouts scheduled in 16 cities across 10 countries. Aside from world-class scale performance and economics, Snowflake differentiates with a relentless focus on enterprise-grade high trust implementation, with security and compliance capabilities enabling the largest enterprises and institutions worldwide to deploy Snowflake for the most critical use cases and applications. Privacy and compliance have become far greater challenges in recent years and created new challenges in data operations. For example, our data clean room operations, which originated in the role of advertising, are now spreading to other vertical industries. Snowflake continues to deepen and strengthen its industry orientation. We expect to understand our customer challenges, solve their problems and speak their language. Leading industries for Snowflake are financial services, advertising, media and entertainment, followed by retail and consumer packaged goods, technology, and healthcare and life sciences. In Q3, product revenue from the financial services industry grew 13% quarter-over-quarter. Financial services client, The Depository Trust & Clearing Corporation, or DTCC, recently announced their use of Snowflake Marketplace. Providing clearing and settlement services, DTCC has access to a vast amount of training data, allowing clients to engage with its data through Snowflake to better understand market liquidity and investor sentiment. During the quarter, at advertising week, we announced an investment in OpenAP, the advanced advertising company. This will accelerate the development of the OpenAP Data Hub, which is a new cross-publisher and cross-platform clean room solution for the television industry powered by Snowflake. The addition of Snowflake validates the commitment FOX, NBCUniversal, Paramount, and Warner Bros Discovery have made to transforming the TV ad industry. We are aware of the weakening macro economy. Customer behavior informs our outlook and investment approach. In Q3, we demonstrated our ability to execute through different economic environments. Our focus remains on revenue growth balanced with free cash flow generation. We are well positioned to drive efficient and durable growth, which Mike will discuss further. The opportunity ahead is massive and will take years to unfold. With that, I will turn the call over to Mike.

Thank you, Frank. Q3 product revenues were $523 million, representing 67% year-over-year growth, and our remaining performance obligations grew 66% year-over-year totaling $3 billion. Of the $3 billion in RPO, we expect approximately 55% to be recognized as revenue in the next 12 months. This represents a 68% increase compared to our estimate as of the same quarter last year. Our net revenue retention rate of 165% includes 14 new customers with $1 million in trailing 12-month product revenue and reflects durable growth among our largest customers. With a focus on the acquisition and growth of the largest enterprises in the world, we added 28 Global 2000 customers in the quarter, our largest quarterly addition in the last five periods. We have confidence in our growth opportunity in these accounts because G2K customers only represent $1.3 million of trailing 12-month product revenue on average. This compares to an average of $3.7 million among customers over $1 million in product revenue. We will continue to grow these accounts through value selling and workload enablement. We are seeing this in our largest accounts today. Quarter-over-quarter, six of our top 10 customers grew faster than the company overall. We are monitoring our key business metrics, which we believe are leading indicators of the macro economy impacting our business. In the quarter, we saw varying degrees of strength and weakness worldwide, making it challenging to identify a consistent trend. Our largest segments, North America and EMEA, outperformed SMB and APJ. The strength in North America includes the headwind from the consumer Internet companies we mentioned earlier this year. This shows the resiliency of Snowflake as enterprises continue to prioritize data operations. Taking a closer look at specific industries, financial services, our largest vertical, grew faster than the company overall while advertising and media entertainment grew slower, and technology as a sector underperformed in the quarter. Each geography and vertical had unique circumstances in the quarter, which will always happen with the consumption model. With that being said, Q3 results reflect strong consumption overall. While we did experience a foreign exchange revenue headwind in the quarter, less than 5% of our revenue is invoiced in currencies other than the U.S. dollar. At the moment, we do not evaluate our business on a constant currency basis given the immateriality. Now turning to margins on a non-GAAP basis. Our product gross margin was 75%. Scale in our public cloud data centers and continued growth in large customer accounts contributed to year-over-year gross margin improvement. Operating margin was 8%, benefiting from revenue outperformance and favorability on headcount and marketing spend. Our adjusted free cash flow margin was 12%, positively impacted by strong collections. We ended the quarter in a strong cash position with $4.9 billion in cash, cash equivalents, and short-term and long-term investments. Now let's turn to our guidance. We remain committed to driving towards greater profitability. We are focused on revenue growth through expanding operating and free cash flow margins. Over the past six weeks, we have seen weaker consumption in the APJ and SMB segment. However, recent consumption patterns give us confidence that our largest and most strategic customers will continue to grow. With the holidays approaching and uncertainty about how customers will operate, we believe taking a more conservative approach is responsible as we resource plan for Q4 and fiscal 2024. Even with slower-than-expected growth, we are committed to generating meaningful free cash flow. For the fourth quarter, we expect product revenue between $535 million and $540 million, representing year-over-year growth between 49% and 50%. Turning to margins, we expect on a non-GAAP basis, 1% operating margin, and we expect 360 million diluted weighted average shares outstanding. For the full fiscal year 2023, we expect product revenues between $1.919 billion and $1.924 billion, representing year-over-year growth between 68% and 69%. Turning to profitability, for the full fiscal year 2023, we expect, on a non-GAAP basis, approximately 75% product gross margin, a 3% operating margin, and a 21% adjusted free cash flow margin, and we expect 359 million diluted weighted average shares outstanding. Year-to-date, we've added over 1,500 net new employees. We view the current hiring market as favorable for Snowflake and will continue to focus hiring in product, engineering, and sales. While we are currently in our planning cycle, we would like to discuss next year's growth outlook based on the consumption we are seeing today. For the full fiscal year 2024, we expect product revenue growth of approximately 47% and a non-GAAP adjusted free cash flow margin of 23% and continued expansion of operating margin. This outlook includes a slowdown in hiring, which we evaluate on a monthly basis, but assumes adding over 1,000 net new employees. Our long-term opportunity remains strong, and we look forward to executing. With that, operator, you can now open up the line for questions.

