Despite cautionary tales on near-term growth prospects from some Cloud Wars Top 10 executives, business customers are making bet-the-company commitments to the cloud and AI as reflected in surging RPO and backlog numbers reported last week by Workday, Snowflake, and Salesforce.
While RPO and backlog numbers reflect future contracted business that has not yet been recognized as revenue, they are neverthless valuable indicators of how aggressive customers are feeling as revealed in their willingness to make long-term commitments.
For the fiscal-Q4 period ending Jan. 31, Workday said total subscription-revenue backlog was up 27% to $20.9 billion; Snowflake said RPO spiked 41% to $5.2 billion; and at Salesforce, total RPO was up 17% to a whopping $56 billion.
The three Cloud Wars Top 10 companies that disclosed fiscal-Q4 numbers last week — Workday, Snowflake, and Salesforce — operate in markedly different categories, which means that the ambitious spending plans reflected in the bookings boom is happening across a wide range of sectors in the cloud and AI business:
- Workday’s a leading apps vendor in HCM and Financials;
- Snowflake is the pioneer of the Data Cloud phenomenon; and
- Salesforce is the world’s largest enterprise-apps vendor, with a longtime focus on the customer relationship management (CRM) space.
Against that broad and deep landscape, here are the key RPO or bookings numbers from each company.
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Workday
Total subscription-revenue backlog jumped 27% to $20.9 billion in contracted commitments. For much more insight on that performance from Workday, please check out “Workday Grows 18% in Q4, Total Backlog Jumps 27% to $20.9 Billion.”
The number reflects a strong trend for future customer commitments, as total subscription-revenue backlog grew 32% in Q2 and 31% in Q3.
Snowflake
Chairman Frank Slootman — who last week turned over the CEO role to Sridhar Ramaswamy — said the bookings boom at his company was marked by a distinct change in customer sentiment toward more-bullish investments.
“The year began against an unsettled macroeconomic backdrop,” Slootman said in his opening remarks during Snowflake’s Feb. 28 earnings call.
“We witnessed lackluster sentiment and customer hesitation due to lack of visibility in their businesses. Customers preferred to take a wait-and-see posture versus leaning into longer-term contract expansions. This reversed in the second half of the year and we started seeing larger multiyear commitments.”
Calling Q4 “an exceptionally strong bookings quarter,” Slootman said RPO jumped 41% to $5.2 billion and offered these Q4 highlights:
- Snowflake signed its largest deal ever as an existing customer committed to a $250-million contract over 5 years;
- the company added 14 new Global 200 customers;
- 8 of its top 10 customers grew sequentially; and
- to help capture this massive cloud and AI momentum, Snowflake is aggressively rolling out new AI technologies and solutions to help customers “mobilize AI.”
Snowflake CFO Mike Scarpelli, who is always rigorously restrained in his commentary about Snowflake’s numbers, went so far as to say that “Q4 was an exceptional bookings quarter for us,” adding that about 50% of that $5.2 billion in RPO will be recognized as revenue within the next 12 months.
Scarpelli then appropriately cautioned that while “bookings are not a leading indicator of revenue,” they nevertheless “do signal an improving macro environment.”
Salesforce
CFO and President Amy Weaver said on Salesforce’s Feb. 28 earnings call that “RPO, which represents all future revenue under contract, ended Q4 at an incredible $56 billion, up 17% year over year. Current remaining performance obligation, or CRPO, ended at $27.6 billion, up 12% year over year and 13% in constant currency, particularly driven by strong execution on early renewals.”
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