SNOW 3Q25 Preview: Short-term Headwinds from One-offs, Re-acceleration Expected in 4Q25

Since our bullish call on Snowflake in 3Q24, the stock has doubled. Looking back at the changes over the past year, the primary drivers have been shifts in organizational structure and culture. While we rarely discuss organizational charts in company reports, the transformation under CEO Sridhar Ramaswamy has been distinct. His leadership has introduced a fundamentally different operating model compared to the previous administration.

Under Frank Slootman, product and engineering were delegated to Benoit Dageville, while Frank focused entirely on sales and structure. This led to the “top-down” planning of several resource-intensive products that were difficult to commercialize (e.g., Unistore and Native Apps).

Since Sridhar took over, the approach has shifted. Sridhar, possessing both product expertise and a strong focus on commercialization, established a “War Room.” He mandates that Product, Engineering, and Sales align expectations within this War Room. All products must now be commercialization-oriented—you must demonstrate an ability to generate revenue before securing headcount. This has fostered a more aggressive, efficient culture, significantly increasing the pace of product iteration.

Snowflake’s new product release velocity in the past year effectively matches the previous two years combined. Employee efficiency has improved, and we expect to see a leaner headcount moving forward.

However, we anticipate that growth this quarter may be softer than in the preceding four quarters. Factors impacting growth include Gen2, Snowpark Connect, and OpenAI. Additionally, the one-off migrations recorded in 2Q25 are also playing a role.

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