What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-20 compared with 2025-03-21 · 116 added, 119 removed, 438 unchanged (35% of the section changed)

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and its consolidated subsidiaries.

Unless otherwise noted, all references in this report to our common stock refer to our Class A common stock.

Unless otherwise noted, all references in this report to our common stock refer to our Class A common stock, which was renamed to “common stock” pursuant to our amended and restated certificate of incorporation filed with the Secretary of State of the State of Delaware on July 3, 2025.

A discussion regarding our financial condition and results of operations for the fiscal year ended January 31, 2026 compared to the fiscal year ended January 31, 2025 is presented below.

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By offering rich primitives for data and applications, we believe that we can create a data connected world where organizations have seamless access to explore, share, and unlock the value of data.

Our vision is a world where data and AI turn possibilities into reality.

To realize this vision, we deliver the AI Data Cloud, a network where Snowflake customers, partners, developers, data providers, and data consumers can break down data silos and derive value from a growing number of data sets in secure, governed, and compliant ways.

Our platform is the innovative technology that powers the AI Data Cloud, enabling customers to consolidate data into a single source of truth to drive meaningful insights, apply AI to solve business problems, 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 cloud-native architecture includes three independently scalable but logically integrated layers across compute, storage, and cloud services.

We provide our platform through a customer-centric, consumption-based business model.

Our cloud-native architecture includes 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.

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.

Within the compute layer, users can clean and prepare their data, including any required metadata and business semantics, to create governed, unified data records that are AI ready and are written back to the storage layer.

The cloud services layer enables users to securely use AI within applications, tools, and processes.

This architecture is built on three major public clouds across 53 regional deployments around the world.

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We primarily focus our selling efforts on large organizations and primarily sell our platform through a direct sales force, which targets technical and business leaders who are adopting a cloud strategy and leveraging data to improve their business performance.

Our sales force is comprised of sales development, inside sales, and field sales personnel and is segmented by the industry, size, and region of prospective customers.

In addition to direct sales, we also sell our platform through resellers and distributors.

Our sales force is comprised of inside and field sales, solution engineering, sales development, partner sales, and specialist sales personnel and is segmented by the industry, size, and region of prospective customers.

Once our platform has been adopted, we focus on increasing the migration of additional customer workloads to our platform to drive increased consumption, as evidenced by our net revenue retention rate of 125% and 126% as of January 31, 2026 and 2025, respectively.

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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.

See the section titled “Key Business Metrics” for how we determine our customer count.

Our fiscal year ends on January 31.

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Impact of Macroeconomic Conditions

Our business and financial condition have been, and may continue to be, impacted by adverse macroeconomic conditions, including inflation, high interest rates, and fluctuations or volatility in capital markets or foreign currency exchange rates.

Our business and financial condition have been, and may continue to be, impacted by adverse macroeconomic conditions, including inflation, high interest rates, fluctuations or volatility in capital markets or foreign currency exchange rates, tariffs and trade wars, and geopolitical and military conflicts.

These conditions have caused, and may continue to cause, customers to rationalize budgets, prioritize cash flow management, including through shortened contract duration, and optimize consumption, including by reducing storage through shorter data retention policies.

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For additional details, see the section titled “Risk Factors.”

Convertible Senior Notes

In September 2024, we completed a private offering of $1.15 billion aggregate principal amount of 0% convertible senior notes due 2027 (2027 Notes) and $1.15 billion aggregate principal amount of 0% convertible senior notes due 2029 (2029 Notes, and together with the 2027 Notes, the Notes).

The total proceeds from the issuance of the Notes were approximately $2.27 billion, net of $31.2 million of debt issuance costs.

We used a portion of the net proceeds from the offering to (i) pay the $195.5 million cost of the privately negotiated capped call transactions relating to each series of the Notes (Capped Calls) and (ii) repurchase $399.6 million of our common stock from purchasers of the Notes in the offering in privately negotiated transactions entered into in connection with the Notes offering at a purchase price of $112.50 per share.

See Note 10, “Convertible Senior Notes,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.

Stock Repurchase Program

In February 2023, our board of directors authorized a stock repurchase program of up to $2.0 billion of our outstanding common stock.

In August 2024, our board of directors authorized the repurchase of an additional $2.5 billion of our outstanding common stock and extended the expiration date of the stock repurchase program from March 2025 to March 2027.

During the fiscal year ended January 31, 2025, we repurchased 14.8 million shares of our outstanding common stock for an aggregate purchase price of $1.9 billion, excluding transaction costs associated with the repurchases, at a weighted-average price of $130.87 per share.

All repurchases were made in open market transactions, except for the 3.6 million shares of our outstanding common stock that were repurchased for $399.6 million from purchasers of the Notes in the offering in privately negotiated transactions entered into in connection with the Notes offering at a purchase price of $112.50 per share.

As of January 31, 2025, $2.0 billion remained available for future repurchases under the stock repurchase program (exclusive of transaction costs associated with repurchases).

See Note 10, “Convertible Senior Notes,” and Note 12, “Equity,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.

The timing and amount of any repurchases will be determined by management based on an evaluation of market conditions and other factors.

The program does not obligate us to acquire any particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at our discretion.

Business Combination

On November 25, 2024, we acquired all of the outstanding capital stock of Datavolo, Inc.

(Datavolo), a privately-held company that built a dataflow infrastructure to support the creation, management, and observability of multimodal data pipelines for enterprise AI.

The acquisition date fair value of the preliminary purchase consideration was $106.8 million, which was comprised of 0.5 million shares of our common stock valued at $87.7 million as of the acquisition date and $19.1 million in cash.

In addition, we issued to certain of Datavolo’s employees a total of 0.4 million shares of our common stock in exchange for a portion of their Datavolo stock.

