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The Snowflake Thesis
What is Snowflake:
Snowflake is a cloud-agnostic data-warehouse company for centralizing all the data in a company. The platform is able to accommodate structured and unstructured data.
They have pioneered a data-cloud enabling customers to consolidate data into a single source of truth to drive meaningful business insights, build data-driven applications, and share data.
Competitive Advantage:
- Market Leader: Advanced storage and computing capabilities together over their competitors like Databricks who is focused on ML/Data science.
- Snowpark marketplace and data sharing capabilities that expands their already Large and growing Total Addressable market opportunity
- Wide-level integrations with multiple customers, partners and system integrators.
- Business Model: Consumption and usage-based model that enables ultimate flexibility for customers.
Product Moat:
- Ease of use, speed, scalability, and performance
- Unique and high switching costs due to the high cost of unlearning and disruption to business services once you have installed Snowflake
- They have a defensible and differentiated technology stack with high barrier to entry.
- The company has a cognitive referent brand within the data industry amongst consumers.
Financial Metrics:
- Accelerating Revenue growth last 4-qtrs - (beat and raise): 117% > 110% > 105% > 110%
- Margins:
- Gross Margins: 56% > 57% > 61% > 64%
- EBITDA Margin Losses: 105% > 90% > -74% > Now: -47%
- Land & Expand: High Net Retention Metric in dollars and customers (Signals customers want the product)
- Customer Growth: 84% > 67% > 60% > 52%
- DBNRR: 168% > 168% > 169% > 173%
In summary, Snowflake is a special company that represents an important future for Data and AI.
If interested, I did a past write-up:
Seeking Alpha
Snowflake Stock: 5 Reasons Why It's Truly Special (NYSE:SNOW)
Snowflake is the leading cloud-computing data warehouse company that will play an integral role in the future of AI. Read 5 reasons why SNOW stock is a buy.
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