Snowflake Routinely Changes How it Calculates or Presents Key Metrics
New customer count presentation is the third key metric methodology change in the last nine months.
June 6, 2022
In its latest earnings release, Snowflake (SNOW), an enterprise SaaS firm, inserted new language related to how it counts the number of customers it has. Previously, Snowflake included boilerplate language regarding customer count being subject to:

"...adjustments for acquisitions, consolidations, spin-offs, and other market activity…”

But the latest earnings release contains new language signaling Snowflake now intends to present total customer count— and customers spending $1 million or more over previous 12-months— for historical periods reflecting these adjustments.

Assuming Snowflake would not revise its customer count metrics to be less flattering, we're awaiting the 10-Q to compare SNOW's prior period customer count (and customers spending $1M) with revised historical counts in the latest quarterly filing.

Two months earlier, Snowflake revealed in its annual report it recently changed how it handles tax withholdings for employee RSUs which will result in higher earnings per share (EPS) by shrinking the denominator in the calculation:

“In future periods, this change in withholding method is expected to reduce (i) net cash provided by financing activities and (ii) our shares outstanding used to calculate net income (loss) per share.”

Prior to this change, we discovered another impacting Snowflake’s net revenue retention rate (NRR), a key metric that helps investors gauge how much more existing customers are using the company’s platform. Snowflake says it will now include customers it previously hadn’t when calculating NRR:

“...the cohorts used to calculate net revenue retention rate include end-customers under a reseller arrangement. Although the impact is not material, we have adjusted all prior periods presented to reflect this inclusion.”

Investors should once again assume the change will positively impact Snowflake’s performance though it’s not clear any adjustments were necessary. NRR for the years 2020 and 2021 in the previous year’s annual report are identical to those in the latest annual report.
Related: CRM, BRK.B, TYL, SPLK, VRNT, CTSH
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