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What changed in Snowflake Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Snowflake Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+451 added−390 removedSource: 10-K (2023-03-29) vs 10-K (2022-03-30)

Top changes in Snowflake Inc.'s 2023 10-K

451 paragraphs added · 390 removed · 325 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

78 edited+17 added−6 removed42 unchanged
Biggest changeWe believe we compete favorably based on the following competitive factors: • ability to provide and innovate around an architecture that is purpose-built for the cloud; • ability to efficiently and seamlessly ingest diverse data types in one location at scale; • ability to drive business value and ROI; • ability to support multiple use cases in one platform, including various industry-specific use cases; • ability to provide seamless and secure access of data to many users simultaneously; • ability to seamlessly and securely share and move data across public clouds or regions; • ability to provide a consistent user experience across multiple public cloud providers; • ability to provide pricing transparency and optimized price-performance benefits; • ability to elastically scale up and scale down in high-intensity use cases; • ease of deployment, implementation, and use; • performance, scalability, and reliability; • security and governance; and • quality of service and customer satisfaction.
Biggest changeOur competition includes the following: • large, well-established, public cloud providers that generally compete in all of our markets, including Amazon Web Services (AWS), Microsoft Azure (Azure), and Google Cloud Platform (GCP); • less-established public and private cloud companies with products that compete in some of our markets; • other established vendors of legacy database solutions or big data offerings; and • new or emerging entrants seeking to develop competing technologies. 15 Ta ble of Contents We believe we compete favorably based on the following competitive factors: • ability to provide and innovate around an architecture that is purpose-built for the cloud; • ability to efficiently and seamlessly ingest diverse data types in one location at scale; • ability to drive business value and ROI; • ability to support multiple use cases in one platform, including various industry-specific use cases; • ability to provide seamless and secure access of data to many users simultaneously; • ability to seamlessly and securely share and move data across public clouds or regions; • ability to provide a consistent user experience across multiple public cloud providers; • ability to provide pricing transparency and optimized price-performance benefits; • ability to elastically scale up and scale down in high-intensity use cases; • ease of deployment, implementation, and use; • choice of programming language; • performance, scalability, and reliability; • security and governance; and • quality of service and customer satisfaction.
Delivered as a service, our platform requires near-zero maintenance, enabling customers to focus on deriving value from their data rather than managing infrastructure. Our cloud-native architecture consists of three independently scalable but logically integrated layers across storage, compute, and cloud services.
Delivered as a service, our platform requires near-zero maintenance, enabling customers to focus on deriving value from their data rather than managing infrastructure. Our cloud-native architecture consists of three independently scalable but logically integrated layers across compute, storage, and cloud services.
The storage layer ingests massive amounts and varieties of structured, semi-structured, and unstructured data to create a unified data record. The compute layer provides dedicated resources to enable users to simultaneously access common data sets for many use cases with minimal latency. The cloud services layer intelligently optimizes each use case’s performance requirements with no administration.
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.
A majority of data science efforts involve transforming massive amounts of raw data at scale to enable advanced analytics, such as advanced statistical analysis and machine learning techniques. For Data Science, our platform enables organizations to: ◦ Accelerate transformations across massive data sets.
A majority of data science efforts involve transforming massive amounts of raw data at scale to enable advanced analytics, such as advanced statistical analysis and machine learning techniques. For Data Science and Machine Learning, our platform enables organizations to: ◦ Accelerate transformations across massive data sets.
Store and transform data at scale with the massive scalability and performance of the public cloud. ◦ Integrate with leading data science tools and languages. Manage resources for data transformation and use leading data science tools, with the support of Scala, R, Java, and Python, to build machine learning algorithms in a single cloud platform. • Data Application Development.
Store and transform data at scale with the massive scalability and performance of the public cloud. ◦ Integrate with leading data science tools and languages. Manage resources for data transformation and use leading data science tools, with the support of Scala, R, Java, and Python, to build machine learning algorithms in a single cloud platform. • Application Development.
Our technology partners provide strategic value to our customers by providing software tools, such as data loading, business intelligence, machine learning, data governance, and security, as well as data sets on our Data Marketplace, to augment the capabilities of our platform.
Our technology partners provide strategic value to our customers by providing software tools, such as data loading, business intelligence, machine learning, data governance, and security, as well as data sets on our Marketplace, to augment the capabilities of our platform.
These deployments are generally interconnected to provide a global and consistent user experience. • Seamless and secure data sharing. Our platform enables governed and secure sharing of live data within an organization and externally across customers and partners, generally without copying or moving the underlying data.
These deployments are generally interconnected to provide a global and consistent user experience. • Seamless and secure collaboration. Our platform enables governed and secure sharing of live data within an organization and externally across customers and partners, generally without copying or moving the underlying data.
Our platform enables data engineers, IT departments, data science teams, and business analytics teams to efficiently build and manage data pipelines using SQL or other programming languages to transform raw data into actionable data for business insights. For Data Engineering, our platform enables organizations to: ◦ Drive faster decision making.
Our platform enables data engineers, IT departments, data science teams, and business analytics teams to efficiently build and manage data pipelines using SQL, Python, or other programming languages to transform raw data into actionable data for business insights. For Data Engineering, our platform enables organizations to: ◦ Drive faster decision making.
To realize this vision, we deliver the Data Cloud, a network where Snowflake customers, partners, data providers, and data consumers can break down data silos and derive value from rapidly growing data sets in secure, governed, and compliant ways.
To realize this vision, we deliver the Data Cloud, a network where Snowflake customers, partners, developers, data providers, and data consumers can break down data silos and derive value from rapidly growing data sets in secure, governed, and compliant ways.
We deliver automated platform updates regularly with minimal planned downtime, eliminating expensive and time-consuming version and patch management. This gives customers the ability to consume more data at a lower total cost of ownership compared with other solutions. • Multi-cloud and multi-region. Our platform is available on three major public clouds across 31 regional deployments around the world.
We deliver automated platform updates regularly with minimal planned downtime, eliminating expensive and time-consuming version and patch management. This gives customers the ability to consume more data at a lower total cost of ownership compared with other solutions. • Multi-cloud and multi-region. Our platform is available on three major public clouds across 38 regional deployments around the world.
Our platform is the innovative technology that powers the Data Cloud, enabling customers to consolidate data into a single source of truth to drive meaningful business insights, build data-driven applications, and share data. We provide our platform through a customer-centric, consumption-based business model, only charging customers for the resources they use.
Our platform is the innovative technology that powers the Data Cloud, enabling customers to consolidate data into a single source of truth to drive meaningful business insights, build data applications, and share data and data products. We provide our platform through a customer-centric, consumption-based business model, only charging customers for the resources they use.
Our platform can be up and running in seconds and is priced based on a consumption-based business model, reducing hidden costs and ensuring customers pay only for what they use. Snowpark, our developer framework, allows developers to interact with Snowflake through various popular programming languages.
Our platform can be up and running in seconds and is priced based on a consumption-based business model, reducing hidden costs and ensuring customers pay only for what they use. Snowpark, our developer framework, allows developers to interact with Snowflake through various popular programming languages, including Python.
Compute clusters can also be configured as a multi-cluster warehouse in which our platform can automatically add and remove additional instances of a given cluster to address variations in query demands. This gives us the ability to offer extremely high levels of concurrency with a simple configuration specification. ◦ Serverless services.
Compute clusters can also be configured as a multi-cluster warehouse in which our platform can automatically add and remove additional instances of a given cluster to address variations in query demands. This gives us the ability to offer extremely high levels of concurrency with a simple configuration specification.
We have invested substantial time and resources in building our team, and we measure employee performance against our company values. We are dependent on our management, highly-skilled software engineers, and sales personnel, and it is crucial that we continue to attract and retain valuable employees.
Total Rewards We have invested substantial time and resources in building our team, and we measure employee performance against our company values. We are dependent on our management, highly-skilled software engineers, and sales personnel, and it is crucial that we continue to attract and retain valuable employees.
Our culture is driven by our core company values: • Put Customers First : We only succeed when our customers succeed, so we focus on what matters most to them. • Integrity Always : We are open, honest, and respectful. • Think Big : We set big goals that will make a positive impact and a lasting difference. • Be Excellent : We hold ourselves to the highest standards to achieve quality and excellence in everything we do. • Make Each Other the Best : We bring ideas and people together through respect and collaboration. • Get it Done : We follow through on our commitments and deliver results. • Own It : We hold ourselves accountable at all times. • Embrace Each Other’s Differences : We are mindful that everyone has different experiences, and we use our differences to strengthen who we are.
Our culture is driven by our core company values: 16 Ta ble of Contents • Put Customers First : We only succeed when our customers succeed, so we focus on what matters most to them. • Integrity Always : We are open, honest, and respectful. • Think Big : We set big goals that will make a positive impact and a lasting difference. • Be Excellent : We hold ourselves to the highest standards to achieve quality and excellence in everything we do. • Make Each Other the Best : We bring ideas and people together through respect and collaboration. • Get it Done : We follow through on our commitments and deliver results. • Own It : We hold ourselves accountable at all times. • Embrace Each Other’s Differences : We are mindful that everyone has different experiences, and we use our differences to strengthen who we are.
As a result, we have historically seen higher collections and consequently higher non-GAAP free cash flow in the first and fourth fiscal quarters of each year, and our sequential growth in remaining performance obligations has historically been highest in the fourth fiscal quarter of each year.
As a result, we have historically seen higher non-GAAP free cash flow in the first and fourth fiscal quarters of each year, and our sequential growth in remaining performance obligations has historically been highest in the fourth fiscal quarter of each year.
This, combined with our familiar SQL-based programming model and query language, provides choice for organizations and saves time and costs to learn new skills or hire specialized analysts or data scientists. • Delivered as a service with no overhead. Our platform is delivered as a service, eliminating the cost, time, and resources associated with managing underlying infrastructure.
This, combined with our familiar SQL-based programming model and query language, provides choice for organizations without governance tradeoffs and saves time and costs to learn new skills or hire specialized analysts or data scientists. • Delivered as a service with no overhead. Our platform is delivered as a service, eliminating the cost, time, and resources associated with managing underlying infrastructure.
This architecture is built on three major public clouds across 31 regional deployments around the world. These deployments are generally interconnected to deliver the Data Cloud, enabling a consistent, global user experience.
This architecture is built on three major public clouds across 38 regional deployments around the world. These deployments are generally interconnected to deliver the Data Cloud, enabling a consistent, global user experience.
We plan to continue investing in adding new customers, partners, data providers, and data consumers to connect on our platform, and to drive market awareness of the Data Cloud. • Grow and invest in our partner network.
We plan to continue investing in adding new customers, partners, data providers, data consumers, and forms of sharing to connect on our platform, and to drive market awareness of the Data Cloud. • Grow and invest in our partner network.
Our platform stores data in a proprietary columnar representation, which optimizes the performance of analytical and reporting queries. It also provides high compression ratios, resulting in economic benefits for customers. 12 Table of Contents ◦ Micro-partitioning. Our platform automatically partitions all data it stores without the need for user specification or configuration.
Our platform stores data in a proprietary columnar representation, which optimizes the performance of analytical and reporting queries. It also provides high compression ratios, resulting in economic benefits for customers. ◦ Micro-partitioning. Our platform automatically partitions all data it stores without the need for user specification or configuration.
Consolidate data into one centralized place with the scalability, security, and analytical power of data warehousing in the cloud to enable real-time analytics on all data. Customers can rely on this centralized data repository to address a variety of use cases. ◦ Enact better governance and security to enable broader data access.
Consolidate data into one centralized place with the scalability, security, and power of the cloud to enable real-time analytics on all data. Customers can rely on this centralized data repository to address a variety of use cases. ◦ Enact better governance and security to enable broader data access.
We make available on our website at www.snowflake.com, free of charge, copies of these reports and other information as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
We make available on our website at www.snowflake.com, free of charge, copies of these reports and other information as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Ta ble of Contents
We continue to make investments in sales and marketing, research and development, customer support, and public cloud deployments across the EMEA, Asia-Pacific and Japan (APJ), and Latin America regions. • Expand data content and data sharing across our global ecosystem. Our platform provides an innovative way for organizations to share, collaborate, and connect with data, including through the Data Marketplace.
We continue to make investments in sales and marketing, research and development, customer support, and public cloud deployments across the EMEA, Asia-Pacific and Japan (APJ), and Latin America regions. • Expand data content and collaboration across our global ecosystem. Our platform provides an innovative way for organizations to collaborate and connect with data and data products, including through our Marketplace.
It also supports customer-managed keys, where an additional layer of encryption is provided by keys controlled by customers, giving them the ability to control access to the data. Sales and Marketing We sell our platform primarily through our direct sales team, which consists of field sales and inside sales professionals segmented by customer industry, size, and region.
It also supports customer-managed keys, where an additional layer of encryption is provided by keys controlled by customers, giving them the ability to control access to the data. 14 Ta ble of Contents Sales and Marketing We sell our platform primarily through our direct sales team, which consists of field sales and inside sales professionals segmented by customer industry, size, and region.
We rely on a combination of patent, copyright, trademark, and trade secret laws in the United States and other jurisdictions, as well as license agreements, confidentiality procedures, non-disclosure agreements with third parties, and other contractual protections, to protect our intellectual property rights, including our proprietary technology, software, know-how, and brand.
We rely on a combination of patent, copyright, trademark, and trade secret laws in the United States and other jurisdictions, as well as license agreements, confidentiality procedures, non-disclosure agreements with third parties, and other contractual protections, to protect our intellectual property rights, including our proprietary technology, software, know-how, and brand. We use open source software in our platform.
It delivers speed without the need for tuning or the expense of manually organizing data prior to use. Organizations can adjust their consumption to precisely match their needs, always optimizing for price-performance. 8 Table of Contents • Easy to use.
It delivers speed without the need for tuning or the expense of manually organizing data prior to use. Organizations can adjust their consumption to precisely match their needs, always optimizing for price-performance. 8 Ta ble of Contents • Easy to use.
Our net loss was $679.9 million, $539.1 million, and $348.5 million for the fiscal years ended January 31, 2022, 2021, and 2020, respectively. The Rise of the Data Cloud Data exists everywhere, but is often held hostage in silos by machines, applications, networks, and clouds.
Our net loss was $797.5 million, $679.9 million, and $539.1 million for the fiscal years ended January 31, 2023, 2022, and 2021, respectively. The Rise of the Data Cloud Data exists everywhere, but is often held hostage in silos by machines, applications, networks, and clouds.
We intend to continue making significant investments in research and development and hiring top technical talent to enable new use cases, strengthen our technical lead in our platform’s architecture, and increase our differentiation through enhanced data sharing capabilities.
We intend to continue making significant investments in research and development and hiring top technical talent to enable new use cases, strengthen our technical lead in our platform’s architecture, and increase our differentiation through enhanced collaboration capabilities.
Our platform can power new applications as well as enable existing applications with capabilities for reporting and analytics. For Data Application Development, our platform enables organizations to: ◦ Develop analytical applications. Build data-driven applications with our platform serving as the analytical engine to provide massive scalability and insights. ◦ Embed Snowflake into existing applications.
Our platform can power new applications as well as enable existing applications with capabilities for reporting and analytics. For Application Development, our platform enables organizations to: ◦ Develop analytical applications. Build data applications with our platform serving as the analytical engine to provide massive scalability and insights with minimal operational overhead. ◦ Embed Snowflake into existing applications.
Our platform provides a number of capabilities for customers to confidently use our platform while preserving the security requirements of their organizations, including: ◦ Authentication. Our platform supports rich authentication capabilities, including federated authentication with a variety of identity providers, as well as support for multi-factor authentication. ◦ Access control.
We built our platform with security as a core tenet. Our platform provides a number of capabilities for customers to confidently use our platform while preserving the security requirements of their organizations, including: ◦ Authentication. Our platform supports rich authentication capabilities, including federated authentication with a variety of identity providers, as well as support for multi-factor authentication. ◦ Access control.
In our platform, data sharing is defined through access control and not through data movement. As such, the data consumer sees no latency relative to updates from the data provider, and incurs no cost to move or transform data to make it usable. • Global Infrastructure ◦ Database replication.
In our platform, data sharing is defined through access control and not through data movement. As such, the data consumer sees no latency relative to updates from the data provider, and incurs no cost to move or transform data to make it usable.
As of January 31, 2022, we had 788 employees in our research and development organization. We intend to continue to invest in our research and development capabilities to expand our platform. Our Competition The markets we serve are highly competitive and rapidly evolving. With the introduction of new technologies and innovations, we expect the competitive environment to remain intense.
As of January 31, 2023, we had 1,378 employees in our research and development organization. We intend to continue to invest in our research and development capabilities to expand our platform. Our Competition The markets we serve are highly competitive and rapidly evolving. With the introduction of new technologies and innovations, we expect the competitive environment to remain intense.
This provides customers with the confidence to share their data inside their organizations, as well as with their partners, customers, and suppliers, to unlock new insights. 9 Table of Contents Our Growth Strategies We intend to invest in our business to advance the Data Cloud through the adoption of our platform.
This provides customers with the confidence to share their data inside their organizations, as well as with their partners, customers, and suppliers, to unlock new insights and build new applications. 9 Ta ble of Contents Our Growth Strategies We intend to invest in our business to advance the Data Cloud through the adoption of our platform.
Our platform exposes compute clusters as a core concept. Our customers are able to create as few or as many compute clusters as they want and specify compute capacity at tiered levels. These clusters can be configured to run only when needed, with cluster instantiation operations typically completed in seconds.
Our customers are able to create as few or as many compute clusters as they want and specify compute capacity at tiered levels. These clusters can be configured to run only when needed, with cluster instantiation operations typically completed in seconds.
