Snowflake announced earnings yesterday, echoing the strength within software companies more broadly & underscoring the shift in enterprise buyer behavior to normal after three quarters of extensive cost cuts.

“Q3 product revenue grew 34% year-over-year to reach $698 million. Non-GAAP adjusted free cash flow was $111 million, representing 7% year-over-year growth. Results reflect strong execution in a broadly stabilizing macro environment.”

The resurgence of strength is a recent phenomenon.

“For 3 weeks, consumption grew faster than any other period in the past 2 years. Consumption continued to grow in the month of October…Consumption trends have improved.”

“We are seeing stability in customer expansion patterns. “

As with many other companies reporting strength in the market, AI & unstructured data workloads are fueling growth.

“I don’t even hear the words AI and budget in the same sentence.”

Unstructured data is the growth engine : 17x growth y/y suggests a small number last year, but phenomenal interest.

“Over 30% of customers use Snowflake to process unstructured data in October. Consumption of unstructured data was up 17x year-over-year.”

A surprising impact of the cost-cutting may be increased margins for SaaS providers on infrastructure as their own cost reductions manifest as margin improvements.

“Non-GAAP product gross margin of 78% was up approximately 300 basis points year-over-year. Improved terms from the cloud service providers have contributed to margin expansion.”

Microsoft is now compensating their salespeople for selling Snowflake more aggressively than in the past, perhaps as a competitive joust to Databricks. Microsoft will launch their Databricks competitor called Fabric soon.

“Yes, we actually saw quite a bit of energy coming from the Azure platform this quarter. The things that we worked on in the renewed relationship with Microsoft is really much better alignment in the field from a compensation standpoint that is just super, super important in our world. And we’re seeing the effects of that. “

Here’s another insight : Google’s cloud is more expensive for customers than others :

” One of the reasons why GCP is not as big as just so much more expensive for our customers to operate in GCP than it is in AWS and Azure. And as a result, our salespeople are really not inclined to do much in GCP.”

For startups operating within data, which tops buyers’ lists, this news further signals a stronger market in 2024.

Time to make some snow angels & sell some software.