These shares are subject to vesting agreements pursuant to which the shares will vest over four years, subject to each of these employees’ continued employment with us or our affiliates.

The $64.6 million fair value of these shares is accounted for as post-combination stock-based compensation over the requisite service period of four years.

On July 3, 2025, we filed an amended and restated certificate of incorporation with the Secretary of State of the State of Delaware effecting (i) the elimination of our Class B common stock, and (ii) the renaming of our Class A common stock to “common stock”.

This amendment had no impact on our issued and outstanding shares, additional paid-in capital, or accumulated deficit.

Business Combinations

On June 6, 2025, we acquired all of the outstanding capital stock of Crunchy Data Solutions, Inc.

(Crunchy Data), a privately-held company that provided PostgreSQL technology, for $164.5 million in cash.

The results of operations of this business combination have been included in our consolidated financial statements from the date of acquisition.

See Note 7, “Business Combinations,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for details regarding this business combination.

On February 2, 2026, we acquired all the outstanding capital stock of Observe, Inc.

(Observe), a privately-held company that built an AI-powered observability platform.

The preliminary purchase consideration was approximately $596.2 million, which was comprised primarily of $286.2 million in cash and approximately 1.5 million shares of our common stock valued at $285.3 million as of the acquisition date.

See Note 7, “Business Combinations,” and Note 16, “Subsequent Events,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for details regarding these business combinations.

Key Factors Affecting Our Performance

Adoption of our Platform and Expansion of the AI Data Cloud

Our future success depends in large part on the market adoption of our platform, including new product functionality, such as, Snowpark and our artificial intelligence and machine learning technology (AI Technology), such as Snowflake Cortex AI.

Our future success depends in large part on the market adoption of our platform, including new product functionality, such as Snowpark and our AI and machine learning technology (collectively, AI Technology).

While we see growing demand for our platform, particularly from large enterprises, many of these organizations have invested substantial technical, financial, and personnel resources in their existing database products or big data offerings.

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New software releases or hardware improvements, like better storage compression, cloud infrastructure processor improvements, and compute optimization, may make our platform more efficient, enabling customers to consume fewer compute, storage, and data transfer resources to accomplish the same workloads.

In addition, new product features allow customers to use our platform for compute services without requiring storage.

In addition, open data formats allow customers to use our platform for compute services without requiring storage.

To the extent these improvements do not result in an offsetting increase in new workloads, we may experience lower revenue.

Our ability to increase usage of our platform by, and sell additional contracted capacity to, existing customers, and, in particular, large enterprise customers, will depend on a number of factors, including our customers’ satisfaction with our platform, competition, pricing, macroeconomic conditions, overall changes in our customers’ spending levels, customers’ attempts to optimize their consumption, our customers’ confidence in the security of our platform, our ability to maintain our reputation as a trustworthy vendor, the effectiveness of our and our partners’ efforts to help our customers realize the benefits of our platform, and the extent to which customers migrate new workloads to our platform over time, including data science, artificial intelligence, and machine learning workloads.

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, our customers’ adoption and use of new product features, competition, pricing, macroeconomic conditions, overall changes in our customers’ spending levels, customers’ attempts to optimize their consumption, our customers’ confidence in the security of our platform, our ability to maintain our reputation as a trustworthy vendor, the effectiveness of our and our partners’ efforts to help our customers realize the benefits of our platform, and the extent to which customers migrate new workloads to our platform over time, including data science, AI, and machine learning workloads.

Acquiring New Customers

Our future success also depends on our ability to acquire new customers.

We believe there is a substantial opportunity to further grow our customer base by continuing to make significant investments in sales and marketing and brand awareness.

Our ability to attract new customers will depend on a number of factors, including the productivity of our sales organization, competitive dynamics in our target markets, changes in our customers’ spending and platform consumption in response to market uncertainty, our ability to mitigate reputational damage following cybersecurity threat activity directed at our customers, and our ability to build and maintain partner relationships, including with global system integrators, resellers, technology partners, and third-party providers of native applications on the Snowflake Marketplace.

Our ability to attract new customers will depend on a number of factors, including the productivity of our sales organization, competitive dynamics in our target markets, changes in our customers’ spending and platform consumption in response to market uncertainty, our ability to promote, maintain, and enhance our brand and reputation, our ability to mitigate reputational damage following cybersecurity threat activity directed at our customers, our ability to build and maintain partner relationships, including with global system integrators, resellers, technology partners, and third-party providers of native applications on the Snowflake Marketplace, and our ability to meet the heightened needs of customers in regulated markets, such as the public sector, financial services, and countries with data localization requirements.

While our platform is built for organizations of all sizes, we focus our selling efforts on large enterprise customers, customers with vast amounts of data, and customers requiring industry-specific solutions.

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In addition, our Forbes Global 2000 customer count reflects adjustments for annual updates to the Forbes Global 2000 list by Forbes.

(5) As of January 31, 2025, our remaining performance obligations were approximately $6.9 billion, of which we expect approximately 48% to be recognized as revenue in the twelve months ending January 31, 2026 based on historical customer consumption patterns.

(5) As of January 31, 2026, our remaining performance obligations were approximately $9.8 billion, of which we expect approximately 46% to be recognized as revenue in the 12 months ending January 31, 2027 based on historical customer consumption patterns.

The weighted-average remaining life of our capacity contracts was 2.7 years as of January 31, 2026.

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Free Cash Flow

We define free cash flow, a non-GAAP financial measure, as GAAP net cash provided by operating activities reduced by purchases of property and equipment and capitalized internal-use software development costs.

We define free cash flow, a non-GAAP financial measure, as GAAP net cash provided by operating activities reduced by purchases of property and equipment and capitalized software development costs.

