Snowflake: A Guided Tour This Boards Posts

Investment Analysis Clubs Saul’s Investing Discussions
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I had no idea what Snowflake was until very recently. I decided to go through the board’s history of all mentions of Snowflake and gather some notes to share as a launching off point for more in-depth and current analysis.

  • I am only including the posts that provide information about Snowflake rather than simply listing all mentions.

  • Most excluded mentions were related to Alteryx and if they compete or not. The answer is generally no, they do not compete. Snowflake is a source of data that customers of both can access.

  • I tried to skip anything related to IPO valuation or purchasing concerns.

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Quick Introduction
Snowflake is a cloud data platform that provides a data warehouse as a service designed for the cloud.

Multi-cloud (works across the public clouds). Gives customers leverage when dealing with these big providers (Amazon, Google, etc)

“Utilization model based on consumption” (usage based) where “customers buy credits and consume them” (quote from CNBC interview below in Saul’s Board History

Partners: Amazon Web Services, Microsoft Azure, Google Cloud Platform, Tableau

S1: https://www.sec.gov/Archives/edgar/data/1640147/000162828020…

https://www.crn.com/slide-shows/applications-os/snowflake-s-…

Recent Funding

Last round from https://finance.yahoo.com/company/snowflake-computing?h=eyJl…
Announced Date: Feb 7, 2020
Funding Type: Series G
Money Raised: $479,000,000
Total Investors: 3
Lead Investors: Dragoneer Investment Group

We also learned that Berkshire Hathaway made a bet on tech with Snowflake!:
https://seekingalpha.com/article/4373917-berkshire-hathaways…

Management

Frank Slootman - Chairman & CEO
Benoit Dageville - Co-founder, President of Products
Marcin Zukowski - Co-Founder
Thierry Cruanes - Co-founder
Chris Degnan - Chief Revenue Officer
Denise Persson - Chief Marketing Officer

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Saul’s Board History

First appeared on 2019-04-11 in post #61300 (https://discussion.fool.com/ayx-did-touch-on-cloud-a-bit-in-er-c…) about Alteryx’s Q3 2019 Alteryx Inc earnings call. I dug up the transcript (https://www.fool.com/earnings/call-transcripts/2019/11/01/al…) and copy and pasted from the source:

Derrick Wood – Cowen & Company – Analyst
…We’re hearing more analytic software companies partnering and integrating with cloud data lakes and cloud data warehouse vendors like Snowflake who’s seen a lot of growth. How are you guys positioned around companies like Snowflake? And do you see your users trying to leverage those cloud platforms in their Alteryx workflow?
Dean A. Stoecker – Chairman and Chief Executive Officer [AYX]
Yes…We have a fair number of server-based customers who deploy both in AWS and Azure. Many of them have leveraged Snowflake as their persistence layer of choice. Not all of them some have – it’s rare that anyone has a complete set of analytic pipelines that leverage a single data source. Most of them have many persistence layers some which reside in cloud vendor of choice. Other parts of their persistence layers reside on-premise. So it’s going to be a hybrid cloud on-prem and ultimately cloud-to-cloud world for quite some time. We actually have a strong relationship with Snowflake. And many of our customers have moved off of other platforms to go to Snowflake and we’re quite supportive of our customers who choose to do so.

2019-09-12 in post #62101 (https://discussion.fool.com/must-see-tv-okta-snowflake-34361417…) by CMFFrankDip: Contains these links to a (broken up) video interview from the CNBC’s Halftime Report with the CEO:

2020-01-31 in post #63222 (https://discussion.fool.com/okta-business-work-2020-i-love-this-…) by CMF_muji about the Okta Business @ Work 2020 report:

“* Snowflake +273% (private)
Data warehouse SaaS platform https://www.snowflake.com/
… Seems to be having some MASSIVE user growth. Not public yet, rumored to be IPOing soon. I was already interested, just knowing the potential in their product space… and now am even MORE interested seeing them jump to #1 on their debut on this list. Seeing this level of user growth means there is a LOT of adoption across large enterprises into their data warehouse platform. Was just named a Leader in the Gartner Magic Quadrant for Data Management Solutions for Analytics.”

Note they did not appear in the neXt list from Okta, as discussed in this thread: https://discussion.fool.com/pandemic-home-work-34506613.aspx?sor…. I did not give this thread it’s own section in this history because there isn’t much info here, only speculation as to why they were pushed off the list. I am including it here for completeness.

04/22/2020 in post #66070 (https://discussion.fool.com/the-argument-that-the-disrupter-gets…) by 12x is a quick mention: ”Right now from what I hear, Snowflake is really taking a beating to TeraData.”.

I looked up TaraData (https://www.teradata.com) and they appear to be about analytics. I did not find anything that leads me to believe they compete.

