Abstract

The case is about cloud-based data warehousing company Snowflake Inc.’s Initial Public Offering, which was the largest initial debut of a software company on the New York Stock Exchange. On September 15, 2020, Snowflake priced its IPO at US$120 a share, well above the target IPO price of US$100 to US$110. The price range was revised upward from the original price of US$75 to US$85 a share that was set during the regulatory filing on September 08, 2020. On the first day of trading on September 16, 2020, the shares began trading at US$245 a share, resulting in the valuation increasing from US$12.4 billion in February to over US$ 67.94 billion during the debut, making its IPO the largest ever for a software firm in the US. Snowflake, a cloud-based data warehousing company, provided businesses with an integrated data management system. It catered to data engineering, data warehousing, and data science companies. For its business, Snowflake relied on data centers hosted by Amazon, Google, and Microsoft. Its data warehouse technology allowed businesses to store and manage data in the cloud, enabling clients to quickly access and analyze information across the enterprise. Its business model revolved around the company’s cloud-based data platform, which gave its clients access to explore, share, and unlock the value from their data. The company grew quickly since its founding in 2012 and was valued at US$12.4 billion in a private funding round in February 2020. After its revenue soared 174% to US$265 million in the fiscal year ending January 2020, it got a lot of attention from investors like Salesforce.com as it took on rivals to compete in the burgeoning market for cloud technology. But, the firm continued to make losses in its businesses over the years. Snowflake is likely to face fierce competition within the cloud services industry and problems with the public cloud providers on which the company’s service runs. However, it has still got adequate opportunity to grow. The Snowflake IPO proves that there is a huge demand for the enterprise software market, which could get even bigger in the years to come.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the data warehousing market
• Understand the demand for cloud-based services during the COVID-19 pandemic
• Analyze the business model of a cloud-based data platform company
• Examine how a software IPO can bring value to the company’s stakeholders
• Evaluate the potential growth opportunities for enterprise software market

Keywords

Cloud data platform; Cloud database market; Data-warehousing; Big data; SaaS technology; Corporate app market; Enterprise cloud solution; Business model of cloud companies; Customer retention; Net revenue retention; Stock market; Software IPO; IPO valuation; Strategic partnership; Market capital