Our first question is with Raimo Lenschow from Barclays.

My question was, as you think about next year, how should we think about existing customers versus new customers? You obviously had a record new customer adds. What are you seeing in terms of customers' willingness to join in? It seems to be different for you. So could you speak a little bit about what you're expecting from new customers versus existing customers in the guidance?

Yes. From a revenue perspective, most of it comes from our existing customers because it takes time for them to input their data into Snowflake and increase production. However, we remain committed to acquiring new customers. Our focus is on the quality rather than the quantity of new customers. We primarily target large enterprises, and the Global 2000 is one of the key metrics we consider. Additionally, we also engage with significant public sector clients and many major private companies globally. We will continue this approach, and as evidenced by the Global 2000, these clients are still open to engaging new vendors.

Our next question is with Kirk Materne from Evercore.

Mike, you mentioned that there weren't any patterns or stuff to decipher just given you guys are across a number of different verticals and geographies. But I was curious in the verticals that are doing well, like financial services and the like, are you starting to see that the network effects that come along with Snowflake are really helping those verticals do well despite the macro backdrop? It's just interesting to note that your stable edges are up. And I expect those verticals where you've really built out industry-specific functionalities playing out and perhaps those customers are able to grow faster just because they're more locked in across the entire industry. Can you just talk about that?

Yes. Well, I'll start and then I'll let Frank. Clearly, the network effect is important, and we really do see that in financial services, which has the biggest concentration of stable edges. You can see that in the outperformance of financial services. But definitely, we are seeing the network effect, and it's really the data sharing that is one of the key things driving that.

Yes. Each industry has its own unique dynamics that influence data networking relationships between different entities. For instance, in healthcare, it's about the connections between payers and providers, while in media and entertainment, there's a significant amount of data sharing occurring, especially among advertisers and retailers in consumer packaged goods. Each sector has its own distinct characteristics. As Mike mentioned, the financial sector is particularly influenced by the fact that financial services institutions transmit large volumes of data every night to various destinations, especially in areas like asset management. We see that data networking operates differently across all industry sectors and subsectors, but there is a substantial data gravity that develops, which greatly benefits us. This significantly reduces the barriers to gaining access to new accounts, and this effect is especially noticeable in sectors like financial services.

Our next question is with Keith Weiss from Morgan Stanley.

This is Sanjit Singh for Keith. I wanted to go back, Mike, to some of the guidance framework that you laid out for us, particularly regarding fiscal year '24, I think you talked about 47% growth. Is there any way you can sort of draw the bridge for us in terms of next quarter you're guiding to think about 49% at the high end, and then for the full year next year, approximately 47%. What sort of gives you the confidence that your Q4 exit growth rate is going to be durable going into next year?

