Snowflake, under the leadership of CEO Sridhar Ramaswamy, is rapidly scaling its global presence while navigating the complexities of competitive markets and evolving customer needs. The company’s approach to innovation, acquisitions, and market expansion sets it apart, especially in regions like India, where digital transformation presents both challenges and immense opportunities. Ramaswamy, along with Vijayant Rai, Managing Director-India, shares insights into Snowflake’s strategy for balancing growth with profitability, fostering ecosystem partnerships, and leveraging its unique value proposition to drive success in cost-sensitive markets. In a conversation with Fortune India, the top management highlights how Snowflake aims to redefine data management and analytics while staying ahead in the competitive data cloud space. 

One admirable thing about the Snowflake founders is that unlike companies where the founders of an acquired company often fade into irrelevance, at Snowflake they let you transition to the top. How did that happen? It’s rare to see a founder step away and the CEO of an acquired company [Neeva] take the helm. 

Snowflake CEO Sridhar Ramaswamy: One thing I want to clarify is that the founders are still a vital part of Snowflake. In fact, I sit right next to them. Our headquarters in San Mateo is open-plan, and one of the founders sits just behind my monitor! They are incredibly technical and deeply understand the business, but being a CEO requires a broader focus — understanding customers deeply, managing teams, and overseeing various functions. It’s about embracing all aspects of the role.

The founders and I have a very healthy relationship. We regularly discuss product challenges and strategies for solving them. I have to give them credit for their collaborative spirit and vision. I also want to acknowledge Frank [Slootman] for recognising that Snowflake was evolving into a very different kind of product and business environment — and for being willing to make the necessary changes to lead us forward. 

Snowflake is at $3.5 billion in revenue, growing at 30% year on year. How do you see that growth engine continuing amid increasing competition? For instance, if AWS gets into the same space, how would you navigate that? 

That’s a complicated question. Let me start by addressing the competition. First, everyone understands that data is important. That’s true, and because of this, there’s going to be a lot of competition — just as there is with AI. Many companies are trying to carve out their space. 

But here’s the key point: even though our formidable competitors — AWS, Microsoft, and Google — have immense resources, I pose this question: who are the best AI model makers on the planet? What would your answer be? 

Open AI? 

And Anthropic. Okay. I tell people that’s actually a positive signal for everybody

But Microsoft has invested in OpenAI, much like Snowflake acquired Neeva. So, in some sense, isn’t OpenAI essentially a Microsoft product? 

It’s not, in the sense that OpenAI remains independent — they’re not one company. But my more important point is that money doesn’t always buy capability. True capability requires effort, dedication, and expertise. Being the best in the world at something is incredibly hard. Just as building advanced AI models is hard and cannot be achieved with money alone, creating a great data platform is equally challenging. 

You can’t just throw money at the problem and expect a great data platform to emerge. It’s a path-dependent outcome, and we’re very proud of the innovations we’ve introduced — starting with our original vision of separating computing and storage. That innovation was foundational to Snowflake. Another milestone was creating a completely serverless platform. Interestingly, competitors are now copying what we pioneered 10 years ago and calling it “innovation.” 

However, creating an easy-to-use, tightly integrated product is incredibly difficult. Many competitors treat features as a laundry list — they want to offer everything. But customers then face the challenge of piecing those features together themselves. It’s like the difference between buying a car’s parts and buying a fully assembled, functional car. Customers want the latter — a complete, ready-to-use solution. 

Does this mean Snowflake’s work is done? Absolutely not. The world is evolving rapidly, especially with the before-and-after impact of AI. We need to continue innovating. This is why Snowflake acquired Neeva. Neeva brought exceptional search capabilities, which are increasingly critical in AI applications. We’re also adept at integrating AI models and applying them effectively. 

While our core value proposition — a simple, fast-to-value data product — remains strong, we’re far from complacent. Over the past nine months, I’ve worked to instil a greater sense of urgency across the company, especially in the product team. This rapidly changing landscape demands faster product releases and iterations. We’ve also made significant investments in improving how we bring new products to market. Many companies excel at their primary product but struggle to launch new ones. We’ve addressed this by creating mechanisms to accelerate the process of taking new products to market. 

