Snowflake turned in second-quarter results, and it was good news for the company and the cloud computing industry in general.
Snowflake is a cloud computing company focused on helping other companies break down data silos, gain better insights from their data, and maximize its overall value. The company just posted its second-quarter results, reporting 83% year-over-year product revenue growth.
In addition to revenue growth, Snowflake posted 171% net revenue retention, owing to significant expansion of services offered to existing customers. The company also has 246 customers accounting for more than $1 million in product revenue.
“Sustained 80%+ product revenue growth in a quarter when the broader demand environment for software softened likely boosts investor confidence that Snowflake’s cloud data platform is viewed as a strategic (and durable) area of investment by enterprise customers,” Morgan Stanley analyst Keith Weiss wrote in a note to clients, according to Seeking Alpha. Morgan Stanley currently has an overweight rating on Snowflake’s stock.
According to Seeking Alpha, much of the cloud industry saw gains following Snowflake’s report. Competitors Datadog and MongoDB saw healthy gains following their own results, while Amazon, Google, Microsoft, and Oracle all saw gains as well. Salesforce was the outlier, falling 5.5%.
“Once you get to the cloud all of a sudden the lid is off,” says Snowflake CEO Frank Slootman. “People can just pursue their backlogs and whatever they can imagine. We’re now in a situation where technology is ahead of what people are capable of and imagining what they could actually do with it. That’s really a big part of what you see in Snowflake’s growth profile, a completely variable paradigm.”
Frank Slootman, CEO of Snowflake, says that on-premise data centers can only accommodate a tiny fraction of what their real demand for data analytics really is:
Once You Get To The Cloud The Lid Is Off
The important thing to understand is that there’s a couple of long-term secular trends that are coinciding and driving the development of the market overall. One is, as everybody knows, the movement towards cloud. It’s really a modernization play. We’re moving from on-premise data centers and we’re taking workloads to the cloud because we get to take advantage of better economics and utility models. Then we no longer have to manage capacity, we pay by the drink and all that sort of thing.
The other aspect that’s really important for our business is that we’ve had an extraordinary amount of pent up demand. The on-premise data centers could only accommodate a very tiny fraction of what their real demand for data analytics really is. Once you get to the cloud all of a sudden the lid is off. People can just pursue their backlogs and whatever they can imagine. We’re now in a situation where technology is ahead of what people are capable of and imagining what they could actually do with it. That’s really a big part of what you see in Snowflake’s growth profile, a completely variable paradigm.
Notion Of Headquarters Is Evaporating
We don’t have a yearning to go back to where we were. I can see why people would have that because of lockdowns and things of that sort. From a business standpoint, there’s a lot of positives to the shock to the system that we received. It’s almost like a wake-up call that is just opening our eyes to the opportunity. This whole notion that the office is your workday home we just realized that it’s nonsense. In other words, offices need to be there for specific purposes, for events, for training, for meetings specifically, but not a place to hang out nine to five. That’s definitely changing. It’s going to really reduce the real estate footprint that companies have.
The other trend and you’ve seen it with companies leaving California, the likes of Oracle and HP and Tesla, and so on is that the whole notion of headquarters is pretty much evaporating in front of our eyes. We’re no longer operating with a physical center of the universe. We’re completely virtual. We’re connecting as needed. We’ve been operating for the better part of a whole year without a headquarters and it’s just fine. All of a sudden everybody’s staring at each other and saying like what is the headquarters anyway. You’ve seen companies like Pinterest and you’re writing up massive leeches in San Francisco and saying we’re going to be headquarter-less. It’s just a concept whose time has gone away… and that’s very profound.
We Are Buying Talent And Technology, No M&A
Usually, big M&A is a function of people running out of market and running out of a lot of opportunity. They’re trying to invade adjacent territories to give themselves new runway. That is obviously not the case for Snowflake. We’re in a tremendous marketplace and we are buying talent and technology. We sometimes refer to it as stem cells that we can use that we don’t have ourselves that we can build very specific technologies around that are very much built snowflake way. We can really enable our platform mission or footer. That’s really been our mode. If you looked at our history we don’t have a history of doing big acquisitions.
“The next decade looking ahead is going to be the Software Decade,” says Snowflake board member and Altimeter Capital partner Kevin Wang. “Trends of moving more software to the cloud are just persisting. Cloud has completely changed the way that software is built and run. Software itself is being completely transformed. If what you saw over the past decade was exciting I’m even more excited about the next decade.”
The past decade has been a prolific time for technology companies. When you look at what we are set up for in the next decade it’s good to pause right now to see what has happened during the pandemic. We’ve seen that software is an integral part of the global economy. During the pandemic, we’ve found that we couldn’t go through the pandemic without the tools that we have.
Stanford research shows that just during the month of May over two-thirds of US GDP was created in our homes alone. That’s just incredible. These trends of moving more software to the cloud are just persisting. The next decade looking ahead is going to be the Software Decade.
Software Itself Is Being Completely Transformed
When we take a step back we look at how these companies are set up for the next ten years. It’s easy to get focused on what might happen in the short run. These trends are so powerful that they are going to power these companies and adoption for several years. It’s true that the pandemic has accelerated and pulled forward a lot of that demand. But a lot of the trends and behaviors we see are going to persist. For example, people are talking over Zoom and that’s just changed the way we are going to work. We can give a lot of examples of how that’s going to persist over the long run.
Software itself is being completely transformed. If what you saw over the past decade was exciting I’m even more excited about the next decade. What you have to understand is that cloud has completely changed the way that software is built and run. As we know, as business are digitally transforming they themselves are building and running more software. When you think about how to do that cloud has changed that.
