C O M PA N Y N O T E

O c t o b e r 11 , 2 0 2 0

Snowflake Inc. (SNOW) Overweight

Reinventing Data Stack via Disruptive Software Layer; Initiating at Overweight

CONCLUSION
PRICE: US$238.00
SNOW has built a new cloud-native software layer that has the potential to redefine and
TARGET: US$264.00
modernize the enterprise data stack. Despite high valuation risks that could spark elevated 60x CY26E FCF of $1.5B discounted back 4
stock volatility over the next six months, we are initiating coverage on SNOW at Overweight yrs by 10%(357M shares, $815M net cash)
with a bias to add to positions on weakness based on a unique cloud product and proven
Brent A. Bracelin
leadership team capable of executing on a compelling 10-year growth trajectory. A premium
Sr. Research Analyst, Piper Sandler & Co.
valuation is warranted for longer-term oriented investors looking out 3-5 years based on 503 275-8316, brent.bracelin@psc.com
1) triple-digit growth last quarter at $0.5 billion revenue scale, 2) a proven leadership team
Clarke Jeffries
stacked with A+ talent, 3) a clear path to multi-billion dollar revenue run-rate within two Research Analyst, Piper Sandler & Co.
years, 4) usage-based pricing model where growth is tied data processing, and 5) secular 503 275-8318, clarke.jeffries@psc.com
growth drivers tied to an untapped greenfield digitization opportunity that can augment a Parker M. Snook
large $300B replacement market ripe for modernization. Research Analyst, Piper Sandler & Co.
503 275-8313, parker.snook@psc.com

• New cloud-native software layer is redefining the data stack. Snowflake was
designed and built from the ground-up as a new cloud-native software layer that can Changes Previous Current
scale automatically with zero maintenance and the inherent capabilities to tackle multiple Rating Overweight
data challenges (cost, complexity, etc.) with no performance trade-offs. This multi-cluster Price Tgt US$264.00
architecture with 251 pending or issued patents gives it a distinct advantage over on- FY21E Rev (mil) — US$562.6
FY22E Rev (mil) — US$1,077.4
premise legacy data vendors and first generation cloud applications like AWS Redshift.
FY21E EPS — US$(1.08)
FY22E EPS — US$(1.02)
• Greenfield digital shift to augment a $300B replacement market. We see a large and
52-Week High / Low US$319.00 / US$208.55
untapped opportunity for Snowflake to become the leading cloud data platform powering
Shares Out (mil) 357.3
digital initiatives at CapitalOne, Disney, Nike, Netflix, and McKesson, among others. This Market Cap. (mil) US$85,037.4
digital greenfield opportunity should augment the $300 billion replacement opportunity Div Yield 0.00%
across the traditional data stack that is ripe for modernization. Fiscal Year End Jan

Price Performance - 1 Year

• Revenue could top $9.5B by CY26E assuming a 60% CAGR. The combination of a USD
unique product, a proven management team led by Frank Slootman, CEO, and Mike 300

Scarpelli, CFO, who scaled ServiceNow to multi-billion revenue scale, and the sheer size
of the market opportunity gives us confidence SNOW can sustain high-growth through 250

2030. We estimate this consumption-driven revenue model could reach $9.5B by CY26E
(vs. $0.5B run-rate today) assuming a 60% CAGR. 200

150
• Initiating coverage at Overweight with a $264 PT. Snowflake is a disruptive cloud-
native software layer that has the potential to redefine the cloud data platform of the 100
future. Despite high valuation risks that could spark elevated stock volatility over the next Sep-20

six months, we are initiating coverage on SNOW at Overweight with a bias to add to Source: Bloomberg
positions on weakness. We are establishing a PT of $264 applying a CY26E EV/FCF
target of 60x, discounted back 10%.
R I S K S TO A C H I E V E M E N T O F P T & R E C O M M E N D AT I O N
Competition, customer concentration, partnerships with public cloud vendors.
C O M PA N Y D E S C R I P T I O N
Snowflake is a disruptive cloud software layer reinventing the enterprise data stack.
REVENUE (US$ m) EARNINGS PER SHARE (US$)
YEAR
Apr Jul Oct Jan FY CY CY Apr Jul Oct Jan FY CY CY
2020A 43.7 60.3 73.0 87.7 264.7 — NA — — — — NA — NA
2021E 108.8A 133.1A 144.6 176.0 562.6 — NA (0.30)A (0.24)A (0.29) (0.25) (1.08) — NA
2022E 212.8 246.7 289.6 328.4 1,077.4 — NA (0.30) (0.29) (0.23) (0.18) (1.02) — NA

