Snowflake's CoCo agent passed 9,100 accounts and its CFO says counting it in guidance would be reckless
Snowflake's CFO refuses to extrapolate CoCo, its AI coding agent, into guidance, calling the math reckless. The same agent ships a top-ten skill whose job is to shrink the consumption bills Snowflake is paid on.
Vincent Jiang · 3 min read
Snowflake−1.10% — Snowflake, down 1.10 percent today (NYSE: SNOW) chief financial officer Brian Robins told broker Piper Sandler's Growth Frontiers conference on September 15 that machine-learning models forecast the data platform's core consumption business every night, "with a very small standard deviation" 1. Its AI coding agent, Cortex Code or CoCo, gets different treatment. "I think it would somewhat be reckless to extract that out and just apply that to guidance," he said, so Snowflake applies "a haircut" 1.
Analysts are less careful. They have raised revenue estimates after each of the last two reports, lifting fiscal 2028 consensus about 10% since March 31 and fiscal 2027 about 7% 1. The product the Street keeps upgrading is the one management refuses to count.
The market noticed anyway. Snowflake closed October 9 at $368.89, up 7.42% 1, after an Agentic Marketplace Discovery preview put CoCo inside Snowsight, the platform's web interface, where users can search its marketplace in plain language 2. Shares trade at 146 times next-twelve-month normalized earnings 1.
The agent that shrinks the bill
CoCo passed 9,100 accounts in the quarter ended July 31, adding more than 2,000 in three months, while CoWork, Snowflake's autonomous AI platform for enterprise workflows, expanded to 5,800 3. Robins said CoCo skills cut customer migrations from 10 or 11 months to about 6, pulling billable consumption forward, and that Snowflake canceled its own analytics contracts in favor of CoCo dashboards 1.
The catch sits in the usage table. A cost-optimization skill ranks among CoCo's 10 most used, and consumption customers who optimize pay Snowflake less 1. The company's own second-quarter release lists "the extent to which customers continue to optimize consumption, including with respect to AI features" among its risks 3. No filing totals the two sides of that ledger.
Cash still sawtooths
July-quarter free cash flow was $83.8 million on $1.55 billion of revenue, a 5.4% margin 3. TIKR, a stock-research platform, counts a $107.27 million consensus for that line: a 21.87% miss, and the third in five quarters 1.
On September 29 the company announced it had priced $3.75 billion of zero-coupon convertible notes, debt that pays no interest and can turn into shares, upsized from a proposed $3.5 billion 4. Twelve quarters of filings show the shape underneath: revenue doubles while the cash line sawtooths 5.
Revenue doubled in 12 quarters; free cash flow still sawtooths
- Revenue
- Free cash flow
Data
| Revenue | Free cash flow | |
|---|---|---|
| Q3 FY24 | $0.73B | $0.1B |
| Q4 FY24 | $0.78B | $0.32B |
| Q1 FY25 | $0.83B | $0.33B |
| Q2 FY25 | $0.87B | $0.06B |
| Q3 FY25 | $0.94B | $0.08B |
| Q4 FY25 | $0.99B | $0.42B |
| Q1 FY26 | $1.04B | $0.18B |
| Q2 FY26 | $1.15B | $0.06B |
| Q3 FY26 | $1.21B | $0.11B |
| Q4 FY26 | $1.28B | $0.77B |
| Q1 FY27 | $1.39B | $0.23B |
| Q2 FY27 | $1.55B | $0.08B |
The flywheel case
Chief executive Sridhar Ramaswamy's answer is that CoCo and CoWork are "fueling rapid adoption, user growth, new workloads, and overall platform consumption" 3. The quarter marked "our third consecutive quarter of product revenue growth acceleration," by the CFO's count, and full-year product revenue guidance rose to $6.07 billion, 36% growth, from $5.84 billion 3. Shares jumped 22% in extended trading on the September 2 report 6.
October partnerships point the same way: Anthropic$350B — Anthropic, private, latest valuation $350B, the AI lab, runs its models where corporate data already sits, and Palantir's−0.36% — Palantir, down 0.36 percent today operational software wires decisions into production, both feeding the same consumption meter 78. July is always the cash trough, and management guides a 23% adjusted free cash flow margin for the year 3. What none of that prices is the optimizer.
December 2 decides the haircut
Expedition, Snowflake's customer conference, streams November 3 to 5, opening with Ramaswamy and Microsoft+1.26% — Microsoft, up 1.26 percent today chairman and chief executive Satya Nadella 1. October-quarter results, expected about December 2 and unconfirmed, carry analyst models near 36% revenue growth 1. If CoCo adds another 2,000-plus accounts and growth clears that line, the haircut was too deep; a smaller gain says the CFO trimmed it right.
Deepdive
AI-generated from this story and its cited sources. Not investment advice.
