Snowflake has gone public in the largest software initial public offering (IPO) on record. Backed by Berkshire Hathaway and Salesforce – both of which bought shares in a private placement, the cloud data platform raised $3.36bn in the IPO and was valued at roughly $70bn. This was a staggering valuation for a company that only turned sales of $242m in the last six months and reported a significant loss. It also marked an unusual foray for Berkshire Hathaway which usually invests in established and profitable businesses. Salesforce’s backing was more to form as it gives SFDC a new tool with which to compete against Amazon, Microsoft and Google.
Snowflake’s stock opened at $245 for 3.5 million shares, making the first trade 104.2 percent above the initial IPO price of $120. At the opening price of $245 per share, the company’s valuation reached more than five times the private-market valuation of $12.4bn that it received in February.
The data cloud firm only set up in 2012 and has grown rapidly. It now employs more than 2,000 people in 19 countries and manages more than 250PB of data across more than 500 million daily workloads. It boasts more than 3,000 customers – double the number it had 12 months ago – including more than 150 of the Fortune 500.
Data, as we all know, is fast becoming the high-value currency for all enterprises and harnessing that data in a cloud data platform seems like an obvious win. Snowflake is being heralded as one of the ‘unicorns’ of the cloud revolution and its backers have bet big that it can continue its trajectory.
Snowflake’s proposition is particularly interesting because it forges a direct relationship with its customers whereas the main cloud platform providers, the likes of AWS and Azure, are often viewed as commoditised purchases. Leveraging the customer relationship will be critical to Snowflake’s continued success. How it does that while maintaining its relationships with the big three cloud platforms – Snowflake is delivered on top of the main cloud infrastructure layer – will be interesting to watch.
When ERP Today spoke to Benoit Dageville, co-founder of Snowflake, we were told: “The IPO is a validation of our initial vision, enabling customers to mobilise their data and gain deeper insights from it for a 360 view. This is just a milestone in our road, and it’s a long road. Becoming a public company will help us reach the next milestone, building Snowflake into the world’s largest cloud company.”
Read more about Snowflake in the next issue of ERP Today, out Feb 2021.