$SNOW is a very good company with great management, but (as I’ve said for a while) it’s been valued like it doesn’t have serious competition, particularly given its relatively low GM. The big-3 cloud giants and now Databricks are all eager to go after the same pie.
4:23 PM · Mar 2, 2022·TweetDeck
Snowflake CEO Frank Slootman said in an interview with Barron’s that the quarter was “exceptional,” but he conceded that revenue beat guidance by a little less than in other recent quarters.
Slootman said one reason that is tied to the company’s unusual consumption-based revenue model—customers pay for the compute time they use, no more, no less. And Slootman notes that a tweak to the software in January allowed customers to do the same workloads with less resources—he said the adjustment cost the company about $2 million in just three weeks in January. “This isn’t philanthropy,” he says, noting that the change will eventually benefit the company. “When you make something cheaper, people buy more of it,” in this case compute time. Slootman notes that the company, which once sold compute time by the hour, now sells it by the second.
But he also notes that Snowflake had “incredible sales performance in the quarter,” and secondary metrics make his case. The company said its net revenue retention rate, a measure of repeat business, was 178%, which was up from 173% in the October quarter. Remaining performance obligations were $2.6 billion, up 99% year-over-year, accelerating from 94% growth one quarter earlier. The company now has 5,944 customers, including 184 with trailing revenue of more than $1 million—up from 116 just one quarter earlier.