$SNOW: Pioneering the Data Cloud

Snowflake Inc. (NYSE: SNOW) helps companies consolidate data in order to drive meaningful business insights, build data-driven applications, and share data.

Its growth rates and metrics would even impress $ZM shareholders

A thread

1/ The Basics

Cloud-native architecture, 3 independently scalable layers:

- Storage
- Compute
- Cloud Services

Key: SNOW separates compute and storage functionality

Built on 3 major public clouds across 22 interconnected deployments to create a single Cloud Data Platform

2/ Market Opportunity

TAM: $137B
-Cloud Data Platform: $81B
-Analytics/Platform/BI: $56B

Tailwinds:
-Accelerating Cloud Adoption (IDC): 30% of data currently stored in public cloud -> 49% by 2025

-Data Proliferation (IDC): 33 ZB of data in 2018 to 175 ZB by 2025 (27% CAGR)

3/ The Data Warehousing Problem

Legacy database architectures: scalability & capacity constraints; not designed for cloud-based workloads.

Resulted in data silos, governance issues, limited business insights.

Can’t support large data volumes or data sharing & expensive

4/ SNOW’s Solution

Leverage elasticity & performance of public cloud; enable customers to unify and query data

Frictionless, governed data access: securely share data in/outside of org

Benefits from powerful network effects (more customers > more data > better data cloud)

5/ Business Model: DWaaS

Usage-based pricing (i.e. $DDOG, $FSLY, $TWLO) -> High DBNR

Separate pricing for storage, compute, and data transfer

Single integrated offering, can’t be purchased separately

Majority of revenue from capacity arrangements https://twitter.com/SeifelCapital/status/1295843009381175296?s=20

6/ GTM

Self-Service with Demo & Trial: Land customers

Upsell Existing Customers: Increase migration of workloads (158% NRR)

Shift Towards Higher ACV Customers: $160K ACV significantly above SaaS avg.
- Better CAC Payback

Customers (): 154% increase in +$1MM customers

7/ Customer Profile

- Total Customers: 3,117 vs. 1,547 (+101% YoY)

- 7 of F10; 146 of F500 (4% & 26% of Revenue)

- Customers > $1MM Revenue: 56 vs. 22 (+155%); 46% of Revenue; Focused on this cohort

- 94% of Revenue from existing customers under capacity arrangements

8/ Key Business Metrics

Q2 Revenue: $133MM vs. $60MM (+121% YoY)
- TTM: $403MM vs. $169MM (+137.7% YoY)

RPO: $688.2MM vs. $221.1MM (+211% YoY)

Net Revenue Retention: 158% (223% Q2 2019)
*Usage-based pricing

Gross Margins: 56%

Rule of 40: 93%

Payback Period: 22 Months

9/ Competition

- Major Cloud Providers: $AMZN $MSFT $GOOGL
[Note: $SNOW only offers its services on ^, majority on AWS]
-> Difference: $SNOW is cloud agnostic, customers avoid vendor lock-in

- Legacy database vendors / big data offerings: $ORCL, Netezza ($IBM), Vertica

10/ Management

Current CEO: Frank Slootman

- Former CEO of $NOW: Oversaw Revenue growth from $100MM to $1.4B in six years (55% CAGR)

Founders: Thierry Cruanes (CTO) and Benoit Dageville (President of Products)

Sutter Hill Ventures was first investor; Mike Speiser was 1st CEO

11/ Conclusion

$SNOW will be the subject of my newsletter next week: http://seifelcapital.substack.com 

The company’s growth and operating metrics are off the charts

I'm a big fan of the business model and market tailwinds

I will be a shareholder after it forms an IPO base

H/T to my friends at @publiccomps

Specifically @jonbma for his excellent breakdown of the $SNOW S-1 from which I used the competitor and ARR images.

His thread is here: https://twitter.com/jonbma/status/1299078997637292032?s=20

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