Snowflake had a bad disappointing quarter. The short term business has taken a huge hit. The question is whether the long term business trajectory is also faltering?
Snowflake’s one or two liner summary of macro impact on their guidance was best given by CEO Slootman himself on CNBC. How much credibility do we give Slootman’s words below, after their guidance take-down? (I still hold it as my largest position for now)
CNBC: Do we need to be concerned about the macro impact on those businesses and how that might affect their rate of consumption?
SLOOTMAN: No, not yet, because the consumption is holding up. I mean, we obviously, you know, took our guidance down, but that was really a reflection of the newer cohorts. You know, having a very different ramp or incline in terms of consumption. And the reason that is happening is we’re seeing much more large mainstream enterprises coming into the business.
Just remember, Snowflake, the early adopters were all digital natives.
Very aggressive adopters, plus the economy was on fire at the time. You saw much more aggressive ramp in the early days.
Now we have mainstream enterprises coming into the cohort mix, and also at times when people are having economic, you know, reservations and caution. That’s really accounting for it.
I do think that the terminal value, if you will, of these large enterprises is going to be much better than the early cohorts. It’s pay me now or pay me later. I don’t view it as a negative at all. I think it will stabilize our business and make it far more predictable where it is all going to end up.