As our customers experience the benefits of our platform, they typically expand their usage significantly, as evidenced by our net revenue retention rate, which was 178% as of January 31, 2022. The number of customers that contributed more than $1 million in trailing 12-month product revenue increased from 77 to 184 as of January 31, 2021 and 2022, respectively.
As our customers experience the benefits of our platform, they typically expand their usage significantly, as evidenced by our net revenue retention rate, which was 158% as of January 31, 2023. The number of customers that contributed more than $1 million in trailing 12-month product revenue increased from 184 to 330 as of January 31, 2022 and 2023, respectively.
Our Technology Innovation is at the core of our culture. We have developed innovative technology across our platform, including managed service, storage, query capabilities, compute model, data sharing, global infrastructure, and integrated security. • Managed Service ◦ High availability. Within a region, all components of our platform are distributed over multiple data centers to ensure high availability.
We have developed innovative technology across our platform, including managed service, storage, query capabilities, compute model, data sharing, global infrastructure, and integrated security. • Managed Service ◦ High availability. Within a region, all components of our platform are distributed over multiple data centers to ensure high availability.
Build a private data hub for employees across all parts of the organization to access, collaborate, and analyze data. ◦ Acquire data sets to enrich analytics. Leverage public data sets on our Data Marketplace to enrich insights, augment analysis, and inform machine learning algorithms. ◦ Monetize new data sets.
Build a private data exchange for employees across all parts of the organization to access, share, and analyze live data. ◦ Acquire data sets to enrich analytics . Leverage public data sets on our Marketplace to enrich insights, augment analysis, and inform machine learning algorithms. ◦ Monetize new data sets and data products .
We have achieved significant growth in recent periods. For the fiscal years ended January 31, 2022, 2021, and 2020, our revenue was $1.2 billion, $592.0 million, and $264.7 million, respectively, representing year-over-year growth of 106% and 124%, respectively.
We have achieved significant growth in recent periods. For the fiscal years ended January 31, 2023, 2022, and 2021, our revenue was $2.1 billion, $1.2 billion, and $592.0 million, respectively, representing year-over-year growth of 69% and 106%, respectively.
For example, our data ingestion service automatically ingests data from cloud storage and allocates compute capacity based on the amount of data ingested; our clustering service continuously rearranges the physical layout of data to ensure conformity with clustering key specifications, improving performance; our materialized views service propagates changes from underlying tables to views that have materialized subsets or summaries; our replication service moves data between regions or clouds; and our search optimization service analyzes changes in data, maintains information that speeds up lookup queries, and accelerates queries performing lookups of specific values. • Data Sharing.
For example, our data ingestion service automatically ingests data from cloud storage and allocates compute capacity based on the amount of data ingested; our clustering service continuously rearranges the physical layout of data to ensure conformity with clustering key specifications, improving performance; our materialized views service propagates changes from underlying tables to views that have materialized subsets or summaries; our replication service moves data between regions or clouds; our search optimization service analyzes changes in data, maintains information that speeds up lookup queries, and accelerates queries performing lookups of specific values; and our query acceleration service automatically offloads parts of eligible queries to shared, flexible compute clusters to handle high-burst workloads. • Data Sharing.
As of January 31, 2022, we held 22 registered trademarks in the United States, and also held 174 registered or protected trademarks in foreign jurisdictions. We continually review our development efforts to assess the existence and patentability of new intellectual property.
As of January 31, 2023, we held 27 registered trademarks in the United States, and also held 363 registered or protected trademarks in foreign jurisdictions. We continually review our development efforts to assess the existence and patentability of new intellectual property.
List data sets to our Data Marketplace and tap into new monetization streams. 11 Table of Contents ◦ Invite external parties to access governed data. Invite customers, suppliers, and partners, to securely access their data to streamline operations and increase transparency. ◦ Enable data clean rooms .
List data sets or data products to our Marketplace and tap into new monetization streams. ◦ Invite external parties to access governed data . Invite customers, suppliers, and partners to securely access their data, streamline operations, and increase transparency. ◦ Enable data clean rooms .
For example, we have launched the Financial Services Data Cloud, the Media Data Cloud, the Healthcare and Life Sciences Data Cloud, and the Retail Data Cloud. Each of these Data Clouds brings together Snowflake’s platform capabilities with industry-specific partner solutions and datasets to drive business growth and deliver improved experiences and insights. Our business benefits from powerful network effects.
For example, we have launched the Telecom Data Cloud, the Financial Services Data Cloud, the Media Data Cloud, the Healthcare and Life Sciences Data Cloud, and the Retail Data Cloud. Each of these brings together Snowflake’s platform capabilities with industry-specific partner solutions and datasets to drive business growth and deliver improved experiences and insights.
Research and Development Our research and development organization is responsible for the design, development, testing, and delivery of new technologies, features, integrations, and improvements of our platform. It is also responsible for operating and scaling our platform, including the underlying public cloud infrastructure. Many of our research and development employees are currently working remotely.
Research and Development Our research and development organization is responsible for the design, development, testing, and delivery of new technologies, features, integrations, and improvements of our platform. It is also responsible for operating and scaling our platform, including the underlying public cloud infrastructure.
We believe this network effect will help us drive our vision of the Data Cloud. 7 Table of Contents Our platform is used globally by organizations of all sizes across a broad range of industries. As of January 31, 2022, we had 5,944 total customers, increasing from 4,139 customers as of January 31, 2021.
We believe this network effect will help us drive our vision of the Data Cloud. 7 Ta ble of Contents Our platform is used globally by organizations of all sizes across a broad range of industries. As of January 31, 2023, we had 7,828 total customers, increasing from 5,967 customers as of January 31, 2022.
Our platform allows for easy replication of data for multiple users across multiple public cloud providers and regions without compromising data integrity and governance, enabling our customers and their users to rely on a single source of truth.
Our platform allows for easy replication of data, accounts, policies, and pipelines for multiple users across multiple public cloud providers and regions without compromising data integrity and governance, enabling our customers and their users to rely on a single source of truth and achieve cross-cloud business continuity. • Data Engineering.
Architecture Our platform was built from the ground up to take advantage of the cloud, and is built on an innovative multi-cluster, shared data architecture. It consists of three independently scalable layers deployed and connected globally across public clouds and regions: • Centralized storage.
Feed data and analytics directly into business applications in the context of daily workstreams. Architecture Our platform was built from the ground up to take advantage of the cloud, and is built on an innovative multi-cluster, shared data architecture. It consists of three independently scalable layers deployed and generally connected globally across public clouds and regions: • Centralized storage.
Moving forward, we are continuing to foster these benefits through industry-specific Data Clouds and the Powered by Snowflake program. Our Solution Our platform is built on a cloud-native architecture that leverages the massive scalability and performance of the public cloud.
As the Data Cloud grows through broad adoption and increasing usage, there are enhanced benefits from greater data availability. Moving forward, we are continuing to foster these benefits through industry-specific Data Clouds and the Powered by Snowflake program. Our Solution Our platform is built on a cloud-native architecture that leverages the massive scalability and performance of the public cloud.
Our Platform Our platform unifies data and supports a growing variety of workloads, including data warehousing, data lakes, data engineering, data science, data application development, and data sharing. Customers can leverage our platform for any one of these workloads, but when taken together, it provides an integrated, end-to-end solution that delivers greater insights, faster data transformations, and improved data sharing.
Customers can leverage our platform for any one of these workloads, but when taken together, it provides an integrated, end-to-end solution that delivers greater insights, faster data transformations, improved data sharing, and accelerated application development.
Our platform supports a wide range of workloads that enable our customers’ most important business objectives, including data warehousing, data lakes, data engineering, data science, data application development, and data sharing.
Our platform supports a wide range of workloads that enable our customers’ most important business objectives, including data warehousing, data lakes, and Unistore, as well as collaboration, data engineering, cybersecurity, data science and machine learning, and application development.
This enables organizations to better reach, engage, and retain their end customers. • Benefit from a global multi-cloud strategy. Our platform delivers a consistent product experience across connected regions and public clouds. With a global multi-cloud strategy, organizations can optimize for the best features and functionality each public cloud provides, without becoming overly reliant on a single public cloud provider.
Our platform delivers a consistent product experience across connected regions and public clouds. With a global multi-cloud strategy, organizations can optimize for the best features and functionality each public cloud provides, without becoming overly reliant on a single public cloud provider.
We recruit and hire employees in jurisdictions around the world based on a range of factors, including the available talent pool, the type of work being performed, the relative cost of labor, regulatory requirements and costs, and other considerations. Since April 2020, the vast majority of our workforce has been working remotely.
We recruit and hire employees in jurisdictions around the world based on a range of factors, including the available talent pool, the type of work being performed, the relative cost of labor, regulatory requirements and costs, and other considerations.
For more information, including a definition of non-GAAP free cash flow and a reconciliation of free cash flow to the most directly comparable financial measure calculated in accordance with GAAP, see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 15 Table of Contents Human Capital Resources General As of January 31, 2022, we had 3,992 employees operating across 23 countries.
For more information, including a definition of non-GAAP free cash flow and a reconciliation of free cash flow to the most directly comparable financial measure calculated in accordance with U.S. generally accepted accounting principles (GAAP), see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Human Capital Resources General As of January 31, 2023, we had 5,884 employees operating across 33 countries.
This provides an integrated and global disaster recovery capability. ◦ Global listings for sharing. Our platform enables a listing to be published globally to access consumers across regions or public clouds. • Built-in Security. We built our platform with security as a core tenet.
Our platform enables failing over and failing back a database and redirecting clients transparently across regions or public clouds. This provides an integrated and global disaster recovery capability. ◦ Global listings for sharing. Our platform enables a listing to be published globally to access consumers across regions or public clouds. • Built-in Security.
Although we rely on intellectual property rights, including patents, copyrights, trademarks, and trade secrets, as well as contractual protections to establish and protect our proprietary rights, we believe that factors such as the technological and creative skills of our personnel, creation of new services, features and functionality, and frequent enhancements to our platform are more essential to establishing and maintaining our technology leadership position.
Although we rely on intellectual property rights, including patents, copyrights, trademarks, and trade secrets, as well as contractual protections to establish and protect our proprietary rights, we believe that factors such as the technological and creative skills of our personnel, creation of new services, features and functionality, and frequent enhancements to our platform are more essential to establishing and maintaining our technology leadership position. 17 Ta ble of Contents We control access to and use of our proprietary technology and other confidential information through the use of internal and external controls, including contractual protections with employees, contractors, customers, and partners.
Delivered as a service, our platform is deployed across multiple public clouds and regions, is easy to use, and requires near-zero maintenance. Workloads Organizations use our platform to power the following workloads: • Data Warehouse. Our platform provides reporting and analytics to increase business intelligence. For Data Warehouse, our platform enables organizations to: ◦ Support multiple users and activities concurrently.
Delivered as a service, our platform is deployed across multiple public clouds and regions, is easy to use, and requires near-zero maintenance. 10 Ta ble of Contents Workloads Organizations use our platform to power the following workloads: • Data Warehouse. Our platform provides reporting and analytics to improve business intelligence.
Enable multiple activities, such as repeatable analytics, rendering of dashboards, or ad hoc explorations, such as data science model training, with flexible compute capacity, no resource contention, and no provisioning of any infrastructure. 10 Table of Contents ◦ Generate comprehensive data insights.
For Data Warehouse, our platform enables organizations to: ◦ Support multiple users and activities concurrently. Enable multiple activities, such as repeatable analytics, rendering of dashboards, or ad hoc explorations, such as data science model training, with flexible compute capacity, no resource contention, and no provisioning of any infrastructure. ◦ Generate comprehensive data insights.
It performs a variety of tasks, including security operations, system monitoring, query optimization, and metadata and state tracking throughout the platform. This architecture is built on three major public clouds across 31 regional deployments around the world. These deployments are generally interconnected to deliver the Data Cloud, enabling a global and consistent user experience.
It performs a variety of tasks, including security operations, system monitoring, query optimization, and metadata and state tracking throughout the platform. This architecture is built on three major public clouds across 38 regional deployments around the world.
Each of our Fortune 500 and Global 2000 customer counts is subject to adjustments for annual updates to the Fortune 500 list by Fortune and to the Global 2000 list by Forbes, respectively, as well as acquisitions, consolidations, spin-offs, and other market activity with respect to such customers.
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.
As of January 31, 2022, our customers included 241 of the Fortune 500, based on the 2021 Fortune 500 list, and 488 of the Global 2000, based on the 2021 Forbes Global 2000 list, and those customers contributed approximately 26% and 40% of our revenue, respectively, for the fiscal year ended January 31, 2022.
As of January 31, 2023, our customers included 573 of the Forbes Global 2000, based on the 2022 Forbes Global 2000 list, and those customers contributed approximately 41% of our revenue for the fiscal year ended January 31, 2023.
As our research and development employees return to an office, we expect them to be located primarily in or around Bellevue, Washington; Berlin, Germany; San Mateo, California; Toronto, Canada; and Warsaw, Poland. 14 Table of Contents Our research and development organization consists of teams specializing in software engineering, user experience, product management, data science, technical program management, and technical writing.
Our research and development employees are located primarily in or around Bellevue, Washington and San Mateo, California in the United States, and internationally in Berlin, Germany; Toronto, Canada; and Warsaw, Poland. Our research and development organization consists of teams specializing in software engineering, user experience, product management, data science, technical program management, and technical writing.
See the section titled “Risk Factors” for a more comprehensive description of risks related to our intellectual property. Available Information Our website address is www.snowflake.com. Information found on, or accessible through, our website is not a part of, and is not incorporated into, this Annual Report on Form 10-K.
For more information on the potential impacts of government regulations affecting our business, see the section titled “Risk Factors.” Available Information Our website address is www.snowflake.com. Information found on, or accessible through, our website is not a part of, and is not incorporated into, this Annual Report on Form 10-K.
This enables organizations to drive greater insights, improve products and services, and pursue new business opportunities. • Consolidate data into a single, analytics-ready source of truth. Our platform simplifies our customers’ data infrastructure by centralizing data in an analytics-ready format. As a result, organizations are able to deliver secure, fast, and accurate decision making.
Our platform eliminates data silos, empowers secure and governed access to data, and removes data management and infrastructure complexities. This enables organizations to drive greater insights, improve products and services, and pursue new business opportunities. • Consolidate data into a single, analytics-ready source of truth. Our platform simplifies our customers’ data infrastructure by centralizing data in an analytics-ready format.
Customers can share and provide access to each other’s data, augment data science and machine learning algorithms with more data sets, connect global supply chains through data hubs, and create new monetization channels by connecting data providers and consumers. As the Data Cloud grows through broad adoption and increasing usage, there are enhanced benefits from greater data availability.
Customers can share and provide access to each other’s data or data products, augment data science and machine learning algorithms with more data sets, connect global supply chains through data hubs, build data products, and create new monetization channels by connecting data providers and consumers.
When sharing data across regions and public clouds, our platform allows customers to easily replicate data and maintain a single source of truth. Key Benefits to our Customers Our platform enables customers to: • Transform into data-driven businesses. Our platform eliminates data silos, empowers secure and governed access to data, and removes data management and infrastructure complexities.
When sharing data across regions and public clouds, our platform allows customers to easily replicate data and maintain a single source of truth. Our platform also enables organizations to securely share and monetize data products. Key Benefits to our Customers Our platform enables customers to: • Transform into data-driven businesses.
We plan to continue investing in building out our partner program to drive more consumption on our platform, broaden our distribution footprint, acquire new customers, and drive greater awareness of our platform. For example, we launched our Powered by Snowflake program in 2021 to help customers and partners build, operate, and grow their applications built using Snowflake.
We plan to continue investing in building out our partner program to drive more consumption on our platform, broaden our distribution footprint, acquire new customers, and drive greater awareness of our platform.
Ingest data and transform it in real time to ensure access to up-to-date information to drive better business outcomes. ◦ Dynamically meet peak business demands . Meet fluctuating business demands by instantly scaling resources up and down. • Data Science.
Ingest data and transform it in real time to ensure access to up-to-date information to drive better business outcomes. ◦ Dynamically meet peak business demands . Meet fluctuating business demands by instantly scaling resources up and down. 11 Ta ble of Contents • Cybersecurity . Our platform helps eliminate data silos, which can enable robust analytics and better security outcomes.
We use open source software in our platform. 16 Table of Contents As of January 31, 2022, we held 261 issued U.S. patents and had 250 U.S. patent applications pending. We also held 85 issued patents in foreign jurisdictions. Our issued patents are scheduled to expire between January 2024 and July 2041.
As of January 31, 2023, we held 486 issued U.S. patents and had 311 U.S. patent applications pending. We also held 117 issued patents in foreign jurisdictions. Our issued patents are scheduled to expire between January 2024 and July 2042.
The Data Cloud will continue to grow as organizations move their siloed data from cloud-based repositories and on-premises data centers to the Data Cloud. The more customers adopt our platform, the more data can be exchanged with other Snowflake customers, partners, data providers, and data consumers, enhancing the value of our platform for all users.
The more customers adopt our platform, the more data can be exchanged with other Snowflake customers, partners, data providers, and data consumers, enhancing the value of our platform for all users.
Our platform offers a variety of capabilities to operate on data, from ingestion to transformation, as well as rich query and analysis. Our compute services are primarily presented to users in one of two models, either through explicit specification of compute clusters or through a number of serverless services. ◦ Compute Clusters.
Our compute services are primarily presented to users in one of two models, either through explicit specification of compute clusters or through a number of serverless features. ◦ Compute Clusters. Our platform exposes compute clusters as a core concept.
Simplify data governance and provide rich security and controls to ensure data is managed and accessed according to regulatory and corporate requirements. • Data Engineering.