Cash outflows for employee payroll tax items related to the net share settlement of equity awards are included in cash flow for financing activities and, as a result, do not have an effect on the calculation of free cash flow.

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purchases of property and equipment (101.6) (46.3) (35.1)

capitalized internal-use software development costs (29.4) (34.1) (24.0)

capitalized software development costs

— (29.4) (34.1)

Free cash flow (non-GAAP) (1)(2)

$ 1,120.3 $ 884.1 $ 778.9

Net cash provided by (used in) investing activities $ 190.6 $ 832.3 $ (597.9)

Net cash provided by investing activities $ 312.2 $ 190.6 $ 832.3

Net cash used in financing activities $ (1,385.4) $ (226.5) $ (854.1)

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Revenue from on-demand arrangements typically relates to customers with lower usage levels or overage consumption beyond a customer’s contracted usage amount under a capacity contract or following the expiration of a customer’s capacity contract.

Revenue from on-demand arrangements represented approximately 2%, 3%, and 2% of our revenue for the fiscal years ended January 31, 2025, 2024, and 2023, respectively.

We recognize revenue as customers consume compute, storage, and data transfer resources under either of these arrangements.

In limited instances, customers pay an annual deployment fee to gain access to a dedicated instance of a virtual private deployment.

We recognize the deployment fee ratably over the contract term.

Such deployment revenue represented less than 1% of our revenue for all periods presented.

Revenue from on-demand arrangements represented approximately 1%, 2%, and 3% of our revenue for the fiscal years ended January 31, 2026, 2025, and 2024, respectively.

Our customer contracts for capacity typically have a term of one to four years.

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Cost of product revenue.

Cost of product revenue consists primarily of (i) third-party cloud infrastructure expenses, including those related to graphics processing units (GPUs), incurred in connection with our customers’ use of our platform and the deployment and maintenance of our platform on public clouds, including different regional deployments, and (ii) personnel-related costs associated with customer support and maintaining service availability and security of our platform, including salaries, benefits, bonuses, and stock-based compensation.

We periodically receive credits from third-party cloud providers that are recorded as a reduction to the third-party cloud infrastructure expenses.

Cost of product revenue also includes amortization of capitalized internal-use software development costs, amortization of acquired intangible assets, and expenses associated with software and subscription services dedicated for use by our customer support team and our engineering team responsible for maintaining our platform.

Cost of product revenue consists primarily of (i) third-party cloud infrastructure expenses, including those related to graphics processing units (GPUs) and AI inference, incurred in connection with our customers’ use of our platform and the deployment and maintenance of our platform on public clouds, including different regional deployments, and (ii) personnel-related costs associated with customer support and maintaining service availability and security of our platform, including salaries, benefits, bonuses, and stock-based compensation.

Cost of product revenue also includes amortization of capitalized software development costs, amortization of acquired intangible assets, and expenses associated with software and subscription services dedicated for use by our customer support team and our engineering team responsible for maintaining our platform.

Cost of professional services and other revenue.

Cost of professional services and other revenue consists primarily of personnel-related costs associated with our professional services and training departments, including salaries, benefits, bonuses, and stock-based compensation, amortization of an acquired intangible asset, and costs of contracted third-party partners and software tools.

Cost of professional services and other revenue consists primarily of personnel-related costs associated with our professional services and training departments, including salaries, benefits, bonuses, and stock-based compensation, amortization of acquired intangible assets, and costs of contracted third-party partners and software tools.

We intend to continue to invest additional resources in our platform infrastructure and our customer support and professional services organizations to support the growth of our business.

Some of these investments, including certain support costs and costs of expanding our business internationally, are incurred in advance of generating revenue, and either the failure to generate anticipated revenue or fluctuations in the timing of revenue could affect our gross margin from period to period.

Some of these investments, including costs associated with GPUs and AI inference, certain support costs and costs of expanding our business internationally, are incurred in advance of generating revenue, and either the failure to generate anticipated revenue or fluctuations in the timing of revenue could affect our gross margin from period to period.

Operating Expenses

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We expect that our sales and marketing expenses will increase in absolute dollars and continue to be our largest operating expense for the foreseeable future as we grow our business.

However, we expect that our sales and marketing expenses will decrease as a percentage of our revenue over time, although the percentage may fluctuate from period to period depending on the timing and the extent of these expenses.

However, we expect that our sales and marketing expenses will decrease as a percentage of our revenue over time due to improved spend efficiency, although the percentage may fluctuate from period to period depending on the timing and the extent of these expenses.

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.

Research and development expenses also include contractor or professional services fees, third-party cloud infrastructure expenses incurred primarily in developing our platform (including with respect to GPUs to develop AI Technology), amortization of acquired intangible assets, and software and subscription services dedicated for use by our research and development organization.

We expect that our research and development expenses will increase in absolute dollars as our business grows, particularly as we incur additional costs related to continued investments in our platform.

However, we expect that our research and development expenses will decrease as a percentage of our revenue over time, although the percentage may fluctuate from period to period depending on the timing and the extent of these expenses.

In addition, research and development expenses that qualify as internal-use software development costs are capitalized.

Research and development expenses also include contractor or professional services fees, third-party cloud infrastructure expenses incurred in developing our platform (including those related to GPUs to develop AI Technology), amortization of acquired intangible assets, and expenses associated with software and subscription services dedicated for use by our research and development organization.

Prior to fiscal 2026, research and development expenses related to our cloud platform that qualified as internal-use software development costs were capitalized under Accounting Standards Codification (ASC) Topic 350-40, Internal-use Software (ASC 350-40).

During fiscal 2026, we began marketing the Snowflake platform to selected public sector customers who will have contractual rights to take possession of our software and who will contract with third parties to host our software.

