As I am parsing the many product announcements coming out of Snowflake Summit, the new Cybersecurity Workload is worth calling out independently. It was first introduced a little over a week ago. This workload’s purpose is to help customer organizations detect and respond to threats by leveraging the Data Cloud for their security analytics. During Summit, the Snowflake team hosted a separate Cybersecurity track which included 15 sessions and presentations from a number of customers. This level of engagement likely explains why Snowflake pre-announced the availability of Cybersecurity workloads, versus bundling it with the other product announcements this week. As an aside, I am planning to publish coverage of the rest of Summit shortly.
Continue readingTag: SNOW (Page 2 of 2)
Capital One recently announced that they are launching an enterprise B2B software business focused on providing cloud and data management solutions for other companies. The idea is that they want to share their expertise and best practices developed in managing large data sets serving over 100M customers.
Continue readingSnowflake (SNOW) announced Q1 FY2023 earnings on May 25th. I will share a short summary of my reactions to the report, structured around positives, negatives and additional data points that are of interest. Overall, this report delivered a mixed bag, following a similarly obfuscated report in Q4. For investors, the challenge is to reconcile headline metrics with the underlying health of the business. Platform optimizations and the impact of customer macro concerns on a consumption business make this challenging in the near term. With explanations from management, these data points can be rationalized, but rely on faith in the long-term durability of Snowflake’s growth model.
Continue readingWolfe Research published a research note on April 25th, initiating coverage of Snowflake (SNOW) with an outperform rating. While I conduct my own research before making an investment decision, their rationalization highlighted a few strengths of the Snowflake thesis that I agree with. These included the ability to generate meaningful FCF over time and new tailwinds from the AWS relationship, which is the source of most of the $1.2B in new hyperscaler partnership bookings over the last year. See my prior posts for more background on the Snowflake investment thesis and their evolving relationship with the hyperscalers.
Continue reading
The dynamic between the public cloud vendors and independent software providers is evolving quickly. Just a few years ago, the hyperscalers (AWS, Azure, GCP) were rapidly rolling out their own infrastructure services targeted at various layers of the application stack. These included solutions for data processing, security, communications, identity and even observability. The premise was that as enterprises migrated application workloads to the cloud, the hyperscalers might as well try to capture as much spend as possible. These services went far beyond the basic storage and compute offerings of their foundation.
Continue reading
Snowflake reported Q4 FY2022 earnings on March 2nd. The results for the quarter were strong across all operational measures. However, planned platform performance optimizations are driving a near term decline in revenue recognition for the next couple of quarters. These were taken into account in setting Q1 and FY2023 revenue projections. The market’s knee jerk reaction was to view this as an indication of revenue deceleration and future execution risk. The stock subsequently dropped by 15% the next day. After a brief dip to a 52 week low on March 14th, the stock has recovered to about a 16% post-earnings dip currently. Notably, SNOW is down 34% since the beginning of 2022 and 45% from its peak in November 2021.
In spite of the market’s reaction, I think Snowflake’s trajectory is well on track. I view the platform optimization less as a revenue headwind and more as a solidification of market share. While Snowflake’s FY2023 (this calendar year) revenue growth may well decelerate into the 80% range, I think this report and several other factors build confidence in durability of revenue growth above 50% for several more years. That compounding growth is supported by an enormous addressable market, which is expanding at an incredible rate. Add to this Snowflake’s increasing product offerings and adoption of data sharing, which serve to drive more consumption of the core compute and storage engine.
I recently had the honor to deliver a guest lecture to the London Business School for their Master’s in Finance program (ranked #1 in the world). As part of their coursework, students are examining the emergence of digitally-driven companies and how to assess their value in the public markets. I provided perspective on trends in the data infrastructure space and what signals are important to watch beyond analysis of financial statements. The talk focused on a case study of Snowflake and why I think they are well-positioned to maintain their leadership in this large category. I will incorporate some of that content into this post.
Continue reading
Conventional paradigms for data management are being disrupted. Collecting data in silos for single purpose analysis captures only a portion of its value. Increasingly, large data sets will be combined across companies and industry ecosystems to generate a higher dimension of insight. These data sets will span enterprises, their suppliers, partners and customers. New businesses will emerge to provide third-party data sets to supplement and enhance data aggregations by industry. These will power the next generation of AI-driven data applications and services.
At the core of multi-party data sets will be a system for controlled, performant data sharing. Such a system must have governance and access control at its core, and utilize materialized views to prevent copying of data. It must be easy to configure and manage, without requiring extensive coding or provisioning new infrastructure. It should also incentivize independent data set creators with a means to market, distribute and monetize their data.
Snowflake is building such a system with their Data Cloud, enhanced by Data Sharing and the recently launched Data Marketplace. While the features and capabilities of their core data management platform are important to consider relative to other providers, the curation and management of industry specific data sharing ecosystems could represent an end-run around competitors. As the number of participants in data sharing and distribution webs increases, network effects will kick in that create stickiness for their core Cloud Data Platform. Participation in the sharing ecosystem could become the primary driver of platform usage over time.
In this post, I will dive into these trends and how Snowflake is well-positioned to capitalize on them. I won’t spend much time detailing Snowflake’s core data platform and how it relates to competitive offerings. Other analysts, particularly Muji at Hhhypergrowth, have covered that extensively (see additional reading at the end). I will focus on the next big wave of growth for Snowflake, centering on their data sharing capabilities and the rapidly developing ecosystem of participants by industry. This opportunity encompasses an enormous addressable market and will drive future expansion of SNOW’s already large market cap.
Continue reading
Subscribe for Convenience