Snowflake CEO Sridhar Ramaswamy (Eóin Noonan / Getty Images)

Weird Money

Snowflake’s business is selling its own stock to employees

Snowflake's stock-based compensation has been more than 40% of its revenues since going public, and investors are losing their patience.

Jack Raines

8/22/24 2:56PM

A favorite accounting trick for publicly-traded companies is to exclude stock-based compensation from EBITDA and cash flow to paint an optimistic picture of company performance. For example, if a company’s net income is negative, but its stock-based compensation is larger than its net loss, adding back stock-based compensation in your financial statements can give you positive operating cash flow. The (incredibly-oversimplified) rationale is, “We’re not actually spending money, we’re just issuing new shares to employees. Why waste time focusing on stock-based comp?” Neat trick, right?

A different, but related, trick that companies love is to announce share buybacks to distract investors from high levels of stock-based compensation. Basically, company management will announce that it’s buying back, like, $500 million of stock, which sounds really good! Except, if the company’s stock-based compensation is more than $500 million over that period, it’s still a net-negative for investors. Think about it like this: while, yes, stock-based compensation is not a “cash expense” for the company, it is a very real expense for shareholders, because their stake in the company gets diluted.

On Wednesday, Snowflake, a data warehouse provider that went public in 2020, reported its Q2 2025 (its 2024 fiscal year ended on January 31, 2024) earnings, and the results were a masterclass in redistributing wealth from shareholders to employees. Snowflake’s stock-based compensation for the quarter was ~$373 million, or 43% of its $869 million in revenue. This matches a trend from the last three years, where Snowflake’s full-year stock-based compensation was 55%, 43%, and 44% of revenues in 2022, 2023, and 2024, respectively.

For context, Snap, which has long been cited as one of the more egregious examples of high stock-based compensation, had stock-based compensation worth 20% of revenue last quarter, compared to 30% last year.

Snowflake announced a $2.5 billion share buyback plan that expires in March 2027, which sounds nice, except the company’s total stock-based compensation over the last three years was approximately $2.8 billion. If this quarter’s equity compensation of $373 million is held constant through March 2027, more than $4 billion in new equity will be issued, and equity comp has only increased since the company went public. Buybacks sound nice, but they don’t mean much for investors if they fail to offset new issuances.

Snowflake lost ~$318 million on the quarter for a -36% profit margin, but if you removed stock-based compensation, the company would have posted a ~$56 million profit. It’s no surprise that investors are growing tired after three years of Snowflake awarding more than 40% of revenue as equity compensation as it remains an unprofitable company with slowing revenue growth. The stock fell as much as 13% today, and it’s down more than 50% from its IPO.

If Snowflake’s new CEO wants to fix his stock price, he should start by reconsidering insiders’ equity grants.

Tom Jones6/24/26

Prime Day is here again and Amazon’s subscription service has never been more popular

Well, it’s that time of year again: many have made their wish lists, people are scraping together the money they’ve saved to pick out a perfect gift, some are presumably leaving out refreshments for the weary delivery drivers and, more and more, drones.

It’s Amazon Prime Day — meaning that it’s the second day of the four-day promotional event that Amazon still calls Prime Day — of course, and it’s even come early this year, with the company bringing the period into late June from July, when it’s been traditionally held for the last five years.

The Prime Age

Alongside the eyes and endless clicks that the arbitrary stream of listicles on “The Best Prime Day Deals” that almost every media outlet pours into, Amazon will also be cheering the fact that there’s now more Prime users than ever before to devour the retailer and its sellers’ sometimes-contested “discounts.” Indeed, according to the latest annual estimates from Consumer Intelligence Research Partners (CIRP), there were just over 200 million American shoppers using Amazon’s massive subscription service at the end of 2025.

Max Knoblauch6/15/26

Electronic Arts launches a platform to put more ads in its games

Video game publishing giant EA launched a new platform on Monday designed to make the process of selling immersive ad space in its popular games easier.