Snowflake’s financial strength stems from its strong core analytics platform. However, our future growth will also be driven by new products in data engineering and AI, which are gaining traction and generating revenue. It’s this combination of a robust core and successful new ventures that gives us confidence not just about the last quarter but about the road ahead. 

At some point, the trade-off between growth and profitability becomes critical. It’s not a booming economy — people are talking about shrinking IT budgets, and deal closures might take longer.

That’s a great question. If you look at a balance sheet, there’s a clear sequence: first, you have revenue, then gross margin, followed by operational expenses and operating margin. After that, you move to cash flow, and finally, something like GAAP profitability. You have to earn your way through each of these stages sequentially. 

But how you play the sequence is also as important

My former boss at Google, Eric Schmidt, had a lot of famous one-liners. One of them was: “Revenue solves all known problems.” It’s crucial not to start by focusing on profitability, especially GAAP profitability — you have to start with revenue. 

That’s why we feel good about where we are. We’re driving 30% growth, and I’m confident about doing even better next year. Reaching $3.4 billion in revenue is no small feat. Very few companies in the world achieve that, and it’s a testament to our strength. 

When it comes to gross margins, we’re also in a strong position. Our gross margins remain solid in the 70% range and have been consistently steady. Another key reason we feel optimistic about sustaining this growth is our metrics like Net Revenue Retention (NRR), which is holding steady at 127%. That’s considered excellent by industry standards. 

So, your customers are locked in for longer periods compared to traditional SaaS companies. Is that what you’re seeing? 

Not exactly. Our customers continue to grow their spending with Snowflake, but they typically renew every two or three years. There’s no lock-in — what they’re doing is investing in their future. That’s what the Net Revenue Retention (NRR) number reflects. 

After that, we look at operating expenses and operating margin. This year, as Mike Scarpelli, our CFO, and I noted, has been a year of significant investment across the board. However, we also shared in our last earnings call that we feel confident about improving our operating margin moving forward. 

But as you chase growth, how would you manage people costs? 

First of foremost, you practice what you preach. We use tools such as AI to enhance our workforce’s productivity and provide better tooling for our sales teams. Snowflake as a company has grown significantly — we now have over 7,500 employees, which is substantial. To manage this growth, I focus on operational efficiency, ensuring we handle work in ways that drive our operating margin. 

Currently, our operating margin is in the single digits, but we believe we can increase it. Additionally, Snowflake has always excelled in generating free cash flow. We’re already generating hundreds of millions of dollars in free cash flow, and we’re on track to soon produce a billion dollars in excess cash flow annually. That’s a remarkable milestone, reflecting the fundamental health of our business. 

The final piece of the puzzle is GAAP profitability. The primary delta between our operating margin and GAAP profitability is stock-based compensation (SBC). Addressing this gap is a focus area for us. 

That’s a huge challenge. 

Building data products is incredibly hard, especially a meta-product such as Snowflake, which is a comprehensive data platform. We’re competing in AI, and we’re competing with companies like OpenAI, so attracting and retaining amazing talent is essential. But having said that... 

So, is SBC the biggest variable for profitability? 

Yes, the biggest delta between operating margin (OPM) and GAAP profitability is stock-based compensation (SBC). We are actively working on it, and I absolutely want to provide a medium- to long-term roadmap — let’s call it a three- to five-year plan — outlining how we will address this. As we scale, we’ll benefit from efficiencies and won’t need SBC to grow very rapidly. 

But that will also depend on the environment, right? 

Partly, yes — it’s a function of the environment. But it’s also about how we structure teams to achieve great leverage. Stock-based compensation incentives are standard in Silicon Valley, and we will continue to use them. The key is doing so thoughtfully, and that’s an ongoing discussion we’re having. 

Achieving GAAP profitability is very important for Snowflake. It’s a prerequisite for milestones like inclusion in the S&P 500 index, which brings significant benefits, such as attracting index fund investments and

…taking the stock price up, doesn’t it? 

Exactly, there are definite benefits to be had. But absolutely, this is a project I’m actively working on. Hopefully, this gives you a sense that we’re being thoughtful in how we manage this process. 

Given that interest rates are at 5%, I don’t think we’re going back to the levels we saw before. This seems to be the new normal for interest rates. 

We don’t know for sure. 

What are customers saying? Are they hesitant?

