Vision is Overrated.
Unfiltered thoughts on Snowflake's earnings.
For a long time, I held this ideal of a CEO as an ultimate visionary: someone who could see what the world looked like years down the line and paint an exciting future for their company in this world.
Well, time has a way of teaching you, doesn’t it ?
Years in the trenches of real life at successful enterprise software companies (Salesforce, Yammer, PagerDuty…) have slowly crumbled this ideal. I know now that vision, while important, is overrated. Instead what is more important is straightforward, honest to goodness, boring execution.
Listening to Frank Slootman (CEO of Snowflake) and Michael Scarpelli (CFO of Snowflake) speak during Snowflake’s (SNOW) latest earnings call, I was struck by their straightforward, execution oriented responses to the analyst questions reminding me of the learning above.
With that, let’s get on to my quick, unfiltered thoughts from the earnings call:
Almost every analyst said congratulations before asking their question. I have seen this before on calls and, believe it or not, it’s been a great leading indicator. It shows that they have a lot of momentum.
There wasn’t a whole lot of visioning on their call or their website. They simply sell a platform for an organization to store, manage, prepare their data for various use cases. They are just really good at it. It’s refreshing as opposed to Palantir.
They provide a data marketplace. Interesting. I need to look into Aladdin and what they did with Blackrock (maybe an upcoming blog post).
Revenue grew 116%. It looks like their future revenue (??) that they have not recognized yet is actually growing over 200% (Not sure if I really get this).
Net Revenue Retention (NRR) is 168%. WOW. (Ps: NRR > 100% means that a company is deriving more revenue from it’s existing customers)
Both the above metrics ticked up from the prior quarter where revenue grew 115% and NRR was 162%.
Currently they are just dealing with structured (ANSI SQL) data. As a product/strategy they are building/looking to introduce unstructured data products. They will show this in an upcomingJune event. -- Frank talked about how relationships between structured and unstructured data is what the real world looks like.
Partnerships with tools to access the Snowflake data, like Tableau (Salesforce), are creating a lot of value for customers enabling them to move quickly.
They said that they are generally considered the second item on the buy list for their customers behind the public cloud.
Takeaway
There is a reason why SNOW is an expensive stock: Great technology, seasoned management, explosive growth, thematic tailwinds and more. With it being ~ 40% off it’s recent highs, it just became an interesting stock as well.
Next
I’ll leave you with this for now. Please be sure to subscribe for my reaction to Datadog (DDOG) earnings coming shortly:
In the meantime, tell your friends.
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• The contents of this blog are the personal opinions and investment choices of the writer. Please don't treat them as investment recommendations.
• I have long positions in SNOW, CRM, PD, MSFT and am considering opening a position in DDOG.