Piper Sandler does and seeks to do business with companies covered in its research reports. As a result, investors should be aware
that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only
a single factor in making their investment decisions. This report should be read in conjunction with important disclosure information,
including an attestation under Regulation Analyst Certification, found on pages 39 - 41 of this report or at the following site:
http://www.pipersandler.com/researchdisclosures.
Snowflake Inc. Page 1 of 41
SNOW | Investment Thesis
Initiating coverage at Overweight with price target of $264

1 Compelling Growth Trajectory as it Redefines the Modern Data Stack

Snowflake represents a disruptive cloud software layer with the potential to redefine and modernize the legacy data stack.
Revenue has scaled to a $0.5 billion run-rate in the last five years yet still grew at an impressive triple-digit growth clip last
quarter. We estimate the revenue run-rate could top $1 billion within four quarters and $2 billion within ten quarter quarters.

2 Veteran Leadership Team is Stacked with A+ Talent

The CEO and CFO of Snowflake have paired together in two other occasions with an impressive track record of execution
helping drive a 3x increase in market valuations from the IPO for Data Domain in 2007 until the acquisition by EMC and
then a 25x increase in market valuation from the IPO for ServiceNow in 2012 until the well respected CEO and CFO team
departed in 2019. Snowflake marks Act 3 for Frank Slootman, CEO, and Mike Scarpelli, CFO.

3 Differentiated New Software Layer with 215 Patents Pending or Issued

Snowflake was designed and built from the ground-up to be a more flexible and faster performing cloud software layer
compared to first-generation cloud data warehouses (i.e., – AWS Redshift). This unique and patented multi-cluster
architecture decouples compute from storage, which has given it a distinct performance advantage. Leveraging an
expanding pool of U.S. patent applications that are pending or issued, SNOW has a differentiated strategy relative to both
on-premise legacy vendors and the cloud titans.

4 Greenfield Opportunity to Augment a $300B Replacement Market

The sheer scope of the replacement opportunity to modernize the legacy data stack is compelling with some $300 billion
of investments into enterprise data technologies between 2016-2019. This replacement market is augmented by a large
an untapped greenfield opportunity across 1000s of exabytes of unstructured data driven by digitization tailwinds.

5 Unique Product, Team, and Digital Tailwinds Warrants a Premium Valuation

Despite being a high-risk investment where stock volatility for SNOW could remain elevated with valuation swings up and
down for the next year possible as fundamentals could take time to catchup with investor optimism, we argue the secular
tailwinds tied to a digital awakening, unique product, and a veteran team capable of executing on the longer-term potential
warrants a premium valuation. Our tactical bias would be to take an opportunistic posture and add on weakness.

Sources: Piper Sandler estimates, Company reports

Snowflake Inc. Page 2 of 41
TABLE OF CONTENTS
I. Industry Background 4
II. Market Opportunity & Competitive Landscape 13
III. Key Growth Levers 17
IV. Financial Model & LT Targets 22
V. Valuation 27
VI. Leadership Team 30

Snowflake Inc. Page 3 of 41

Section 1
Industry Background

Snowflake Inc. Page 4 of 41

Snowflake Inc.
remote work in 2020.
Digital Consumer Inflection

Source: AppFigures, U.S. Consensus Data, Piper Sandler Estimates

McKinsey estimates five years of digital
adoption was compressed into eight weeks
sparked by the global pandemic and shift to
20%
60%
80%

40%
100%
120%
140%

0%

(20%)

7/8/2019
-
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000

5,000,000

7/15/2019
7/22/2019 7/8/2019
Weekly

7/29/2019 7/15/2019
8/5/2019 7/22/2019
8/12/2019 7/29/2019
8/19/2019 8/5/2019
8/26/2019 8/12/2019
9/2/2019 8/19/2019
9/9/2019 8/26/2019
9/16/2019 9/2/2019
9/23/2019 9/9/2019
9/30/2019 9/16/2019
10/7/2019 9/23/2019
10/14/2019 9/30/2019
10/21/2019 10/7/2019
10/28/2019 10/14/2019
11/4/2019 10/21/2019
11/11/2019 10/28/2019
11/18/2019 11/4/2019
11/25/2019 11/11/2019
12/2/2019 11/18/2019
11/25/2019
12/9/2019
12/2/2019
12/16/2019
7%

