Snowflake is the best company I own. Yes, even better than CRWD. Problem is, Snowflake may *not* be the best stock I own! Great company. Possibly over valued stock? I am still undecided. At some price point, Snowflake is a bargain, but I have no idea what that price is.
If DDOG and NET and CRWD can have multiples over 60 (and they all did not that long ago), and SNOW has better fundamentals than all of them, shouldn't SNOW command a much higher valuation? Yes, but then how much? This is truly anyone's guess and is the reason why SNOW is not a 30% position for me.
Snowflake advertises itself to shareholders as “not a SAAS company” because their revenue is consumption based. This consumption model is for sure superior to the SAAS model so long as customers are willing to pay up. They are, and this is because, as per CEO Frank Slootman, Snowflake enables "10x the work at half the price", compared to legacy competitors.
And unlike many of our other companies which benefitted greatly from the pandemic, it is hard to say that Snowflake’s growth is attributed to the pandemic at all.
A few key pieces to Snowflake's success are, firstly that it supports and is indifferent between the major cloud providers AWS, GCP, and Azure. Second, they have separated data storage resources and compute resources. And lastly, Snowflake increases Data Access, making it simpler than ever for organizations to share data internally at organizations or externally to other organizations, which is "increasingly critical for data science, artificial intelligence and machine learning workloads".
The snowflake data marketplace is gaining traction, "with consumption attributable to data from marketplace providers up 48% quarter-over-quarter and new listings growing 10x year- on-year to a total of 380 as of the end of the fiscal year." My thoughts here is that this will have a viral networking effect - the more data that goes to snowflake the more people will want to join Snowflake, thereby increasing its value in a virtuous cycle beneficial to both snowflake and its customers.
They also had a major customer win this past quarter - BlackRock, an 800 lb gorilla in the financial world with many clients, and " all of those Aladdin customers that want data through [Blackrock's] Aladdin, if they want to get their data the most efficient way are going to have to be Snowflake customers."
In Q4 the number of customers with greater than $1 million in trailing 12 months product revenue increased to 77, up from 65 last quarter, with 12 customers are now consuming over $5 million on a trailing 12 month basis.
The business is scaling nicely - annual cash burn was cut by 64% or $128mm.
Product revenue guidance for Q1 2021 is for $200mm, which would be a 12% QoQ increase.
Below ordering is always most recent to least recent:
YoY Rev Increase: 116%, 119%, 121%, 147%, 137%, 151%
QoQ Rev Increase, 19%, 20%, 22%, 24%, 21%, 22%, 36%, 19%, 28%
Net Rev Retention Rate: 168%, 162%, 158%
^^This is a key part of my investment thesis on Snowflake. With net retention this high, revenue numbers are sure to stay elevated for a long time. And, CEO Frank Slootman was willing to say it will stay over 160% for the entirety of 2021, a very bold statement that speaks to SNOW's potential.
Adjusted GM: 67%
RPO growth QoQ: 44%, 35%, 47%, 10%, 56%
Enterprise Customers (>1mm in rev) by quarter: 77, 65, 56, 48, 41, 31, 22
In the prior twelve months that ended on July 31, 2020, these customers represented 46% of all revenues.
Total Customers by quarter: 4139, 3554, 3117, 2720, 2392, 1934
Total Customers Increase % QoQ: 16%, 14%, 15%, 14%, 24%
Non Gaap gross margin: 67%
Non gaap product gross margin: 70%
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