Dive Brief:
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Consumption of Snowflake services soared in September and October, as enterprises migrated data to cloud in advance of AI adoption, Frank Slootman, chairman and CEO, said Wednesday during a Q3 2024 earnings call.
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Usage of the data cloud company’s processing solution Snowpark grew 47% quarter over quarter and was up 500% in October compared to the same month last year, Slootman said. Total product revenue increased 34% year-over-year to $698.5 million for the three-month period ending Oct. 31.
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“Migrations drove growth in Q3,” CFO Mike Scarpelli said during the call. “Our two fastest-growing customers were both migrating workloads from a legacy vendor.”
Dive Insight:
Generative AI has yet to move the needle on enterprise IT spending, according to most analysts. But data cloud services are starting to reap the benefits of this year’s model harvest.
“Interest in AI is also driving interest in data strategy, which then has a knock-on effect on consumption,” Slootman said.
CRM giant Salesforce also benefited from higher-than-expected year-over-year revenue gains in the quarter running concurrently with Snowflake’s Q3, due largely to usage of its Data Cloud services.
Most companies acknowledge that their data estate isn’t AI-ready, according to an October survey of 334 chief data officers conducted by AWS in conjunction with the International MIT Chief Data Officer and Information Quality Symposium.
But AI enthusiasm has made data strategy a pressing issue for organizations.
Enterprises are prioritizing migration, modernization and integration, according to Gartner data. More than three-quarters of CIOs ranked data analytics as a top IT budget category for 2024.
“Customers are now getting preoccupied with their data estates,” Slootman said. “They have to get them into shape where they can productively take advantage of newer technologies.”
While replatforming legacy workloads remains the core of Snowflake’s business, preparing data for AI training and inference is a growing segment, Slootman said.
The company launched Snowflake Cortex, a managed service for inferencing large language models, in November and a cloud container service for AI/ML workloads in June. Both are currently in private preview.
AI is only the tip of the iceberg, Slootman said. “Everything that has to happen to support it is happening below the surface.”
The pinch the company felt from tightened cloud spend, when enterprises prioritized optimization earlier this year, has eased. AI has helped loosen the grip of budget hawks, according to the company.
“I don't even hear the words AI and budget in the same sentence,” Slootman said. “In other words, they're going to make resources available to enable it.”