12/9/2019
12/23/2019
12/16/2019
12/30/2019
12/23/2019
1/6/2020 12/30/2019
1/13/2020 1/6/2020
y/y growth

1/20/2020 1/13/2020
1/27/2020 1/20/2020
Weekly Download Sums

2/3/2020 1/27/2020
2/10/2020 2/3/2020
2/17/2020 2/10/2020
2/24/2020 2/17/2020
3/2/2020 2/24/2020
3/9/2020 3/2/2020
3/16/2020 3/9/2020
3/23/2020 3/16/2020
Digital Enterprise Inflection

3/30/2020 3/23/2020
4/6/2020 3/30/2020
4/13/2020 4/6/2020
4/20/2020 4/13/2020
4/27/2020 4/20/2020
5/4/2020 4/27/2020
Download Activity and % Y/Y Growth Trendline

5/11/2020 5/4/2020
5/18/2020 5/11/2020
Accelerating digital transformation trends could spark the next major data tsunami

5/25/2020 5/18/2020
6/1/2020 5/25/2020
6/8/2020 6/1/2020
6/15/2020 6/8/2020
6/22/2020 6/15/2020
6/29/2020 6/22/2020
6/29/2020
73%

7/6/2020
7/6/2020
DAPR Vol. 2 | Total Digital Activity (n=50)

Page 5 of 41
Industry Background | Digital Awakening Accelerating Digital Drivers
Industry Background | Why is Digital Data Increasingly Important?
Data is at the heart of digital transformations

Digital is Fueling the Future of Retail

Nike achieved 30% digital mix three years ahead of plan
Nearly 100% growth for digital sales in North America
150% growth in sales through the Nike mobile app

Powering Direct to Consumer (DTC) Evolution

Disney+ has reached 60M subscribers in less than one year.
Full portfolio of direct-to-consumer now exceeds 100M subscribers

Revolutionizing Farming Using Data

John Deere is in the midst of a Smart Industrial Redesign
201K connected machines with visibility covering 190M+ acres

Al and Data at the Core of the Fastest Growing Consumer App

TikTok has surged by 800% in U.S. to 100M MAU vs. 11M in 2018.
Viral nature of TikTok driven by a progressive AI recommendation engine
2 billion downloads globally hint at the future of coupling AI + data.

Triple-digital digital growth reported during Q2

Source: Company Reports and Event Transcripts, FactSet

Snowflake Inc. Page 6 of 41
Industry Background | 10% Cloud Penetration Could Hit 50%+
Digitization trends post COVID provide greater confidence in cloud penetration rising to 50%+

2019 2030E

1% 10% 50%

Jump ball opportunity Trillion dollar (digital)

$1.7T relative to enterprise
IT spend per year. transformation opportunity

Source: Gartner, Piper Sandler Estimates

Snowflake Inc. Page 7 of 41
Industry Background | Data Challenges
Three decades of unique innovations designed to overcome persistent data challenges

Data 1990 2020 Multiple Compression On-Premise Cloud

1 Cost
$9,000 $0.02 Data copies & Dedupe Storage Area Pay Per Use
Managed Service
gigabyte gigabyte Networks

Data 500 Million Database Sprawl

Volume Variety Velocity
2 Complexity Data Size Data Structure Speed of Change
New applications to be
1:1 ratio between cloud
developed in 5 years
Data Sources application and database
surpassing the last 40 years

Data Data Schema JSON RDMS NoSQL SQL

3 Compatibility Format data is stored, which is Structured Query
tightly coupled to query language Hadoop EDW Language

EDW Limited EDW + Expanded

Data
4 Accessibility
Enterprise Data
Warehouse
Number of users
accessing EDW data
Visualization number of departmental users with 1,000s
of reports connected to an EDW data
Front-End

1,000 days
Data
5 Gravity
To transfer 1 petabyte of data
using a 100 Mbps connection

Source: Company Reports, AWS, Gartner, Piper Sandler Estimates

Snowflake Inc. Page 8 of 41
Industry Background | Data Innovation Matrix
Snowflake was architected to be the first cloud data platform tackling all data challenges
Data Innovations Solving a Specific Data Challenge