As a result, our ongoing and future software development costs related to the Snowflake platform must be accounted for under ASC 985-20, Costs of Software to be Sold, Leased or Marketed (ASC 985-20).

Costs that meet the criteria for capitalization under ASC 985-20 were not material for the fiscal year ended January 31, 2026.

Software development costs capitalized prior to fiscal 2026 in connection with the Snowflake platform will be amortized over their remaining useful life and recognized as cost of product revenue.

See Note 2, “Basis of Presentation and Summary of Significant Accounting Policies,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.

We expect that our research and development expenses will increase in absolute dollars due to business growth, continued investments in our platform, and a decrease in the amount of software development costs eligible for capitalization.

However, we expect that our research and development expenses will decrease as a percentage of our revenue over time due to improved spend efficiency, although the percentage may fluctuate from period to period depending on the timing and the extent of these expenses.

General and Administrative

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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 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.

In addition, we expect our general and administrative expenses to increase during fiscal 2026 due to anticipated asset impairment charges upon the cease-use of our San Mateo office facility.

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 due to improved spend efficiency, although the percentage may fluctuate from period to period depending on the timing and the extent of these expenses.

In addition, during the fiscal year ended January 31, 2026, we recognized asset impairment charges of $108.7 million as general and administrative expenses, primarily relating to the cease-use of our San Mateo office facility.

See Note 11, “Commitments and Contingencies,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.

Interest Income

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Net loss (1,329,035) (1,289,212) (837,990)

net loss attributable to noncontrolling interest (3,572) (1,893) (821)

net income (loss) attributable to noncontrolling interest 2,581 (3,572) (1,893)

Net loss attributable to Snowflake Inc.

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Total stock-based compensation $ 1,599,547 $ 1,479,314 $ 1,168,015

The overall increase in stock-based compensation for the fiscal year ended January 31, 2025, compared to the fiscal year ended January 31, 2024, was primarily attributable to additional equity awards granted to new and existing employees, partially offset by the effects of equity awards that became forfeited or fully vested.

The overall increase in stock-based compensation for the fiscal year ended January 31, 2026, compared to the fiscal year ended January 31, 2025, was primarily attributable to additional equity awards granted to existing and new employees, partially offset by the effects of equity awards that became fully vested or forfeited.

As of January 31, 2026, total compensation cost related to unvested awards not yet recognized was $3.1 billion, which will be recognized over a weighted-average period of 2.7 years.

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Net loss (28) (36) (30)

net loss attributable to noncontrolling interest — — —

net income (loss) attributable to noncontrolling interest — — —

Net loss attributable to Snowflake Inc.

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Total 100% 100%

Product revenue increased $795.6 million for the fiscal year ended January 31, 2025, 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 126% as of January 31, 2025.

Product revenue increased $1.0 billion for the fiscal year ended January 31, 2026, 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 125% as of January 31, 2026.

We had 733 customers with product revenue of greater than $1 million for the trailing 12 months ended January 31, 2026, an increase from 576 customers as of January 31, 2025.

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The substantial majority of our revenue was derived from existing customers under capacity arrangements, which represented approximately 97% of our revenue for each of the fiscal years ended January 31, 2026 and 2025.

The remainder was derived from on-demand arrangements and new customers under capacity arrangements.

The remainder was derived from new customers under capacity arrangements and on-demand arrangements.

The preceding historical metrics reflect any adjustments for acquisitions, consolidations, spin-offs, and other market activity.

For purposes of determining revenue derived from (i) customers with trailing 12-month product revenue greater than $1 million, (ii) new customers, and (iii) existing customers, we treat each customer account, including accounts for end-customers under a reseller arrangement, that has at least one corresponding capacity contract as a unique customer, and a single organization with multiple divisions, segments, or subsidiaries may be counted as multiple customers.

Professional services and other revenue increased $24.3 million for the fiscal year ended January 31, 2025, 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.

Professional services and other revenue increased $47.7 million for the fiscal year ended January 31, 2026, compared to the prior fiscal year, as our professional services organization continues to expand and evolve to help our customers further realize the benefits of our platform.

Cost of Revenue, Gross Profit (Loss), and Gross Margin

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Cost of product revenue increased $268.3 million for the fiscal year ended January 31, 2026, compared to the prior fiscal year.

The increase was primarily due to an increase of $176.8 million in third-party cloud infrastructure expenses (including those related to GPUs), mainly as a result of increased customer consumption of our platform.

Personnel-related costs and allocated overhead costs also increased $45.3 million for the fiscal year ended January 31, 2025, 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 primarily related to additional equity awards granted to existing and new employees.

Additionally, amortization of capitalized internal-use software development costs and acquired developed technology intangible assets also increased $37.5 million and $11.1 million, respectively, for the fiscal year ended January 31, 2025, compared to the prior fiscal year.

The remaining increase in cost of product revenue was primarily attributable to $7.7 million in costs incurred by us during fiscal 2025 in connection with a restructuring plan for a majority-owned subsidiary.

The increase was primarily due to an increase of $248.1 million in third-party cloud infrastructure expenses (including those related to AI inference), mainly as a result of increased customer consumption of our platform.

Amortization of capitalized software development costs and acquired developed technology intangible assets also increased $27.9 million for the fiscal year ended January 31, 2026, compared to the prior fiscal year.

The overall increase in cost of product revenue was partially offset by a decrease of $12.7 million in costs incurred by us in connection with a restructuring plan for a majority-owned subsidiary, net of associated income and recoveries.

Our product gross margin was 72% for the fiscal year ended January 31, 2026, compared to 71% for the prior fiscal year.

This decline is primarily attributable to newly launched product capabilities and features that have not yet reached economies of scale.

This slight improvement is primarily due to the decrease in personnel-related costs and the aforementioned restructuring costs as a percentage of product revenue, offset by costs attributable to newly launched product capabilities and features that have not yet reached economies of scale.

