Snowflake joins the tracked set today, two weeks before it reports the July quarter on 2 September. Its Rule of 40 for the April quarter is 50.2 — 33.5% revenue growth plus a 16.7% free-cash-flow margin, on this site's quarterly basis.
Take that number on its own and you would conclude Snowflake comfortably clears the bar. Take the four quarters before it and you would conclude four different things:
| Quarter (FY ends 31 Jan) | Revenue | YoY | FCF | FCF margin | R40 |
|---|---|---|---|---|---|
| FY2025 Q4 (Jan 2025) | $986.8M | +27.4% | $421.4M | 42.7% | 70.1 |
| FY2026 Q1 (Apr 2025) | $1,042.1M | +25.7% | $183.4M | 17.6% | 43.3 |
| FY2026 Q2 (Jul 2025) | $1,145.0M | +31.8% | $57.8M | 5.1% | 36.9 |
| FY2026 Q3 (Oct 2025) | $1,212.9M | +28.7% | $113.6M | 9.4% | 38.1 |
| FY2026 Q4 (Jan 2026) | $1,283.9M | +30.1% | $765.0M | 59.6% | 89.7 |
| FY2027 Q1 (Apr 2026) | $1,391.0M | +33.5% | $232.8M | 16.7% | 50.2 |
The growth column moves between 25.7% and 33.5% — a business changing gradually. The cash column moves between 5.1% and 59.6% of revenue, and it is the same business in every row.
The swing is collections, not economics
Snowflake bills consumption but invoices in advance, and its fiscal fourth quarter — November through January — is when the largest capacity commitments land and get paid. $765.0 million of free cash flow arrived in the January 2026 quarter, more than the three quarters around it put together. The July quarter is the trough at the other end: $57.8 million, a 5.1% margin, on a quarter that grew revenue 31.8%.
A reader who annualises either one gets a company that does not exist. This is the specific failure mode the Rule of 40 has at any business with lumpy cash timing, and it is worth naming on the day the ticker joins rather than the first time the score halves.
On the trailing four quarters the score is 54.3 — $5.03 billion of revenue growing 31.1% against a 23.2% free-cash-flow margin. That is the stable read, and it is the one we will use when the quarterly print swings.
What is genuinely improving
Revenue growth accelerated for three consecutive quarters, from 25.7% to 33.5%, at a $5bn revenue base. For a consumption business that is unusual: growth has to come from customers running more, not from seats booked at renewal, so the base case is a slow decline. It went the other way, and that is the single most important line in the table.
Gross margin has stopped climbing. It ran 66.2% → 67.8% and came back to 66.6%. The compute under AI workloads costs more than storage and query ever did, and this is where that shows up first.
The GAAP loss is not the cash story. Snowflake lost $0.86 a share in the April quarter and has never printed a GAAP profit, while generating $232.8M of free cash flow in the same three months. The gap is overwhelmingly stock-based compensation — a real cost to holders through dilution, not a cash cost in the quarter it is booked. Diluted shares were 346.6 million at the last 10-Q against 345.7 million at the fiscal year end.
What 2 September has to show
- Whether growth holds above 30%. Two consecutive quarters make a trend; one makes a comparison.
- Free cash flow against the July 2025 quarter's $57.8M. The seasonal trough is the honest comparison, and the trailing line moves on the difference — not on whether the quarterly score looks weak, which it will.
- The gross-margin line. Another quarter at or below 66.6% says AI compute is now setting the margin rather than the mix.
Every figure here is derived from Snowflake's own filings via the SEC's XBRL company-facts API — quarterly revenue, gross profit, operating cash flow, capital expenditure and diluted EPS — with fourth-quarter figures derived as the fiscal year less the first three quarters, and free cash flow as operating cash flow less purchases of property and equipment. Each derived fiscal year reconciles to the filed annual total. The Rule of 40 on this site is quarterly revenue growth year over year plus quarterly free-cash-flow margin; the trailing figure is stated as such where used. The 2 September report date is Snowflake's own, from its 3 August announcement. No share-price or valuation claim appears here.
