Snowflake: Everything about the hottest tech listing
This year as the tech industry thrives, Snowflake is one of many start-ups that has gone public.
Snowflake Initial Public Offering
The cloud-based data-warehousing startup went public with its IPO listing on the NYSE on September 16, 2020. What is becoming the largest IPO in tech history started at $120 a share. By Wednesday afternoon it got raised to $245 a share due to the demand and even went above $300, for a 150% gain. The first day of trading finished with a 112% gain.
The company managed to raise nearly $3.4 billion by selling 28 million shares. Warren Buffett’s Berkshire Hathaway (BRKB), and Salesforce (CRM) secured a private placement of $250 million at the IPO price. Snowflake is valued at roughly $70 billion with the closing price of almost $254 per share. Other companies that own stakes in Snowflake Inc are Sutter Hill, ICONIQ Capital, Sequoia, Altimeter Capital, and Redpoint Ventures.
As compared to other tech backed companies that have gone public this year Snowflake’s IPO valuation is much larger. When it comes to the highest IPO valuation, only ZoomInfo falls on the list. ZoomInfo went public in June and had an IPO valuation of $8.2 billion. Snowflake priced higher making its IPO valuation more than four times that of ZoomInfo.
Interestingly on its IPO debut, the Silicon Valley firm was the highest valued software IPO ever and valued more than Uber, Dell, and General Motors at the end of the day.
Benoit Dageville, Thierry Cruanes, and Marcin Zukowski founded Snowflake Inc. in 2012 in San Mateo, California. The start-up got its name from the founder partners’ love for snow sports. Since coming out of stealth mode in 2014, Snowflake quickly became the front runner in cloud computing. In last year alone Snowflake was listed as №2 on Forbes magazine’s Cloud 100 list and ranked №1 on LinkedIn’s 2019 U.S. list of Top Startups. The cloud data warehouse became available to the public in 2015. In 5 years from 80 organizations using its services, it now has approximately 3,200 active customers. Frank Slootman joined Snowflake as its new CEO in May 2019. It has raised more than $1.4 billion in venture capital.
Why Snowflake is a big deal?
Snowflake is disrupting the data warehouse industry as we knew it. Gone is the era of expensive hardware appliances and running a data center in the name of a data warehouse. Snowflake delivers an on-demand Cloud Data Warehousing in a solely integrated system.
This means Snowflake has eliminated the need of a hardware or software to select, install, configure, or manage the data. Thus, making it ideal for organizations which no longer have to invest their resources in setup, maintenance, and support of in-house servers. Server-less services such as Data Warehouses play a paramount role in organizations.
Snowflake’s platform is built on top of the Amazon Web Services or Microsoft Azure cloud infrastructure. This makes it easier to share data, especially with other Snowflake users. Snowflake has enabled businesses to use data effortlessly in a cost-effective way, on fully automated platforms with tools like Tableau, Power BI, Mode Analytics and Looker.
Snowflake’s phenomenal growth rate is the main reason why this company has created so much buzz. Snowflake reported approximately $242 million in revenue for the six months that ended on July 31, 2020, and $171 million in net losses for the same period. During the same period last year, it had lost $177 million, thus losses have also decreased year-over-year. In the previous fiscal year that ended on Jan 31, 2020, they delivered $264.7 million in sales annually. The year on year growth comes to 133%.
They are adding big-spending customers and have a net retention rate of 158% in Q2 2021. This means that their present customers are scaling which is good news for the tech startup. Unlike the competition, they offer a new approach to their clientele. Instead of a subscription plan, they offer their customers a pay-as-you-go system. The customer payments are based on the Snowflake Compute Credits they use and the amount of data stored. It assists the customers to manage their cloud storage expenditure.