What I did:
I sold ~28% of my 19% position in Cloudflare @$117 to add 50% more to my 12% position in Snowflake.
Why I did it:
When I saw a 30%+ drop in share price just as I was reading the headline numbers, my first inclination was to follow through on my plan prior to earnings - the plan I’d made if the numbers confirmed Snowflakes Narritive as I understood it. But, The Revenue number was a little low so I wrote into my Investing Jounal, “Wait for the Call to make sure management still sounds as confident”. Those 55 minutes were longer than I wanted. So, I sold the amount of Cloudflare in AH trading with the requisite Limit in place.
The call was stellar as usual. Only 5 minutes in and I left the Call to add the shares of Snowflake from the sale of Cloudflare. Snowflake is a monster of a company, unlike any other. Snowflake adding $1.2B in contract value in this quarter was what got me to add as much as I did. The following characterizes well the tone of the call and much of how I measure managements confidence in their ability to carry their plans forward.
Mike Scarplei casually mentioning this early in the call,
You saw that we closed over $1.2 billion in contract value in the quarter, growing our RPO to $2.6 billion. That was well above what we were planning internally. The other thing I want to call out, too, is we co-sold with the cloud vendors, $1.2 billion in contract value for the year as well.…
About 20 minutes later this question was asked, sounding incredulous…
And one other thing I hope I’m not trying to transposing as well. I think you also said that there was $1.2 billion co-sold with the hyperscalers for the year. I think last quarter, you talked about $500 million, which would obviously imply you added $700 million – that seems like a really big number.
In immediate response,
Yes. It was very – and we sold in totaled for the quarter over $1.2 billion just for the quarter and roughly $700 million was co-sold with the hyperscalers.
After hearing the above, I re-read my initial notes after reading this quarters press release, Disappointed on the product revenue, looks like QoQ was only 15%. Non-Saas revenue is lumpy so listen to the Call for tone. With a FY guide of 66% growth, with beat and raise this could become 90% , that’s if the flood gates aren’t opening yet (this last bit was in reference to what CEO, Slootman, said in a call a few quarters ago when he was explaining his expectations for revenue growth in the future.
Is $1.2B in contract value QoQ an amount that justifies us saying, ‘perhaps the floodgates have begun to open’?
Irregardless, I believe +$1.2B added to their bank account just this quarter does make announcing the Guide difficult to say with a straight face😉.