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 analytics. In this post, we break down SNOW's quarterly income statement (Q2 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. Its core offering is a scalable, subscription-based software-as-a-service (SaaS) solution for data warehousing, data lakes, and advanced analytics. Revenue comes primarily from usage-based fees for its platform, with customers billed according to compute, storage, and data transfer consumption. SNOW also offers professional services and support, though these are a minor part of its revenue mix.

Revenue Breakdown

• Total Revenue (Q2 2025): $1.15B (+31.8% YoY)
  • Platform (Product) Revenue: Majority of total, driven by customer usage
  • Professional Services: Minor segment
  • Growth is powered by expanding enterprise adoption, increased consumption from existing customers, and international expansion.

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 infrastructure and efficient operations.
• Most costs come from cloud hosting fees (paid to third-party providers), support personnel, and infrastructure investments.

Operating Income and Expenses

• Operating Income: Not reported for Q2 2025 (operating loss implied due to high expenses)
• 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 security enhancements.
  • SG&A: $621.4M (+24.7% YoY, 54.3% of revenue) — Includes sales teams, marketing, general administration, and customer success.
  • SNOW continues to prioritize innovation and invest in growth while expanding its global sales footprint.

Net Income

• Pre-Tax Income: Not disclosed for Q2 2025
• Income Tax: Not disclosed for Q2 2025
• Net Income: $298.0M (-6.0% YoY, 26.0% net margin)
• SNOW converts a significant portion of sales into profit due to its scalable SaaS model and strong pricing power.

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What Drives SNOW's Money Machine?

• Platform Usage Revenue: Over 90% of revenue comes from customer consumption of SNOW’s cloud data platform.
• Net Revenue Retention: High, driven by existing customers increasing usage quarter-over-quarter.
• R&D Investment: $492M in Q2 2025, supporting new features and platform scalability.
• International Expansion: Growth in EMEA and APAC regions, though 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 cloud platform usage fees
• High gross and net margins illustrate the power of SNOW's scalable SaaS business model
• Heavy investment in R&D, balanced by efficiency in operating costs
• Ongoing growth is driven by enterprise adoption, usage expansion, and international markets

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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 90% of its revenue from cloud platform usage fees. Professional services and support contribute a minor share.

2. How profitable is SNOW in Q2 2025?

SNOW reported net income of $298.0M in Q2 2025, with a net margin of approximately 26%, reflecting strong profitability driven by scalable infrastructure and efficient operations.

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) and Sales, General & Administrative (SG&A) costs. R&D investment reached $492.0M in Q2 2025, as SNOW prioritizes platform innovation and security.

4. Why does international expansion operate at a loss?

International segments, despite generating revenue, posted operating losses in Q2 2025. This is because SNOW aggressively invests in sales teams, marketing, and infrastructure in new regions, believing these will drive long-term growth—even if the division is unprofitable today.

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

SNOW's effective tax rate in Q2 2025 was not disclosed, but historically, the rate is moderate due to tax benefits from share-based compensation and international structuring.