A growth stock that could keep on growing
Jamie Louko (Snowflake): It’s been challenging to find another public business that has consistently expanded faster the Snowflake. Since the company came public in late 2020, Snowflake has yet to see a quarter where revenue hasn’t soared over 60% year over year.
This adoption is not terribly surprising because the company operates in a vital, fast-moving industry. Snowflake is building the future by offering businesses to unified location for all their data. When it comes to large enterprises, many businesses store data on multiple platforms. However, analyzing that data to drive business decisions can be difficult when data is spread across competing clouds. Snowflake breaks down this wall, helping companies gain an edge by analyzing all their data together.
Don’t believe that this is a vital part of an organization? Just look at the company’s meteoric rise. Snowflake’s third quarter -- which ended October 31, 2022 -- saw revenue soar 67% year over year to $557 million. Comparatively, Snowflake generated just $592 million in revenue during its entire 2021 fiscal year, which ended January 31, 2021.
This rapid adoption is being driven largely by its pre-existing customers. Once an enterprise starts using Snowflake, it realizes how valuable it is. These businesses subsequently rapidly become more reliant on Snowflake, as seen by the company's world-class net retention rate of 165% in Q3.
The stars seem to be aligning for Snowflake as it capitalizes on this lucrative industry, and profitability is coming with it. The company has seen its non-GAAP adjusted free cash flow margin rise from negative 12% in fiscal year 2021 to 21% in the first nine months of fiscal year 2023. With climbing cash generation, massive adoption, and its criticality to businesses, Snowflake looks like a company to buy on the dip and own for the long haul.
