Snowflake finance veep says big corps migrate at a glacial pace

$100 million+ deals are beholden to enterprises' on-prem upgrade cycles

Snowflake's ability to grow in the market for larger enterprise customers is hampered by the renewal cycle for older, on-prem data warehouse and analytics tech.

This is according to Jimmy Sexton, Snowflake's veep of finance, who was speaking at a conference run by investment bank Jefferies. He said that in its early years, the cloud data warehouse, analytics, and data engineering biz had achieved growth by attracting customers whose primary business was online. As it shifted towards more traditional enterprise businesses, Snowflake found itself beholden to their timetable for updating existing on-prem data warehousing systems.

Last month, Snowflake beat analysts' estimates with its Q1 results after posting revenue of just under $1 billion, up 26 percent over the same quarter the previous year.

A former ServiceNow executive, Sexton told the Jefferies conference Snowflake had struck two deals of more than $100 million with companies in the financial services sector in the quarter. But they take time.

"With these types of companies, we start with one on-prem data estate, and then slowly tick those down because you have the ability to take smaller bites of the apple up front. That follows massive professional services engagements over a multi-year period. The data warehouse migration customers will just slowly purchase those over time, because they are really cumbersome projects," he said.

The pattern meant that it was hard to engage new customers in that market until it was getting toward time to renew their data warehouse and analytics contracts.

"We're at the mercy of a lot of renewal cycles for on-prem data estates," he said.

With one customer, Snowflake had signed an eight-figure professional services deal to migrate on-prem data systems as they came up for renewal. "That isn't just the Teradata of the world. That's also the Hadoop environments, and so that's kind of why we benefit. [But] it's hard to convince someone to start a migration and double pay for a long period of time, unless that renewal is on the horizon," said Sexton.

Although Teradata became well-known for its optimized appliance servers, the company launched a cloud platform in 2019, separating storage and compute in the same way that Snowflake and Google's BigQuery had pioneered. Hadoop vendors such as Cloudera have also made their journey to the cloud and re-engineered data lakes on blob storage.

Snowflake enjoyed a storm of attention shortly after its IPO, boasting a market capitalization of $120 billion in 2020. It now sits at around $70 billion. ®