Snowflake IPO Raises Record-Setting $3.4 Billion for Software Industry

Snowflake IPO
Image credit: Bloomberg Finance LLP

The Business of Snowflake

Snowflake offers businesses new, cloud-based ways to store and access data, providing what is often dubbed “data warehouse as-a-service.” It has taken on other competing cloud infrastructure providers including Amazon, Microsoft, and Google. Snowflake has won significant amounts of business from companies transitioning from legacy databases like Oracle into the cloud. However, it also faces competition from Amazon’s cloud-based data warehousing product called Redshift, which is part of Amazon Web Services (AWS). Interestingly, Amazon also happens to be a major partner to Snowflake as it competes with it on many fronts. Snowflake has agreed to spend a minimum of $1.2 billion on Amazon cloud infrastructure services through 2025. Snowflake is heavily reliant on AWS as a cloud user. To lessen its reliance on AWS, Snowflake also uses services from Microsoft Azure and Google Cloud Platform.

History of the Company

The startup came out of stealth mode in 2014. Although Snowflake has yet to make a profit and burns through cash, its sales are growing rapidly. In 2019, it reported well over $100 million in revenue. Over the past four quarters, Snowflake’s revenue has grown by an average of 141% on a year-over-year basis. Its clients include 146 of the companies in the Fortune 500, and it currently has over 3,100 customers.

Slootman Credited for Snowflake’s Success

Snowflake made headlines as one of the hottest tech IPOs of the year. Yet for CEO Frank Slootman, it is the third tech company he has successfully taken public. His first tech IPO, Data Domain, occurred 13 years ago and his second, ServiceNow, occurred 8 years ago. Following the ServiceNow IPO, Slootman made over $550 million. The board appointed Slootman CEO of Snowflake just 16 months before its IPO this September. As a result of his 5.9% stake in Snowflake, he has become a newly minted billionaire.

Cloud Software Thriving

Cloud software companies have thrived in the COVID-19 economy. Amid the rapid push towards digital transformation, Snowflake has been able to meet surging new business demand. Its tools help manage remote workforces and process data. For example, the healthcare industry has increasingly become reliant on Snowflake’s data analytics capabilities to store and analyze data about the coronavirus. Overall, the company has seen an uptick in demand from customers across a wide variety of industries. This trend that is almost certain to continue in the future.



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Carpenter Wellington PLLC

Carpenter Wellington PLLC


Ryan Carpenter serves as Attorney and Managing Director of Carpenter Wellington. Ryan advises clients across a broad set of corporate and commercial matters.