Snowflake (SNOW) is set to go public on Wednesday, September 16. The company provides a SQL data warehouse and breaks down its data warehousing architecture into storage, virtual warehouses (compute), and cloud services.
Offering: 28M shares (plus 4.2M set aside for underwriter options) priced at $75-78/share, putting the value at about $2.2B at the midpoint. The proposed market cap sits near $24B at the high end.
Structure: Class A shares have one vote, Class B shares have 10 votes per share. After the offering and private placements are finished, Class B shareholders will own approximately 86.3% of outstanding shares and hold 98.4% of the voting power.
How it makes money: Snowflake operates on customer credits, which are cashed in only when a customer is using resources. There are four different Snowflake Editions (Standard, Enterprise, Business Critical, Virtual Private) and customers can either buy the service on-demand or through pre-paid capacity.
Financials: 2019 revenue was $264.7M (+173% Y/Y) with a $348.5M net loss ($178M loss in prior year). H1 revenue was $242M (+133%) with a $171.3M net loss ($177.2M loss the prior year).
Key business metrics: Product revenue, $252.2M in 2019 (+163%) and $227M in 1H20 (+126%); Remaining product obligations, $426.3M in 2019 (+233%) and $688.2 in H1 (+211%); Total customers, 2,392 in 2019 (+152%) and 3,117 in H1 (+101%); Net dollar retention rates, 169% in 2019 and 158% in H1; Customers with TTM product revenue above $1M, 41 in 2019 (up from 14 the prior year) and 56 in H1 (up from 22).
TAM: Snowflake estimates an $81B addressable market for its Cloud Data Platform. The company cites IDC data showing that the combined market for Analytics Data Management and Integration Platforms and Business Intelligence and Analytics Tools will be valued at $56B at year’s end and $84B by the end of 2023.
Competitors: Amazon’s AWS, Microsoft Azure, Google Cloud are the major industry players. Snowflake’s cloud data platform also operates on those public clouds, primarily on AWS.
Key facts: Salesforce Ventures and Berkshire Hathaway will each buy $250M worth of shares in a private placement at the IPO price (about 3.125M shares each at midpoint). Berkshire will also purchase around 4M shares from a selling stockholder.
Deeper dive: Snowflake and the Data Blizzard
Image source: Snowflake S-1.