Snowflake continued on its high-growth trajectory in its fiscal Q4 ended Jan. 31 with product revenue jumping 116% to $178 million and overall revenue soaring 117% to $190 million.
Revenue for the fiscal year was $592 million. The cloud database provider’s guidance for the current year puts it on track to generate product revenue of between $1 billion and $1.02 billion in FY2022, which would be in the range of 81% to 84% growth. While that would represent a slowdown in Snowflake’s growth rate, that’s not unusual for a company reaching that size.
Snowflake last week was named to the Cloud Database Report’s Top 20 cloud database providers.
On Snowflake’s earnings call, CEO Frank Slootman and CFO Mike Scarpelli painted an optimistic picture of the company’s strategic moves and progress. Q4 highlights included:
- 4,139 total customers in 2020, including 77 with trailing 12-month product revenue of more than $1 million
- A partnership with BlackRock to create a data cloud platform called Aladdin Data Cloud for the investment management industry
- Remaining performance obligations (a measure of contracted but unrecognized future revenue) of $1.3 billion, representing 213% year-over-year growth
Some of the most eye-opening insights came in the Q&A session after Snowflake’s scripted presentation. Here are four takeaways that jumped out as having implications not just for Snowflake, but for the wider cloud database market.
- As Snowflake signs bigger deals, it is increasingly engaging directly with CEOs on data strategy, not just CIOs and CTOs. Snowflake added 19 Fortune 500 customers in Q4 and now has a dozen customers with trailing 12-month product revenue of more than $5 million. “We’re operating far more at a CEO level now,” Slootman said. “There’s definitely been, I feel, an inflection.” That’s significant because it shows an up-leveling of conversations around cloud databases, from the nitty gritty of data formats and APIs to business strategy and objectives. “There’s always an industry context to the conversation,” said Slootman, “It’s much more outcome-oriented.”
- The reason Snowflake has been invited into the C-suite is because business leaders, in the wake of the Covid-19 pandemic, are putting a premium on business transformation, not just IT modernization. “We’re sort of in this period where we’re unleashing all of this imagination,” said Slootman. “Things are going to go end-to-end digital at lightspeed, so the digital transformation is a big thing. You can think of things like really improving the efficiency and yield on marketing and sales outreach, improving service experiences.”
- How are businesses making the jump into this new world of transformation? In two words—data clouds. “This whole conversation around customers building their own data cloud, it’s really the center of their universe,” Slootman said. “The way they interact with their partners, their customers, their stakeholders is a huge idea, and people are seeing the opportunity and the potential.” Among the advantages of Snowflake’s cloud model are that data can be accessed from many sources and shared—consumption of data from Snowflake’s data marketplace was up 48% in the quarter and data sharing increased 51%.
- These data transformations are not as easy as they sound, especially when projects require that existing on-premises systems be moved to the cloud. Slootman said the public cloud vendors (i.e. AWS, Google Cloud, and Microsoft Azure) face “significant struggles” in trying to migrate databases from so-called legacy database platforms (i.e. Oracle, IBM, Teradata). It can take six months or longer for customers to move these workloads, CFO Scarpelli said. Database migrations have never been easy, Slootman added. “They’ve been lengthy, they’ve been expensive, they’ve been risky. And customers are quite leery of them.” Snowflake’s expertise enables it to accomplish such projects faster and more effectively, he said. In FY2021, Snowflake took on 75 data warehouse migrations from traditional platforms and “we have identified many more for this year,” Slootman said.
Snowflake’s progress is the latest evidence of a fast-growing, fast-changing cloud database market. Gartner recently predicted that 75% of all databases will be deployed or migrated to a cloud platform by 2022.
For more on cloud database providers and platforms, please see my just-published Cloud Database Report.
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