The company says the platform, called EA Advertising, allows brands to “integrate directly into gameplay through dynamic, real-time placements, from stadium signage to custom in-game content.”

More so than other studios, EA has incorporated advertising into its most popular titles. As Kotaku points out, the company’s ad efforts stretch as far back as 2006. Several of its sports franchises already feature partnerships with brands like Visa, Lowe’s, Red Bull, and PepsiCo.

In-game advertising hasn’t exactly been embraced by fans, but industry experts expect it to ramp up as companies seek more revenue to offset higher games budgets and surging memory costs. EA rival Take-Two has taken a different approach, with CEO Strauss Zelnick recently saying the company was “not at risk of doing brand partnerships” in the forthcoming “Grand Theft Auto VI,” and that ads in full-price games seems “unfair.”

The $55 billion deal to take EA private, led by Saudi Arabia’s Public Investment Fund, is set to close at the end of this month. Being the largest leveraged buyout in history, EA will likely look for more ways to boost revenue to cover interest payments.

Electronic Arts Makes Push for Ad Dollars Tied to Sports

Millie Giles6/11/26

JM Smucker says it sold $1 billion worth of Uncrustables in FY2026

After years of booming sandwich sales, JM Smucker has finally earned a billion-dollar crust.

On Tuesday, the company reported results for fiscal year 2026, highlighting better-than-expected profits driven by higher prices for coffee and sweet baked goods. However, at another point on the earnings call, CEO Mark Smucker pointed to one particularly jammy figure: in line with previous forecasts, the company sold $1 billion worth of its (almost always) crustless sandwiches, Uncrustables, in the last year alone.

Max Knoblauch6/8/26

Paramount reportedly offers concessions to resolve multistate antitrust investigation

Paramount has reportedly offered up some concessions in an effort to prevent an antitrust lawsuit by California and about 10 other states, according to Bloomberg reporting on Monday.

Reuters first reported on the potential suit from a group of unnamed states last week, which could throw a wrench in Paramount’s plans to buy rival Warner Bros. Discovery in a Hollywood megamerger.

The list of concessions is unknown, though Bloomberg previously reported that Paramount is open to divesting some of its kids TV assets to appease EU regulators.

Late last month, reports said US regulators appeared likely to approve the $110 billion merger, following a meeting between Paramount CEO David Ellison and DOJ antitrust staffers.

Paramount Offers Concessions to Head Off State Antitrust Lawsuit

The list of concessions is unknown, though Bloomberg previously reported that Paramount is open to divesting some of its kids TV assets to appease EU regulators.

Late last month, reports said US regulators appeared likely to approve the $110 billion merger, following a meeting between Paramount CEO David Ellison and DOJ antitrust staffers.

$98B ⛽

Max Knoblauch6/8/26

The IATA released its latest financial outlook for the airline industry over the weekend, forecasting a $98 billion jump in the sector’s collective fuel bill. The world’s largest trade group representing airlines expects the oil spike to halve profits by 49% from last year to $23 billion.

The group also expects profit margins to halve year over year, falling from 2025’s 4.2% to 2%. Still, revenue is expected to climb to $1.17 trillion from $1.07 trillion.

A surge in the cost of jet fuel has rocked US and global airlines this year, leading Delta Air Lines, United Airlines, American Airlines, Southwest Airlines, JetBlue, and others to raise fares and ancillary charges like bag fees. Low-cost carriers, which operate on smaller margins, have been squeezed the hardest, resulting in Spirit’s shutdown.

“It’s a tough year for all airlines, especially those whose balance sheets had not yet recovered from COVID. And, of course, for those operating in the Gulf,” said IATA Director General Willie Walsh, who added that demand is holding up and about half of passengers expect to spend more on travel this year. “That bodes well for a strong northern summer peak season. The big unknown is how long travelers and shippers can tolerate the higher costs of connectivity.”