First of all, Snowflake operates on a consumption-based model. We make money when our customers consume what they’ve purchased from us, and our teams work closely with them on joint projects. The overarching message I bring to every conversation — and encourage my teams to communicate — is that we need to show ROI with every project. 

In fact, I often remind our sales team — though it’s not always a message they enjoy hearing — that a customer spending unwisely on Snowflake is a ticking time-bomb. It creates dissatisfaction and risks the relationship. So, we aim to be thoughtful in how we engage with customers. 

Typically, if we do our job right, customers spend at or above their intended contract level. For example, when contracts are signed, customers look at their current spend — let’s say $800,000 — and estimate what they’ll need over the next three years, perhaps $1 million annually. Based on that, they might sign a $3 million contract. 

As they begin new projects, often jointly with Snowflake and partners, their spend might increase to $1.2 to $1.3 million annually. This means their $3 million contract gets consumed faster than anticipated — within two years instead of three. At that point, either we approach them or they come to us to discuss the next contract. 

Because of this collaborative, usage-driven approach, we rarely face conflicts over contract renewals or commitments. We’re not asking for indefinite commitments, and we work to ensure that customers see real utility and value from what they’re using. This fosters strong, ongoing relationships where customers are actively and effectively using Snowflake. 

When you look at global opportunities, where do China and India fit in for Snowflake? 

At the outset, India and China are vastly different markets for Western companies. Our presence in China is minimal and primarily exists to support our regular customers who are also doing business there. We don’t have a native China-focused operation; we operate there mainly as an extension of our global customer relationships. 

Isn’t it a missed opportunity to not have a significant presence in China, given its growth potential? While India is often highlighted as the flavour of the season, the big money seems to be in China. 

It’s [China] undoubtedly a big market, but it’s also a very tough place to make money. That’s the simplest way to put it. I used to be part of Google, so I’ve experienced firsthand the challenges we faced with search in China. Similar to how cloud service providers don’t become the best AI players by merely longing to succeed in AI, you can’t become a major player in China by just wishing for success there. It requires immense effort, and the competition and environment are entirely different and extremely demanding. 

I’m not overly concerned about that choice because the practical difficulties of operating in China are very real. From my perspective, the potential in other regions, starting with India, is far greater. India is growing exceptionally and reclaiming its rightful place as one of the top economies in the world. Historically, during the 17th century, India’s share of global GDP was around 25%. While that’s a far cry from the last 35 years, the trajectory now is highly promising. We are genuinely excited to be part of this growth story. 

We already play a key role in financial services in the US, powering asset managers, data providers, and institutions such as the S&P, New York Stock Exchange, and BlackRock. Even Bloomberg, famously an on-prem company, uses us for numerous use cases — basic analytics, financial reporting, next-best-action recommendations, and AML applications, to name a few. The list of applications in financial services alone is extensive. Beyond that, we have a strong presence in media, entertainment, healthcare, and other industries. We believe we have a lot to contribute globally. 

That said, there’s a difference between aspiration and execution. We have significant work ahead to ensure these markets become impactful for us. It’s no different in India, Japan, or other regions. For example, I was in Japan last month, and our work there revolves around proving ourselves as a credible partner. 

The message I share with customers is simple: being proficient and effective with data is a must-have for enterprises in the 21st century. That’s the partnership we bring to the table. Many of our customers have also become partners by moving parts of their software to run on our platform or by using data as a product. Companies such as Siemens and Ericsson, for example, see us as a platform to develop future applications since much of their work is heavily data-focused. It’s these kinds of partnerships that we aim to foster and grow. 

What’s the lowest-hanging fruit in the Indian market? Is it enterprise or financial services?

One key area is digital leaders — they continue to grow very strongly for us, and we rely on their momentum. Financial services is another major focus, particularly fintech and insurance, which are evolving faster than traditional banks. Traditional banks will take more time to modernize, but they remain a promising part of the financial services sector. 

Another significant opportunity lies in manufacturing. India has a large SAP-installed base, which makes it ripe for modernization. Many organizations are already exploring solutions like SAP Rise, and we see an opportunity to help them unlock analytics and modernize their infrastructure. This presents a substantial growth area for us. 

We also see massive potential in creating ecosystem plays. For instance, look at the Razorpay story, where we’ve enabled data sharing at the scale of millions of UPI transactions daily. That kind of ecosystem building has transformative potential. Similarly, there are opportunities in partnerships like the RTA (Registrar and Transfer Agents) and CAMS (Computer Age Management Services) piece, which we’re actively building out. 

