A slowing economy and plummeting stock markets may be top priorities for most companies, but smart companies with a long-term view won’t get bogged down by these short-term concerns. On the contrary, their competitors may take a more conservative stance, so they confidently move toward their goals and extend their lead even further.
snowflakeof (snow -0.93%) The recently announced acquisition of Mobilize.Net’s SnowConvert software platform is a good example. While the full details of the acquisition have not yet been released and the news has not received much attention, it is a move that will excite current and future Snowflake investors. Here’s why:
Make it easy for customers to migrate to Snowflake
Snowflake’s data cloud enables enterprises to collect and analyze vast amounts of disparate data in a single, unified data repository. Snowflake enables customers to break down data silos within their organizations and make timely, smart, data-driven decisions.
Databases have existed in many forms for decades, and companies have traditionally selected industry incumbents such as: Oracle, microsoftWhen Teradata Save your data. However, Snowflake has quickly become a priority for enterprises due to its one-stop-shop cloud-based data platform, ease of operation, high performance, and rich tool collection. While not necessarily a complete replacement for traditional databases, they are prime candidates for organization and analysis of large amounts of data. As of October 31, 2022, the company had 7,292 customers of his, 287 of whom had paid him more than $1 million in revenue in the last 12 months.
The first step for most Snowflake adopters is to migrate their existing data from a diverse set of data stores to Snowflake’s data cloud. Migrating data and associated software code is one of the most complex and daunting technology tasks, regardless of source and destination platforms. This involves careful planning, analysis, and software development that, if not done properly, can result in an enormous amount of rework, additional costs, and delays.
Snowflake announced last week that it plans to acquire Mobilize.Net’s SnowConvert software tool that simplifies and automates the data migration process for its customers. Snowflake has partnered with many companies that provide such toolsets and Mobilize.Net is one of his partners. SnowConvert has translated 1.5 billion lines of software code embedded in traditional databases in their migration to Snowflake. As a company, Snowflake appears to have a high level of trust in SnowConvert.
With this acquisition, Snowflake will continue to enhance SnowConvert’s data migration tools, integrate them more effectively into the Snowflake Data Cloud, and ultimately further simplify a potentially burdensome and costly task for new customers. can.
Focus on long-term goals
Snowflake has set a goal of generating $10 billion in annual revenue by fiscal year 2029, with a long-term year-over-year revenue growth rate of 30%. The company wants to maintain its growth trajectory while generating 25% adjusted free cash flow. These are lofty goals, but Snowflake has built a great foundation. The company has a growing number of customers in various industries. In the third quarter of fiscal 2023, which ends October 31, 2022, total customer numbers increased 34% year-over-year, and customers paying $1 million or more increased 94%. Revenue growth has slowed compared to historical rates, but is still up 67% year-over-year. Snowflake continues to maintain an industry-leading dollar-based net retention rate (a measure of how much money existing customers have spent in the previous year) of 165%. Finally, the company also improved its free cash flow generation year-over-year.
Snowflake believes there is a significant market opportunity for its services, estimated at $248 billion. With projected revenue for fiscal 2023 he’s $248 billion, the company has a big runway ahead.
Acquiring SnowConvert is a smart move, especially in the broader context of the company’s long-term goals. Making the customer data migration process easier makes Snowflake even more attractive to new customers. Faster data migration also allows customers to take advantage of his Snowflake platform sooner, ultimately generating revenue sooner.
As of October 31, 2022, Snowflake has approximately $4 billion in cash and short-term investments and no long-term debt. With its strong balance sheet, high revenue growth, and improved profitability, Snowflake is highly resilient in the face of a challenging macro environment. These capabilities also give the company the confidence to pursue key acquisitions such as his SnowConvert to further strengthen its position.
How should investors approach Snowflake?
Snowflake is performing at a high level, and there are huge opportunities ahead. However, the market recognizes it and is placing a high premium on its shares. While the stock is trading near its lowest valuation since going public, the current price-to-sales ratio is above 25, still pricing in very high expectations. Company performance — a balanced approach.
Not many people pay attention to the Snowflake acquisition news. But smart investors who watch Snowflake closely will find that Snowflake focuses on long-term performance and steady execution. Stocks may look expensive, but investing now can pay off well in the long run.