Snowflake's growth signals look genuinely strong: forward bookings and customer renewal rates both point to continued growth, and management just raised its outlook.
But on a stricter definition of cash flow (after fully accounting for stock-based pay), the company is still burning cash rather than generating it, despite reporting a positive cash-flow margin on a looser definition.
At about $262 a share, the stock trades above even our most optimistic fair-value estimate.
Significantly Overvalued, and the evidence here is unusually consistent, with little to suggest a more favorable read.
Snowflake sells cloud-based data storage and analytics software, billed by usage, mostly to large enterprises in the US, with a smaller but faster-growing international business.
We'd revisit this call if the price falls below $122.00 or rises above $237.00.
These are review triggers for us to take another look, not price targets or a promise the stock will reach them.
| Metric | SNOW (subject) | Peer median |
|---|---|---|
| EV/Sales | 18.51x | 4.81x |
| EV/EBIT | -60.41x | 24.06x |
| EV/EBITDA | -71.37x | 33.28x |
| P/B | 46.29x | 8.98x |
| Gross Margin | 67.2% | 77.7% |
| ROIC | N.M. | 0.3% |
| ROE | -69.2% | 2.9% |
| Rule of 40 | 21.1% | 27.6% |
FY2026 (ended 1/31/26) revenue $4,684M (+29.2% YoY); Q1 FY2027 (4/30/26) revenue $1,391M (+33% YoY), product revenue $1,334M (+34%), an acceleration, not a deceleration (10-K; 8-K 5/27/26). Company raised FY27 product-revenue guidance to +31% YoY (from +27%) and non-GAAP op-margin guidance to 13.5% (from 12.5%) after one quarter. The inflection (AI/Cortex-driven consumption) is real but not yet separately quantified by the company; the 12-month execution debate is whether growth holds >30% at $5B+ scale.
GAAP gross margin 67% (FY26), GAAP operating loss -31% of revenue, narrowing to -23.4% in Q1 FY27. Non-GAAP op margin guided to 13.5% for FY27. SBC fell from 42%→34% of revenue over three years, real (if slow) operating leverage.
Company FCF (OCF-capex) was $1,120M/23.9% margin FY26. Under the plan's rule (FCF=OCF-capex-SBC), FY26 SBC was $1,600M (34% of revenue) vs OCF $1,222M: SBC-adjusted FCF = -$479M (FY26) / -$453M TTM through 4/30/26, a margin of roughly -9% to -10%. This is the single biggest gap between the company narrative and the plan's numbers.
Net cash ~$2.5B ($4.78B cash+investments less $2.28B 0%-coupon converts, 10-K). Shares outstanding grew 333.9M→343.9M (+3.0%) in FY26 despite $873.5M/4.9M-share buybacks (avg $177.37); gross dilution before buybacks was ~4.5%. Remaining buyback authorization (~$0.8-1.1B) is ~1% of market cap, no buyback support.
NRR 125% (1/31/26) vs 126% (1/31/25) vs 133% (1/31/24), decelerating trend, ticked back to 126% at 4/30/26 (8-K); peer Datadog NRR "low 120s%" Q1 2026 (secondary, TIKR/company commentary). RPO $9,772M (1/31/26, +42.3% YoY) vs revenue +29.2% → accel ahead (S6); at 4/30/26 RPO $9.21B (+38% YoY) vs revenue +33% → accel ahead persists. DAU/ARPU: UNAVAILABLE (not disclosed). Gross margin 67% GAAP / 75.1% non-GAAP product (Q1 FY27). ROIC: not meaningful (GAAP net loss). FCF yield (plan FCF/mktcap): -0.5%. Reverse-DCF: N/A for HYPERGROWTH (EV/Sales variant only).
Current EV (~$88B) / TTM revenue (~$5.0B) ≈ 17-18x, well above Datadog's ~11.4x NTM EV/Revenue and a broader infra-SaaS peer median cited near ~7x (secondary sources, May 2026, figures vary by source, treated as directional only). This is a stock-specific premium (superior NRR and gross margin vs several peers), not a sector-wide re-rating, not a sector bet.
Consumption-based revenue model is sensitive to enterprise IT/cloud-spend cycles; a macro slowdown that cuts customer data-warehouse usage would show up first in RPO growth decelerating below revenue growth (flip to decel ahead) before it hits reported revenue.
No open-market insider buying found. Secondary Form-4 aggregation shows ~$98.1M of insider sales on 5/28/26 (10 sales + 2 option-exercise conversions), ~0.1% of market cap, below the 1% DEGRADED threshold; reads as routine, scheduled diversification, not a directional signal (UNVERIFIED against raw SEC Form 4 XML, sourced via stocktitan.net).
Catalysts: Q2 FY27 earnings (~Aug 2026) testing whether RPO/NRR acceleration continues; further AI-product disclosure. Risks: Databricks (private, ~$134B valuation Dec 2025, ~65% YoY run-rate growth per secondary sources) is the most specific, named competitive threat; a sustained pivot of AI/agentic workloads to Databricks would show up as RPO growth falling below revenue growth. Segment proxy (single reportable segment, 10-K): APAC revenue +44.1% YoY (smallest base, $271M) is strongest; US, 75% of revenue, grew a slower +27.6%, deceleration concentrated in the largest, most-penetrated market.
(a) RPO growth (38-42% YoY) and NRR (125-126%) are leading revenue by 2-4 quarters and both point up, not down (10-K; 8-K). (b) Guidance was raised, not cut, one quarter into FY27, an early, credible signal, not just sandbagging. (c) Net cash (~$2.5B) and a 0%-coupon convert structure mean no near-term refinancing risk even with negative SBC-adjusted FCF.
reassess_low ≈ $96 (0.55x base case $175), a level this low would itself need scrutiny for overshoot. reassess_high ≈ $193 (1.10x base case $175), price falling toward this level would mean much of the valuation gap has closed; re-run our research at either trigger.
Mechanical model output, a screen, not a fair value.
Independent peer-anchored EV/Sales scenario analysis (bear 6.5x / base 9.5x / bull 13x on FY2027 guided ~$6.1B total revenue, net of ~$2.5B net cash) puts fair value at roughly $122-$237/share; the $262.09 price sits above even the bull case, implying the market is pricing sustained top-tier (Datadog/Cloudflare-tier) multiples plus further growth reacceleration beyond management's own raised FY27 guidance.
The mechanical screen and the research view reach the same verdict.
Confidence = 0.7 × research sub-score + 0.3 × mechanical sub-score. Mechanical sub-score rewards the Layer 1 screen for agreeing with Layer 2's direction (corroboration), not just for being conviction=NORMAL in isolation.