Public Venture

Here’s What You Need To Know About Snowflake And Its Giant IPO

Data warehouse company Snowflake is set to start trading on the public markets on Wednesday in the largest software IPO ever, according to Renaissance Capital.

On Tuesday afternoon, the company priced its shares at $120 apiece —well above its previous IPO ranges — valuing it at $33.2 billion, according to the Wall Street Journal. Though it’s not necessarily a household name (it happens when you’re B2B software), Snowflake is a fast-growing, well-capitalized company that’s drawn big-name investors.

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We’ll be keeping an eye on the market when San Mateo-based Snowflake starts trading on the New York Stock Exchange on Wednesday, but until then, here’s what you need to know about the buzzy software company.

What It Does

In short, Snowflake is a cloud data platform. Customers can store data, exchange it, use it for data applications, and data engineering, among other things. 

In Snowflake’s own words, from its S-1 filing:

“Our platform solves the decades-old problem of data silos and data governance. Leveraging the elasticity and performance of the public cloud, our platform enables customers to unify and query data to support a wide variety of use cases. It also provides frictionless and governed data access so users can securely share data inside and outside of their organizations, generally without copying or moving the underlying data. As a result, customers can blend existing data with new data for broader context, augment data science efforts, or create new monetization streams. Delivered as a service, our platform requires near-zero maintenance, enabling customers to focus on deriving value from their data rather than managing infrastructure.”

Venture Capital Investment In Snowflake

As a private company, Snowflake has raised at least $1.4 billion in funding from investors including Sequoia Capital and Sutter Hill Ventures. The company last raised funding with a $479 million Series G round led by Dragoneer Investment Group. That round basically tripled the company’s valuation, bringing it to $12.4 billion. 

Take a look back at the company’s funding and valuation history here:

 

Growth

In its S-1 filing with the United States Securities and Exchange Commission, Snowflake reported around $242 million in revenue for the six months that ended on July 31, 2020. That means revenue grew about 133 percent from the same period last year, when it came up with about $104 million in revenue.

The company reported $171 million in net losses for the six months ending on July 31, 2020. It lost $177 million during the same period in 2019, so losses have decreased year-over-year.

Translation: Snowflake is growing fast and getting its losses under control. Growing 133 percent year-over-year when you’re a company the size of Snowflake is no small feat, and says something about the appetite for the cloud data platform. The company had 3,117 customers as of July 31.

The Winners

Early investors in the company will win big with the historic IPO. Among the biggest beneficiaries: 

Here’s a breakdown of how many shares each currently owns:

  • Sutter Hill Ventures: 49,564,848 shares (17.4 percent) of Class B common stock
  • Altimeter Capital: 36,286,307 shares (15.1 percent) of Class B common stock
  • Iconiq Capital: 33,752,048 shares (14 percent) of Class B common stock
  • Redpoint Ventures: 21,928,585 shares (9.1 percent) of Class B common stock
  • Sequoia Capital: 20,619,156 shares (8.6 percent) of Class B common stock

Compared To Other IPOs…

Snowflake is huge. According to Renaissance Capital, Snowflake is the biggest software IPO of all time.

The company initially set its price range between $75 and $85 per share. It then raised the range to be between $100 and $110 per share. Now that the company has reportedly priced above those ranges at $120 apiece, Snowflake is set to raise about $3.36 billion by selling 28 million shares through its IPO.

For context, Snowflake’s IPO valuation is much, much larger than the IPO valuations of any of the venture-backed tech or tech-ish companies that have gone public this year. Crunchbase News keeps a running list of venture-backed tech and tech-ish companies that go public via IPO, and so far ZoomInfo topped the list in terms of highest IPO valuation. ZoomInfo had an IPO valuation of $8.2 billion when it went public in June — Snowflake priced higher than the top of its range, making its IPO valuation more than four times that of ZoomInfo. 

There are several tech companies going public this week and next week, but in valuation alone, Snowflake stands out.

Illustration: Dom Guzman

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