As the latest indication of Wall Street’s huge demand for cloud computing services businesses, Snowflake has launched the largest ever public offering for a US software company.
Investors agreed to buy 28 million shares of Snowflake stock worth $ 120 ($ 101), promising people $ 3.4 billion in revenue for the cloud software company. That price would give the company a market capitalization of more than $ 33 billion, based on the number of shares outstanding.
Snowflake’s share price exceeded the company’s target range of $ 100 to $ 110, up more than a quarter earlier this week. The company’s market value is two and a half times the value of $ 12.4 billion achieved in the latest fundraising phase in February. It declined to comment on pricing.
Snowflake’s IPO will soon create a large publicly listed company in the cloud software industry.
According to data provider Refinitive, the offer is the largest this year and the largest in the US since Uber’s $ 8.1 billion float in May last year. The majority of VMware, a cloud computing company owned by Dell, previously completed its largest software IPO in 2007.
Snowflake, which allows users to analyze data across multiple remote storage providers such as Amazon Web Services, has attracted investors based on its fast-growing customer base for its data warehousing Singh product.
The company’s revenue grew by 121 percent in the second quarter compared to the same period last year, the highest “net retention” figure ever measured by customer loyalty.
Like many tech start-ups, Snowflake burned cash to gain market share, recording a loss of $ 348.5 million in revenue from $ 264.7 million in the most recent fiscal year.
The IPO received a boost last week after Warren Buffett Berkshire Hathaway and Sailforce have agreed to buy $ 250 million worth of stock with Flotation. Berkshire bought the company for an additional $ 320 million from former chief executive Bob Muglia.
Snowflake’s current chief executive, Frank Slotman, previously oversaw the IPOs of tech companies Data Domain and ServiceNow.
Venture capital group Sutter Hill Ventures is set to reap the biggest rewards from the company’s listing, having acquired more than 20 per cent of its stake before the offer.
Snowflake’s listing is further evidence that tech companies are increasingly benefiting from the shift to remote working. The BVP Nasdaq Emerging Cloud Index, which monitors cloud software companies, has gained nearly 59 percent this year, doubling the earnings of the broader tech-heavy Nasdaq index.
During the busy week for IPOs, the float of snowflakes is coming, and a dozen companies are ready to enter the US stock market.
Video game software company Unity is expected to raise more than $ 1 billion this weekend, while another data platform, Sumo Logic, and Israeli software development company Jeffrog are planning listings.
Snowflake’s deal surpassed two listings in June, with Royalty Pharma raising $ 2.5 billion, Warner Music $ 2.2 billion, which previously topped the list this year.
Refinitive says recent activity has raised the amount raised in 2020 to a one-year high from 2014. That year, Alibaba’s $ 25 billion float set a world record.
Goldman Sachs and Morgan Stanley were the main underwriters in Snowflake’s offerings.
– Copyright Financial Times Limited 2020