We expect our product gross margin to fluctuate from period to period due to a number of factors, including, but not limited to:

(i) fluctuations in the mix and timing of customers’ consumption, which is inherently variable at our customers’ discretion, (ii) our pricing model and discounting practices, (iii) the extent of our investments in new product capabilities, features, and operations, such as investments in AI Technology and performance improvements that may make our platform or the underlying cloud infrastructure more efficient, and (iv) stock-based compensation.

Cost of professional services and other revenue increased $25.2 million for the fiscal year ended January 31, 2025, compared to the prior fiscal year, primarily due to an increase of $12.9 million in personnel-related costs and allocated overhead costs as a result of increased headcount.

The remaining increase in cost of professional services and other revenue was primarily driven by an increase of $10.9 million in costs of contracted third-party partners and software tools to support the growth in our business.

Cost of professional services and other revenue increased $54.9 million for the fiscal year ended January 31, 2026, compared to the prior fiscal year.

The increase was primarily due to an increase of $44.2 million in personnel-related costs and allocated overhead costs, as a result of increased headcount and stock-based compensation.

The remaining increase in cost of professional services and other revenue was primarily driven by increased costs of contracted third-party partners to support the growth in our business.

Professional services and other gross margin was (31%) and (36%) for the fiscal years ended January 31, 2026 and 2025, respectively.

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Sales and marketing expenses increased $390.0 million for the fiscal year ended January 31, 2026, compared to the prior fiscal year, primarily due to an increase of $270.1 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.

The increase in personnel-related costs included a $32.1 million increase in stock-based compensation for the fiscal year ended January 31, 2025, compared to the prior fiscal year, primarily related to additional equity awards granted to existing and new employees, partially offset by the effects of equity awards that became forfeited or fully vested.

Expenses associated with sales commissions and draws paid to our sales force and certain referral fees paid to third parties, including amortization of deferred commissions, also increased $86.0 million for the fiscal year ended January 31, 2025, compared to the prior fiscal year, primarily attributable to sales commissions tied to customers’ consumption.

In addition, advertising costs and other expenses associated with our sales, marketing and business development programs increased $26.0 million for the fiscal year ended January 31, 2025, compared to the prior fiscal year.

The remaining increase in sales and marketing expenses for the fiscal year ended January 31, 2025 was primarily attributable to a $16.1 million increase in travel-related expenses.

The increase in personnel-related costs included a $47.1 million increase in stock-based compensation for the fiscal year ended January 31, 2026, compared to the prior fiscal year, primarily related to additional equity awards granted to new and existing employees, partially offset by the effects of equity awards that became forfeited or fully vested.

In addition, 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 $47.9 million for the fiscal year ended January 31, 2026, compared to the prior fiscal year, primarily due to increases in the annualized contract value of our customer contracts and customers’ consumption of our platform.

Advertising costs and other expenses associated with our sales, marketing and business development programs, as well as travel-related expenses, increased $42.2 million for the fiscal year ended January 31, 2026, compared to the prior fiscal year.

Research and Development

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Headcount (at period end) 2,424 2,257

Research and development expenses increased $495.4 million for the fiscal year ended January 31, 2025, compared to the prior fiscal year, primarily due to an increase of $389.2 million in personnel-related costs and allocated overhead costs, as a result of increased stock-based compensation, headcount, and overall costs to support the growth in our business.

The increase in personnel-related costs included a $207.1 million increase in stock-based compensation, primarily related to additional equity awards granted to existing and new employees, partially offset by the effects of equity awards that became forfeited or fully vested.

Third-party cloud infrastructure expenses, incurred primarily in developing our platform (including with respect to GPUs to develop AI Technology), also increased $92.7 million for the fiscal year ended January 31, 2025, compared to the prior fiscal year.

The remaining increase in research and development expenses for the fiscal year ended January 31, 2025 was primarily attributable to $11.0 million in costs incurred by us during fiscal 2025 in connection with a restructuring plan for a majority-owned subsidiary.

The overall increase in research and development expenses for the fiscal year ended January 31, 2025 was partially offset by impairment charges of $7.1 million recognized during fiscal 2024.

These impairment charges were related to our capitalized internal-use software development costs previously included in construction in progress that were no longer probable of being completed.

Research and development expenses increased $186.1 million for the fiscal year ended January 31, 2026, compared to the prior fiscal year, primarily due to an increase of $185.6 million in personnel-related costs and allocated overhead costs, as a result of increased headcount, stock-based compensation, and overall costs to support the growth in our business.

The increase in personnel-related costs included a $83.4 million increase in stock-based compensation, primarily related to additional equity awards granted to new and existing employees, partially offset by the effects of equity awards that became forfeited or fully vested.

In addition, third-party cloud infrastructure expenses, incurred primarily in developing our platform, increased $18.1 million for the fiscal year ended January 31, 2026, compared to the prior fiscal year.

The overall increase in research and development expenses for the fiscal year ended January 31, 2026 was partially offset by a decrease of $17.0 million in costs incurred by us in connection with a restructuring plan for a majority-owned subsidiary, net of associated income and recoveries.

General and Administrative

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Headcount (at period end) 1,189 1,183

General and administrative expenses increased $89.3 million for the fiscal year ended January 31, 2025, compared to the prior fiscal year, primarily due to an increase in personnel-related costs and allocated overhead costs, as a result of increased stock-based compensation, headcount, and overall costs to support the growth in our business.

General and administrative expenses increased $137.4 million for the fiscal year ended January 31, 2026, compared to the prior fiscal year.

During the fiscal year ended January 31, 2026, we recognized asset impairment charges of $108.7 million, primarily relating to the cease-use of our San Mateo office facility.