Data Challenges

Industry First Cloud Data Platform

Data
1 Cost Yes Yes Yes Yes Yes
via cloud
economics

Data
2 Complexity Yes Yes Yes Yes

3 Data Yes
Compatibility via SQL
support

Data
4 Accessibility Yes Yes Yes

Yes
Data via Data
5 Gravity Sharing

Source: Company Reports, Piper Sandler Estimates

Snowflake Inc. Page 9 of 41
Section 2
Market Opportunity & Competitive Landscape

Snowflake Inc. Page 10 of 41

Market Opportunity | Long Runway for Growth at <1% Penetration
Snowflake penetration today is miniscule at less than 1% by spend and by storage volumes

Penetration: By Legacy Data Stack Penetration: By Data Volumes

$300B 200EB+
investments into the data Storage capacity
stack over the last four shipments in 2019
years (2016-2019)

$688M
RPO Backlog

$532M >1EB*
Revenue run-rate Snowflake
data cloud
0.2% Penetration
0.5% Penetration
*Exabyte: 1,000 Petabytes

Source: Gartner, Seagate, Company Reports, Piper Sandler Estimates

Snowflake Inc. Page 11 of 41
Market Opportunity | $300 Billion Replacement Opportunity
Investments across the data stack between 2016-2019 equate to $300B installed base

Snowflake Cloud Data Platform encompasses five

BI | Visualization core applications including:
$300B $90B
1.
2.
Data Warehouse
Data Lake
Two biggest
revenue drivers in
investment cycle 4-year Spend (2016-2019)
3. Data Engineering the short-run.
across enterprise
data stack between 4. Data Science
2016-2019 Advanced Analytics 5. Data Applications

$10B
4-year Spend (2016-2019)

Data Integration

$21B
4-year Spend (2016-2019)

Database | Data
Warehouse
$179B **Snowflake sizes the TAM opportunity at $81B in
4-year Spend (2016-2019)
*Inclusive of all DBMS the S-1 filing applying average customer spend
across businesses worldwide with 200+ employees.

Source: Gartner, Company Reports, Piper Sandler Estimates

Snowflake Inc. Page 12 of 41
Market Opportunity | Untapped Greenfield Opportunity
Only 3% of the 275 zettabytes of information created is expected to be processed or stored

“But if we go out to that 2025, we're looking at about, the best estimate, 175 zettabytes
275ZB of data created. The anomaly here is that a lot of that data is not stored. It's very
volume of digital information created transient. It's started at the end of the session. When you log off of your computer, all
by 2025E the temporary files go away, everything that was generated to support that activity or
that session vanish and the data is not permanently stored. And out of that, we see
about 95% of the data that is created really never does get stored. So that leaves us in
2025 with the best estimate of around 7.5 zettabytes of stored data.”

Fred Moore, President – Horison Information Strategies

Data Storage Industry Analyst
August 26, 2020 Presentation

Greenfield opportunity to narrow the gap

between the massive volume of digital
information created versus the amount that
is stored, processed, or archived.

1 million Petabytes = 1 Zetabyte

3%
of digital information (7.5ZB) expected to be
stored, processed, or archived.

**Zetabyte: 1,000,000 Petabytes

*Exabyte: 1,000 Petabytes

Source: Piper Sandler Estimates, Quantum Corp. Analyst Day

Snowflake Inc. Page 13 of 41
Market Opportunity | M&A Could Expand Data Application Portfolio
Snowflake has options to build or buy as it looks to expand product portfolio

$300B Installed Base

BI | Visualization Raised $743M in funding; Search alternative to dashboards

$90B Data application

4-year Spend (2016-2019)
Advanced Analytics
$10B
4-year Spend (2016-2019)
Raised $346M in funding; Data catalog to quickly discover data. partners that could
strategically align
in build vs. buy
discussions.
Raised $246M in funding; ML collaboration and deployment tools.

Data Integration Raised $430M in funding; Platform to automate ML models.

$21B
4-year Spend (2016-2019)

Database | Data
Warehouse
$179B
4-year Spend (2016-2019)
*Inclusive of all DBMS

Source: Gartner, Piper Sandler Estimates

Snowflake Inc. Page 14 of 41
Competitive Landscape | New Cloud-Native Software Layer
Architected from the ground up to be a modern cloud-native software layer

1 Cloud Native 2 Multi-Cluster 3 Shared Data 4 Cloud Agnostic

New software layer was Multi-cluster architecture Ability to securely combine Software ported to run on all
originally designed to automatically scales and share data across three of the major cloud IaaS
harness the full power of compute and storage departments or partners platforms giving customers
cloud elasticity and cloud resources with near zero using a single, live flexibility to store and share
economics. administration support. governed copy. data cross-region.