Simplify data governance and provide rich security and controls to ensure data is managed and accessed according to regulatory and corporate requirements. • Collaboration . Our platform enables organizations to securely share, monetize, and acquire live data sets and data products. For Collaboration, our platform enables organizations to: ◦ Securely share live data .
To facilitate attraction and retention, we strive to provide opportunities for our employees to grow and develop in their careers, supported by strong compensation and benefits programs, including equity-based compensation that is designed to align our employees’ interests with those of our stockholders. Intellectual Property Intellectual property rights are important to the success of our business.
To facilitate attraction and retention, we strive to provide opportunities for our employees to grow and develop in their careers, supported by strong compensation and benefits programs.
It also simplifies governance and minimizes the errors, complexity, and costs associated with managing data silos. • Increase agility and augment insights through seamless data sharing. Our platform allows customers to seamlessly share and consume live data across their organizations, and with their partners, customers, and suppliers, without moving the underlying data.
Our platform allows customers to seamlessly share and consume live data across their organizations, and with their partners, customers, and suppliers, without moving the underlying data. Our platform also allows customers to unlock previously untapped monetization streams through creating and sharing data applications and data products.
Customers can also leverage the Snowflake Data Marketplace, which provides access to hundreds of live, ready-to-query third-party data sets across a wide range of categories.
Customers can also leverage the Snowflake Marketplace, which provides access to hundreds of live, ready-to-query third-party data sets and data products across a wide range of categories. Through collaborating within and outside of their ecosystems, our customers are able to enhance insights and better reach, engage, and retain their end customers. • Benefit from a global multi-cloud strategy.
From January 1, 2022 to January 31, 2022, we processed an average of over 1,496 million daily queries across all of our customer accounts, up from an average of over 777 million daily queries during the corresponding month of the prior fiscal year.
From January 1, 2023 to January 31, 2023, we processed an average of approximately 2.6 billion daily queries across all our customer accounts, up from an average of approximately 1.5 billion daily queries during the corresponding month of the prior fiscal year. We are committed to expanding our platform’s use cases and supporting developers in building their applications and businesses.
Our platform leverages the separation between cloud services and storage to be able to track independent clones of objects sharing the same physical copy of the underlying data. This enables a variety of customer use cases such as making copies of production data for data scientists, creating custom snapshots in time, or testing data pipelines. • Compute Model.
Our platform leverages the separation between cloud services and storage to be able to track independent clones of objects sharing the same physical copy of the underlying data.
We offer a number of additional services that automatically provide the capacity our customers require.
We also offer warehouse recommendations for workloads that have large memory requirements, such as machine learning use cases. ◦ Serverless features. We offer a number of additional services that automatically provide the capacity our customers require.
We also recently launched our Powered by Snowflake program to help companies build, operate, and grow applications in the Data Cloud by supporting developers across all stages of the application journey. Members of the program have access to go-to-market, customer support, and engineering expertise. We have an industry-vertical focus, which allows us to go to market with tailored business solutions.
In 2021, we launched Snowpark for Java to allow developers to build in the language of their choice, and in 2022 we added support for Python. We continue to invest in our Powered by Snowflake program to help companies build, operate, and market applications in the Data Cloud by supporting developers across all stages of the application journey.
Our platform enables customers to replicate data from one region or public cloud to another region or public cloud while maintaining transactional integrity. 13 Table of Contents ◦ Business continuity. Our platform enables failing over and failing back a database and redirecting clients transparently across regions or public clouds.
Based on the same technology principles, our platform enables data clean rooms. • Global Infrastructure ◦ Database replication. Our platform enables customers to replicate data from one region or public cloud to another region or public cloud while maintaining transactional integrity. ◦ Business continuity.
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Through data sharing within and outside of their ecosystems, our customers are able to blend their existing data with broader context to gain deeper insights and enhance their partnerships. • Create new monetization streams and data-driven applications. Our platform allows customers to unlock previously untapped monetization streams and create new data-driven applications.
Added
As of January 31, 2023, we had over 820 Powered by Snowflake registrants. Powered by Snowflake partners have access to go-to-market, customer support, and engineering expertise. We have an industry-vertical focus, which allows us to go to market with tailored business solutions.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition to the other risks described herein, factors that may affect our results of operations include the following: • fluctuations in demand for or pricing of our platform; • fluctuations in usage of our platform; • our ability to attract new customers; • our ability to retain existing customers; • customer expansion rates; • timing, amount, and cost of our investments to expand the capacity of our public cloud providers; • seasonality; • investments in new features and functionality; 21 Table of Contents • fluctuations in consumption resulting from the introduction of new features, technologies, or capabilities to our software, systems, or to underlying cloud infrastructure, including features or capabilities that may increase or decrease the consumption required to execute existing or future workloads, like better storage compression and cloud infrastructure processor improvements; • the timing of purchases; • the speed with which customers are able to migrate data onto our platform; • fluctuations or delays in purchasing decisions in anticipation of new products or enhancements by us or our competitors; • changes in customers’ budgets and in the timing of their budget cycles and purchasing decisions; • our ability to control costs, including our operating expenses; • the amount and timing of operating expenses, particularly research and development and sales and marketing expenses, including commissions; • the amount and timing of non-cash expenses, including stock-based compensation, goodwill impairments, and other non-cash charges; • the amount and timing of costs associated with recruiting, training, and integrating new employees and retaining and motivating existing employees; • the effects and timing of acquisitions and their integration; • general economic conditions, both domestically and internationally, as well as economic conditions specifically affecting industries in which our customers and partners participate; • health epidemics or pandemics, such as the COVID-19 pandemic; • the impact, or timing of our adoption, of new accounting pronouncements; • changes in regulatory or legal environments that may cause us to incur, among other things, expenses associated with compliance; • the overall tax rate for our business, which may be affected by the mix of income we earn in the United States and in jurisdictions with different tax rates, the effects of stock-based compensation, and the effects of changes in our business; • the impact of changes in tax laws or judicial or regulatory interpretations of tax laws, which are recorded in the period in which such laws are enacted or interpretations are issued and may significantly affect the effective tax rate of that period; • rising inflation and our ability to control costs, including our operating expenses; • fluctuations in currency exchange rates and changes in the proportion of our revenue and expenses denominated in foreign currencies; • fluctuations or impairments in the market values of our portfolio or strategic investments, or in interest rates; • changes in the competitive dynamics of our market, including consolidation among competitors or customers; and • significant security breaches of, technical difficulties with, or interruptions to, the delivery and use of our platform.
Biggest changeIn addition to the other risks described herein, factors that may affect our results of operations include the following: • fluctuations in demand for our platform or changes in our pricing model; • fluctuations in usage of our platform, including as a result of customer optimization efforts that result in reduced consumption to execute workloads; • our ability to attract new customers; • our ability to retain existing customers and drive their increased consumption of our platform; • customer expansion rates, particularly for newer customers who we have recently seen, and may continue to see, increase their consumption of our platform at a slower pace than our more tenured customers; • timing, amount, and cost of our investments to expand the capacity of our public cloud providers; • seasonality; • investments in new features, functionality, and programming languages, including investments in making our platform available to store and process highly regulated data or comply with new or existing data sovereignty requirements; • fluctuations in consumption resulting from the introduction of new features, technologies, or capabilities to our software, systems, or to underlying cloud infrastructure, including features or capabilities that may increase or decrease the consumption required to execute existing or future workloads, like better storage compression and cloud infrastructure processor improvements; • the timing and frequency of purchases; • the speed with which customers are able to migrate data onto our platform; • fluctuations or delays in purchasing decisions in anticipation of new products or enhancements by us or our competitors; 23 Ta ble of Contents • changes in customers’ budgets and in the timing of their budget cycles and purchasing decisions; • our ability to control costs, including our operating expenses; • the amount and timing of operating expenses, particularly research and development and sales and marketing expenses, including commissions; • the amount and timing of non-cash expenses, including stock-based compensation, goodwill impairments, and other non-cash charges; • the amount and timing of costs associated with recruiting, training, and integrating new employees and retaining and motivating existing employees; • the effects and timing of acquisitions and their integration; • general political, social, market, and economic conditions, uncertainty, or volatility, both domestically and internationally, as well as political, social, and economic conditions specifically affecting industries in which our customers and partners participate or on which they rely; • health epidemics or pandemics, such as the COVID-19 pandemic; • the impact, or timing of our adoption, of new accounting pronouncements; • changes in regulatory or legal environments, including the interpretation or enforcement of regulatory or legal requirements, that may cause us to incur, among other things, expenses associated with compliance; • the overall tax rate for our business, which may be affected by the mix of income we earn in the United States and in jurisdictions with different tax rates, the effects of stock-based compensation, and the effects of changes in our business; • the impact of changes in tax laws or judicial or regulatory interpretations of tax laws, which are recorded in the period in which such laws are enacted or interpretations are issued and may significantly affect the effective tax rate of that period; • rising inflation and our ability to control costs, including our operating expenses; • fluctuations in currency exchange rates and changes in the proportion of our revenue and expenses denominated or measured in foreign currencies; • fluctuations or impairments in, or the full loss of, the market values of our strategic investments or of our portfolio, including changes to the value or accessibility of our cash and cash equivalents as a result of economic conditions or bank failures; • fluctuations in interest rates; • changes in the competitive dynamics of our market, including consolidation among competitors or customers; and • significant security breaches of, technical difficulties with, or interruptions to, the delivery and use of our platform.
Customers consume our platform by using compute, storage, and data transfer resources. Unlike a subscription-based business model, in which revenue is recognized ratably over the term of the subscription, we generally recognize revenue on consumption.
Customers generally consume our platform by using compute, storage, and data transfer resources. Unlike a subscription-based business model, in which revenue is recognized ratably over the term of the subscription, we generally recognize revenue on consumption.
In addition, we cannot be sure that our existing insurance coverage and coverage for errors and omissions will continue to be available on acceptable terms or that our insurers will not deny coverage as to any future claim.
In addition, we cannot be sure that our existing insurance coverage and coverage for errors and omissions will continue to be available on acceptable terms or that our insurers will not deny coverage as to any future claim.
We also believe our culture has been a key contributor to our success to date and that the critical nature of the platform that we provide promotes a sense of greater purpose and fulfillment in our employees. As our workforce becomes more distributed around the world, we may not be able to maintain important aspects of our culture.
We also believe our culture has been a key contributor to our success to date and that the critical nature of the platform that we provide promotes a sense of greater purpose and fulfillment in our employees. As our workforce becomes larger and more distributed around the world, we may not be able to maintain important aspects of our culture.
As a result, our stockholders bear the risk of future issuances of debt or equity securities reducing the value of our common stock and diluting their interests. We are exposed to fluctuations in currency exchange rates and interest rates, which could negatively affect our results of operations and our ability to invest and hold our cash.
As a result, our stockholders bear the risk of future issuances of debt or equity securities reducing the value of our common stock and diluting their interests. We are exposed to fluctuations in currency exchange rates, which could negatively affect our results of operations and our ability to invest and hold our cash.
As a result of our rapid revenue growth in prior periods, we expect our revenue growth rate to decline in future periods, and a decline in our revenue growth rate could adversely affect investors’ perceptions of our business, and negatively impact the trading price of our common stock.
As a result of the foregoing and our rapid revenue growth in prior periods, we expect our revenue growth rate to decline in future periods, and a decline in our revenue growth rate could adversely affect investors’ perceptions of our business, and negatively impact the trading price of our common stock.
If we incur debt, the debt holders would have rights senior to holders of common stock to make claims on our assets, and the terms of any debt could restrict our operations, including our ability to pay dividends on our common stock.
If we incur debt, the debt holders would have rights senior to holders of common stock to make claims on our assets, and the terms of any debt could restrict our operations, including our ability to repurchase stock and pay dividends on our common stock.
Examples of recent and anticipated developments that have or could impact our business include the following: • The European Union’s (EU) General Data Protection Regulation (GDPR) and the United Kingdom’s General Data Protection Regulation established strict requirements applicable to the handling of personal information. • The EU has proposed the Regulation on Privacy and Electronic Communications, which, if adopted, would impose new obligations on using personal information in the context of electronic communications, particularly with respect to online tracking technologies and direct marketing. • Certain other jurisdictions have enacted data localization laws and cross-border personal information transfer laws, which could make it more difficult for us to transfer personal information across jurisdictions (such as transferring or receiving personal information that originates in the EU), or to enable our customers to transfer or replicate their data across jurisdictions using our platform.
Examples of recent and anticipated developments that have or could impact our business include the following: • The European Union’s (EU) General Data Protection Regulation (GDPR) and the United Kingdom’s General Data Protection Regulation established strict requirements applicable to the handling of personal information. • The EU has proposed the Regulation on Privacy and Electronic Communications, which, if adopted, would impose new obligations on using personal information in the context of electronic communications, particularly with respect to online tracking technologies and direct marketing. • Certain other jurisdictions have enacted data localization laws and cross-border personal information transfer laws, such as Brazil and China, which could make it more difficult for us to transfer personal information across jurisdictions (such as transferring or receiving personal or other sensitive information that originates in the EU or China), or to enable our customers to transfer or replicate their data across jurisdictions using our platform.
However, government certification requirements may change, we may be unable to achieve or sustain one or more required government certifications, or we may be required to make unexpected changes to our business or products in order to sustain such certifications.
However, government certification requirements may change, we may be unable to achieve or sustain one or more required government certifications, or we may be required to make unexpected changes to our business or products in order to obtain or sustain such certifications.
In particular, we may encounter difficulties assimilating or integrating the businesses, technologies, products, personnel, or operations of any acquired companies, particularly if the key personnel of an acquired company choose not to work for us, their software is not easily adapted to work with our platform, or we have difficulty retaining the customers of any acquired business due to changes in ownership, management, or otherwise.
In particular, we may encounter difficulties or unexpected costs assimilating or integrating the businesses, technologies, products, personnel, or operations of any acquired companies, particularly if the key personnel of an acquired company choose not to work for us, their software is not easily adapted to work with our platform, or we have difficulty retaining the customers of any acquired business due to changes in ownership, management, or otherwise.
For example, the California Consumer Privacy Act (CCPA) provides increased privacy rights and protections, including the ability to opt out of specific disclosures of their personal information.
For example, the California Consumer Privacy Act (CCPA) provides increased privacy rights and protections, including the ability of individuals to opt out of specific disclosures of their personal information.
Each of these difficulties could materially adversely affect our business and results of operations. Any future litigation against us could be costly and time-consuming to defend.
Each of these difficulties could materially adversely affect our business and results of operations. Any litigation against us could be costly and time-consuming to defend.
Despite our efforts to implement these protections, they may not protect our business or provide us with a competitive advantage for a variety of reasons, including: • the failure by us to obtain patents and other intellectual property rights for important innovations or maintain appropriate confidentiality and other protective measures to establish and maintain our trade secrets; • to the extent a customer or partner owns any intellectual property created through a professional services engagement, our inability to use or monetize that intellectual property as part of our business; • uncertainty in, and evolution of, legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights; • potential invalidation of our intellectual property rights through administrative processes or litigation; • our inability to detect infringement or other misappropriation of our intellectual property rights by third parties; and • other practical, resource, or business limitations on our ability to enforce our rights.
Despite our efforts to implement these protections, they may not protect our business or provide us with a competitive advantage for a variety of reasons, including: • the failure by us to obtain patents and other intellectual property rights for important innovations or maintain appropriate confidentiality and other protective measures to establish and maintain our trade secrets; 32 Ta ble of Contents • to the extent a customer or partner owns any intellectual property created through a professional services engagement, our inability to use or monetize that intellectual property as part of our business; • uncertainty in, and evolution of, legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights; • potential invalidation of our intellectual property rights through administrative processes or litigation; • our inability to detect infringement or other misappropriation of our intellectual property rights by third parties; and • other practical, resource, or business limitations on our ability to enforce our rights.
Although we attempt to limit our indemnity obligations and negotiate indemnification rights with vendors that would require them to contribute to our indemnity obligations, we may not be successful in doing so, and an event triggering our indemnity obligations could give rise to multiple claims involving multiple customers or other third parties.
Although we attempt to limit our liability and indemnity obligations and negotiate corresponding liability and indemnification rights with vendors that would require them to contribute to our indemnity obligations, we may not be successful in doing so, and an event triggering our liability or indemnity obligations could give rise to multiple claims involving multiple customers or other third parties.
There is no assurance that our applicable insurance coverage, if any, would cover, in whole or in part, any such indemnity obligations.
There is no assurance that our applicable insurance coverage, if any, would cover, in whole or in part, any such liability or indemnity obligations.
In addition, regulatory agencies may impose requirements toward third-party vendors generally, or our company in particular, that we may not be able to, or may not choose to, meet. In addition, customers in these heavily regulated areas often have a right to conduct audits of our systems, products, and practices.
In addition, regulatory agencies may impose requirements toward third-party vendors generally, or our company in particular, that we may not be able to, or may not choose to, meet. In addition, customers in these heavily regulated areas and their regulators often have a right to conduct audits of our systems, products, and practices.
For more information, including a definition of non-GAAP free cash flow and a reconciliation of free cash flow to the most directly comparable financial measure calculated in accordance with GAAP, see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 26 Table of Contents We do business with federal, state, local, and foreign governments and agencies, and heavily regulated organizations; as a result, we face risks related to the procurement process, budget, and product decisions driven by statutory and regulatory determinations, termination of contracts, and compliance with government contracting requirements.
For more information, including a definition of non-GAAP free cash flow and a reconciliation of free cash flow to the most directly comparable financial measure calculated in accordance with GAAP, see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We do business with federal, state, local, and foreign governments and agencies, and heavily regulated organizations; as a result, we face risks related to the procurement process, budget, delays, and product decisions driven by statutory and regulatory determinations, termination of contracts, and compliance with government contracting requirements.