See Note 11, “Commitments and Contingencies,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.

In addition, personnel-related costs (excluding stock-based compensation) and allocated overhead costs increased $19.3 million for the fiscal year ended January 31, 2026, compared to the prior fiscal year, as a result of increased headcount and overall costs to support the growth in our business.

The remaining increase in general and administrative expenses was primarily driven by unallocated lease costs associated with unused office facilities to accommodate planned headcount growth.

Interest Income

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Interest income $ 190,556 $ 209,009 (9%)

Interest income increased $8.3 million for the fiscal year ended January 31, 2025, compared to the prior fiscal year, primarily due to higher yields on our cash equivalents and investments in available-for-sale marketable debt securities.

See Note 4, “Cash Equivalents and Investments,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details on our cash equivalents and investments.

Other Income (Expense), Net

Interest income decreased $18.5 million for the fiscal year ended January 31, 2026, compared to the prior fiscal year, primarily due to lower weighted-average annual yields on our cash equivalents and investments in available-for-sale marketable debt securities as a result of decreased interest rates.

See Note 4, “Cash Equivalents, Investments, and Strategic Investments,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details on our cash equivalents and investments.

Other Expense, Net

Fiscal Year Ended January 31,

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$ (53,852) $ (11,578) 365%

Net unrealized gains (losses) on strategic investments in marketable equity securities

Net unrealized losses on strategic investments in marketable equity securities

(7,569) (2,428) 212%

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Other 892 (3,919) (123%)

Other income (expense), net

Other expense, net

$ (59,003) $ (35,339) 67%

________________

(1) The net realized gains on strategic investments in equity securities for the fiscal year ended January 31, 2024 include primarily a remeasurement gain of $34.0 million recognized on a previously held equity interest as a result of a business combination completed during fiscal 2024.

See Note 7, “Business Combinations,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.

For strategic investments in equity securities sold, the realized gains or losses represent the difference between the sale proceeds and the carrying value of the securities at the beginning of the period or the purchase date, if later.

Other income (expense), net decreased $80.2 million for the fiscal year ended January 31, 2025, compared to the prior fiscal year, primarily due to changes in net realized and unrealized gains (losses) and impairments on our strategic investments in equity securities.

See Note 5, “Fair Value Measurements,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.

Provision for (Benefit from) Income Taxes

(1) Represents the difference between the sale proceeds and the carrying value of the securities at the beginning of the period or the purchase date, if later.

Other expense, net increased $23.7 million for the fiscal year ended January 31, 2026, compared to the prior fiscal year, primarily due to impairments and changes in net realized and unrealized gains (losses) on our strategic investments in equity securities.

See Note 4, “Cash Equivalents, Investments, and Strategic Investments,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.

Provision for Income Taxes

Fiscal Year Ended January 31,

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Loss before income taxes $ (1,311,910) $ (1,285,099) 2%

Provision for (benefit from) income taxes

Provision for income taxes

17,125 4,113 316%

Effective tax rate (1.3%) (0.3%)

Our provision for income taxes was $4.1 million for the fiscal year ended January 31, 2025, compared to our benefit from income taxes of $11.2 million for the fiscal year ended January 31, 2024, primarily due to partial releases of valuation allowances from the business combinations completed during fiscal 2024.

Our provision for income taxes increased $13.0 million for the fiscal year ended January 31, 2026, compared to the prior fiscal year, primarily due to higher tax provisions in foreign jurisdictions and an increase in our unrecognized tax benefits.

We maintain a full valuation allowance on our U.S.

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Our cash equivalents and investments primarily consist of money market funds, corporate notes and bonds, U.S.

government and agency securities, commercial paper, certificates of deposit, and time deposits.

government and agency securities, time deposits, certificates of deposit, and commercial paper.

As of January 31, 2026, our RPO was $9.8 billion.

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dollars each period based on the applicable period-end exchange rates.

Our primary source of cash is payments received from our customers as well as net proceeds from the issuance of the Notes.

Our primary uses of cash include personnel-related expenses, third-party cloud infrastructure expenses (including with respect to GPUs to develop AI Technology), sales and marketing expenses, overhead costs, acquisitions and strategic investments we may make from time to time, and repurchases of our common stock under our authorized stock repurchase program.

As of January 31, 2025, our material cash requirements from known contractual obligations and commitments relate primarily to (i) third-party cloud infrastructure agreements, (ii) the Notes, (iii) operating leases for office facilities, and (iv) subscription arrangements used to facilitate our operations at the enterprise level.

Our primary sources of cash are payments received from our customers as well as net proceeds from the issuance of our convertible senior notes.

Our primary uses of cash include personnel-related expenses, third-party cloud infrastructure expenses (including those related to GPUs and AI inference), sales and marketing expenses, overhead costs, acquisitions and strategic investments we may make from time to time, and repurchases of our common stock under our authorized stock repurchase program.

As of January 31, 2026, our material cash requirements from known contractual obligations and commitments relate primarily to (i) third-party cloud infrastructure agreements, (ii) our convertible senior notes, (iii) operating leases for office facilities, and (iv) subscription arrangements used to facilitate our operations at the enterprise level.

These agreements are enforceable and legally binding and specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the actions under the contracts.

For more information regarding our contractual obligations and commitments (excluding the Notes) as of January 31, 2025, see Note 11, “Commitments and Contingencies,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

For more information regarding our contractual obligations and commitments (excluding our convertible senior notes) as of January 31, 2026, see Note 11, “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.

On February 2, 2026, we acquired all the outstanding capital stock of Observe, Inc., a privately-held company that built an AI-powered observability platform.

In February 2026, we entered into agreements for new office facilities located in the United States and Germany, with a total commitment of $85 million, net of tenant incentives expected to be received.