Snowflake Patented Software Layer

215
Patents applications
pending or issued in
the U.S.

Agnostic to Underlying IaaS Layer (Compute | Storage APIs)

Source: Company Reports, Piper Sandler Estimates

Snowflake Inc. Page 15 of 41
Competitive Landscape | Data Warehouse and Data Lake
Primary replacement opportunity lies within the data warehouse and data lake segments

Modern Cloud Software Platforms

$179B $12B
Estimated
Revenue

investment in $9.4B
database, data revenue run-rate at
modern cloud software
warehouse, and platforms $1.7B
data lakes between
2016-2019.
$0.5B
7% 39% yy
of installed base
converted to cloud in the $0.5B
last year 121% yy

Legacy EDW Data Lake Cloud Native

Competitors Competitors Competitors
Legacy On-Premise Platforms
Estimated
Revenue

$15.1B
Most at risk $4.9B

$0.8B
$0.7B

Source: Gartner, Company Reports, Piper Sandler Estimates

Snowflake Inc. Page 16 of 41
Competitive Landscape | Co-opetition with Cloud Titans
Architectural differences and limitations of proprietary cloud titan software vs. Snowflake

1st Generation Cloud 2nd Generation Cloud

2012 launch 2010 launch 2016 launch 2015 launch

1 Multi-Cluster No Yes Yes Yes

Single-cluster
architecture
Software architecture has
2 Auto-Scaling No advantages that could
No Management Manual tuning Yes Yes Yes also position SNOW to
required take share from first
generation cloud options.
3 SQL Support Limited Limited Limited Yes

4 Cloud IaaS No Limited No Yes

Agnostic Exclusively Primarily GCP Exclusively
runs on AWS runs on Azure

5 IaaS Customer
No No No Yes
*meaningful spend

Source: Piper Sandler Estimates

Snowflake Inc. Page 17 of 41
Section 3
Key Growth Levers

Snowflake Inc. Page 18 of 41

SNOW | Driver #1 – Broader F100 Enterprise Penetration
New leadership team that joined in 2019 refocused sales efforts on the largest enterprise cohort

% of Revenue By Enterprise Customer Cohort Key GTM Changes in the last 12 months

1. Moved commission structure to usage compared to renewals

and created strict discounting
Results:
• Aligned sales incentives with company revenue model
• Best in class NRR at 155% in 2Q21
• % of revenue coming of from existing customers was
94% F1H21 compared to 84% in F2020
• Capacity sales price increased 11% y/y in 1H21 due to
stricter discounts

2. Focus on top 200+ enterprise targets and multi-year deals

Results:
7 Fortune 10 • Customers spending over $1M growing 155% y/y in
Customers
2Q21 compared to total customers growth of 101%
• RPO with contracts with terms over 12 months grew
146 Fortune 500 +342% from F2020 to F1H21.
Customers

Source: Company Reports, Piper Sandler Estimates

Snowflake Inc. Page 19 of 41

SNOW | Driver #2 – Untapped International Expansion (12% of sales)
Untapped opportunity to expand international footprint as an incremental growth lever in 2021 and beyond

% of Revenue By Geographic Segment International Plans

International presents a large opportunity, with revenue

outside the US making up only 12% of revenue in F2020

Opportunity:
• G2K opportunity aligns with the current enterprise sales motion
• Direct sales and marketing outside of North America. Currently
Majority of current international sales is done from North
America, but SNOW has a small dedicated sales teams for
EMEA and APAC.
• Utilize GSI’s to increase footprint in region with little presence
from Snowflake

Source: Company Reports, Piper Sandler Estimates

Snowflake Inc. Page 20 of 41

SNOW | Driver #3 – Expand Product Portfolio (Build or Buy)
Opportunity to capitalize on architecture advantage by expanding into new use cases

Source: Company reports

Snowflake Inc. Page 21 of 41
SNOW | Driver #4 – Data Sharing Cornerstone to Mobility Vision
Longer-term opportunity to facilitate data sharing and mobility represents a large greenfield market

Traditional Data Sharing Process Snowflake Data Sharing

Traditional data sharing requires large amounts of resources for Snowflake removes the friction of sharing data with a
even simple requests, and is burdened by manual, time consuming, proprietary data exchange; allowing users to monetize their
and error prone processes. datasets by enabling querying/access from other customers.