Sure. Well, I'll say Q4 is a quarter that has a lot of holidays in it, and we do think we've lived through COVID. People are traveling more. There is a big human component as well too. We have been forecasting that Q4 would see the impact of that, but we also have a number of significant customers that we have signed up that we see ramping up next year on Snowflake as well as some of the things we're doing with Snowpark with Python. We're starting to see traction in that too, but we think that's going to be more of a 2024 impact.

Makes total sense. And then I was wondering if you could give us a little bit of sense of the consumption, the cohorts, and how they're sort of behaving. So you've talked quite positively about the top 10 customers, and obviously, new customers don't contribute even though they're coming in at a very fast clip. But if we strip out just the top 10 customers and the new customers, what's the underlying expansion trend materializing over the quarter and as we've gotten past the October quarter into November and December? What are some of the underlying trends for the core of the business outside of the top 10?

Yes. Let me clarify something on the top 10. When I said six are growing faster than the pace of the company, we actually have three that sequentially were down in the quarter, which was expected. These are some of those companies we talked about early in the year, and they're all in the technology sector, which wouldn't surprise you if you knew their names. What I will say is we continue to see strength, particularly in financial services, and the advertising and media space. Where we do see weakness is in the APJ and a lot of that has to do with the fact the FX is really impacting them. We do see weakness in the bookings but in consumption in the more of the SMB customers. We do see that we call them our corporate accounts, but these are the 500 or fewer employees, and I definitely saw some consumption weakness. But I want to stress, I didn't see the need for bookings that they have that added RPO; but definitely out of consumption.

Our next question is with Alex Zukin from Wolfe Research.

It seems there is a lot of complexity across various industries, customer sizes, and regions. Regarding the guidance for next year, what are you projecting? You mentioned the guidance for the next quarter, and it seems wise to consider a more cautious approach given the ongoing macro trends. Are you expecting an improvement in the second half of the year compared to the first half, or do you anticipate further decline? Please elaborate on the factors influencing your guidance for the upcoming year.

I'm factoring in that we're going to continue to stay consistent with where we are right now through the balance of next year. If things turn around, that's upside for us. This is how we're doing planning right now. We're not expecting things to change. I really don't know, and maybe you have a better sense, but all I can do is forecast based upon what we see today.

Got it. And for some of the customers or cohorts that you're seeing where they're sequentially declining, are you starting to see kind of we're working with them around a new baseline? When do some of these optimization patterns kind of rebase and start growing in some of these new areas like Streamlit and others that you're out there in the market with?

What I would say is these are three customers that are unique to them with the challenges that they've been facing in their businesses that have been pretty public. I think too one of the reasons why as I said, technology has underperformed. We are seeing a lot of technology companies you're hearing in the news that are either freezing hiring or cutting headcount, and they're definitely looking to optimize on cost. These three customers, in particular, I think we're at their baseline right now. As long as their businesses stabilize and grow, then we'll see some growth out of them, but I'm not factoring any growth in them this quarter.

Our next question is with Brad Zelnick from Deutsche Bank.

Congratulations on delivering very healthy product revenue in this environment. My question relates to Q4, where obviously the product revenue guidance was below where consensus was. I’m curious how much of this Mike was a reflection of a moderation in consumption in the month of November or over the last six weeks, as you said, in APJ and across the SMB as opposed to embedding more conservatism amid the existing macro uncertainty. Would you say it's tilted more towards one versus the other?

Well, the way we do our forecast is based upon historical performance, and we definitely did see a slowdown in the month of October. It wasn't that dramatic, but we typically would see week-over-week growth and saw a number of weeks where it was pretty flat. I will say November is starting to tick back up again, and that's all factored into the guidance, given the macro backdrop we have right now.

Our next question is with Simon Leopold from Raymond James.

This is Victor Chiu in for Simon. Previously, your commentary seemed to imply that slowing consumption in a weaker macro environment would be more concentrated around customer groups or verticals. Is that still the case? It seems that that's still the case. I just want to confirm. And what, I guess, has changed versus your expectations in the past? What kind of trends are you observing that are kind of falling out of what you were expecting previously?

To be clear, it hasn't changed that much from what we've been expecting all year. Financial services are doing extremely well and expect that to continue. We landed a very nice deal in the financial services sector that will ramp in the second half of next year and will be a meaningful customer. The other area doing very well is the whole advertising media space, and much of that is driven by our clean room technology and what we're doing there as well. The only thing that really changed this quarter is a very small piece of our overall revenue, which is the SMB segment. We're seeing a slowdown in consumption by those customers. It's not going away, but it's just not growing like it was at the pace of growth. Same with APJ. But the U.S. verticals and large enterprises are doing extremely well.

Okay. That's helpful. And I guess can you just give us an update around some of your new initiatives like Snowpark and unstructured data and just kind of the traction and progress you're having with those initiatives?

Snowpark saw GA on November 7. As a percentage of customers that are evaluating the technology, it's a very healthy rate. The consumption has not yet materialized because they're planning pre-migration doing POCs, etc., but it's quite promising. As Frank mentioned, Streamlit will be in private preview at the beginning of the year, which we also think will have a good number of interesting use cases for our customers.

Our next question is with Kamil Mielczarek from William Blair.

You've done a great job growing the salesforce this year; the pace of hiring seems to have accelerated in the quarter. Can you talk about where you're focusing incremental investments? Should we expect these new hires to begin to contribute in fiscal '24 to revenue? Or will the impact come in 18 to 24 months given the time it takes for new customers?

Well, we're very much focused this year on our hiring and our sales force to go into existing markets. We're not opening many new territories this year, and it's really to go deeper into core markets, both verticals, North America, but in particular, Germany, France, and the U.K., as well as Australia and Japan and APJ. We do believe these people will be contributing to bookings more in the second half of next year. Remember, when a booking comes in, it takes a while before you really start to see meaningful revenue from those customers. Generally, it's a six-month lag before they really ramp up.

That's helpful. And just a quick follow-up. Can you update us on Python environment? Are you seeing any changes, particularly on the product side?

It's Frank. I would say that the competitive dynamic is substantially unchanged. The balance of partnership versus competition shifts marginally from one period to the next. I think we've set publicly that our partnership with AWS has been incrementally stronger and less competitive over time, and that continues. Microsoft has been healthy, and Google GCP has been about the same. Most of our competitive reality, if you will, is really dominated by the public cloud companies, and that's been true for as long as we've been here.

Our next question is with Derrick Wood from Cowen & Company.

Great. I always like that you guys highlight the average G2K spend, I think you said it was $1.3 million. As you look at other companies that are more mature, have larger revenue scale or even as you look at your own more mature customers, what do you think the longer-term level of spend out of an average G2K customer could be down the road? And then I guess, more specific to the quarter, you did have a strong G2K add, strongest in five quarters. Are you seeing any pickup in migration activity or anything to call out in terms of strength this quarter?

Yes. I'll just say on the G2K, there's no reason why a G2K can't spend well north of $10 million a year on Snowflake, and that's a conservative number. It will take time to get there. This is really a marathon, not a sprint for our customers, and it will take time. We are starting to see very large customer relationships. We did sign a $100 million contract in the quarter, again, with an existing customer on renewal. We will have $100 million plus contracts this quarter in Q4 with customers that I know are running out of credits and want to lock in for the long term. It's just going to take time to grow these customers. Just like it took us, I think Capital One is one of our largest customers. It's taken them 5.3 years to get to where we are now. Most of our top 10 customers have taken 4.5 to 5 years to get into that top 10. We think that trend will continue; it will take customers that long to ramp to those sizes. And sorry, Derrick, what was the second part of your question?

Just the strength in the G2K adds in the quarter and if there was anything to call out, if you're seeing perhaps a pickup in legacy migration activity.

No. What I want to remind you, though, too, is selling into a Global 2000 is not a one or two-quarter event. These are one to two-year sales cycles. It wasn't surprising to us that we landed these. We’ve been working on these for quite some time, just like we have a very healthy pipeline for all of next year. What quarter they'll land in is hard to say, but even if I land them, it takes me six to nine months to ramp them. We're very focused on those, and we know who they all are, and we have reps assigned to them.

Our next question is with Sterling Auty from SVB.

I'm just wondering with the macro uncertainty, if you're seeing any customer behavior changes in terms of the type of data that they're ingesting or even if they modify and reduce some of the data ingestion that maybe they were doing previously?

This is Frank. We're not really seeing that. We have traveled extensively during the quarter, both domestically and internationally. One key point I want to highlight is that we've moved beyond the early adopters we've acquired over the last five to seven years. We're now engaging with those who didn't sign up initially. Their main sentiment is a fear of missing out. They see us as a vital resource to help them catch up. Often, the challenges they face stem from their ability to leverage the technology due to a lack of skills and expertise. Therefore, our mix of tools will evolve to assist customers in addressing that gap because they want to accelerate their progress and move faster. Their primary concern is that this is essential.

Our next question is with Brad Reback from Stifel.

Mike, as we think about the macro backdrop, what impact should we expect from that to have on an RPO in Q4? I don't see it having a big impact on Q4 based upon the pipeline of deals and knowing the number of customers I know are running out of credits. From a current RPO, the big question is whether customers in this environment will do multiyear deals or just choose to renew for one year, which they have the option to do as well. But I know Q4 will always be our largest addition to RPO. Based upon all the sales calls that we have, I feel pretty good about that right now, where we're sitting. Obviously, there's still two months left in the quarter.

Our next question is with Will Power from Baird.

Mike, it was great to see the higher free cash flow guidance, I guess, this year initial expectations for next year. The longer-term target looks pretty conservative in light of that, but it would be great just to get kind of perspective on the key upside drivers relative to what you were previously anticipating.

Part of it is just what we guided to. This year is going to come in where we thought it would come in for the second half of the year. A lot of it is driven by customer consumption with some of our largest customers and knowing the RPO they have and the timing of when those things are going to get billed. Coupled with the fact that we are slowing our hiring down next year, we're seeing very positive gross margin improvements. I do think there's more opportunity next year for gross margin improvement, but wait until we guide just based on some things we're in discussions with the cloud providers. I feel pretty good about those numbers sitting here right now on our preliminary planning for next year.

Our next question is with Mike Cikos from Needham & Company.

I had a question about the optimization trends that we're seeing from customers, and it really relates to the cohorts here. Given the current macro backdrop, is it fair to think that newer customers who maybe were onboarded in the most recent six or nine months are on that growth trajectory? Are they at a slower rate versus previous cohorts? Can you elaborate at all regarding what the more recent cohorts are demonstrating from a growth perspective?

I really haven't looked at that, but I'm not sure. Customers today, we spend a lot more time with them on making sure they use Snowflake efficiently. There's a lot more people that have experience with Snowflake. I think the customers that are growing on Snowflake today that are starting out are much, much more efficient in how they use it. But I'll turn it over to Christian, who actually talks to a lot of our customers.

Yes. We're very focused on helping our customers not go through a cycle of grow, optimize, grow, optimize, but just have a smoother curve all along. It's expectation setting, explaining with training and other material, but also product enhancement, and we're seeing that type of behavior, both with existing and new customers.

Our next question is with Steve Koenig from SMBC.

Great. Your ability to grow revenue 67% year-on-year in this environment speaks to very strong long-term adoption trends. But I'm wondering more on a short-term basis, if we look at quarter-on-quarter product revenue additions, I think it's kind of gone flattish in Q3 year-on-year and may go negative next quarter. So how do you think about planning your sales additions and maintaining sales productivity? I'm curious about your thought process there.

In a consumption model, quarter-over-quarter additions are not as meaningful because so much of the consumption is tied to what customers are doing at specific times in their business. Q4, as I said, is one that has seasonally higher number of holidays with people taking breaks. Remember, about 70% of our revenue is tied to human interaction with our system; 30% is really driven by scheduled jobs. That has an impact. But also, I want to remind you that a lot of the stuff we've been doing around hardware improvements and optimizations is really hitting us in Q4.

Our final question shall be from Brent Bracelin with Piper Sandler.

Thanks for squeezing me in here. I totally get how consumption could slow here just given some of the challenges in these verticals and the obvious recessionary headwinds. I'd be curious... more curious to hear the offset to consumption, which is an expanding number of use cases. Do you have any sights or visibility into how, in a recessionary environment, customers' appetite to expand into new departments or data science? Some of our job postings data suggests that there are people aggressively hiring for Snowflake and data science scenarios. I'd love to get the view here on how quickly over the next year or two, you could see use cases drive an offset to consumption?

Yes. After visiting lots of customers during our Data Cloud world tour, we see pretty high interest in a number of new use cases, Snowpark for data engineering, as well as data science. Cybersecurity is a new workload we see significant interest from our customers. While it may be a little later when that materializes on our end, the ability to build applications in Snowflake is definitely driving a lot of interest. The willingness to expand the use cases seems unaffected by the broader context.

That concludes today's call. Thank you for your participation. You may now disconnect your lines.