‘All else being equal’, SNOW deserves a higher valuation than other SaaS / SaaS like companies.
Below is a table I assembled from quickly looking through SNOW’s featured customer stories on their website and customers listed in their S1, as well as a few customers from some recent news articles I recalled from the past year.
I only listed the publicly known customers that were at least above $1 billion in revenue in the last year (the “large sized” enterprises; companies below $1 billion in annual sales are considered small/mid sized)
This list isn’t intended to bring any new facts to light about SNOW, but I think the table is a great visualization of how SNOW could potentially ramp up large spend in the next several years. It hammers home the opportunity that lies ahead.
Just look at how enormous some of these enterprises are, with above $10B, $20B…$50B…$100B…$200B in yearly sales, and then think about how massive their IT budgets will eventually be geared towards the cloud, and now think about the giant companies NOT listed here that ARE existing SNOW customers, and then think about the other great companies that will eventually sign onto SNOW in the future…
|Company that uses Snowflake||Revenue above $1B (USD) in 2021|
|Walgreens Boots Alliance||132.5|
|Genuine Parts Company||18.87|
|St James Place||18|
|CUNA Mutual Group||5.4|
|Penguin Random House||4|
|Portland General Electric||2.33|
|The Trade Desk||1.2|
Now to pull from recent earnings calls/conferences, there is nothing new that hadn’t been pointed out on this board in the past, but I’m highlighting it all again as it really reinforces how incredible SNOW is growing at this scale and will continue to do so in the long run - because of these big spenders.
Q2 2023: Advertising, media and entertainment, and technology verticals grew in line with the overall company. Driving this growth is our continual move upmarket. In the quarter, we added 12 new Global 2000 customers. Our average trailing 12-month product revenue from these customers grew 14% quarter over quarter to $1.2 million.
I would go back and read that again. These are the large companies, the 510 customers in the Global 2000 last quarter that used SNOW, and the product revenue from these customers grew 14% QUARTER over QUARTER.
Q2 2023: …We believe these accounts will grow to become our largest customers. A Global 2000 technology company is now a top 10 product revenue customer less than two years after signing their initial deal.
That’s crazy. Some of these big traditional companies that are new SNOW customers can ramp up insanely quickly.
Not only that, but think also about the older customers, such as Capital One, where in a recent conference it was said that they initially thought the company was saturated 2 years ago, BUT instead they had gone from 29M to 49M annual spending run rate since then - and still growing as of today!
Q3 2022: …The other thing that I would say is that, you know, we shouldn’t sort of view things in the historical way that, you know, the money is [only] going to come from Fortune 500 companies. This is absolutely not the case. I mean, you’ll be stumped if you look at the number of customers that we – who are not Fortune 500 and how high their revenue contribution is.
And that’s because these are newer enterprises, they are born in the cloud, and digital, direct-to-consumer-oriented, and they have a very different culture toward data and a very different orientation. They will definitely feature very, very prominently in our business mix. It doesn’t mean that Fortune 500 isn’t important, you know, it obviously is. But, you know, their adoption as traditional enterprises is often not as fast as the newer entities that we’re dealing with, you know?
Q3 2022: The 10 largest consumers in Q3 include four Fortune 500 companies, four companies less than 10 years old, and the Powered By Snowflake program partner.
Let that sink in…
…the top 10 largest customers had FOUR of them being companies LESS THAN 10 years old. These are the newer, fast growing software/data driven companies out there, that may not have yet reached $1B in annualized sales…
Think about the Brazes and Amplitudes, Canvas and Figmas of the world that use Snowflake (yes, all four of these I just mentioned, are actually powered by SNOW). These are the companies that I could not even list onto the table above because their company sales had not exceeded $1B in 2021, and yet, many of these types of companies are already contributing huge chunks of revenue to SNOW!
I think what sets SNOW apart from the other companies discussed on the board is its very large customers, and very large and ever growing addressable (serviceable) TAM. There should be a premium towards these companies where a single customer can contribute immense amounts of spend.
@PaulWBryant 's had sort of said this recently about MNDY’s TAM, with valid skepticism of Monday’s hypergrowth in the long run.
Let’s say for example, Capital One magically became MNDY’s customer overnight and rolled out its product to every employee.
Does anyone think Capital One can ever spend $49 million dollars on Monday.com’s collaborative software? And grow that spend each year?
Let’s do the math: they have 51985 employees, and suppose they pay $32 per person (Monday’s website pricing for the highest “Pro” is $16/seat/month, and to be generous I am assuming $32 per person per month for an “enterprise”). This becomes $19.96M in annual spend. So the answer is NO.
Again, this is assuming a lot of unrealism here: that they can price double that of their highest Pro tier, that every single employee of Capital One will be on Monday’s software. And keep in mind, that this is the MAXIMUM spend they could ever reach (Capital One probably isn’t going to increase headcount 14% QoQ).
Meanwhile SNOW is still growing the spend of Capital One over time, above and beyond $49M.
Obviously that 19M figure is not going to be close to attainable for Monday.
This all speaks to the value of the underlying product. If SNOW can drive a customer to spend 49M and continue to grow that spend each year, then clearly SNOW is more critical and beneficial to the enterprise than Monday’s software product. There are also many more use cases to be found over time with Snowflake, than a collaborative software tool.
If we look to other companies like CRWD. I think once again, SNOW deserves a premium over them too.
SNOW doing product revenue of 466M (1Q ago) on 6808 total customers at 83% YoY growth, speaks greater volumes than CRWD (2Q ago) having 460M subscription revenue on 17945 customers at 64% YoY.
Let us suppose both companies suddenly cannot grow their customer counts anymore in their respective moments in time; SNOW will be superior in its terminal end valuation, as each customer spend will ramp much, much, much higher than CRWD ever will (CRWD doesn’t give out 1M customer figures for a reason); this also including my belief that SNOW will have similar or better operating margins in the long run.
The way I see it, SNOW’s products help customers save money and make more money. CRWD’s primary products only help customers possibly not lose money to attacks.
The greater value proposition for SNOW means a greater chance of hypergrowth for a longer run.