06/09/2020 in post #68304 (https://discussion.fool.com/snowflake-ipo-34531243.aspx?sort=who…) by Rubenslash

Snowflake just filed for an IPO: https://www.bnnbloomberg.ca/cloud-data-firm-snowflake-confid…

- Cloud data warehouse, founded in 2012
- Main competitors are Teradata, Oracle and IBM
- Not founder led, CEO is Slootman who took ServiceNow public. Also backed by Salesforce
- 35 billion $ TAM in 2023
- Last valuation round in February at 12.4b $
- Over 2.000 customers, added 500 customers in the last quarter alone (article dated Feb 2020)
- Number 2 on Forbes Cloud 100 in 2019, Datadog was no 5 (list of best private cloud companies)
- Revenue growth of 174% in 2019
- Over 100 million $ revenue in 2019, not yet profitable
- Usage based invoicing, very high NER

[CONTINUED IN NEXT POST…]

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07/26/2020 in post #69883 (http://discussion.fool.com/Message.asp?mid=34570579) deep in the thread “Re: MongoDB & the Digital Transformation” by Muji:

Snowflake (currently late stage private co) is a SaaS cloud-native database provider that operates across AWS, Azure and GCP. They are a fantastic platform for data warehouse & data lake needs, and are FedRAMP approved for gov use. They support structured relational data as well as the semi-structured data that MongoDB excels at, allowing a SQL and search interface over it all. This is a direct competitor to MongoDB, in particular Atlas hosting as well as its Search and Data Lake side-car products. In fact, I don’t see Atlas Data Lake really succeeding because Snowflake is doing it way better. Snowflake not only allows database storage but also has a compute engine that sits alongside that data, allowing distributed compute tasks to live next to the distributed data they are interfacing with (akin to Hadoop’s structure). Snowflake claims a massive improvement in compute tasks (like search and analytics) due to this locational proximity combined with the distributed nature of their platform, at cloud-scale.

Same thread, post #69893 by Smorgasbord1:
And as for Mongo and Snowflake, I, too, am watching Snowflake. I know the CEO there, Frank Slootman, as he was CEO at another company I previously worked at (which he took public and then sold) and, frankly, he’s excellent both as a people manager and steering a company’s direction. The only gotcha with Snowflake is that everyone else is looking at them too, and I suspect their IPO is going to have a colossal valuation ($12+ Billion so far) from the get-go as expectations are sky-high.

You can see a recent interview with Slootman here: https://www.cnbc.com/video/2020/02/10/snowflake-ceo-frank-sl… . I recommend it even if you’re not looking at Snowflake or MDB. He talks about how big the cloud software market is, saying that all software developed over the last century is moving to the cloud - it’s a bigger market than mobile, in his opinion.

08/24/2020 in post #71066 (https://discussion.fool.com/snowflake-ipo-filing-34600655.aspx) “SnowFlake IPO Filing” by XMFBreakerForce:

https://www.sec.gov/Archives/edgar/data/1640147/000162828020…
Just caught the headline and link for the new S1 on Snowflake (SNOW). I’m sure this will be a huge huge popping IPO soon. Some eye-popping numbers include:

121% Revenue growth in its most recent quarter

158% (!!) Net Retention/Expansion rate

More than doubled customer count to 3,177

FY2019 revenue $96.7mln
FY2020 revenue $264.7mln (+174%!)

$242mln in revs through the first 6 months of the year.

Time to dive into the S1 :slight_smile:

Alex49t added:
One thing that caught my eye. Revenue breakdown in the last 2 Qs of 2020
4% from Fortune 10
26% from Fortune 500.
Pretty good split with room to grow - especially consider the below information.
Also Highlighted in their S1. My employer made up 17% of their revenue in 2018 and 11% in 2019. Not totally surprised (we are a large user of some of our favorite companies… esp Zoom.)
Just something to note - I view this as a positive… I don’t see us moving away, but that leaves ample room for the rest of the F500 usage to grow.

Later Smorgasbord1 replied with this explanation of what they do:

Snowflake is Data Warehousing As A Service for enterprises. “Data Warehousing” is a fancy name for data storage. The “As A Service” indicates that it’s cloud-based and hosted, with no installs, no need for on-premise servers, no need for maintenance, and is charged via a subscription model. Snowflake charges by usage.

Snowflake is self-managing, automatically providing redundancy, security, file structure, compression, metadata, and backups. It integrates with a lot of different data services, from Informatica at the front-end (for ETL [Extract, Transform, Load] operations) to Tableau at the back-end for visualization, for instances. It also integrates with Salesforce, Talend, etc. You use standard SQL for data access.

Probably the biggest claim to fame for Snowflake is that it separates storage from compute. You setup whatever storage you need for your data, and then when you need to process it, you create these “Virtual Warehouses” to run compute (which can MPP - Massively Parallel Processing). You can have multiple Virtual Warehouses on a single data set, and they operate independently, so there’s no performance penalty.

If you’re familiar with Amazon’s Redshift, Snowflake is somewhat similar, with some differences:
1) Snowflake separates compute from storage. One advantage of this is that you only pay for what you use. You don’t have to size the environment for the largest workflow, you establish what you need for the data, and then spin-up what you need for the compute (analysis, visualization, etc.). The other advantage is performance, since each compute environment is separate.
2) It’s cloud-provider agnostic. While the first versions of Snowflake were built on top of AWS, there are now versions for Microsoft’s Azure and Google Cloud Platform. AND, you can move your data between providers with almost no reconfiguration in Snowflake. This alone is a reason some enterprises will choose Snowflake.
3) Snowflake scales better. There are two aspects to this. The first is that since compute and storage are separate, the compute services can instantly scale up. The second is that Snowflake has a hybrid architecture combining aspects of a central repository (“shared-data”) with local storage (“shared-nothing”) (kind of an edge storage/compute thing).
4) Snowflake handles JSON data much better. It’s kind of hard to explain this in non-technical terms, but JSON (JavaScript Object Notation) is a format for structured data that a lot of engineers like to use. This structured data doesn’t have to conform to a schema, so is very flexible.
5) Snowflake has more automation - it’s simpler to use. For instance, compression is automatic on Snowflake, but has to be configured and controlled on Redshift.

Google’s BigQuery is another competitor. I’m not as familiar with it, but it’s certainly not cloud-provider agnostic.

As for why enterprises turn to Data Warehousing, that comes from all the data that many enterprises capture and want to leverage. IoT data pours in minute by minute, customer data is valuable and provides business insights. Do enterprises want to store that data on premise and try to keep up as the data set grows exponentially? Many will want to put it in the cloud and not have to worry about configuration and management. But, then how do your applications gets access to the data, and how do they perform? Many enterprises are worried about cloud provider lock-in - once you’re up on AWS or Azure or GCP it can be really hard to migrate to different provider and so you’re stuck with whatever pricing they give you. Most enterprises will simply leave data and start new work on a different cloud provider, which becomes a headache for their IT departments.

This isn’t a sexy business, it’s infrastructure.

09/12/2020 in post #71066 (https://discussion.fool.com/a-snowflake-deep-dive-34615482.aspx) “A Snowflake deep dive” by Muji. I won’t yank notes for this thread as it is new and worth reading!

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Wanted to add one more link to this - it’s a very thorough dive into the business, its backers, the CEO, and the competitive landscape. I found this piece to be a bit less technical and more accessible read than the other posts we’ve had on the board. In addition, there’s quite a bit in there about leadership and the venture backers that I haven’t seen mentioned yet around here.

https://thegeneralist.substack.com/p/the-s-1-club-snowflake-…

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Muji of course already included this link in his breakdown, but just wanted to point it out in case people here didn’t click on all of the resources from Muji’s post

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Last quarterly revenue: 133m x 4 = 0.53B current annual revenue.

Yahoo shows current market cap is: 70.46B

P/S: 133

The valuation is slightly above fair at the moment.What happens if we buy a hyper growth stock at a high valuation? We simply lose around one year of growth. If revenue doubles next year, P/S 133 is cut in half to become a more reasonable 66.So in the first year, the stock may drop 50% or it may stagnate for one year.

The main risk of Snowflake is it depends on the Amazon AWS, Microsoft Azure. Currently, Snowflake has biggest exposure to AWS. Amazon has a habit of displacing its own vendor on the online shopping site. They have amazon branded product e.g. AmazonBasic to compete with other vendors. So Amazon has a product called Redshift to compete with Snowflake. However, I think Amazon will be very careful not to kill off their vendors. They’ll be very careful not to over compete and allow room for growth for both. On the Amazon shopping site, I bought from amazon branded products but mostly bought from other vendors.

I bought a 1% position.

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Maybe it is a bit offtopic but there is the next big IPO coming: company xyz.
Looks interesting too. Guys you have opinion on this?

gerrard,
that’s completely inappropriate for our board and will be deleted. If you want to introduce a company to the board, tell us about it, what it does, why you think it is interesting, etc. Don’t just drop a name and ask us to do the work.
saul

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04/22/2020 in post #66070 (https://discussion.fool.com/the-argument-that-the-disrupter-gets…) by 12x is a quick mention: ”Right now from what I hear, Snowflake is really taking a beating to TeraData.”.

I looked up TaraData (https://www.teradata.com) and they appear to be about analytics. I did not find anything that leads me to believe they compete.

Rafe,

You can see various blogs from TeraData themselves where they are posting attacks on Snowflake. They clearly see Snowflake as a competitor as we are talking about shifting on premise data warehouse appliances to the cloud via Snowflake.
https://www.teradata.com/Blogs/Retire-Teradata-Dream-on-Snow…
https://www.teradata.com/Blogs/Snowflake-Claims-Cost-Savings…

Here is another example.
https://www.nexla.com/how-to-migrate-your-data-from-teradata…

Teradata has been a popular on-premise database system for decades, catering to enterprises who want to manage and analyze large volumes of data. But the advent of Snowflake, a modern cloud computing data warehouse, has opened up modern data analytics capabilities. For example, Snowflake’s multi-cluster cloud infrastructure that separates compute from storage enables enterprises to automatically and instantly scale their infrastructure.

TeraData also offers a cloud hosting solution. Cloudera is also offering one now and now several articles are talking about Cloudera as a way to play the shift to the cloud via a relative cheap stock versus Snowflake.

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