Historically, you always had to decide better, faster, cheaper. You could only pick one or two of them. Now you can do all three. When you look at Snowflake, for example, you used to have to manage a cloud data warehouse, and that was a lot of work for your database experts. You don’t have to do any of that anymore. Snowflake will manage all of that for you.
“Snowflake is a very disruptive enterprise software company actually going out and going public larger than Google did,” says Box CEO Aaron Levie. “It’s a profound statement about the power of the cloud and the scale of these opportunities. We would not have anticipated ten years ago an enterprise software cloud company that doesn’t exist in 2010 going public at $60 or $70 billion. These markets are enormous and the opportunities for disruption only continues.”
Aaron Levie, CEO of Box, discusses how the Google-sized Snowflake IPO illustrates the “power of the cloud” and how disruptive it is to the past way of doing business:
Move To Digital Adds Tailwind For Cloud Companies
Certainly, the macro market is very volatile right now (for cloud and tech IPOs). You’re going to see a dynamic range of prices both on the day of an IPO and the subsequent trading (for companies like Snowflake). We’re going to have a lot of different narratives about did people leave money on the table, did stocks go down or up in any of these kinds of trading periods.
The broader macro thing that we’re seeing is that these are companies that in many cases were founded seven, eight, nine, ten years ago. They’ve now reached a scale with even more of a tailwind right now because of this move to digital. These are companies going after incredibly large multi-billion and multi-tens of billion-dollar markets um that have a tremendous amount of growth going forward in front of them.
You’re just going to continue to see this IPO pipeline. Over the past decade, we’ve seen dozens if not hundreds of very disruptive enterprise software companies emerge and get funded and really be able to reach scale.
Snowflake IPO Shows Power Of The Cloud
I remember Google having this jaw-dropping valuation and game-changing and historic IPO in terms of its scale. Then you have Snowflake which is a company that is not necessarily known by consumers generally. But it’s a very disruptive enterprise software company actually going out and going public larger than Google did. It’s a profound statement about the power of the cloud and the scale of these opportunities. For Snowflake to be as big as Google a lot of other things would have to happen in terms of their portfolio.
The size of these companies and the markets they’re going after are so enormous. We would not have anticipated that five or ten years ago if you had said are you going to see an enterprise software cloud company that doesn’t exist today, back in 2010, going public at $60 or $70 billion? I don’t know who you’d be able to find that would say yes to that. These markets are enormous and the opportunities for disruption only continues. I think we’re just going to continue to see more and more companies go public.
We Didn’t Feel We Left Money On The Table
It’s great that there are lots of different ways to do an IPO, direct listings, and more of a traditional IPO. It’s fantastic that the market supports different approaches. Now you have SPACs in the mix as well. We went public with a fairly traditional approach. Our stock went up by 70 percent or so on the first day of trading. We didn’t really feel like we left money on the table. We were happy to be public. We got great investor support. Some of these things are easy to look at in retrospect. You don’t often know the sheer demand for a new public offering at the start of the IPO process. Some of this ends up being easy to to to be able to comment on after the fact.
From an entrepreneur and from a company and corporate standpoint, your biggest priority when you’re going public is making sure you can educate investors, building a strong set of support in your IPO process. Sort of incrementally leaving 10 or 20 percent of financing on the table is not usually the most important factor that you’re focused on. Maybe it should be which is again why it’s great to have these different points of view out there.
An albino gorilla who lived for 40 years at a Barcelona zoo is the subject of a new study that traced his origins, and the results are surprising.
Snowflake was famous up until his death in 2003 from skin cancer because of his extraordinary coloring; after being born in the wild, he was captured by Equatorial Guinea villagers and was the only known albino gorilla in the world. He was given the Spanish name Copito de Nieve, and the English name Snowflake. Studies were done to try and find what caused his rare condition, but none ever came close to the findings that Spanish researchers say they have discovered. After extensive gene sequencing, they isolated the reported cause: Snowflake was the offspring of an uncle and a niece who mated somewhere down the line.
The gene was found after careful searching through DNA, which was taken from a frozen blood sample of Snowflake’s. The DNA showed that 12% of his mother and father’s genes matched.
Some scientists believe that factors like habitat loss and reduced populations contribute to animal inbreeding.
“If we are reducing much more the space that they have now, it is more likely that they will be forced to stay in the group and that will increase the consanguinity,” (shared blood), Tomas Marques-Bonet, who led the study, said.
A new study published in the journal BMC Genomics has found that famous albino gorilla Snowflake’s white hair was caused by inbreeding.
Researchers at the Barcelona Institute of Evolutionary Biology at the University of Pompeu Fabra in Spain have sequenced Snowflake’s genome and found that is albinism was caused by a mutation of the SLC45A2 gene. The same gene is also responsible for albinism in some mice, horses, and tigers. It is speculated that the gorilla’s grandfather carried the recessive trait and passed it on to his offspring, who were Snowflake’s parents, who may have been sibings, cousins, or half-siblings.
Snowflake was found in Equatorial Guinea during the 60s and taken to live at the Barcelona Zoo in Spain. The unique gorilla was featured in National Geographic magazine and became the face of the zoo until his death from skin cancer in 2003. Snowflake fathered 22 children during his life at the zoo, though none of them were albino. The new study was partially funded through a Snowflake scholarship program set up by the Barcelona Zoo.
In addition to his white skin, hair, and eyes, Snowflake suffered from vision problems brought on by his albinism. The researchers also believe that the condition led to the rare skin cancer that killed Snowflake.
Javier Prado Martinez, the lead author of the study, stated that discovery could have an impact on endangered species research.
“We believe that this approach can have a significant impact on the study of the conservation of endangered species such as gorillas and other great apes, although it can be extended to any endangered species,” said Martinez.
(Image courtesy the Barcelona Institute of Evolutionary Biology)