These leases will commence on various dates starting in fiscal 2027 with lease terms ranging from 7.2 years to 12.3 years.

Convertible Senior Notes

In September 2024, we issued an aggregate principal amount of $2.3 billion of the Notes in a private placement to qualified institutional buyers, comprising of (i) $1.15 billion aggregate principal amount of the 2027 Notes and (ii) $1.15 billion aggregate principal amount of the 2029 Notes.

Each series of Notes was issued pursuant to separate indentures, as supplemented (each an Indenture and together, the Indentures), between us and U.S.

Bank Trust Company, National Association, as trustee.

In September 2024, we issued an aggregate principal amount of $2.3 billion of convertible senior notes in a private placement to qualified institutional buyers, comprising of (i) $1.15 billion aggregate principal amount of 0% convertible senior notes due 2027 (2027 Notes) and (ii) $1.15 billion aggregate principal amount of 0% convertible senior notes due 2029 (2029 Notes, and together with the 2027 Notes, the Notes).

The Notes are general, senior unsecured obligations.

The 2027 Notes will mature on October 1, 2027 and the 2029 Notes will mature on October 1, 2029, in each case unless earlier converted, redeemed, or repurchased.

Neither the 2027 Notes nor the 2029 Notes bear regular interest, and the principal amount of the Notes will not accrete.

We may elect or be required to pay special interest on the Notes under certain circumstances in accordance with the terms of the applicable Indenture.

Special interest, if any, will be payable semiannually in arrears on April 1 and October 1 of each year, beginning on April 1, 2025.

Upon conversion of the Notes, we may satisfy our conversion obligation by paying or delivering, as the case may be, cash, shares of our common stock or a combination of both, at our election.

The total proceeds from the issuance of the Notes were approximately $2.27 billion, net of $31.2 million of debt issuance costs.

In connection with the Notes offering, we entered into Capped Calls with certain of the initial purchasers or affiliates thereof and certain other financial institutions for a cost of $195.5 million.

The outstanding principal of the 2027 Notes and the 2029 Notes was $1.15 billion each as of January 31, 2026 and January 31, 2025.

In connection with the Notes offering, we entered into privately negotiated capped call transactions relating to each series of Notes (Capped Calls) with certain of the initial purchasers or affiliates thereof and certain other financial institutions for a cost of $195.5 million.

The Capped Calls are generally expected to reduce the potential dilution to our common stock upon any conversion of the relevant series of the Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted Notes of such series, as the case may be, with such reduction and/or offset subject to a cap based on a cap price initially equal to $225.00 per share.

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We expect to use the remainder of the net proceeds for general corporate purposes, which may include other repurchases of our common stock from time to time under our existing or any future stock repurchase program, as well as acquisitions or strategic investments in complementary businesses or technologies.

See Note 10, “Convertible Senior Notes,” and Note 12, “Equity,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional details.

The Sale Price Trigger, as discussed in Note 10, “Convertible Senior Notes,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, was met during each of the three months ended July 31, 2025, October 31, 2025, and January 31, 2026, and as a result, holders may convert the Notes at any time during each of the three months ending October 31, 2025, January 31, 2026, and April 30, 2026.

To the extent we receive notices of conversion, we may choose to pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.

See Note 10, “Convertible Senior Notes,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional details.

Stock Repurchase Program

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The program does not obligate us to acquire any particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at our discretion.

As of January 31, 2025, $2.0 billion remained available for future repurchases under the stock repurchase program (exclusive of transaction costs associated with repurchases).

See Note 10, “Convertible Senior Notes,” and Note 12, “Equity,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional details.

During the fiscal year ended January 31, 2026, we repurchased 4.9 million shares of our outstanding common stock for an aggregate purchase price of $873.5 million, excluding transaction costs associated with the repurchases, at a weighted-average price of $177.37 per share.

All repurchases were made in open market transactions.

As of January 31, 2026, approximately $1.1 billion remained available for future repurchases under the stock repurchase program (exclusive of transaction costs associated with repurchases).

See Note 12, “Equity,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional details.

Subsequent to January 31, 2026, and through March 20, 2026, we repurchased 1.7 million shares of our outstanding common stock for an aggregate purchase price of $300.0 million, excluding transaction costs associated with the repurchases, at a weighted-average price of $178.95 per share.

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Net cash provided by operating activities $

Net cash provided by (used in) investing activities $ 190,646 $ 832,258 $ (597,885)

Net cash provided by investing activities $

Net cash used in financing activities $

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) amortization of operating lease right-of-use assets, (v) net amortization (accretion) of premiums (discounts) on investments, (vi) net realized and unrealized gains and losses on strategic investments in equity securities, and (vii) deferred income tax benefit or expense, and changes in operating assets and liabilities during each period.

For the fiscal year ended January 31, 2025, net cash provided by operating activities was $959.8 million, consisting of our net loss of $1.3 billion, adjusted for non-cash charges of $1.8 billion, and net cash inflows of $443.6 million provided by changes in our operating assets and liabilities, net of the effects of business combinations.

The main drivers of the changes in operating assets and liabilities during fiscal 2025 were (i) a $382.8 million increase in deferred revenue due to invoicing for prepaid capacity agreements outpacing revenue recognition, (ii) a $108.9 million increase in accounts payable due to timing of invoices and payments, (iii) a $70.9 million increase in accrued expenses and other liabilities primarily due to the timing of accruals and payments, and (iv) a $29.9 million decrease in prepaid expenses and other assets primarily driven by a decrease in prepaid third-party cloud infrastructure expenses, partially offset by (a) a $101.6 million increase in deferred commissions earned upon the origination of customer contracts, and (b) a $47.7 million decrease in operating lease liabilities due to payments related to our operating lease obligations.

