Snowflake Expectations

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21

Just finished listening to the call. The 100M less guidance for next year is even better than it seems. They are saving customers 160M next year; expecting that starting in 6 months or so, customers will start moving more workloads over in response to this lower billing they are using. They expect for the next year, this extra workload will offset about 60M of that 160, hence the 100M.

FF, why is this great?

  1. Helps keep that customer 100% satisfaction
  2. Putting MORE workloads on Snowflake; MORE workloads that’ll increase usage 150-178% NRR

I think they may have shortened their triple digit growing by a few quarters but this move extended their 80%+ growing YoY quarters by a whole lot with a longer-term outlook of it being a huge deal! The more workloads running Snowflake the better.

Second, and maybe just as important or better… 700M of their 1.2B sold this quarter were IN CONJUNCTION with either AWS or Azure. The majority with AWS!! This is a HUUUUUUGE deal. For companies who maybe don’t know much about Snowflake but could use them… to have an AWS or Azure helping out… This gives gives sales & marketing an easier way to legitimize themselves to new and existing clients…

Oh hey Big fortune 500 company… Oh, you’re also looking at Azure Synapse, AWS Redshift and Databricks? Snowflake is so well respected in this field that AWS and Azure RECOMMEND us; even though they have decent COMPETING products!

Signs that Snowflake is distancing themselves from the competition??

Ok ok, I’ve had a bit of wine, maybe I should take off these Chianti colored glasses.

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22

It might make sense for Amazon and Microsoft to do this since they are so constrained on Tech Talent, it might be easier to outsource this to Snowflake than to compete with them. This will free up engineering resources for other things they can compete at.

Could be wrong.

23

Snowflakes cost of revenue is basically usage fees paid to AWS, Google Cloud and MS Azure, so increased usage of Snowflake still has some revenue pass through to them.

JDR

24

It was clearly stated on the conference call that GCP (google cloud platform) contributed nothing. They specifically called that out.

All revenue growth from hyperscalers was AWS and Azure. Very interesting.

The reasoning for the ‘slowdown’ was perfectly in line with a customer oriented company who desires the best services possible and will do everything necessary to innovate their moat (that is precisely what is happening here).

I added 33% to my stake in SNOW AH. Now 10% position.

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