SNOW - Q321
12/3/20
PR: https://investors.snowflake.com/news/news-details/2020/Snowf…
Investors presentation: https://s26.q4cdn.com/463892824/files/doc_financials/quarter…
CC Transcript: https://seekingalpha.com/article/4392690-snowflake-inc-snow-…
Saul thoughts thread: https://discussion.fool.com/snowflake-results-my-thoughts-346886…
Revenue 159.6M +118.6% (vs +155%)
- Product Rev 148.5M +115%
- Pro Svcs 11.2M +194%
RPO 928M +240% ^^, +35% seq
Adj Gross Profit 107.0M +140% !!!!
Adj Gross Margin 67% +600bps !!!!
- Adj Product Margin 70% +500bps
Adj Op Loss -48.1M (vs -66.9M)
... margin -30.1% (vs -91.5%) +6146bps !!!!
Opex 262.4M +96.3%
- SBC 106.9M (vs 23.0M)
Adj Opex 155.1M +39.1% !!!!
CFO -19.8M (vs-23.75M)
... margin -12.4% (vs -32.5%) +2012bps !!!
FCF -37.9M (vs -28.2M)
... margin -23.7% (vs -38.6%) +1487bps
Cash 5.1B
Empl 2253 +48%, +11% seq
Customers 3554 +84%, +14% seq
- Fortune 500 165 +56%, +13% seq
- Custs >1M TTM 65 +110%, +16% seq
$NRR 162% -2700bps, +400bps seq !!
- Americas 86%, EMEA 11%, APAC 3%
- longer term contracts, weighted contract life is 2.5 years
- 600M+ daily queries in Oct’20 (was 500M+ at IPO)
- 23% of custs using data sharing
- 100+ data providers on platform, adding S&P Global, Morningstar, Core Logic
- expanded partnership w/ Salesforce, released data connector to GA
- announced Snowflake Ventures to empower data cloud
Quotes
CEO on Analytics end: “As far as machine learning goes, what we are doing is we’re really enabling our sales architecturally to really accommodate machine learning services so that we can really take advantage of all the technology that is out there. What you’re not going to see from Snowflake is that we’re going to go buy something and then go it alone and sort of shut out our partners. Our architecture and our strategy is very much on embracing and enabling all the capabilities that are out there.”
CEO on partners driving consumption: “So we’re not going to be a company where we have our own flavor of everything and our partners are all going to be secondary. We want to actively encourage development on our platform, participation on our platform, because again we’re consumption company.”
CFO on int’l: “Well, what I would say is we’re very much focused on first on geography, EMEA is one that we’re investing very heavily in and adding a fair number of people there as a percent of what they have. We’re clearly focused on going after the largest enterprises in the world and so we are continuing to add perhaps there. I would say, we really never slowed down given what was happening in the economy.”
CEO on verticals: “we’re also on a massive push to drive verticalization and in our selling motions. And that means that quota is going to be overlaid and added by vertical as well. So you will see our capacity to sell will grow and it’s really nice that we have - we have a geographically, we have it by large enterprise accounts and we’re going to have it by vertical. So we’re very excited about the company verticalizing, because we’re having great business in the technology side, in the media side, retail consumer buckets, goods, health care. So that’s where lot of our selling capacity is going to grow in the coming years.”
CFO on SI: “… we’ve really been focused in the last 12 months on the system integrators and the global system integrators, who we’re adding more people there, the likes of Deloitte and Accenture building a real practices around Snowflake and we’re going to continue to invest in those because they are starting to drive meaningful business to us.”
New Announcements
PR: https://www.snowflake.com/news/snowflake-announces-new-featu…
Datanami article: https://www.datanami.com/2020/11/17/snowflake-extends-its-da…
Snowpark
Snowpark is a new set of APIs (DataFrame API) that allow developers access to run ingest & data management workloads directly within the Snowflake platform (like is possible on analytics end).
- initially supports SQL, Python, Java and Scala
- APIs for handling data ingest (ETL) and managing or manipulating the data from there (ELT)
- allows data engineers to customize ETL/ELT data flows, increases stickyness
- score ML models
- exposes feature engineering capabilities (using ML/AI to mold the data layout)
Sidesteps needs for outside ELT/Data Prep platforms like Databricks.
CEO in CC: “So what Snow Park will do is, we will start hosting the language run times inside the Snowflake platform so it becomes - it becomes a completely optimized experience. It dramatically expands the workload scope of Snowflake. … our whole strategy is driven to move the dial on consumption and this is definitely going to do it. We have many large customers who said that this is really, really important… [for] very, very highly optimized performance and efficiency … and the third one is super important is governance and that is related to privacy and security.”
Integrations
New integration category for Data Services, allowing 3rd party data services direct access to their customers’ data (ingest and ELT). This will help partners that focus on data enrichment, risk assessment, and analytics.
Can leverage external functions to allow services to enrich or modify data, do assessment or ML.
Data-powered services can expose analytics over their Snowflake data, as paid services. !!!
Don’t have to expose the underlying data, only the end result (risk score, etc)
Data Cloud Internal Features
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Adding support for unstructured or binary data (blobs). Supports embedding unstructured data into records, like images, audio or video files, documents, spreadsheets, and the like (now in private beta).
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Added conditional row-based data access restrictions (coming later this year). Fence the exact rows users can access within that table. Also adding tagging and column masking capabilities.
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External tables now GA
https://www.snowflake.com/blog/external-tables-are-now-gener…
Extend Snowflake into existing data lakes in AWS S3, Azure Data Lake Storage, and Google Cloud Storage. Query external data lakes or create materialized views, w/o pulling data into Snowflake directly. Run queries over existing data lakes to analyze structure, before pulling into Snowflake.
- Manage across multiple accts in Snowflake Organizations
https://www.snowflake.com/blog/managing-multiple-accounts-wi…
Misc
- Lacework uses Snowflake for building a security data cloud; Snowflake Ventures invested in them.
https://www.snowflake.com/blog/snowflake-ventures-breaks-dow…
Lacework
https://www.lacework.com
Behavioral analytics over cloud workloads. - Configuration analysis and audit
- Workload and container security
- Advanced Threat Detection
- Vuln Monitoring
Conclusion
That +61pp swing in adj op loss sure stands out, as do the CFO +20pp and FCF +14pp. In contrast to the Twilio I just posted on, gross margin is RISING from 61% → 67%. Custs +84%, custs>1M TTM +110%, NRR 162%. All wonderful.
What got me was this:
- 23% of custs using data sharing … way more to go
- big push starting in Europe (which is only 11% of rev atm)
- in 1 Q they’ve gone from 500M daily queries to 600M+
- new Snowpark APIs for embedding custom logic/compute into ingest side (like is on the analytical side)
- going after specific verticals now
- many comments from CEO that they will remain a platform for consumption, not going after specific solutions w/in the platform. they want ALL THE PARTNERS.
All shares finally free up in last lockup expiration in March, so there will be a lot more float. Keeping this position cautious for now.
-muji
long SNOW