For the fiscal year ended January 31, 2024, net cash provided by operating activities was $848.1 million, consisting of our net loss of $838.0 million, adjusted for non-cash charges of $1.3 billion, and net cash inflows of $390.7 million provided by changes in our operating assets and liabilities, net of the effects of business combinations.

Net cash provided by operating activities increased $111.6 million for the fiscal year ended January 31, 2025, compared to the fiscal year ended January 31, 2024, primarily due to an increase in cash collected from customers resulting from increased sales.

This was partially offset by increased expenditures due to an increase in headcount and growth in our business.

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) asset impairment related to office facility exit, (v) amortization of operating lease right-of-use assets, (vi) net realized and unrealized gains and losses on strategic investments in equity securities, and (vii) net amortization (accretion) of premiums (discounts) on investments, and changes in operating assets and liabilities during each period.

For the fiscal year ended January 31, 2026, net cash provided by operating activities was $1.2 billion, consisting of our net loss of approximately $1.3 billion, adjusted for non-cash charges of approximately $2.2 billion, and net cash inflows of $383.8 million resulting from changes in our operating assets and liabilities, net of the effects of business combinations.

The main drivers of the changes in operating assets and liabilities during fiscal 2026 were (i) a $755.2 million increase in deferred revenue due to invoicing for prepaid capacity agreements outpacing revenue recognition and (ii) a $393.3 million increase in accrued expenses and other liabilities primarily due to the timing of accruals and payments and growth in our business, partially offset by (a) a $380.0 million increase in accounts receivable primarily due to growth in our business, (b) a $305.1 million increase in deferred commissions earned primarily by our sales force upon the origination, expansion, or renewal of customer contracts, (c) a $44.5 million increase in prepaid expenses and other assets primarily driven by prepayments related to our sales, marketing and business development programs, including our user conferences, and (d) a $26.9 million decrease in operating lease liabilities due to payments related to our operating lease obligations, net of tenant incentives received.

For the fiscal year ended January 31, 2025, net cash provided by operating activities was $959.8 million, consisting of our net loss of approximately $1.3 billion, adjusted for non-cash charges of approximately $1.8 billion, and net cash inflows of $443.6 million resulting from changes in our operating assets and liabilities, net of the effects of business combinations.

Net cash provided by operating activities increased $262.2 million for the fiscal year ended January 31, 2026, compared to the fiscal year ended January 31, 2025, primarily due to an increase in cash collected from customers resulting from increased sales, partially offset by increased expenditures due to an increase in headcount and growth in our business.

We expect to continue to generate positive net cash flows from operating activities for fiscal 2027.

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Net cash provided by investing activities for the fiscal year ended January 31, 2026 was $312.2 million, primarily driven by proceeds of $595.8 million from net sales, maturities and redemptions of investments.

The increase is partially offset by (i) $46.3 million in purchases of property and equipment to support our office facilities, (ii) an aggregate of $30.3 million in cash paid for Datavolo and other business combinations, net of cash and cash equivalents acquired, and (iii) $29.4 million in capitalized internal-use software development costs.

Net cash provided by investing activities for the fiscal year ended January 31, 2024 was $832.3 million, primarily driven by proceeds of $1.2 billion from net sales, maturities and redemptions of investments, partially offset by an aggregate of $275.7 million in cash paid for the Neeva, Mountain, LeapYear and other business combinations, net of cash, cash equivalents, and restricted cash acquired, and, to a lesser extent, purchases of property and equipment to support our office facilities, capitalized internal-use software development costs, and purchases of intangible assets.

The increase is partially offset by (i) an aggregate of $178.9 million in cash paid for Crunchy Data and other business combinations, net of cash acquired, and (ii) $101.6 million in purchases of property and equipment to support our office facilities.

Net cash provided by investing activities for the fiscal year ended January 31, 2025 was $190.6 million, primarily driven by proceeds of $297.4 million from net sales, maturities and redemptions of investments.

Financing Activities

Net cash used in financing activities for the fiscal year ended January 31, 2025 was $226.5 million, primarily driven by (i) $1.9 billion in repurchases of our common stock under our authorized stock repurchase program, (ii) $489.1 million in taxes paid related to net share settlement of equity awards, and (iii) $195.5 million in purchases of the Capped Calls, partially offset by (a) proceeds of approximately $2.27 billion from the issuance of the Notes, net of $31.2 million in cash paid for issuance costs, and (b) proceeds of $121.9 million from the issuance of equity securities under our equity incentive plans.

Net cash used in financing activities for the fiscal year ended January 31, 2024 was $854.1 million, primarily as a result of $591.7 million in repurchases of our common stock under our authorized stock repurchase program and $380.8 million in taxes paid related to net share settlement of equity awards, partially offset by proceeds of $118.4 million from the issuance of equity securities under our equity incentive plans.

Net cash used in financing activities for the fiscal year ended January 31, 2026 was approximately $1.4 billion, primarily driven by (i) $873.5 million in repurchases of our common stock under our authorized stock repurchase program and (ii) $672.9 million in taxes paid related to net share settlement of equity awards, partially offset by proceeds of $172.3 million from the issuance of equity securities under our equity incentive plans.

Net cash used in financing activities for the fiscal year ended January 31, 2025 was $226.5 million, primarily driven by (i) approximately $1.9 billion in repurchases of our common stock under our authorized stock repurchase program, (ii) $489.1 million in taxes paid related to net share settlement of equity awards, and (iii) $195.5 million in purchases of the Capped Calls, partially offset by (a) proceeds of approximately $2.27 billion from the issuance of the Notes, net of $31.2 million in cash paid for issuance costs, and (b) proceeds of $121.9 million from the issuance of equity securities under our equity incentive plans.

Critical Accounting Estimates

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis