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Snowflake was one of the hottest IPOs of 2020, maybe hottest Cloud IPO so far
It now trades at $88B, or 120x its ARR! Growing 115% YoY at $600m+ ARR
Now, we aren't all running data warehouses
But there's a lot we can learn from Snowflake still
5 Interesting Learnings:
It now trades at $88B, or 120x its ARR! Growing 115% YoY at $600m+ ARR
Now, we aren't all running data warehouses
But there's a lot we can learn from Snowflake still
5 Interesting Learnings:
#1. #93% of Snowflake’s revenue is consumption-based
We’ve seen New Relic move back toward consumption pricing, and even Shopify's revenue is mostly transactional.
If your customers want to buy in a consumptive vs. subscription fashion … let them
We’ve seen New Relic move back toward consumption pricing, and even Shopify's revenue is mostly transactional.
If your customers want to buy in a consumptive vs. subscription fashion … let them
The key again, as we've seen with New Relic, Datadog, Shopify and others, is consumption-based revenue in Cloud/SaaS is now seen as just as good as subscription revenue ... IF the NRR and growth is also as good
Snowflake has 162% NRR. So who cares exactly how customers pay.
Snowflake has 162% NRR. So who cares exactly how customers pay.
#2. Snowflake now has software-type margins (60%+), but it took its time getting there
The lesson is it’s OK if you have variable costs like Twilio, Snowflake, etc. to not hit software-like margins at first.
But you may need to hit 60%+ gross margins as you IPO.
The lesson is it’s OK if you have variable costs like Twilio, Snowflake, etc. to not hit software-like margins at first.
But you may need to hit 60%+ gross margins as you IPO.
#3. NRR has come down a bit, but still world-class at 162%.
This is a trend we’ve seen with so many Cloud leaders.
NRR sometimes does dip a bit as you approach $1B ARR.
But it can stay high ... maybe forever.
This is a trend we’ve seen with so many Cloud leaders.
NRR sometimes does dip a bit as you approach $1B ARR.
But it can stay high ... maybe forever.
This "NRR can stay high forever" math is sort of counter-intuitive. Don't mature accounts "max out"?
In theory, yes. But in practice, almost every Cloud leader has shown accounts can grow for so long, & get so big, that NRR can stay high well past $1B ARR
We'll see at $10B ARR!
In theory, yes. But in practice, almost every Cloud leader has shown accounts can grow for so long, & get so big, that NRR can stay high well past $1B ARR
We'll see at $10B ARR!
#4. Slow to go global, but becoming material now.
We’ve seen many SaaS leaders go quite global in their footprint early, especially those with global roots (e.g., Zendesk)
Snowflake waited until it was ready.
We’ve seen many SaaS leaders go quite global in their footprint early, especially those with global roots (e.g., Zendesk)
Snowflake waited until it was ready.
#5. 3,500+ Customers ... But 65 $1M+/year Customers.
Its top 65 customers pay $1M+ & are growing the fastest. But it has a pool of 3,500 customers trying, using & loving the platform.
Overall customer growth is 84% YoY, but the "whales" are growing 110%:
Its top 65 customers pay $1M+ & are growing the fastest. But it has a pool of 3,500 customers trying, using & loving the platform.
Overall customer growth is 84% YoY, but the "whales" are growing 110%:
So Snowflake, like Fastly, is pretty "enterprise" in the Cloud, but still makes it easy and cheap to try and deploy.
Yes, this is inherent to many top B2D products.
But it's also a reminder that you can do it, too. You can make customers Small, Medium and Large all happy.
Yes, this is inherent to many top B2D products.
But it's also a reminder that you can do it, too. You can make customers Small, Medium and Large all happy.
