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My Take: Snowflake $SNOW at the JMP Technology Conference
Conference Link: https://wsw.com/webcast/jmp58/snow/1714700
Participant(s): CFO Mike Scarpelli
Highlights:
- What was different in Q4: Newer customers ramping on Snowflake are significantly better trained to use the platform out of the gate and using the platform more efficiently. These factors, plus the implementation of alerts for features like auto-suspend, mean that these new customers are ramping slower than expected.
- Won't apologize for 40% revenue growth guidance - still really good at Snowflake's current scale.
- How salespeople increase customer spend: Ask questions to see if there is demand for Snowpark, e.g. Cloudera, Spark, EMR (Amazon Elastic MapReduce). Don't actually have to sell, just educate and get the customer using a new feature. Which will lead to more consumption. Azure, GCP, AWS all pay their reps like this based on revenue, not on bookings.
- Snowpark captures Spark workloads that were previously being migrated out of Snowflake and then brought back in. These ML workloads were being run in Databricks, EMR, etc.
- Not sure how ChatGPT is going to make money - reiterating what was talked about on the recent All-In Podcast.
- How large language models benefit Snowflake: Running models in Snowflake to fine tune them.
- Competitive landscape: Google BigQuery #1, Microsoft #2, Databricks #3. "Google definitely the most competitive." Big reason why Google and Microsoft are the biggest competitors is because of their ability to bundle and offer services for "free".
- Public sector opportunity: FedRamp High is expected "very soon". Could be a week, could be two months. Public sector is only upside, currently only 1% of business. Big opportunity not only in the US but internationally. Doing very well in state and local where FedRamp High isn't required. FedRamp High and IL5 (Impact Level) will open up the federal opportunities. Don't think Snowflake will ever get to IL6 (the highest level).
- What investors don't currently get about the story: Investors may not appreciate how long some migrations are going to take. Some customers could take up to 10 years with how big their current on-prem data state is. Early adopters were often digitally native companies; however, new customers tend to require migrations which leads to the previously discussed longer ramp times.
My Take:
There was a lot of useful, novel information in this jam-packed 20 minute conference appearance from CFO Mike Scarpelli. The big takeaways for me were the public sector opportunity, which I've confirmed to at least anecdotally be true from my channel checks, and how durable the sales runway is for the company. We all know about the Snowflake's guidance for $10B revenue in 2028, and the more I learn about Snowflake's expanding TAM and execution the more I think they would have to try to not meet the lofty-sounding goal.
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