Here is my deep dive on Snowflake’s architecture & platform. They are about to IPO - ticker symbol will be SNOW. (And I once again I have to say - it is so much nicer having embeddable images and drawings right in my posts. I hope the drawings makes it easier to grok tech architectures.)
Snowflake wants to be the engine that drives all analytics – both business intelligence (BI) and data science (ML/AI) – over the entire enterprise. They provide a turnkey cloud-native, scalable database platform with a heavy focus on enterprise concerns of security, governance & compliance, while having a rich ecosystem of integrations & tooling available for ingest, BI and analytics.
I was pretty amazed by the sheer number of use cases their platform enables. In particular, how the platform allows for the secure sharing & exchange of data between customers and outside users. This includes a Data Marketplace, which enables the rise of the Data Broker.
Customers choose Snowflake for its cost, performance, scalability, ease of use, secure sharing, and flexibility. Investors will choose Snowflake for its optionality and ever increasing TAM.
Data will always grow, and analytics are becoming more and more crucial. Snowflake = A Data + Analytics Cloud. It is a data cloud-within-a-cloud, that also acts like Hadoop-as-a-service, allowing data scientists to run analytical code directly inside their compute.
I have seen a lot of recent takes on Snowflake, including tech dives & investment theses, and… I wish I could sit with a bright red marker and highlight the mistakes, and especially the omissions. Maybe I will just berate the authors on Twitter.(Nah, being a jerk is not my style.)
Most takes continue to focus solely on Data Warehouse (where they started), and don’t mention Data Lake (the entire core of their platform!) or all the other product lines that spawned from their Data Lake + Data Warehouse architecture like Data Exchange or Data Marketplace.
To me, it’s like calling Fastly “just a CDN”. So I am glad to try to help the individual investors here @ Saul’s get their tech straight. Analysts want to gloss over the details and just get a boiled down version - or know just enough about the underlying tech that it causes them to look at the company with blinders on from pre-conceptions. Keep boiling it down too much and you cannot see the finer details, where often times the real value emerges in these highly sticky platforms!
So set aside an hour and dive in. (Or, maybe two or three times through for the luddites out there.) At a minimum, you will walk away understanding all the terms being bandied about in all the other Snowflake takes. At a maximum, you will come to understand the potential of this company well.
Just look at these numbers again:
Revenue 133M +121% TTM Revenue 403B +137% RPO 688M +211% Gross Margins 62% +1300bps $NER 158% Custs 3117 +101% - Custs >1M 56 +155%
And the prior 8 Qs of the top line:
| Period | Rev | QoQ | YoY | |--------|------|------|-------| | Q221 | 133 | +22% | +122% | | Q121 | 109 | +24% | +148% | | Q420 | 88 | +21% | +138% | | Q320 | 73 | +22% | +152% | | Q220 | 60 | +36% | | | Q120 | 44 | +19% | | | Q419 | 37 | +28% | | | Q319 | 29 | | |
For a followup companion piece to mine, w/ a fantastic investment view of the numbers plus comparables to the SaaS industry (which I love), I highly recommend this piece by the Public Comps blog: https://blog.publiccomps.com/snowflake-s1-ipo-teardown/
Unfortunately Snowflake has a lot of attention (damn you Warren Buffet!), and valuation is due to be astronomical, plus this is a full backbench of investors skipping IPO day that are eager to buy on dips. Really wish I could have invested in them a year ago when I first noticed them!
But regardless of day 1 valuation, as we know from Saul - scaled hypergrowth + operational leverage = scaled profits. This company has all the hallmarks of a top-tier Saul stock. It is bound to execute extremely well, as customers are flocking to it, and are spending more and more. All this in an industry (Data + Analytics) that is on fire and growing for years to come.
Hope you enjoy.
PS I talk about AYX and MDB a bit too (and not exactly in a positive way).