How SNOW (Snowflake) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a cloud data platform like SNOW makes money is essential for investors and anyone interested in the business of enterprise software and data infrastructure. In this post, we break down SNOW's quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick SNOW Overview

SNOW operates a cloud-native data platform that enables organizations to store, process, and analyze massive volumes of data across multiple clouds. Its core business model is based on consumption-based pricing for data storage, compute, and analytics services.
Revenue comes primarily from product revenue (usage of its platform by enterprise customers), with a smaller portion from professional services and other revenue (implementation, training, and support).
SNOW’s business segments reflect its focus on scalable cloud infrastructure and data-driven enterprise solutions.

Revenue Breakdown

• Total Revenue (Q3 2025): $1.15B (+31.8% YoY)
  • Product Revenue: $1.09B (95.2% of total, +31.5% YoY)
  • Professional Services and Other Revenue: $54.5M (4.8% of total, +37.7% YoY)
  • Growth is powered by expanding enterprise adoption, increased data workloads, and strong customer retention.

Gross Profit and Margins

• Gross Profit: $773.2M (67.5% gross margin)
  • Cost of Revenue: $371.8M (+29.1% YoY)
  • SNOW maintains robust margins due to its scalable cloud business model and operational efficiencies in infrastructure management.
• Most costs come from cloud hosting fees, infrastructure, and support services.

Operating Income and Expenses

• Operating Income: Not reported for Q3 2025 (operating expenses exceed gross profit, indicating an operating loss)
• Operating Expenses: $1.11B (+19.0% YoY)
  • R&D: $492.0M (+12.4% YoY, 43.0% of revenue) — Focused on platform innovation, AI/ML capabilities, and expanding cloud features.
  • SG&A: $621.4M (+24.7% YoY, 54.3% of revenue) — Includes sales, marketing, and general administrative costs to drive customer acquisition and global expansion.
  • SNOW continues to prioritize innovation and invest in growth while expanding operations globally.

Net Income

• Pre-Tax Income: Not reported for Q3 2025
• Income Tax: Not reported for Q3 2025
• Net Income: $298.0M (-6.0% YoY, 26.0% net margin)
• SNOW converts a moderate portion of sales into profit due to its scalable platform and pricing power, despite heavy investments in R&D and SG&A.

What Drives SNOW's Money Machine?

• Product Revenue: Over 95% of revenue comes from platform usage by enterprise customers, reflecting SNOW’s dominant position in cloud data infrastructure.
• Consumption Growth: Data processed and stored on SNOW’s platform continues to grow rapidly, driving recurring revenue.
• R&D Investment: Nearly half of revenue is reinvested into product development, AI, and platform enhancements.
• Future Growth Areas: Expansion into AI-driven analytics, industry-specific data solutions, and global markets, though these segments are not yet profitable.

Visualizing SNOW's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially R&D and SG&A) taking the largest chunk.
• Even after large investments in innovation and sales, 26% of revenue drops to the bottom line.

Key Takeaways

• SNOW's money comes overwhelmingly from product revenue (cloud platform usage)
• High gross margins illustrate the power of SNOW's scalable cloud business model
• Heavy investment in R&D, balanced by efficiency in operating costs
• Ongoing growth is driven by enterprise adoption, data volume expansion, and platform innovation

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FAQ About SNOW's Income Statement

1. What is the main source of SNOW's revenue in 2025?

SNOW generates over 95% of its revenue from product revenue, which comes from enterprise customers using its cloud data platform. Professional services and other revenue contribute less than 5%, mainly from implementation and support.

2. How profitable is SNOW in Q3 2025?

SNOW reported net income of $298.0M in Q3 2025, with a net margin of approximately 26%, reflecting moderate profitability driven by strong gross margins and recurring product revenue, offset by high R&D and SG&A investments.

3. What are the largest expense categories for SNOW?

The biggest expenses on SNOW's income statement are operating expenses, particularly Research & Development (R&D) at $492.0M (43% of revenue) and Sales, General & Administrative (SG&A) at $621.4M (54.3% of revenue). R&D investment is focused on platform innovation and AI capabilities.

4. Why does professional services operate at a loss?

Professional Services and Other Revenue, despite generating $54.5M in revenue, posted an operating loss in Q3 2025. This is because SNOW aggressively invests in customer onboarding, support, and training, believing these will drive long-term platform adoption—even if the division is unprofitable today.

5. How does SNOW's effective tax rate compare to previous years?

SNOW's effective tax rate for Q3 2025 was not reported in the latest filing. Historically, SNOW’s tax rate has been moderate, influenced by international structuring and tax benefits from share-based compensation.