Existing and prospective customers, such as those in these industries, may be required to comply with more stringent regulations in connection with subscribing to and implementing our services or particular regulations regarding third-party vendors that may be interpreted differently by different customers.
Existing and prospective customers, such as those in these industries, may be required to comply with more stringent regulations in connection with using and implementing our services or particular regulations regarding third-party vendors that may be interpreted differently by different customers.
In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as one or more stockholders or groups of stockholders who own at least 5% of our stock increasing their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period, the corporation’s ability to use its pre-change NOL carryforwards to offset its post-change income or taxes may be limited.
In addition, under Section 382 of the Code, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as one or more stockholders or groups of stockholders who own at least 5% of our stock increasing their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period, the corporation’s ability to use its pre-change NOL carryforwards to offset its post-change income or taxes may be limited.
As a result, we have historically seen higher collections and consequently higher non-GAAP free cash flow in the first and fourth fiscal quarters of each year, and our sequential growth in remaining performance obligations has historically been highest in the fourth fiscal quarter of each year.
As a result, we have historically seen higher non-GAAP free cash flow in the first and fourth fiscal quarters of each year, and our sequential growth in remaining performance obligations has historically been highest in the fourth fiscal quarter of each year.
For example, we anticipate that we will need to establish relationships with new partners in order to expand into certain countries, and if we fail to identify, establish, and maintain such relationships, we may be unable to execute on our expansion plans.
For example, we anticipate that we will need to establish relationships with new partners in order to expand into certain countries, including China, and if we fail to identify, establish, and maintain such relationships, we may be unable to execute on our expansion plans.
Of the $5.8 billion U.S. federal NOL carryforwards, $5.7 billion may be carried forward indefinitely with utilization limited to 80% of taxable income, and the remaining $0.1 billion will begin to expire in 2032. The state NOL carryforwards begin to expire in 2022.
Of the $5.8 billion U.S. federal NOL carryforwards, $5.7 billion may be carried forward indefinitely with utilization limited to 80% of taxable income, and the remaining $0.1 billion will begin to expire in 2032. The state NOL carryforwards begin to expire in 2023.
We expect to issue additional capital stock in the future that will result in dilution to all other stockholders. We expect to grant equity awards to employees, directors, and consultants under our equity incentive plans. We may also raise capital through equity financings in the future.
We expect to issue additional capital stock in the future that will result in dilution to all other stockholders. We expect to grant equity awards to employees, non-employee directors, and consultants under our equity incentive plans. We may also raise capital through equity financings in the future.
If the value of our equity awards declines or continues to experience significant volatility, or if our existing employees receive significant proceeds from liquidating their previously vested equity awards, it may adversely affect our ability to recruit and retain key employees.
If the actual or perceived value of our equity awards declines or continues to experience significant volatility, or if our existing employees receive significant proceeds from liquidating their previously vested equity awards, it may adversely affect our ability to recruit and retain key employees.
We believe our future success depends in part on investment in professional services to facilitate customer migration from legacy solutions and adoption of our platform, especially with large enterprises.
We believe our future success depends in part on investment in professional services to facilitate customer code conversion and migration from legacy solutions and adoption of our platform, especially with large enterprises.
We expect our costs and expenses to increase in future periods. In particular, we intend to continue to invest significant resources to further develop our platform and expand our sales, marketing, and professional services teams.
We expect our costs and expenses to increase in future periods. In particular, we intend to continue to invest significant resources to further develop our platform, expand our sales, marketing, and professional services teams, and retain our employees.
Our future success depends on our ability to continue to innovate and increase customer adoption of our platform and the Data Cloud. Further, the value of our platform to customers is increased to the extent they are able to use it to process and access all types of data.
Our future success depends on our ability to continue to innovate and increase customer adoption of our platform and the Data Cloud, including Snowflake Marketplace. Further, the value of our platform to customers is increased to the extent they are able to use it to process and access all types of data.
This choice of forum provision does not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions.
This choice of forum provision does not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. 42 Ta ble of Contents Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions.
As we increase our international sales and business and sales to the public sector, we may engage with business partners and third-party intermediaries to market or resell our products and to obtain necessary permits, licenses, and other regulatory approvals.
As we increase our international sales, including in China, and sales to the public sector, we may engage with business partners and third-party intermediaries to market or resell our products and to obtain necessary permits, licenses, and other regulatory approvals.
Further, certain holders of our common stock have rights, subject to some conditions, to require us to file registration statements covering the sale of their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. 37 Table of Contents Our issuance of additional capital stock in connection with financings, acquisitions, investments, our equity incentive plans, or otherwise will dilute all other stockholders.
Further, certain holders of our common stock have rights, subject to some conditions, to require us to file registration statements covering the sale of their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. 39 Ta ble of Contents Our issuance of additional capital stock in connection with financings, acquisitions, investments, our equity incentive plans, or otherwise will dilute all other stockholders.
Our current operations are international in scope, and we plan further geographic expansion, creating a variety of operational challenges. A component of our growth strategy involves the further expansion of our operations and customer base internationally. Customer accounts outside the United States generated 20% of our revenue for the fiscal year ended January 31, 2022.
Our current operations are international in scope, and we plan further geographic expansion, creating a variety of operational challenges. A component of our growth strategy involves the further expansion of our operations and customer base internationally. Customer accounts outside the United States generated 21% of our revenue for the fiscal year ended January 31, 2023.
If our results of operations fall below the expectations of investors and securities analysts who follow our stock, the price of our common stock could decline substantially, and we could face costly lawsuits, including securities class actions. 22 Table of Contents Failure to effectively develop and expand our sales and marketing capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our products and platform.
If our results of operations fall below the expectations of investors and securities analysts who follow our stock, the price of our common stock could decline substantially, and we could face costly lawsuits, including securities class actions. 24 Ta ble of Contents Failure to effectively develop and expand our sales and marketing capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our products and platform.
We could be required to fundamentally change our business activities and practices or modify our platform capabilities in response to such litigation, which could have an adverse effect on our business. 20 Table of Contents Our insurance coverage may not be adequate for data security, indemnification obligations, or other liabilities.
We could be required to fundamentally change our business activities and practices or modify our platform capabilities in response to such litigation, which could have an adverse effect on our business. Our insurance coverage may not be adequate for data security, indemnification obligations, or other liabilities.
We expect to invest substantial time and resources to further expand our international operations and, if we are unable to do so successfully and in a timely manner, our business and results of operations will suffer. 29 Table of Contents We may require additional capital to support the growth of our business, and this capital might not be available on acceptable terms, if at all.
We expect to invest substantial time and resources to further expand our international operations and, if we are unable to do so successfully and in a timely manner, our business and results of operations will suffer. 31 Ta ble of Contents We may require additional capital to support the growth of our business, and this capital might not be available on acceptable terms, if at all.
If we are unable to successfully manage the growth of our professional services business and improve our profit margin from these services, our operating results will be harmed. Our professional services business, which performs implementation services for our customers, has grown as our product revenue has grown.
If we are unable to successfully manage the growth of our professional services business and improve our profit margin from these services, our operating results will be harmed. Our professional services business, which performs implementation services for our customers, has grown larger and more complex as our product revenue has increased.
Our platform and the public cloud infrastructure on which our platform relies are vulnerable to damage or interruption from catastrophic occurrences, such as earthquakes, floods, fires, power loss, telecommunication failures, military conflict or war, terrorist attacks, criminal acts, sabotage, other intentional acts of vandalism and misconduct, geopolitical events, disease, such as the COVID-19 pandemic, and similar events.
Our platform and the public cloud infrastructure on which our platform relies are vulnerable to damage or interruption from catastrophic events, such as earthquakes, floods, fires, power loss, telecommunication failures, military conflict or war, terrorist attacks, criminal acts, sabotage, other intentional acts of vandalism and misconduct, geopolitical events, and disease.
Negative conditions in the general economy both in the United States and abroad, including conditions resulting from changes in gross domestic product growth, financial and credit market fluctuations, international trade relations, inflation, pandemic (such as the COVID-19 pandemic), political turmoil, natural catastrophes, warfare, and terrorist attacks on the United States, Europe, the Asia-Pacific region, Japan, or elsewhere, could cause a decrease in business investments, including spending on cloud technologies, and negatively affect the growth of our business.
Negative conditions or volatility in the general economy both in the United States and abroad, including conditions resulting from changes in gross domestic product growth, financial and credit market fluctuations, bank failures, international trade relations, inflation, and interest rate fluctuations, or the existence of pandemics (such as the COVID-19 pandemic), political turmoil, natural catastrophes, warfare, or terrorist attacks on the United States, Europe, the Asia-Pacific region, Japan, or elsewhere, could cause a decrease in business investments, including spending on cloud technologies, and negatively affect the growth of our business.
We have funded our operations since inception primarily through equity financings, payments received from our customers, and more recently, proceeds from our IPO. We cannot be certain if our operations will generate sufficient cash to fully fund our ongoing operations or the growth of our business.
We have funded our operations since inception primarily through equity financings, including our IPO, and payments received from our customers. We cannot be certain if our operations will generate sufficient cash to fully fund our ongoing operations or the growth of our business.
Furthermore, future business expansions or acquisitions could expose us to additional cybersecurity risks and vulnerabilities. The techniques used to sabotage or to obtain unauthorized access to our platform, systems, networks, or physical facilities in which data is stored or processed, or through which data is transmitted change frequently, and are becoming increasingly difficult to detect.
Furthermore, future business expansions or acquisitions could expose us to additional cybersecurity risks and vulnerabilities. The techniques used to sabotage or to obtain unauthorized access to our and our third-party providers’ platforms, systems, networks, or physical facilities in which data is stored or processed, or through which data is transmitted change frequently, and are becoming increasingly difficult to detect.
We could suffer disruptions, outages, defects, and other performance and quality problems with our platform or with the public cloud and internet infrastructure on which it relies. Our business depends on our platform to be available without disruption. We have experienced, and may in the future experience, disruptions, outages, defects, and other performance and quality problems with our platform.
Our business depends on our platform to be available without disruption. We have experienced, and may in the future experience, disruptions, outages, defects, and other performance and quality problems with our platform and with the public cloud and internet infrastructure on which our platform relies.
We believe that the pace of innovation will continue to accelerate as customers increasingly base their purchases of cloud data platforms on a broad range of factors, including performance and scale, markets addressed, types of data processed, ease of data ingestion, user experience, and data governance and regulatory compliance.
We believe that the pace of innovation will continue to accelerate as customers increasingly base their purchases of cloud data platforms on a broad range of factors, including performance and scale, markets addressed, types of data processed, ease of data ingestion, user experience and programming languages, use of artificial intelligence, and data governance and regulatory compliance.
Any of these developments could adversely affect our results of operations. 36 Table of Contents Risks Related to the Ownership of Our Common Stock Our stock price may be volatile, and the value of our common stock may decline.
Any of these developments could adversely affect our results of operations. Risks Related to the Ownership of Our Common Stock Our stock price may be volatile, and the value of our common stock may decline.
If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease, which might cause our stock price to decline and could decrease the trading volume of our common stock.
If one or more of these analysts cease coverage of us, publish inaccurate research about our business, or fail to publish reports on us regularly, demand for our common stock could decrease, which might cause our stock price to decline and could decrease the trading volume of our common stock.
If we are not able to successfully hedge against the risks associated with currency fluctuations, our results of operations could be adversely affected. For example, for international customers with sales denominated in U.S. dollars, a strengthening of the U.S. dollar could increase the real cost of our platform to such customers, which could adversely affect our results of operations.
If we are not able to successfully hedge against the risks associated with currency fluctuations, our results of operations could be adversely affected. For example, a strengthening of the U.S. dollar could increase the real cost of our platform to international customers, which could adversely affect our results of operations.
We have experienced net losses in each period since inception. We generated net losses of $679.9 million, $539.1 million, and $348.5 million for the fiscal years ended January 31, 2022, 2021, and 2020, respectively. As of January 31, 2022 and 2021, we had an accumulated deficit of $1.9 billion and $1.2 billion, respectively.
We have experienced net losses in each period since inception. We generated net losses of $797.5 million, $679.9 million, and $539.1 million for the fiscal years ended January 31, 2023, 2022, and 2021, respectively. As of January 31, 2023 and 2022, we had an accumulated deficit of $2.7 billion and $1.9 billion, respectively.
For example, large customers may require considerable time to evaluate and test our platform prior to making a purchase decision and placing an order. In addition, large customers may be switching from legacy on-premises solutions when purchasing our products, and may rely on third-parties with whom we do not have relationships when making purchasing decisions.
For example, large customers may require considerable time to evaluate and test our platform or new features prior to making a purchase decision. In addition, large customers may be switching from legacy on-premises solutions when purchasing our products, and may rely on third parties with whom we do not have relationships when making purchasing decisions.
If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected. The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes appearing elsewhere herein.
If our estimates or judgments relating to our critical accounting estimates prove to be incorrect, our results of operations could be adversely affected. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes appearing elsewhere herein.
Our sales are currently denominated in U.S. dollars and in Euros, and will likely be denominated in other currencies in the future. Because we report our results of operations and revenue in U.S. dollars, we currently face exposure to foreign currency translation risk and may in the future face other foreign currency risks.
Our sales are currently denominated in U.S. dollars, Euros, British pounds, Australian dollars, and Brazilian reals, and will likely be denominated in other currencies in the future. Because we report our results of operations and revenue in U.S. dollars, we currently face exposure to foreign currency translation risk and may in the future face other foreign currency risks.
As a result of our historical rapid growth and limited operating history, our ability to accurately forecast our future results of operations, including revenue, remaining performance obligations (RPO), and the percentage of RPO we expect to be recognized as revenue in future periods, is limited and subject to a number of uncertainties, including our ability to plan for and model future growth and platform consumption.
As a result of our historical rapid growth, limited operating history, and unstable macroeconomic conditions, our ability to accurately forecast our future results of operations, including revenue, remaining performance obligations (RPO), and the percentage of RPO we expect to recognize as revenue in future periods, is limited and subject to a number of uncertainties, including our ability to plan for and model future growth and platform consumption.
Our platform processes, stores, and transmits our customers’ and partners’ proprietary, confidential, and sensitive data, such as personal information, protected health information, and financial data. Our platform is built to be available on the infrastructure of third-party public cloud providers, such as AWS, Azure, and GCP.
Our platform processes, stores, and transmits our own sensitive data as well as customers’ and partners’ proprietary, confidential, and sensitive data, such as personal information, protected health information, and financial data. Our platform is built on the infrastructure of third-party public cloud providers, such as AWS, Azure, and GCP.
Even though we may not control the security measures of these vendors, we may be responsible for any breach of such measures. Threats to information systems and data come from a variety of sources, including traditional computer “hackers,” threat actors, personnel (such as through theft or misuse), sophisticated nation-states, and nation-state-supported actors.
Even though we may not control the security measures of these vendors, we may be responsible for any breach of such measures. 21 Ta ble of Contents Threats to information systems and data come from a variety of sources, including traditional computer “hackers,” internal and external personnel (such as through theft or misuse), sophisticated nation-states, and nation-state-supported actors.
Any of these and other factors, or the cumulative effect of some of these factors, may cause our results of operations to vary significantly.
Any of these and other factors, or the cumulative effect of some of these factors, may cause our results of operations to vary significantly or be adversely affected.
We expect that our international activities will continue to grow for the foreseeable future as we continue to pursue opportunities in existing and new international markets, which will require significant dedication of management attention and financial resources. 28 Table of Contents Our current and future international business and operations involve a variety of risks, including: • slower than anticipated public cloud adoption by international businesses; • changes in a specific country’s or region’s political, economic, or legal and regulatory environment, including the effects of Brexit, pandemics, tariffs, trade wars, sanctions, or long-term environmental risks; • the need to adapt and localize our platform for specific countries; • greater difficulty collecting accounts receivable and longer payment cycles; • unexpected changes in trade relations, regulations, or laws; • new, evolving, and more stringent regulations relating to privacy and data security and the unauthorized use of, or access to, commercial and personal information; • differing and potentially more onerous labor regulations where labor laws are generally more advantageous to employees as compared to the United States, including regulations governing terminations in locations that do not permit at-will employment and deemed hourly wage and overtime regulations; • challenges inherent in efficiently managing, and the increased costs associated with, an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits, and compliance programs that are specific to each jurisdiction; • difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems, and regulatory systems; • increased travel, real estate, infrastructure, and legal compliance costs associated with international operations; • currency exchange rate fluctuations and the resulting effect on our revenue, RPO, and expenses, and the cost and risk of entering into hedging transactions to the extent we do so in the future; • limitations on, or charges or taxes associated with, our ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries; • laws and business practices favoring local competitors or general market preferences for local vendors; • limited or insufficient intellectual property protection or difficulties obtaining, maintaining, protecting, or enforcing our intellectual property rights, including our trademarks and patents; • political instability, military conflict or war, or terrorist activities; • COVID-19 or any other pandemics or epidemics that could result in decreased economic activity in certain markets; additional costs associated with travel, return to work, or other restrictions that are specific to certain markets; decreased use of our products and services; or decreased ability to import, export, or sell our products and services to existing or new customers in international markets; • exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S.
Our current and future international business and operations involve a variety of risks, including: • slower than anticipated public cloud adoption by international businesses; 30 Ta ble of Contents • changes in a specific country’s or region’s political, economic, or legal and regulatory environment, including the effects of Brexit, pandemics, tariffs, trade wars, sanctions, or long-term environmental risks; • the need to adapt and localize our platform for China and other countries, including as a result of data sovereignty requirements, and the engineering and related costs that we may incur when making those changes; • greater difficulty collecting accounts receivable and longer payment cycles; • unexpected changes in, or the selective application of, trade relations, regulations, or laws; • new, evolving, and more stringent regulations relating to privacy and data security and the unauthorized use of, or access to, commercial and personal information; • differing and potentially more onerous labor regulations where labor laws are generally more advantageous to employees as compared to the United States, including regulations governing terminations in locations that do not permit at-will employment and deemed hourly wage and overtime regulations; • challenges inherent in efficiently managing, and the increased costs associated with, an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits, and compliance programs that are specific to each jurisdiction; • difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems, and regulatory systems; • increased travel, real estate, infrastructure, and legal compliance costs associated with international operations, including increased costs associated with changing and potentially conflicting environmental regulations and requirements; • currency exchange rate fluctuations and the resulting effect on our revenue, RPO, and expenses, and the cost and risk of utilizing mitigating derivative transactions and entering into hedging transactions to the extent we do so in the future; • limitations on, or charges or taxes associated with, our ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries; • laws and business practices favoring local competitors or general market preferences for local vendors; • limited or insufficient intellectual property protection or difficulties obtaining, maintaining, protecting, or enforcing our intellectual property rights, including our trademarks and patents; • political instability, military conflict or war, or terrorist activities; • COVID-19 or any other pandemics or epidemics that could result in decreased economic activity in certain markets; additional costs associated with travel, return to work, or other restrictions that are specific to certain markets; decreased use of our products and services; or decreased ability to import, export, or sell our products and services to existing or new customers in international markets; • exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S.
Any intellectual property litigation to which we become a party may require us to do one or more of the following: • cease selling, licensing, or using products or features that incorporate the intellectual property rights that we allegedly infringe, misappropriate, or violate; • require us to change the name of our products or services; • make substantial payments for legal fees, settlement payments, or other costs or damages, including indemnification of third parties; • obtain a license or enter into a royalty agreement, either of which may not be available on reasonable terms or at all, in order to obtain the right to sell or use the relevant intellectual property; or • redesign the allegedly infringing products to avoid infringement, misappropriation, or violation, which could be costly, time-consuming, or impossible.
Any intellectual property litigation to which we become a party may require us to do one or more of the following: • cease selling, licensing, or using products or features that incorporate the intellectual property rights that we allegedly infringe, misappropriate, or violate; • require us to change the name of our products or services; • make substantial payments for legal fees, settlement payments, or other costs or damages, including indemnification of third parties; • obtain a license or enter into a royalty agreement, either of which may not be available on reasonable terms or at all, in order to obtain the right to sell or use the relevant intellectual property; or • redesign the allegedly infringing products to avoid infringement, misappropriation, or violation, which could be costly, time-consuming, or impossible. 33 Ta ble of Contents Intellectual property litigation is typically complex, time consuming, and expensive to resolve and would divert the time and attention of our management and technical personnel.
To the extent any of the companies in which we invest are not successful, which can include failure to achieve strategic business objectives as well as failure to achieve a favorable exit, we could recognize an impairment or loss on all or part of our investment. Seasonality may cause fluctuations in our remaining performance obligations.
To the extent any of the companies in which we invest are not successful, which can include failure to achieve strategic business objectives as well as failure to achieve a favorable exit, we could recognize an impairment or loss on all or part of our investment.
In the future, we intend to price our professional services based on the anticipated cost of those services and, as a result, expect to improve the gross profit percentage of our professional services business.
We price our professional services based on the anticipated cost of those services and, as a result, we expect to improve the gross profit percentage of our professional services business over time.
For example, in March 2022 we acquired Streamlit, Inc., a company that provides a framework built to simplify and accelerate the creation of data applications, representing a larger and more complex acquisition than our prior endeavors.
For example, in March 2022 we acquired Streamlit, Inc., a privately-held company which provides an open-source framework built to simplify and accelerate the creation of data applications, representing a larger and more complex acquisition than our prior endeavors.
A number of factors also influence the length and variability of our sales cycle, including the need to educate potential customers about the uses and benefits of our platform, the discretionary nature of purchasing and budget cycles, and the competitive nature of evaluation and purchasing approval processes.
A number of factors also influence the length and variability of our sales cycle, including the need to educate potential customers about the uses and benefits of our platform, the renegotiation of existing agreements to cover additional workloads, changing laws, the discretionary nature of purchasing and budget cycles, and the competitive nature of evaluation and purchasing approval processes.
Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the market price of our common stock. 30 Table of Contents Our business could be disrupted by catastrophic occurrences and similar events.
Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the market price of our common stock.
The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the New York Stock Exchange, and other applicable securities rules and regulations impose various requirements on public companies. Our management and other personnel devote a substantial amount of time to compliance with these requirements.
As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the New York Stock Exchange, and other applicable securities rules and regulations. Our management and other personnel devote a substantial amount of time to compliance with these requirements.
From time to time, companies that use third-party open source software have faced claims challenging the use of such open source software and their compliance with the terms of the applicable open source license.
We use open source software in our platform and in our professional service engagements. From time to time, companies that use third-party open source software have faced claims challenging the use of such open source software and their compliance with the terms of the applicable open source license.
We are required, pursuant to Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting as of January 31, 2022. This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting.
We are required, pursuant to Section 404 of the Sarbanes-Oxley Act (Section 404), to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting as of the end of each fiscal year. This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting.
We must also continue to enhance our data sharing and data marketplace capabilities so customers can share their data with internal business units, customers, and other third parties, and acquire additional third-party data to combine with their own data in order to gain additional business insights. In addition, our platform requires third-party public cloud infrastructure to operate.
We must also continue to enhance our data sharing and marketplace capabilities so customers can share their data with internal business units, customers, and other third parties, acquire additional third-party data to combine with their own data in order to gain additional business insights, and develop and monetize applications on our platform.
If, as a result of an audit or investigation, it is determined that we have failed to comply with applicable requirements, we may be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits or payments we have received, costs associated with the triggering of price reduction clauses, fines, and suspensions or debarment from future government business, and we may suffer reputational harm. 27 Table of Contents Further, we are increasingly doing business in heavily regulated industries, such as the financial services and health care industries.
If, as a result of an audit or investigation, it is determined that we have failed to comply with applicable requirements, we may be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits or payments we have received, costs associated with the triggering of price reduction clauses, fines, and suspensions or debarment from future government business, and we may suffer reputational harm.
We introduced data warehousing on our platform in 2014 as our core use case, and our customers subsequently began using our platform for additional use cases, including data lake, data engineering, data science, data application development, and data sharing.
We introduced data warehousing on our platform in 2014 as our core use case, and our customers subsequently began using our platform for additional workloads, including data lake, data engineering, data science and machine learning, application development, cybersecurity, Unistore, and collaboration.
We are subject to a variety of evolving threats, including cyber-attacks, denial-of-service attacks, ransomware attacks, business email compromises, computer malware, viruses, social engineering attacks (including phishing), personnel misconduct or error, supply-chain attacks, software bugs, and software or hardware failures, all of which are prevalent in our industry and our customers’ and partners’ industries.
We and the third parties on which we rely are subject to a variety of evolving cyber threats, including unauthorized intrusions, denial-of-service attacks, ransomware attacks, business email compromises, computer malware, social engineering attacks (including phishing), internal and external personnel misconduct or error, supply-chain attacks, software vulnerabilities, and software or hardware disruptions or failures, all of which are prevalent in our industry and our customers’ and partners’ industries.
We intend to continue to make investments to support our business, which may require us to engage in equity or debt financings to secure additional funds. Additional financing may not be available on terms favorable to us, if at all.
We intend to continue to make investments to support our business, which may require us to engage in equity or debt financings to secure additional funds. Additional financing may not be available on terms favorable to us, if at all, particularly during times of market volatility and general economic instability.
To be successful, we must protect our technology and brand in the United States and other jurisdictions through trademarks, trade secrets, patents, copyrights, service marks, invention assignments, contractual restrictions, and other intellectual property rights and confidentiality procedures.
Risks Related to Our Intellectual Property Our intellectual property rights may not protect our business or provide us with a competitive advantage. To be successful, we must protect our technology and brand in the United States and other jurisdictions through trademarks, trade secrets, patents, copyrights, service marks, invention assignments, contractual restrictions, and other intellectual property rights and confidentiality procedures.
Our customers may delegate their GDPR compliance or other privacy law obligations to us, and we may otherwise be required to expend resources to assist our customers with such compliance obligations. 33 Table of Contents Although we endeavor to comply with applicable data privacy and security obligations, any actual or perceived non-compliance with such obligations could result in proceedings, investigations, or claims against us by regulatory authorities, customers, or others, leading to reputational harm, significant fines, litigation costs, additional reporting requirements or oversight, bans on processing personal information, orders to destroy or not use personal information, limitations in our ability to develop or commercialize our platform, inability to process personal information or operate in certain jurisdictions, and other damages.
Although we endeavor to comply with applicable data privacy and security obligations, any actual or perceived non-compliance with such obligations by us or our third-party service providers and sub-processors could result in proceedings, investigations, or claims against us by regulatory authorities, customers, or others, leading to reputational harm, higher liability and indemnity obligations, significant fines, litigation costs, additional reporting requirements or oversight, bans on processing personal information, orders to destroy or not use personal information, limitations in our ability to develop or commercialize our platform, inability to process personal information or operate in certain jurisdictions, and other damages.
As a result, our ability to sell into the government sector could be restricted until we satisfy the requirements of such certifications. A substantial majority of our sales to date to government entities have been made indirectly through our distribution and reseller partners. Doing business with government entities, whether directly or indirectly, presents a variety of risks.
As a result, our ability to sell into the government sector could be restricted until we satisfy the requirements of such certifications. 28 Ta ble of Contents A substantial majority of our sales to date to government entities have been made indirectly through our distribution and reseller partners.
Such mandatory disclosures are costly, could lead to negative publicity, may cause our customers or partners to lose confidence in the effectiveness of our security measures, divert management’s attention, lead to governmental investigations, and require us to expend significant capital and other resources to respond to or alleviate problems caused by the actual or perceived security breach.
Such mandatory disclosures are costly and could lead to negative publicity, loss of customer or partner confidence in the effectiveness of our security measures, diversion of management’s attention, governmental investigations, and the expenditure of significant capital and other resources to respond to or alleviate problems caused by the actual or perceived security breach.
The market price of our common stock has been and may continue to be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, some of which are beyond our control, including: • actual or anticipated fluctuations in our financial condition or results of operations; • variance in our actual or projected financial performance from expectations of securities analysts; • changes in the pricing or consumption of our platform; • updates to our projected operating and financial results; • changes in laws or regulations applicable to our business; • announcements by us or our competitors of significant business developments, acquisitions, investments, or new offerings; • significant data breaches, disruptions to, or other incidents involving our platform; • our involvement in litigation; • future sales of our common stock by us or our major pre-IPO stockholders, including as a result of the expiration of market standoff agreements in September 2021 relating to concurrent private placements completed at the time of our IPO; • changes in senior management or key personnel; • the trading volume of our common stock; • changes in the anticipated future size and growth rate of our market; and • general economic and market conditions.
The market price of our common stock has been and may continue to be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, some of which are beyond our control, including: • actual or anticipated fluctuations in our financial condition or results of operations; 38 Ta ble of Contents • variance in our actual or projected financial performance from expectations of securities analysts; • changes in the pricing or consumption of our platform; • updates to our projected operating and financial results; • changes in laws or regulations applicable to our business; • announcements by us or our competitors of significant business developments, acquisitions, investments, or new offerings; • significant data breaches, disruptions to, or other incidents involving our platform; • our involvement in litigation; • changes in senior management or key personnel; • fluctuations in company valuations, particularly valuations of high-growth or cloud companies, perceived to be comparable to us • the trading volume of our common stock; • changes in the anticipated future size and growth rate of our market; • our issuance or repurchase of shares of our common stock; and • general political, social, economic, and market conditions.
Our contracts with customers, investors, and other third parties may include indemnification provisions under which we agree to defend and indemnify them against claims and losses arising from alleged infringement, misappropriation, or other violation of intellectual property rights, data protection violations, breaches of representations and warranties, damage to property or persons, or other liabilities arising from our products or such contracts.
Our contracts with customers, investors, and other third parties may also include indemnification provisions under which we agree to defend and indemnify them against claims and losses arising from alleged infringement, misappropriation, or other violation of intellectual property rights and for other matters.
If we are unable to prevent third parties from infringing upon or misappropriating our intellectual property or are required to incur substantial expenses defending our intellectual property rights, our business, financial condition, and results of operations may be materially adversely affected. 31 Table of Contents We may become subject to intellectual property disputes, which are costly and may subject us to significant liability and increased costs of doing business.
If we are unable to prevent third parties from infringing upon or misappropriating our intellectual property or are required to incur substantial expenses defending our intellectual property rights, our business, financial condition, and results of operations may be materially adversely affected.
Any use of open source software inconsistent with our policies or licensing terms could harm our business and financial position. 32 Table of Contents Risks Related to Our Tax, Legal, and Regulatory Environment We are subject to stringent and changing obligations related to data privacy and security, and the failure or perceived failure to comply with these obligations could result in significant fines and liability or otherwise result in substantial harm to our business and prospects.
Risks Related to Our Tax, Legal, and Regulatory Environment We are subject to stringent and changing obligations related to data privacy and security, and the failure or perceived failure to comply with these obligations could result in significant fines and liability or otherwise result in substantial harm to our business and prospects.
As a result, the length of our sales cycle, from identification of the opportunity to deal closure, may vary significantly from customer to customer, with sales to large enterprises typically taking longer to complete.
As a result, the length of our sales cycle, from identification of the opportunity to deal closure, may vary significantly from customer to customer, with sales to large enterprises typically taking longer to complete. We have also historically seen consumption growth from large enterprises take longer than when compared to smaller enterprises.
Bribery Act 2010, and other anti-corruption and anti-money laundering laws in the countries in which we conduct business.
We are subject to the FCPA, U.S. domestic bribery laws, the U.K. Bribery Act 2010, and other anti-corruption and anti-money laundering laws in the countries in which we conduct business.
Under legislation enacted in 2017, informally titled the Tax Act, as modified by legislation enacted on March 27, 2020, entitled the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), U.S. federal NOLs incurred in taxable years beginning after December 31, 2017 can be carried forward indefinitely, but the deductibility of such U.S. federal NOLs in taxable years beginning after December 31, 2020 is limited to 80% of taxable income.
Under the Tax Act, as modified by 2020 legislation referred to as the CARES Act, U.S. federal NOLs arising in taxable years beginning after December 31, 2017 can be carried forward indefinitely, but the deductibility of such U.S. federal NOLs in taxable years beginning after December 31, 2020 is limited to 80% of such year’s taxable income.
In addition, an increasing portion of our operating expenses is incurred outside the United States. These operating expenses are denominated in foreign currencies and are subject to fluctuations due to changes in foreign currency exchange rates.
In addition, as our international operations expand, an increasing portion of our operating expenses is incurred outside the United States. These operating expenses are denominated in foreign currencies and are subject to fluctuations due to changes in foreign currency exchange rates. Exposure to these risks and fluctuations could adversely affect our financial position, results of operations, and cash flows.
We compete in markets where there are a large number of patents, copyrights, trademarks, trade secrets, and other intellectual and proprietary rights, as well as disputes regarding infringement of these rights.
We may become subject to intellectual property disputes, which are costly and may subject us to significant liability and increased costs of doing business. We compete in markets where there are a large number of patents, copyrights, trademarks, trade secrets, and other intellectual and proprietary rights, as well as disputes regarding infringement of these rights.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe currently lease offices in the United States, including in Atlanta, Georgia; Bellevue, Washington; Bozeman, Montana; Denver, Colorado; Dublin, California; and San Mateo, California. We also have offices in multiple locations in Canada, Europe, and the APJ and EMEA regions. All of our offices are leased, and we do not own any real property.
Biggest changeWe currently lease offices in the United States, including in Atlanta, Georgia; Bellevue, Washington; Boston, Massachusetts; Bozeman, Montana; Denver, Colorado; Dublin, California; San Mateo, California; and Washington, D.C. We also have offices in multiple locations in Canada, Europe, and the APJ and EMEA regions. All of our offices are leased, and we do not own any real property.
While we believe that our current facilities are adequate to meet our foreseeable needs, we intend to expand our facilities in the future as we continue to add employees around the world. We believe that suitable additional or alternative space will be available to accommodate our future growth. 40 Table of Contents
While we believe that our current facilities are adequate to meet our foreseeable needs, we intend to expand our facilities in the future as we continue to add employees around the world. We believe that suitable additional or alternative space will be available to accommodate our future growth.
Removed
Since April 2020, the majority of our workforce has been working remotely. Although we have recently opened most of our offices for voluntary use and we expect many of our employees to return to physical offices during the fiscal year ending January 31, 2023, the nature and extent of that return is uncertain.
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The majority of our workforce began working remotely in April 2020 and although some of our employees continue to work remotely following the COVID-19 pandemic, the majority of our workforce has returned to physical offices.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors. ITEM 4. MINE SAFETY DISCLOSURES None. 41 Table of Contents PART II
Biggest changeThe results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSecurities Authorized for Issuance under Equity Compensation Plans The information required by this item is incorporated by reference to the definitive Proxy Statement for the 2022 Annual Meeting of Stockholders, which will be filed with the SEC no later than 120 days after January 31, 2022. Recent Sales of Unregistered Equity Securities None.
Biggest changeSecurities Authorized for Issuance under Equity Compensation Plans The information required by this item is incorporated by reference to the definitive Proxy Statement for the 2023 Annual Meeting of Stockholders, which will be filed with the SEC no later than 120 days after January 31, 2023.
The graph below shows the cumulative total return to our stockholders between September 16, 2020 (the date that our Class A common stock commenced trading on the New York Stock Exchange) through January 31, 2022 in comparison to the S&P 500 Index and the S&P 500 Information Technology Index.
The graph below shows the cumulative total return to our stockholders between September 16, 2020 (the date that our Class A common stock commenced trading on the New York Stock Exchange) through January 31, 2023 in comparison to the S&P 500 Index and the S&P 500 Information Technology Index.
See Note 11, “Equity,” in the notes to our consolidated financial statements included elsewhere in this Annual Form on Form 10-K for further details. Dividend Policy We have never declared or paid cash dividends on our capital stock.
See Note 12, “Equity,” in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details. Dividend Policy We have never declared or paid cash dividends on our capital stock.
Use of Proceeds On September 18, 2020, we closed our IPO of 32,200,000 shares of our Class A common stock at an offering price of $120.00 per share, including 4,200,000 shares pursuant to the exercise of the underwriters’ option to purchase additional shares of our Class A common stock, resulting in gross proceeds to us of $3.7 billion, net of the underwriting discounts.
Use of Proceeds On September 18, 2020, we closed our IPO of 32.2 million shares of our Class A common stock at an offering price of $120.00 per share, including 4.2 million shares pursuant to the exercise of the underwriters’ option to purchase additional shares of our Class A common stock, resulting in gross proceeds to us of $3.7 billion, net of the underwriting discounts.
Immediately subsequent to the closing of our IPO, each of Salesforce Ventures LLC and Berkshire Hathaway Inc. purchased from us approximately 2,083,333 shares of our Class A common stock at a price per share equal to the IPO price of $120.00 per share in two concurrent private placements.
Immediately subsequent to the closing of our IPO, each of Salesforce Ventures LLC and Berkshire Hathaway Inc. purchased from us approximately 2.1 million shares of our Class A common stock at a price per share equal to the IPO price of $120.00 per share in two concurrent private placements.
Prior to that date, there was no public trading market for our Class A common stock. Holders of Record As of March 1, 2022, there were 133 stockholders of record of our Class A common stock.
Prior to that date, there was no public trading market for our Class A common stock. Holders of Record As of March 1, 2023, there were 157 stockholders of record of our Class A common stock.
Added
Recent Sales of Unregistered Equity Securities In connection with our acquisition of the outstanding capital stock of Streamlit, Inc. in March 2022, we agreed to issue 2.3 million shares of our common stock as consideration (Equity Consideration), all of which have been issued.
Added
A portion of the Equity Consideration that was issued to Streamlit’s founders (Founder Shares) are subject to vesting agreements pursuant to which the Founder Shares vest over three years, subject to each founder’s continued employment with Snowflake or its affiliates.
Added
See Note 12, “Equity,” in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.
Added
These issuances were made in reliance on one or more of the following exemptions or exclusions from the registration requirements of the Securities Act of 1933, as amended (the Securities Act): Section 4(a)(2) of the Securities Act and Regulation D promulgated under the Securities Act.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeSee Note 11, “Equity,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details. 52 Table of Contents The following table sets forth our consolidated statements of operations data expressed as a percentage of revenue for the periods indicated: Fiscal Year Ended January 31, 2022 2021 2020 Revenue 100 % 100 % 100 % Cost of revenue (1) 38 41 44 Gross profit 62 59 56 Operating expenses (1) : Sales and marketing 61 81 111 Research and development 38 40 40 General and administrative 22 30 41 Total operating expenses 121 151 192 Operating loss (59) (92) (136) Interest income 1 1 4 Other income (expense), net 2 — — Loss before income taxes (56) (91) (132) Provision for income taxes — — — Net loss (56%) (91%) (132%) ________________ (1) Stock-based compensation included in the table above as a percentage of revenue as follows: Fiscal Year Ended January 31, 2022 2021 2020 Cost of revenue 7 % 6 % 1 % Sales and marketing 15 17 8 Research and development 19 17 6 General and administrative 9 11 15 Total stock-based compensation 50 % 51 % 30 % Comparison of the Fiscal Years Ended January 31, 2022 and 2021 Revenue Fiscal Year Ended January 31, 2022 2021 % Change (dollars in thousands) Revenue: Product $ 1,140,469 $ 553,794 106% Professional services and other 78,858 38,255 106% Total $ 1,219,327 $ 592,049 106% Percentage of revenue: Product 94% 94% Professional services and other 6% 6% Total 100% 100% 53 Table of Contents Product revenue increased $586.7 million for the fiscal year ended January 31, 2022, compared to the prior fiscal year, primarily due to increased consumption of our platform by existing customers, as evidenced by our net revenue retention rate of 178% as of January 31, 2022.
Biggest changeSee Note 12, “Equity,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details. 55 Ta ble of Contents The following table sets forth our consolidated statements of operations data expressed as a percentage of revenue for the periods indicated: Fiscal Year Ended January 31, 2023 2022 2021 Revenue 100 % 100 % 100 % Cost of revenue (1) 35 38 41 Gross profit 65 62 59 Operating expenses (1) : Sales and marketing 54 61 81 Research and development 38 38 40 General and administrative 14 22 30 Total operating expenses 106 121 151 Operating loss (41) (59) (92) Interest income 3 1 1 Other income (expense), net (2) 2 — Loss before income taxes (40) (56) (91) Provision for (benefit from) income taxes (1) — — Net loss (39%) (56%) (91%) Less: net loss attributable to noncontrolling interest — — — Net loss attributable to Snowflake Inc.
Our cloud-native architecture consists of three independently scalable but logically integrated layers across storage, compute, and cloud services. The storage layer ingests massive amounts and varieties of structured, semi-structured, and unstructured data to create a unified data record. The compute layer provides dedicated resources to enable users to simultaneously access common data sets for many use cases with minimal latency.
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.
We generate the substantial majority of our revenue from fees charged to our customers based on the storage, compute, and data transfer resources consumed on our platform as a single, integrated offering. We do not make any one of these resources available for consumption without the others.
We generate the substantial majority of our revenue from fees charged to our customers based on the compute, storage, and data transfer resources consumed on our platform as a single, integrated offering. We do not make any one of these resources available for consumption without the others.
Financing Activities Net cash provided by financing activities for the fiscal year ended January 31, 2022 was $178.2 million, primarily as a result of proceeds from the issuance of equity securities under our equity incentive plans.
Net cash provided by financing activities for the fiscal year ended January 31, 2022 was $178.2 million, primarily as a result of proceeds from the issuance of equity securities under our equity incentive plans.
Our revenue also includes professional services and other revenue, which consists primarily of consulting, on-site technical solution services, and training related to our platform. Our professional services revenue is recognized over time based on input measures, including time and materials costs incurred relative to total costs, with consideration given to output measures, such as contract deliverables, when applicable.
Our revenue also includes professional services and other revenue, which consists primarily of consulting, technical solution services, and training related to our platform. Our professional services revenue is recognized over time based on input measures, including time and materials costs incurred relative to total costs, with consideration given to output measures, such as contract deliverables, when applicable.
While we expect our product gross margin to remain relatively flat for the fiscal year ending January 31, 2023, a number of factors could hinder any improvement in our product gross margin, including (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 our marketplace listings, (iii) our discounting practices, including as a result of changes to the competitive environment, and (iv) the extent of our investments in our operations, including performance improvements that may make our platform or the underlying cloud infrastructure more efficient.
While we expect our product gross margin to remain relatively flat for the fiscal year ending January 31, 2024, a number of factors could hinder any improvement in our product gross margin, including (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 our marketplace listings, (iii) our discounting practices, including as a result of changes to the competitive environment, and (iv) the extent of our investments in our operations, including performance improvements that may make our platform or the underlying cloud infrastructure more efficient.
To realize this vision, we deliver the Data Cloud, a network where Snowflake customers, partners, data providers, and data consumers can break down data silos and derive value from rapidly growing data sets in secure, governed, and compliant ways.
To realize this vision, we deliver the Data Cloud, a network where Snowflake customers, partners, developers, data providers, and data consumers can break down data silos and derive value from rapidly growing data sets in secure, governed, and compliant ways.
Interest Income Interest income consists primarily of interest income earned on our cash equivalents and short-term and long-term investments, including amortization of premiums and accretion of discounts related to our available-for-sale marketable securities, net of associated fees.
Interest Income Interest income consists primarily of interest income earned on our cash and cash equivalents and short-term and long-term investments, including amortization of premiums and accretion of discounts related to our available-for-sale marketable debt securities, net of associated fees.
Sales and marketing expenses also include advertising costs and other expenses associated with our marketing and business development programs, including Summit, our user conference, offset by proceeds from such conferences and programs.
Sales and marketing expenses also include advertising costs and other expenses associated with our sales, marketing and business development programs, including Summit, our annual user conference, offset by proceeds from such conferences and programs.
Our ability to increase usage of our platform by, and sell additional contracted capacity to, existing customers, and, in particular, large enterprise customers, will depend on a number of factors, including our customers’ satisfaction with our platform, competition, pricing, overall changes in our customers’ spending levels, the effectiveness of our and our partners’ efforts to help our customers realize the benefits of our platform, and the extent to which customers migrate new workloads to our platform over time.
Our ability to increase usage of our platform by, and sell additional contracted capacity to, existing customers, and, in particular, large enterprise customers, will depend on a number of factors, including our customers’ satisfaction with our platform, competition, pricing, economic conditions, overall changes in our customers’ spending levels, the effectiveness of our and our partners’ efforts to help our customers realize the benefits of our platform, and the extent to which customers migrate new workloads to our platform over time.
Our platform is the innovative technology that powers the Data Cloud, enabling customers to consolidate data into a single source of truth to drive meaningful business insights, build data-driven applications, and share data. We provide our platform through a customer-centric, consumption-based business model, only charging customers for the resources they use.
Our platform is the innovative technology that powers the Data Cloud, enabling customers to consolidate data into a single source of truth to drive meaningful business insights, build data applications, and share data and data products. We provide our platform through a customer-centric, consumption-based business model, only charging customers for the resources they use.
While we have seen a rapid increase in the number of customers that have contributed more than $1 million in product revenue in the trailing 12 months, we believe that there is a substantial opportunity to continue growing these customers further, as well as continuing to expand the usage of our platform within our other existing customers.
While we have seen an increase in the number of customers that have contributed more than $1 million in product revenue in the trailing 12 months, we believe that there is a substantial opportunity to continue growing these customers further, as well as continuing to expand the usage of our platform within our other existing customers.
Provision for (Benefit from) Income Taxes Provision for (benefit from) income taxes consists primarily of income taxes in certain foreign and U.S. state jurisdictions in which we conduct business.
Provision for (Benefit from) Income Taxes Provision for (benefit from) income taxes consists primarily of income taxes in certain foreign and U.S. federal and state jurisdictions in which we conduct business.
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 31 regional deployments around the world. These deployments are generally interconnected to deliver the Data Cloud, enabling a consistent, global user experience.
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 38 regional deployments around the world. These deployments are generally interconnected to deliver the Data Cloud, enabling a consistent, global user experience.
As of January 31, 2022, our material cash requirements from known contractual obligations and commitments relate 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.
As of January 31, 2023, our material cash requirements from known contractual obligations and commitments relate 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.
For more information regarding our contractual obligations and commitments as of January 31, 2022, see Note 9, “Commitments and Contingencies,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Our long-term purchase commitments may be satisfied earlier than the payment periods presented as we continue to grow and scale our business.
For more information regarding our contractual obligations and commitments as of January 31, 2023, see Note 10, “Commitments and Contingencies,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Our long-term purchase commitments may be satisfied earlier than the payment periods presented as we continue to grow and scale our business.
Unless the context otherwise requires, all references in this report to “Snowflake,” the “Company,” “we,” “our,” “us,” or similar terms refer to Snowflake Inc. and its subsidiaries. A discussion regarding our financial condition and results of operations for the fiscal year ended January 31, 2022 compared to the fiscal year ended January 31, 2021 is presented below.
Unless the context otherwise requires, all references in this report to “Snowflake,” the “Company,” “we,” “our,” “us,” or similar terms refer to Snowflake Inc. and its consolidated subsidiaries. A discussion regarding our financial condition and results of operations for the fiscal year ended January 31, 2023 compared to the fiscal year ended January 31, 2022 is presented below.
A discussion regarding our financial condition and results of operations for the fiscal year ended January 31, 2021 compared to the fiscal year ended January 31, 2020 can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended January 31, 2021 filed with the SEC on March 31, 2021.
A discussion regarding our financial condition and results of operations for the fiscal year ended January 31, 2022 compared to the fiscal year ended January 31, 2021 can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended January 31, 2022 filed with the SEC on March 30, 2022.
However, the amount and timing of revenue recognition are generally driven by customers' 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.
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.
We intend to expand our direct sales force, with a focus on specific industries and increasing sales to large organizations. While our platform is built for organizations of all sizes, we focus our selling efforts on large enterprise customers and customers with vast amounts of data, and providing industry-specific solutions.
We intend to continue expanding our direct sales force, with a focus on specific industries and increasing sales to large organizations. While our platform is built for organizations of all sizes, we focus our selling efforts on large enterprise customers and customers with vast amounts of data, and providing industry-specific solutions.
Such costs include costs associated with office facilities, depreciation of property and equipment, and information technology (IT) related personnel and other expenses, such as software and subscription services. Cost of Revenue Cost of revenue consists of cost of product revenue and cost of professional services and other revenue. Cost of revenue also includes allocated overhead costs.
Such costs include costs associated with office facilities, depreciation of property and equipment, information technology (IT) and general recruiting related expenses and other expenses, such as software and subscription services. Cost of Revenue Cost of revenue consists of cost of product revenue and cost of professional services and other revenue. Cost of revenue also includes allocated overhead costs.
For data transfer resources, consumption fees are based on terabytes of data transferred, the public cloud provider used, and the region to and from which the transfer is executed. 43 Table of Contents Our customers typically enter into capacity arrangements with a term of one to four years, or consume our platform under on-demand arrangements in which we charge for use of our platform monthly in arrears.
For data transfer resources, consumption fees are based on terabytes of data transferred, the public cloud provider used, and the region to and from which the transfer is executed. 45 Ta ble of Contents Our customers typically enter into capacity arrangements with a term of one to four years, or consume our platform under on-demand arrangements in which we charge for use of our platform monthly in arrears.
As our customer base grows, we expect our ability to forecast customer consumption in the aggregate to improve. However, in any given period, there is a risk that customers will consume our platform more slowly than we expect, which may cause fluctuations in our revenue and results of operations.
As our customer base grows, we expect our ability to forecast customer consumption in the aggregate to improve. However, in any given period, there is a risk that customers will consume our platform more slowly than we expect, including in response to adverse macroeconomic conditions, which may cause fluctuations in our revenue and results of operations.
Although our net revenue retention rate has increased over the periods presented above, we expect our net revenue retention rate to decrease over the long-term as customers that have consumed our platform for an extended period of time become a larger portion of both our overall customer base and our product revenue that we use to calculate net revenue retention rate, and as their consumption growth primarily relates to existing use cases rather than new use cases.
We expect our net revenue retention rate to decrease over the long-term as customers that have consumed our platform for an extended period of time become a larger portion of both our overall customer base and our product revenue that we use to calculate net revenue retention rate, and as their consumption growth primarily relates to existing use cases rather than new use cases.
In addition to our results determined in accordance with GAAP, free cash flow, a non-GAAP financial measure, is included in the section titled “Key Business Metrics.” This non-GAAP financial measure is not meant to be considered in isolation or as a substitute for, or superior to, comparable GAAP financial measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.
In addition to our results determined in accordance with U.S. generally accepted accounting principles (GAAP), free cash flow, a non-GAAP financial measure, is included in the section titled “Key Business Metrics.” This non-GAAP financial measure is not meant to be considered in isolation or as a substitute for, or superior to, comparable GAAP financial measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.
The following table presents a reconciliation of free cash flow to net cash provided by (used in) operating activities, the most directly comparable financial measure calculated in accordance with GAAP, for the periods presented (in millions): Fiscal Year Ended January 31, 2022 2021 2020 Net cash provided by (used in) operating activities $ 110.2 $ (45.4) $ (176.6) Less: purchases of property and equipment (16.2) (35.0) (18.6) Less: capitalized internal-use software development costs (12.8) (5.3) (4.3) Free cash flow (non-GAAP) (1) $ 81.2 $ (85.7) $ (199.4) ________________ (1) Free cash flow for the fiscal years ended January 31, 2022, 2021, and 2020 included the effect of $68.6 million, $14.1 million, and $0.2 million, respectively, in the net cash paid on payroll tax-related items on employee stock transactions.
The following table presents a reconciliation of free cash flow to net cash provided by (used in) operating activities, the most directly comparable financial measure calculated in accordance with GAAP, for the periods presented (in millions): Fiscal Year Ended January 31, 2023 2022 2021 Net cash provided by (used in) operating activities $ 545.6 $ 110.2 $ (45.4) Less: purchases of property and equipment (25.1) (16.2) (35.0) Less: capitalized internal-use software development costs (24.0) (12.8) (5.3) Free cash flow (non-GAAP) (1)(2) $ 496.5 $ 81.2 $ (85.7) ________________ (1) Free cash flow for the fiscal years ended January 31, 2023, 2022, and 2021 included the effect of $23.9 million, $68.6 million, and $14.1 million, respectively, in the net cash paid on payroll tax-related items on employee stock transactions.
Other revenue consists primarily of fees from customer training delivered on-site or through publicly available classes. 49 Table of Contents Allocation of Overhead Costs Overhead costs that are not substantially dedicated for use by a specific functional group are allocated based on headcount.
Other revenue consists primarily of fees from customer training delivered on-site or through publicly available classes. 52 Ta ble of Contents Allocation of Overhead Costs Overhead costs that are not substantially dedicated for use by a specific functional group are allocated based on headcount.
Revenue from on-demand arrangements typically relates to initial consumption as part of customer onboarding and, to a lesser extent, overage consumption beyond a customer’s contracted usage amount or following the expiration of a customer’s contract. Revenue from on-demand arrangements represented 3%, 4%, and 4% of the Company’s revenue for the fiscal years ended January 31, 2022, 2021, and 2020, respectively.
Revenue from on-demand arrangements typically relates to initial consumption as part of customer onboarding and, to a lesser extent, overage consumption beyond a customer’s contracted usage amount or following the expiration of a customer’s contract. Revenue from on-demand arrangements represented approximately 2%, 3%, and 4% of our revenue for the fiscal years ended January 31, 2023, 2022, and 2021, respectively.
Once our platform has been adopted, we focus on increasing the migration of additional customer workloads to our platform to drive increased consumption, as evidenced by our net revenue retention rate of 178% and 168% as of January 31, 2022 and 2021, respectively. See the section titled “Key Business Metrics” for a definition of net revenue retention rate.
Once our platform has been adopted, we focus on increasing the migration of additional customer workloads to our platform to drive increased consumption, as evidenced by our net revenue retention rate of 158% and 177% as of January 31, 2023 and 2022, respectively. See the section titled “Key Business Metrics” for a definition of net revenue retention rate.
Our ability to attract new customers will depend on a number of factors, including our success in recruiting and scaling our sales and marketing organization, competitive dynamics in our target markets, and our ability to build and maintain partner relationships, including with global system integrators, resellers, and technology partners.
Our ability to attract new customers will depend on a number of factors, including our success in recruiting and scaling our sales and marketing organization, competitive dynamics in our target markets, changes in our customers’ spending in response to market uncertainty, and our ability to build and maintain partner relationships, including with global system integrators, resellers, and technology partners.
Any customer in the cohort that did not use our platform in the second year remains in the calculation and contributes zero product revenue in the second year. Our net revenue retention rate is subject to adjustments for acquisitions, consolidations, spin-offs, and other market activity.
Any customer in the cohort that did not use our platform in the second year remains in the calculation and contributes zero product revenue in the second year. Our net revenue retention rate is subject to adjustments for acquisitions, consolidations, spin-offs, and other market activity, and we present our net revenue retention rate for historical periods reflecting these adjustments.
Such deployment revenue represented approximately 1% of our revenue for all periods presented. 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 fiscal year ended January 31, 2022 is 2.4 years.
Such deployment revenue represented less than 1% of our revenue for all periods presented. 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 fiscal year ended January 31, 2023 is 2.2 years.
Moreover, RPO is influenced by a number of factors, including the timing of renewals, the timing of purchases of additional capacity, average contract terms, seasonality, and the extent to which customers are permitted to roll over unused capacity to future periods, generally upon the purchase of additional capacity at renewal.
Moreover, RPO is influenced by a number of factors, including the timing and size of renewals, the timing and size of purchases of additional capacity, average contract terms, seasonality, changes in foreign currency exchange rates, and the extent to which customers are permitted to roll over unused capacity to future periods, generally upon the purchase of additional capacity at renewal.
As of January 31, 2022, our principal sources of liquidity were cash, cash equivalents, and short-term and long-term investments totaling $5.1 billion. Our investments primarily consist of corporate notes and bonds, commercial paper, money market funds, U.S. government and agency securities, and certificates of deposit. As of January 31, 2022, our RPO was $2.6 billion.
Liquidity and Capital Resources As of January 31, 2023, our principal sources of liquidity were cash, cash equivalents, and short-term and long-term investments totaling $5.1 billion. Our investments primarily consist of corporate notes and bonds, commercial paper, U.S. government and agency securities, certificates of deposit, and money market funds. As of January 31, 2023, our RPO was $3.7 billion.
In any given period, there is a risk that customer consumption of our platform will be slower than we expect, which may cause fluctuations in our revenue and results of operations.
In any given period, there is a risk that customer consumption of our platform will be slower than we expect, including in response to adverse macroeconomic conditions, which may cause fluctuations in our revenue and results of operations.
We may not achieve anticipated revenue growth from expanding our sales force to focus on large enterprises and specific industries if we are unable to hire, develop, integrate, and retain talented and effective sales personnel; if our new and existing sales personnel are unable to achieve desired productivity levels in a reasonable period of time; or if our sales and marketing programs are not effective. 45 Table of Contents Investing in Growth and Scaling our Business We are focused on our long-term revenue potential.
We may not achieve anticipated revenue growth from expanding our sales force to focus on large enterprises and specific industries if we are unable to hire, develop, integrate, and retain talented and effective sales personnel; if our new and existing sales personnel are unable to achieve desired productivity levels in a reasonable period of time; or if our sales and marketing programs are not effective.
Revenue derived from new customers under capacity arrangements represented approximately 4% and 7% of our revenue for the fiscal years ended January 31, 2022 and 2021, respectively. The remainder was driven by on-demand arrangements.
Approximately 96% and 93% of our revenue was derived from existing customers under capacity arrangements for the fiscal years ended January 31, 2023 and 2022, respectively. Revenue derived from new customers under capacity arrangements represented approximately 2% and 4% of our revenue for the fiscal years ended January 31, 2023 and 2022, respectively. The remainder was driven by on-demand arrangements.
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, and outside services contracted for sales and marketing purposes.
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 developer community intangible asset, and outside services contracted for sales and marketing purposes.
Our platform is used globally by organizations of all sizes across a broad range of industries. As of January 31, 2022, we had 5,944 total customers, increasing from 4,139 customers as of January 31, 2021.
Our platform is used globally by organizations of all sizes across a broad range of industries. As of January 31, 2023, we had 7,828 total customers, increasing from 5,967 customers as of January 31, 2022.
Cost of professional services and other revenue increased $61.9 million for the fiscal year ended January 31, 2022, compared to the prior fiscal year, primarily due to an increase of $59.3 million in personnel-related costs and allocated overhead costs, 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 RSUs granted after our IPO.
Cost of professional services and other revenue increased $59.4 million for the fiscal year ended January 31, 2023, compared to the prior fiscal year, primarily due to an increase of $48.3 million in personnel-related costs and allocated overhead costs, 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.
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, increased $34.3 million for the fiscal year ended January 31, 2022, compared to the prior fiscal year, primarily due to increases in customers’ consumption of our platform and in bookings.
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, increased $33.1 million for the fiscal year ended January 31, 2023, compared to the prior fiscal year, primarily due to increases in customers’ consumption of our platform and in the annualized contract value of our customer contracts.
The remaining increase in general and administrative expenses was attributable to increased insurance expenses and other corporate expenses to support the normal course of operating as a public company and our continued growth.
The remaining increase in general and administrative expenses was primarily attributable to increased insurance expenses and increased other corporate expenses to support the normal course of operations and our continued growth.
We expect that our research and development expenses will increase in absolute dollars as our business grows, particularly as we incur additional costs related to continued investments in our platform. However, we expect that our research and development expenses will decrease as a percentage of our revenue over time.
We expect that our research and development expenses will increase in absolute dollars as our business grows, particularly as we incur additional costs related to continued investments in our platform.
Professional services and other revenue increased $40.6 million for the fiscal year ended January 31, 2022. compared to the prior fiscal year, as we expanded our professional services organization to help our customers further realize the benefits of our platform.
Professional services and other revenue increased $48.0 million for the fiscal year ended January 31, 2023, compared to the prior fiscal year, as we continued to expand our professional services organization to help our customers further realize the benefits of our platform.
As of January 31, 2022, total compensation cost related to unvested stock-based awards not yet recognized was $1.4 billion, which will be recognized over a weighted-average period of 3.0 years.
As of January 31, 2023, total compensation cost related to unvested equity awards not yet recognized was $2.4 billion, which will be recognized over a weighted-average period of 2.9 years.
We have a history of introducing successful new features and capabilities on our platform, and we intend to continue to invest heavily to grow our business to take advantage of our expansive market opportunity rather than optimize for profitability or cash flow in the near future.
We have a history of introducing successful new features and capabilities on our platform, and we intend to continue to invest heavily to grow our business to take advantage of our expansive market opportunity while also focusing on profitability and cash flow.
In the three months ending April 30, 2022, we began funding withholding taxes in certain jurisdictions due on the vesting of employee RSUs by net share settlement, rather than our previous approach of selling shares of our common stock to cover taxes upon vesting of such awards.
During the fiscal year ended January 31, 2023, we began funding withholding taxes due upon the vesting of employee RSUs in certain jurisdictions by net share settlement, rather than our previous approach of selling shares of our common stock to cover taxes upon vesting of such awards.
The following tables present a summary of key business metrics for the periods presented: Fiscal Year Ended January 31, 2022 2021 2020 Product revenue (in millions) $ 1,140.5 $ 553.8 $ 252.2 Free cash flow (non-GAAP) (in millions) (1) $ 81.2 $ (85.7) $ (199.4) January 31, 2022 January 31, 2021 January 31, 2020 Remaining performance obligations (in millions) (2) $ 2,646.5 $ 1,332.8 $ 426.3 Total customers 5,944 4,139 2,392 Net revenue retention rate 178 % 168 % 169 % Customers with trailing 12-month product revenue greater than $1 million 184 77 41 ________________ (1) Free cash flow for the fiscal years ended January 31, 2022, 2021, and 2020 included the effect of $68.6 million, $14.1 million, and $0.2 million, respectively, in the net cash paid on payroll tax-related items on employee stock transactions.
The following tables present a summary of key business metrics for the periods presented: Fiscal Year Ended January 31, 2023 2022 2021 Product revenue (in millions) $ 1,938.8 $ 1,140.5 $ 553.8 Free cash flow (non-GAAP) (in millions) (1)(2) $ 496.5 $ 81.2 $ (85.7) 48 Ta ble of Contents January 31, 2023 January 31, 2022 January 31, 2021 Customers with trailing 12-month product revenue greater than $1 million (3) 330 184 79 Net revenue retention rate (3) 158 % 177 % 168 % Forbes Global 2000 customers (3) 573 492 403 Remaining performance obligations (in millions) (4) $ 3,660.5 $ 2,646.5 $ 1,332.8 ________________ (1) Free cash flow for the fiscal years ended January 31, 2023, 2022, and 2021 included the effect of $23.9 million, $68.6 million, and $14.1 million, respectively, in the net cash paid on payroll tax-related items on employee stock transactions.
Each of our Fortune 500 and Global 2000 customer counts is subject to adjustments for annual updates to the Fortune 500 list by Fortune and to the Global 2000 list by Forbes, respectively, as well as acquisitions, consolidations, spin-offs, and other market activity with respect to such customers.
Our Forbes Global 2000 customer count is subject to adjustments for annual updates to the 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.
Net cash provided by operating activities was $110.2 million for the fiscal year ended January 31, 2022, compared to the net cash used in operating activities of $45.4 million for the fiscal year ended January 31, 2021, primarily due to an increase of $724.4 million in cash collected from customers resulting from increased sales.
Net cash provided by operating activities increased $435.5 million for the fiscal year ended January 31, 2023, compared to the fiscal year ended January 31, 2022, primarily due to an increase of $954.1 million in cash collected from customers resulting from increased sales.
Sales and Marketing Fiscal Year Ended January 31, 2022 2021 % Change (dollars in thousands) Sales and marketing $ 743,965 $ 479,317 55% Percentage of revenue 61 % 81 % Headcount (at period end) 1,891 1,257 Sales and marketing expenses increased $264.6 million for the fiscal year ended January 31, 2022, compared to the prior fiscal year, primarily due to an increase of $208.7 million in personnel-related costs (excluding commission expenses) and allocated overhead costs, 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 RSUs granted after our IPO.
Sales and Marketing Fiscal Year Ended January 31, 2023 2022 % Change (dollars in thousands) Sales and marketing $ 1,106,507 $ 743,965 49% Percentage of revenue 54 % 61 % Headcount (at period end) 2,738 1,891 Sales and marketing expenses increased $362.5 million for the fiscal year ended January 31, 2023, compared to the prior fiscal year, primarily due to an increase of $232.5 million in personnel-related costs (excluding commission expenses) and allocated overhead costs, as a result of increased headcount, stock-based compensation, and overall costs to support the growth in our business.
As of January 31, 2022, our customers included 241 of the Fortune 500, based on the 2021 Fortune 500 list, and 488 of the Global 2000, based on the 2021 Forbes Global 2000 list, and those customers contributed approximately 26% and 40% of our revenue, respectively, for the fiscal year ended January 31, 2022.
As of January 31, 2023, our customers included 573 of the Forbes Global 2000, based on the 2022 Forbes Global 2000 list, and those customers contributed approximately 41% of our revenue for the fiscal year ended January 31, 2023.
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.
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. In January 2023, we amended one of our third-party cloud infrastructure agreements effective February 1, 2023.
However, we expect that our sales and marketing expenses will decrease as a percentage of our revenue over time. 50 Table of Contents Research and Development Research and development expenses consist primarily of personnel-related expenses associated with our research and development staff, including salaries, benefits, bonuses, and stock-based compensation.
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. 53 Ta ble of Contents Research and Development Research and development expenses consist primarily of personnel-related expenses associated with our research and development staff, including salaries, benefits, bonuses, and stock-based compensation.
We expect that our general and administrative expenses will increase in absolute dollars as our business grows but will decrease as a percentage of our revenue over time.
We expect that our general and administrative expenses will increase in absolute dollars as our business grows but 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.
While customer use of our platform in any period is not necessarily indicative of future use, we estimate future revenue using predictive models based on customers’ historical usage to plan and determine financial forecasts.
While customer use of our platform in any period is not necessarily indicative of future use, we estimate future revenue using predictive models based on customers’ historical usage to plan and determine financial forecasts. Product revenue excludes our professional services and other revenue, which has been less than 10% of revenue for each of the periods presented.
The main drivers of the changes in operating assets and liabilities during the fiscal year ended January 31, 2022 were (i) a $526.2 million increase in deferred revenue due to invoicing for prepaid capacity agreements outpacing revenue recognition, and (ii) a $79.8 million increase in accrued expenses and other liabilities primarily due to increased headcount and growth in our business, partially offset by (a) a $251.7 million increase in accounts receivable primarily due to growth in our business, (b) a $159.2 million increase in prepaid expenses and other assets primarily driven by increased prepaid third-party cloud infrastructure expenses, (c) a $95.9 million increase in deferred commissions earned on bookings, and (d) a $38.2 million decrease in operating lease liabilities due to payments related to our operating lease obligations.
The main drivers of the changes in operating assets and liabilities during the fiscal year ended January 31, 2023 were (i) a $514.3 million increase in deferred revenue due to invoicing for prepaid capacity agreements outpacing revenue recognition, and (ii) a $74.5 million increase in accrued expenses and other liabilities primarily due to increased headcount and growth in our business, partially offset by (a) a $167.0 million increase in accounts receivable primarily due to growth in our business, (b) a $95.1 million increase in deferred commissions earned upon the origination of customer contracts, and (c) a $42.3 million decrease in operating lease liabilities due to payments related to our operating lease obligations.
Once deployed, our customers often expand their use of our platform more broadly within the enterprise and across their ecosystem of customers and partners as they migrate more data to the public cloud, identify new use cases, and realize the benefits of our platform and the Data Cloud.
We plan to continue investing to encourage increased consumption and adoption of new use cases among our existing customers, particularly large enterprises. 47 Ta ble of Contents Once deployed, our customers often expand their use of our platform more broadly within the enterprise and across their ecosystem of customers and partners as they migrate more data to the public cloud, identify new use cases, and realize the benefits of our platform and the Data Cloud.
Instead, each of compute, storage, and data transfer work together to drive consumption on our platform. For storage resources, consumption for a given customer is based on the average terabytes per month of all of such customer’s data stored in our platform.
For storage resources, consumption for a given customer is based on the average terabytes per month of all of such customer’s data stored in our platform. For data transfer resources, consumption is based on terabytes of data transferred, the public cloud provider used, and the region to and from which the transfer is executed.
We then calculate our net revenue retention rate as the quotient obtained by dividing our product revenue from this cohort in the second year of the measurement period by our product revenue from this cohort in the first year of the measurement period.
Although the impact is not material, we have adjusted all prior periods presented to reflect this inclusion. We then calculate our net revenue retention rate as the quotient obtained by dividing our product revenue from this cohort in the second year of the measurement period by our product revenue from this cohort in the first year of the measurement period.
General and administrative expenses also include external legal, accounting, and other professional services fees, software and subscription services dedicated for use by our general and administrative functions, insurance and other corporate expenses.
General and administrative expenses also include external legal, accounting, and other professional services fees, software and subscription services dedicated for use by our general and administrative functions, insurance, unallocated lease costs associated with unused office facilities to accommodate planned headcount growth, and other corporate expenses.
We generate the substantial majority of our revenue from fees charged to our customers based on the storage, compute, and data transfer resources consumed on our platform as a single, integrated offering. For storage resources, consumption fees are based on the average terabytes per month of all of the customer’s data stored in our platform.
We generate the substantial majority of our revenue from fees charged to our customers based on the compute, storage, and data transfer resources consumed on our platform as a single, integrated offering. For compute resources, consumption fees are based on the type of compute resource used and the duration of use or, for some features, the volume of data processed.
The following table shows a summary of our cash flows for the periods presented (in thousands): Fiscal Year Ended January 31, 2022 2021 2020 Net cash provided by (used in) operating activities $ 110,179 $ (45,417) $ (176,558) Net cash provided by (used in) investing activities $ (20,800) $ (4,036,645) $ 138,495 Net cash provided by financing activities $ 178,198 $ 4,775,290 $ 57,469 Operating Activities 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) net amortization (accretion) of premiums (discounts) on investments, (iii) amortization of deferred commissions, (iv) amortization of operating lease right-of-use assets, (v) net unrealized gains on strategic investments in equity securities, and (vi) depreciation of property and equipment and amortization of acquired intangible assets, and changes in operating assets and liabilities during each period.
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. 61 Ta ble of Contents The following table shows a summary of our cash flows for the periods presented (in thousands): Fiscal Year Ended January 31, 2023 2022 2021 Net cash provided by (used in) operating activities $ 545,639 $ 110,179 $ (45,417) Net cash used in investing activities $ (597,885) $ (20,800) $ (4,036,645) Net cash provided by (used in) financing activities $ (92,624) $ 178,198 $ 4,775,290 Operating Activities 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) net unrealized gains or losses on strategic investments in equity securities, (v) amortization of operating lease right-of-use assets, (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.
Research and Development Fiscal Year Ended January 31, 2022 2021 % Change (dollars in thousands) Research and development $ 466,932 $ 237,946 96% Percentage of revenue 38 % 40 % Headcount (at period end) 788 478 55 Table of Contents Research and development expenses increased $229.0 million for the fiscal year ended January 31, 2022, compared to the prior fiscal year, primarily due to an increase of $202.9 million in personnel-related costs and allocated overhead costs, 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 RSUs granted after our IPO, partially offset by increased capitalized internal-use software development costs.
Research and Development Fiscal Year Ended January 31, 2023 2022 % Change (dollars in thousands) Research and development $ 788,058 $ 466,932 69% Percentage of revenue 38 % 38 % Headcount (at period end) 1,378 788 Research and development expenses increased $321.1 million for the fiscal year ended January 31, 2023, compared to the prior fiscal year, primarily due to an increase of $279.9 million in personnel-related costs and allocated overhead costs, as a result of increased stock-based compensation, headcount, and overall costs to support the growth in our business.
For compute resources, consumption fees are based on the type of compute resource used and the duration of use or, for some features, the volume of data processed.
Instead, each of compute, storage, and data transfer work together to drive consumption on our platform. For compute resources, consumption is based on the type of compute resource used and the duration of use or, for some features, the volume of data processed.
We believe that our market opportunity is large, and we will continue to invest significantly in scaling across all organizational functions in order to grow our operations both domestically and internationally.
Investing in Growth and Scaling our Business We are focused on our long-term revenue potential. We believe that our market opportunity is large, and we will continue to invest significantly in scaling across all organizational functions, with a focus on research and development, and sales and marketing, in order to grow our operations both domestically and internationally.
We had 184 customers with product revenue of greater than $1 million for the trailing 12 months ended January 31, 2022, an increase from 77 customers as of January 31, 2021. Such customers represented approximately 56% and 47% of our product revenue for the trailing 12 months ended January 31, 2022 and 2021, respectively.
Such customers represented approximately 62% and 56% of our product revenue for the trailing 12 months ended January 31, 2023 and 2022, respectively. Within these customers, we had 59 and 19 customers with product revenue of greater than $5 million and $10 million, respectively, for the trailing 12 months ended January 31, 2023.
For the fiscal year ended January 31, 2021, net cash used in operating activities was $45.4 million, primarily consisting of our net loss of $539.1 million, adjusted for non-cash charges of $386.8 million, and net cash inflows of $106.9 million provided by changes in our operating assets and liabilities, net of the effect of a business combination.
For the fiscal year ended January 31, 2023, net cash provided by operating activities was $545.6 million, primarily consisting of our net loss of $797.5 million, adjusted for non-cash charges of $1.1 billion, and net cash inflows of $289.5 million provided by changes in our operating assets and liabilities, net of the effects of business combinations.
We expect to continue to generate positive net cash flows from operating activities for the fiscal year ending January 31, 2023. 58 Table of Contents Investing Activities Net cash used in investing activities for the fiscal year ended January 31, 2022 was $20.8 million, primarily as a result of purchases of investments, purchases of intangible assets, purchases of property and equipment to support our office facilities, and capitalized internal-use software development costs, partially offset by proceeds from the sales, maturities and redemptions of investments.
Net cash used in investing activities for the fiscal year ended January 31, 2022 was $20.8 million, primarily as a result of purchases of investments, purchases of intangible assets, purchases of property and equipment to support our office facilities, and capitalized internal-use software development costs, partially offset by proceeds from the sales, maturities, and redemptions of investments. 62 Ta ble of Contents Financing Activities Net cash used in financing activities for the fiscal year ended January 31, 2023 was $92.6 million, primarily as a result of taxes paid related to net share settlement of employee equity awards of $184.6 million, partially offset by proceeds of $80.8 million from the issuance of equity securities under our equity incentive plans, and capital contributions of $13.0 million from noncontrolling interest holders.
Professional services and other gross margins declined significantly for the fiscal year ended January 31, 2022, compared to the prior fiscal year, primarily due to the increase in stock-based compensation.
Professional services and other gross margin improved for the fiscal year ended January 31, 2023, compared to the prior fiscal year, primarily due to decreased stock-based compensation as a percentage of professional services and other revenue.
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.
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.
Other income (expense), net increased $29.6 million for the fiscal year ended January 31, 2022, compared to the prior fiscal year, primarily due to net unrealized gains on our strategic investments in equity securities recorded during the fiscal year ended January 31, 2022.
Other income (expense), net decreased $76.5 million for the fiscal year ended January 31, 2023, compared to the prior fiscal year, primarily due to (i) impairments recorded on our strategic investments in non-marketable equity securities, (ii) a decrease in upward adjustments recorded on our strategic investments in non-marketable equity securities, and (iii) increased net unrealized losses recorded on our strategic investments in marketable equity securities.
Cost of Revenue, Gross Profit (Loss), and Gross Margin Fiscal Year Ended January 31, 2022 2021 % Change (dollars in thousands) Cost of revenue: Product $ 347,817 $ 193,835 79% Professional services and other 110,616 48,753 127% Total cost of revenue $ 458,433 $ 242,588 89% Gross profit (loss): Product $ 792,652 $ 359,959 120% Professional services and other (31,758) (10,498) 203% Total gross profit $ 760,894 $ 349,461 118% Gross margin: Product 70 % 65% Professional services and other (40 %) (27%) Total gross margin 62 % 59% Headcount (at period end) Product 243 154 Professional services and other 348 185 Total headcount 591 339 Cost of product revenue increased $154.0 million for the fiscal year ended January 31, 2022, compared to the prior fiscal year, primarily due to an increase of $99.3 million in third-party cloud infrastructure expenses as a result of increased customer consumption.
Cost of Revenue, Gross Profit (Loss), and Gross Margin Fiscal Year Ended January 31, 2023 2022 % Change (dollars in thousands) Cost of revenue: Product $ 547,547 $ 347,817 57% Professional services and other 169,993 110,616 54% Total cost of revenue $ 717,540 $ 458,433 57% Gross profit (loss): Product $ 1,391,236 $ 792,652 76% Professional services and other (43,117) (31,758) 36% Total gross profit $ 1,348,119 $ 760,894 77% Gross margin: Product 72% 70% Professional services and other (34%) (40%) Total gross margin 65% 62% Headcount (at period end) Product 373 243 Professional services and other 488 348 Total headcount 861 591 Cost of product revenue increased $199.7 million for the fiscal year ended January 31, 2023, compared to the prior fiscal year, primarily due to an increase of $156.9 million in third-party cloud infrastructure expenses as a result of increased customer consumption.
Product revenue excludes our professional services and other revenue, which has been less than 10% of revenue for each of the periods presented. 46 Table of Contents Remaining Performance Obligations Remaining performance obligations (RPO) represent 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.
Remaining Performance Obligations Remaining performance obligations (RPO) represent 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. RPO excludes performance obligations from on-demand arrangements and certain time and materials contracts that are billed in arrears.
To calculate this metric, we first specify a measurement period consisting of the trailing two years from our current period end. Next, we define as our measurement cohort the population of customers under capacity contracts that used our platform at any point in the first month of the first year of the measurement period.
Next, we define as our measurement cohort the population of customers under capacity contracts that used our platform at any point in the first month of the first year of the measurement period. Starting with the fiscal quarter ended October 31, 2021, the cohorts used to calculate net revenue retention rate include end-customers under a reseller arrangement.
We believe that the accounting policy and estimate described below involves a substantial degree of judgment and complexity and therefore is the most critical to aid in fully understanding and evaluating our financial condition and results of operations.
We believe that the accounting policies and estimates associated with revenue recognition and business combinations involve a substantial degree of judgment and complexity and therefore are the most critical to aid in fully understanding and evaluating our financial condition and results of operations. Revenue Recognition Many of our contracts with customers include multiple performance obligations.
General and Administrative Fiscal Year Ended January 31, 2022 2021 % Change (dollars in thousands) General and administrative $ 265,033 $ 176,135 50% Percentage of revenue 22 % 30 % Headcount (at period end) 722 421 General and administrative expenses increased $88.9 million for the fiscal year ended January 31, 2022, compared to the prior fiscal year, primarily due to an increase of $75.0 million in personnel-related costs and allocated overhead costs 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 RSUs granted after our IPO.
General and Administrative Fiscal Year Ended January 31, 2023 2022 % Change (dollars in thousands) General and administrative $ 295,821 $ 265,033 12% Percentage of revenue 14 % 22 % Headcount (at period end) 907 722 General and administrative expenses increased $30.8 million for the fiscal year ended January 31, 2023, compared to the prior fiscal year, primarily due to an increase of $14.0 million in outside services mainly as a result of increased legal fees related to acquisitions.
RPO is not necessarily indicative of future product revenue growth because it does not account for the timing of customers’ consumption or their consumption of more than their contracted capacity.
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. RPO is not necessarily indicative of future product revenue growth because it does not account for the timing of customers’ consumption or their consumption of more than their contracted capacity.
Personnel-related costs and allocated overhead costs also increased $49.7 million for the fiscal year ended January 31, 2022, compared to the prior fiscal year, as a result of increased headcount and overall costs to support the growth in our business, and increased stock-based compensation related to additional RSUs granted after our IPO. 54 Table of Contents Our product gross margin was 70% for the fiscal year ended January 31, 2022, compared to 65% for the prior fiscal year, primarily due to (i) higher volume-based discounts for our purchases of third-party cloud infrastructure, (ii) an increased percentage of revenue from consumption of computing resources due to better storage compression, (iii) an increased percentage of revenue from consumption of higher-priced editions of our platform, and (iv) increased scale across our cloud infrastructure regions, partially offset by the increase in stock-based compensation.
The remaining increase in cost of product revenue was primarily driven by an increase of $7.6 million in amortization of internal-use software development costs and acquired developed technology intangible assets. 57 Ta ble of Contents Our product gross margin was 72% for the fiscal year ended January 31, 2023, compared to 70% for the prior fiscal year, primarily due to (i) increased cost efficiency as a result of cloud infrastructure processor improvements, (ii) an increased percentage of revenue from consumption of higher-priced editions of our platform, (iii) increased scale across our cloud infrastructure regions, and (iv) higher volume-based discounts for our purchases of third-party cloud infrastructure.
Expanding Within our Existing Customer Base Our large base of customers represents a significant opportunity for further consumption of our platform.
Our future growth will be increasingly dependent on our ability to increase consumption of our platform by building and expanding the Data Cloud. Expanding Within our Existing Customer Base Our large base of customers represents a significant opportunity for further consumption of our platform.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe do not believe a 10% increase or decrease in the relative value of the U.S. dollar would have a material impact on our operating results for the fiscal years ended January 31, 2022, 2021, and 2020, respectively. Other Market Risk Our strategic investments portfolio includes investments in privately-held and publicly-traded companies.
Biggest changeWe do not believe a 10% increase or decrease in the relative value of the U.S. dollar would have had a material impact on our operating results for the fiscal years ended January 31, 2022 and 2021, respectively. 64 Ta ble of Contents Other Market Risk Our strategic investments consist primarily of (i) non-marketable equity securities recorded at cost minus impairment, if any, and adjusted for observable transactions for the same or similar investments of the same issuer (referred to as the Measurement Alternative), and (ii) marketable equity securities.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk As of January 31, 2022, we had $5.1 billion of cash, cash equivalents, and short-term and long-term investments in a variety of securities, including corporate notes and bonds, commercial paper, money market funds, U.S. government and agency securities, and certificates of deposit.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk As of January 31, 2023, we had $5.1 billion of cash, cash equivalents, and short-term and long-term investments in a variety of securities, including corporate notes and bonds, commercial paper, U.S. government and agency securities, certificates of deposit, and money market funds.
We plan to continue these types of strategic investments as part of our corporate development program. We anticipate additional volatility to our consolidated statements of operations as a result of changes in market prices, changes resulting from observable transactions for the same or similar investments of the same issuer, and impairments to our strategic investments.
We plan to continue these types of strategic investments as part of our corporate development program. We anticipate additional volatility to our consolidated statements of operations as a result of changes in market prices, changes resulting from observable transactions for the same or similar investments of the same issuer, and impairments to our strategic investments. 65 Table of Contents
A hypothetical 100 basis point increase or decrease in interest rates would have resulted in a decrease of $27.3 million or an increase of $23.5 million, respectively, in the market value of our cash equivalents, and short-term and long-term investments as of January 31, 2022.
As of January 31, 2022, we had $5.1 billion of cash, cash equivalents, and short-term and long-term investments, and a hypothetical 100 basis point increase or decrease in interest rates would have resulted in a decrease of $27.3 million or an increase of $23.5 million, respectively, in the market value.
Foreign Currency Exchange Risk Our reporting currency is the United States dollar. The functional currency of our foreign subsidiaries is the U.S. dollar or the Euro. The majority of our sales are currently denominated in U.S. dollars, although we also have sales in Euros.
Foreign Currency Exchange Risk Our reporting currency is the U.S. dollar. The functional currency of our foreign subsidiaries is the U.S. dollar or the Euro. The majority of our sales are currently denominated in U.S. dollars, although we also have sales in Euros and, to a lesser extent, in British pounds, Australian dollars, and Brazilian reals.
As of January 31, 2021, we had $5.1 billion of cash, cash equivalents, and short-term and long-term investments, and a hypothetical 100 basis point increase or decrease in interest rates would have resulted in a decrease of $29.2 million or an increase of $7.6 million, respectively, in the market value.
A hypothetical 100 basis point increase or decrease in interest rates would have resulted in a decrease of $26.0 million or an increase of $25.9 million, respectively, in the market value of our cash equivalents, and short-term and long-term investments as of January 31, 2023.
In addition, we had $16.8 million of restricted cash primarily due to outstanding letters of credit established in connection with lease agreements for our facilities. Our cash, cash equivalents, and short-term and long-term investments are held for working capital purposes. We do not enter into investments for trading or speculative purposes.
In addition, we had $16.8 million of restricted cash primarily due to outstanding letters of credit established in connection with lease agreements for our facilities.
Therefore our revenue is not currently subject to significant foreign currency risk, but that will likely change in the future. Our operating expenses are denominated in the currencies of the countries in which our operations are located, which is primarily in the United States and to a lesser extent in Europe, Canada, and the Asia-Pacific region.
Our operating expenses are denominated in the currencies of the countries in which our operations are located, which is primarily in the United States and to a lesser extent in Europe, Canada, and the Asia-Pacific region. Monetary assets and liabilities denominated in currencies other than the functional currency are remeasured to the functional currency at period-end exchange rates.
Removed
To date, we have not entered into any hedging arrangements with respect to foreign currency risk or other derivative financial instruments, although we may choose to do so in the future.
Added
Our cash, cash equivalents, and short-term and long-term investments are held for working capital, capital expenditure, and general corporate purposes, including repurchases of our common stock as well as acquisitions and strategic investments we may make from time to time. We do not enter into investments for trading or speculative purposes.
Removed
As of January 31, 2022 and 2021, the carrying amount of these investments was $207.8 million and $41.5 million, respectively. 61 Table of Contents
Added
Therefore our revenue is not currently subject to significant foreign currency risk, but that will likely change in the future as we increase sales in these international currencies and enable sales in additional currencies.
Added
In order to manage our exposure to certain foreign currency exchange risks, during the fiscal year ended January 31, 2023, we entered into deliverable foreign currency forward contracts with maturities of one month or less to hedge a portion of certain intercompany balances denominated in currencies other than the U.S. dollar.
Added
These forward contracts reduced, but did not entirely eliminate, the impact of adverse currency exchange rate movements. We did not enter into these forward contracts for trading or speculative purposes. See Note 2, “Basis of Presentation and Summary of Significant Accounting Policies,” to our consolidated financial statements included elsewhere in Annual Report on Form 10-K for more information.
Added
A hypothetical 10% increase or decrease in foreign currency exchange rates would have resulted in a theoretical increase or decrease in operating loss of approximately $32 million for the fiscal year ended January 31, 2023. This sensitivity analysis assumes that all foreign currencies move in the same direction at the same time in the absence of hedging activities.
Added
In addition, a strengthening of the U.S. dollar makes our platform more expensive for international customers, which may slow down consumption.
Added
These strategic investments are subject to a wide variety of market-related risks, including volatility in the public and private markets, that could substantially reduce or increase the carrying value of our investments and, as a result, our financial results may fluctuate.
Added
Strategic investments are subject to periodic impairment analyses, which involves an assessment of both qualitative and quantitative factors, including the investee’s financial metrics, market acceptance of the investee’s product or technology, and the rate at which the investee is using its cash.
Added
The following table presents our strategic investments by type (in thousands): January 31, 2023 January 31, 2022 Equity securities: Non-marketable equity securities under Measurement Alternative $ 174,248 $ 170,860 Non-marketable equity securities under equity method 5,066 — Marketable equity securities 22,122 34,646 Debt securities: Non-marketable debt securities 1,500 2,250 Total strategic investments—included in other assets $ 202,936 $ 207,756 See Note 5, “Fair Value Measurements,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.

Other SNOW 10-K year-over-year comparisons