Snowflake seeks to raise funds with $2B bond sale

Poorly received by investors, the moves comes in a difficult year

Cloud-based data warehousing and analytics biz Snowflake has issued $2 billion in bonds with the aim to buy back shares and potentially launch an acquisition strategy.

The tech firm's share price fell by around 3 percent in after hours trading following its announcement of the plan.

In a statement, Snowflake said it would offer two sets of bonds each worth $1.0 billion and due in 2027 and 2029 respectively. The company intends to use the proceeds to buy back up to $575 million of shares "in privately negotiated transactions."

It also said the funds raised could be used in acquisitions or strategic investments in "complementary businesses or technologies," yet emphasized it does not currently have such purchases or investment plans.

Snowflake burst onto the scene by offering consumption-based pricing on cloud data warehouse systems. Businesses seemed to have an insatiable appetite for the product and investors were convinced.

Shortly after its IPO in December 2020, the company was valued at $120 billion, more than IBM at the time, after setting a price of $33 billion in the run up to the offering. Just 18 months earlier the company was valued at $1.5 billion, according to an investment round.

Yet since its initial flurry of public floatation, the company has been beset with challenges. During this year, its value has fallen by around 43 percent, as the it grappled with financial results which disappointed shareholders. Meanwhile, Frank Slootman departed as CEO, having taken the company through its IPO period.

Snowflake's reputation also took a hit after details of a major cyber-crime incident became public. In July, US telecoms giant AT&T said that data involving around 110 million customers was snatched from compromised cloud storage run by Snowflake. It joined around 165 companies which had internal data compromised from their individual Snowflake online database storage spaces, in a breach uncovered by Mandiant. Snowflake has denied its systems were compromised.

Although the data analytics and storage company has said it has no immediate plans for acquisitions, its interest may be been piqued when rival cloud analytics firm Databricks snatched up Tabular, an early-days startup specializing in supporting the open table format Iceberg, for a staggering $1 billion — some reports suggest it may have paid more.

The move from Databricks, which also supports separate open table format Delta Lake, was seen as evidence that Iceberg had won the table format wars, Snowflake CEO Sridhar Ramaswamy said on an investment call.

“This is the end of the Betamax wars… with everybody centering around the one format that has broad support. We will continue to be a key player in this ecosystem to ensure that the format truly serves everybody and moves the industry forward,” he said at the time. ®