Snowflake Lost Nearly $200M in Q4 While Revenue Soared 117%

Snowflake, which was the hottest of hot IPOs in 2020, capped off its first fiscal year as a public company with a mixed bag of results as the the data warehousing vendor’s stronger-than-expected financial growth was overshadowed by expanding quarterly and annual losses that sent shares lower in after-hours trading Wednesday. Snowflake, which was the hottest of hot IPOs in 2020, capped off its first fiscal year as a public company with a mixed bag of results as the the data warehousing vendor’s stronger-than-expected financial growth was overshadowed by expanding quarterly and annual losses that sent shares lower in after-hours trading Wednesday. For the full fiscal year 2021, Snowflake reported $592.04 million in revenue, up 124% compared to $264.74 million in fiscal 2020. Meanwhile, net losses on the year jumped from $348.5 million, or $7.77 a share, to $539.1 million, or $3.81 a share. Fourth quarter total revenue climbed 117% year over year to reach $190 million, up 19% from the previous quarter of $159.6 million. Snowflake reported a fourth-quarter loss of $198.9 million, or 70 cents a share, more than double the loss of $83.3 million in the same quarter a year ago. Product revenue for the quarter was $178.3 million, a 116% year-over-year increase, while product revenue for the full year grew 120% to $553.8 million.  The financial results follow Snowflake’s record-setting initial public offering (IPO) that blew the roof off the New York Stock Exchange last September. The 8-year-old startup sold 28 million shares after raising its IPO price from $85 to $110 before settling on $120 per share. Even then, shares opened for trading at $245 before ultimately rallying all the way up to $429. The stock jumped 134% through the end of 2020, but has declined 12% so far this year, and investors are soured to say the least.  To this end, Snowflake CEO Frank Slootman coaxed weary investors with assurance that the onslaught of digital transformation has brought data operations to the fore as “the beating heart of the modern enterprise.” “These results indicate that customers across multiple industries rely on the Snowflake Data Cloud to mobilize their data and enable breakthrough data strategies,” he added. But investors didn’t seem to bite: stock fell as much as 8% on Wednesday, then dropped more than 5% in after-market trading following the news. Snowflake provides data warehouse services using a cloud-based architecture offered through an as-a-service model. This allows enterprise customers to analyze data stored in a central repository using business intelligence tools or other analytics applications. Its platform supports the three largest public clouds — Amazon Web Services (AWS), Microsoft Azure, and Google Cloud — however, it also competes against these platforms. Slootman said that competitive balance continues as it’s only dealing with on-premises competitors when enterprises are looking to migrate toward a cloud-based option. And the legacy, on-premises vendors aren’t sitting on their laurels. IBM, for example, reported a 19% increase in cloud revenue in 2020.  IBM has been gradually building out its hybrid cloud business model, which has included a lot of Red Hat integration. The tech giant is ditching its lagging legacy services business units into their own separate public company dubbed “NewCo.” The new operation will hit the streets as a significant player in the managed infrastructure services market, offering hosting and network services, infrastructure modernization, services management, and multi-cloud management and migration.  “I think that Snowflake is really the only platform that is successfully and consistently moving these workloads at scale to the cloud,” Slootman said. Snowflake would be wise to check over both shoulders as modern cloud data platform startups are also gunning for a larger share of the market. VCs have jumped on massive late-stage investments in data lake and data warehousing platforms in the past six months, indicating that these types of cloud-delivered storage and analytics services will continue growing in value through 2021. Looking ahead to fiscal 2022, Slootman said the company’s focus will be to “turbocharge our Snowflake Data Cloud with massive workload execution extensions and refinements, as well as extend our date of federation with numerous new additions to the Snowflake marketplace.” Snowflake most recently updated its cloud data platform with its new Snowpak engineering tool, an expansion of its Snowflake Data Marketplace, new data governance technology, and support for unstructured data. The company also expanded Snowflake Data Marketplace, its third-party data sets hosting platform that can be accessed through Snowflake accounts, with new data service providers to make it easier for customers to “unlock, discover, and access data,” said Christian Kleinerman, SVP of product at Snowflake, in a previous interview. “We have been told by a number of our customers that we are the second largest line item in their budget behind the public cloud and that may come as a shock to some,” Slootman said. “But I am telling you that that’s not going to be out of the ordinary going forward based on what we are seeing.”