Ahead of its scheduled IPO date tomorrow, cloud-based data warehousing startup Snowflake raised its expected price range from $ 100 to $ 110 per share, from $ 75 to $ 85. dollars. The increase suggests that investor demand for the deal is strong, which will allow Snowflake to raise even more capital to help fund future growth.
Here’s what potential investors need to know.
Valued up to $ 30 billion
In the middle of the new range ($ 105), Snowflake now expects to receive net proceeds of $ 3.3 billion, up from the previous expectation of $ 2.7 billion. If the underwriters exercise their option to purchase additional shares, transportation could reach up to $ 3.8 billion.
These products will include the two simultaneous private placements with Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) and Salesforce Ventures, the venture capital division of salesforce.com (NYSE: CRM). The increased range will impact both Berkshire Hathaway and Salesforce Ventures, as the private placement will be at the same price as the IPO. These investors have agreed to invest $ 250 million each, which will now only buy 2.4 million shares instead of 3.1 million shares.
Based on the total of 277.3 million Class A and Class B shares that will be outstanding after the offer, Snowflake will be worth between $ 27.7 billion and $ 30.5 billion. This valuation is a bit higher than the original estimate of $ 20.9 billion to $ 23.7 billion (which was based on a slightly higher number of expected actions).
Halfway through, Snowflake would be valued at 72 times its 12-month revenue (TTM) of around $ 402 million. That’s an incredibly high rating, even for enterprise Software as a Service (SaaS) stocks, which often get top ratings because SaaS companies often provide essential services to large businesses while generating recurring revenue. at high margin.
Snowflake somewhat justifies this bonus by strong growth: revenue climbed 121% in the second fiscal quarter to $ 133.1 million. TTM’s revenue is up 138% from a year ago. And Snowflake is rapidly expanding relationships with existing customers, with a net revenue retention rate of 158% for the first half of this year. The company isn’t profitable yet, but when was the last time investors in high-growth tech stocks looked at black ink?
As is often the case with tech companies these days, Snowflake will have a two-class structure designed to preserve control between insiders. Class B shares carry the right to 10 votes per share and insiders collectively will hold 98.5% of the total voting rights, according to the latest prospectus.
It should be noted that the supply could potentially cost even higher than the expected range, which is not uncommon when investor demand is high. The IPO is expected to price tomorrow, and the shares will begin trading the following day under the symbol “NYSE: SNOW”.
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