India’s scale is unparalleled, with an enormous amount of data being generated and consumed daily. It’s also a cost-competitive market, with some of the lowest rates in the world. That presents challenges, but it also opens doors to innovations that can capitalize on the vast data landscape here. 

That makes it even more challenging, doesn’t it? 

It does, but we ultimately focus on the volumes and the scale available. We believe that at some point, we’ll be well-positioned to create ecosystem plays across industries. For instance, today we see opportunities with partnerships like Razorpay and e-commerce companies, or Razorpay and banks. Similarly, we aim to build ecosystems within the financial services industry itself — connecting banks, financial services, NBFCs, and insurance companies. The volumes in this sector are significant enough to support data sharing and collaboration. 

The opportunity in ecosystem plays is immense, particularly across verticals like BFSI (Banking, Financial Services, and Insurance), manufacturing, and retail. Retail is especially promising, and we’ve seen tremendous success with campaigns in the US. We have fantastic references and use cases from those markets, and we’re actively bringing those insights and solutions to India. 

So, are your partnerships in India largely dependent on leveraging parent associations with multinational corporations (MNCs) that also have a presence here?

You have to earn that. I don’t think anything here has come easily — we’ve had to work to earn business in India. As I mentioned earlier, India is a very different market compared to China. It’s a more rational business environment, but that doesn’t mean it’s simple or straightforward. You need to prove your value and build trust with Indian customers. 

When you say, “rational business environment,” are you politely suggesting that it’s a very cost-competitive market? 

Vijayant Rai, Managing Director-India, Snowflake: India is indeed a very cost-competitive market, but I’d describe it as one that values innovation and time to value. India is still largely an on-premises market, especially in the enterprise space. Digital natives were the first to embrace the cloud and adopt platforms like ours, mainly because we are the most innovative solution available. 

Now, we’re seeing similar interest from traditional enterprises as well. Just today, we announced a press release about our work with Bajaj, highlighting some amazing, innovative projects. Similarly, we’re exploring opportunities in other traditional sectors, including SAP migrations and modernizing legacy systems. 

It’s a competitive battle out there, no doubt, but we’re confident in our unique value proposition. What sets us apart is our ability to deliver time to value very quickly. Customers can realize tangible benefits from our platform faster, which is a significant USP for us across all markets. 

Where does the threshold lie for you to determine that a market is meaningful enough to justify the time and effort required to develop it? 

We tend to rely on global metrics when evaluating market potential, although specifics vary by country. My investment rationale is quite straightforward. For instance, in Paris, we deploy a businessperson paired with a technical person — what we call an account executive working alongside a sales engineer or solutions engineer. We have clear expectations of their average performance. 

Sometimes, however, we choose to lean into new areas. That’s been the case with Japan, and it’s the case with India now. We’re investing heavily and will be growing the size of our Indian team substantially. This reflects our belief that India is a market worth the time, effort, and resources we’re putting into it. 

So, what’s the investment strategy here? What quantum of investment is Snowflake planning to make in India? Do you have a line of sight on that? 

Are you asking in terms of the expected return? 

Achieving billion-dollar revenues in India has proven to be challenging. That’s why I’m asking — what’s the meaningful threshold for you to say it’s worth the effort, or will India remain just a decimal in the parent company’s financials? 

Compounded growth is something people often underestimate. I remember the struggles we faced at Google — it took years to achieve a billion dollars in revenue from India. Patience is critical for a market like this. 

Without disclosing exact figures, I can say that our investment in India is substantial. By substantial, I mean meaningful. To put it into context, our sales force globally is about 3,000 people out of our total workforce of 7,500. India represents a significant portion of that 3,000 — it’s not a small number. 

In terms of relevance, India is on par with other major regions for us, whether it’s Japan, Australia, Germany, or the UK. When you’re generating $3.5 billion in revenue, every $100 million — around 3% of that — is significant. That’s the kind of relevance we’re looking for. 

I also communicate this to my product team: I will consider their contributions relevant when they have thousands of customers or are driving hundreds of millions of dollars in revenue. For larger companies such as Google, the scale is different — you add a zero here or there — but the principle remains the same.