- Manually Intensive - Fully Elastic

- Error Prone - Anonymized

- Dedicated Infrastructure - Ecosystem Benefit

- Potential Network Effect

Source: Company reports, Piper Sandler estimates

Snowflake Inc. Page 22 of 41
Section 4
Financial Model & LT Targets

Snowflake Inc. Page 23 of 41

 SNOW | Bull-Case Revenue Could Eclipse $12B By CY26E
Consumption revenue model could continue hyper-growth at scale similar to other established cloud vendors

$14,000 $0.5B Bull-Case

revenue run-rate in first five years +65%

6-Year CAGR
$12B
$12,000
$1B+
revenue run-rate within 4 quarters
$10,000

Base-Case
$2B+ $9.5B
$8,000
revenue run-rate within 10 quarters
+60%
Revenue

6-Year CAGR
(billions)

$6,000
$6.5B

$4,000
$4.4B

$2,000 $2.8B
$1.7B
$563M
$1.0B
$0
CY20E CY21E CY22E CY23E CY24E CY25E CY26E

Sources: Company reports, Piper Sandler estimates

Snowflake Inc. Page 24 of 41
SNOW | Large Customer Momentum Key to Hyper-Growth Success
New leadership team targeting large enterprise customers; Signed first $100M+ multi-year contract during Q2

Total Customers

101% y/y
2Q20 56 155% y/y 47%
$1M+ Customers 2Q20 of product
revenue

146 26%
Fortune 500 Customers of revenue
Customers with $1M in TTM Revenue

155% y/y 11% of revenue

2Q20

7 4%
Fortune 10 Customers of revenue

Sources: Company reports, Piper Sandler

Snowflake Inc. Page 25 of 41

SNOW | 2H Product Revenue Growth Poised to Remain at ~100%
Assumes $173K existing customer ARPU
1 Existing Customers in the 2H vs. $173K last quarter
SNOW: Snowflake Inc. 1Q20 2Q20 3Q20 4Q20 FY 1Q21 2Q21 3Q21E 4Q21E FY 1Q22E 2Q22E 3Q22E 4Q22E FY
Drivers APR JUL OCT Jan 2020 APR JUL OCT Jan 2021E APR JUL OCT Jan 2022E
Ending Customers 1,194 1,547 1,934 2,392 2,392 2,720 3,117 3,462 3,962 3,962 4,362 4,792 5,267 5,817 5,817
Average Customers 1,071 1,371 1,741 2,163 2,556 2,919 3,290 3,712 4,162 4,577 5,030 5,542
ARPC - monthly $12.631 $13.559 $12.527 $11.934 $13.337 $14.424 $13.833 $15.050 $15.833 $16.733 $17.833 $18.417
ARPC - yearly $151.576 $162.704 $150.327 $143.212 $160.047 $173.093 $166.000 $180.600 $190.000 $200.800 $214.000 $221.000
% Q/Q -12% 7% -8% -5% 12% 8% -4% 9% 5% 6% 7% 3%
% Y/Y -17% 6% 6% 10% 26% 19% 16% 29% 22%
Existing Customer Contribution $35,923 $48,567 $58,139 $69,243 $211,872 $95,708 $117,703 $129,356 $156,309 $499,076 $188,195 $218,972 $256,372 $291,002 $954,541
% Y/Y 149% 129% NM 166% 142% 122% 126% 136% 97% 86% 98% 86% 91%
% Product Revenue 84% 84% 84% 84% 84% 94% 94% 95% 94% 94% 96% 96% 96% 95% 96%

Assumes 845 net adds in the 2H21 vs.

2 New Customers 725 in 1H21 and 845 in 2H20
SNOW: Snowflake Inc. 1Q20 2Q20 3Q20 4Q20 FY 1Q21 2Q21 3Q21E 4Q21E FY 1Q22E 2Q22E 3Q22E 4Q22E FY
Drivers APR JUL OCT Jan 2020 APR JUL OCT Jan 2021E APR JUL OCT Jan 2022E
Net New Customers 246 353 387 458 1,444 328 397 345 500 1,570 400 430 475 550 1,855
ARPC - quarterly $24.338 $21.293 $21.461 $19.798 $9.313 $9.462 $5.000 $7.400 $9.000 $9.500 $10.500 $11.100
ARPC - yearly $97.353 $85.171 $85.846 $79.192 $37.250 $37.849 $20.000 $29.600 $36.000 $38.000 $42.000 $44.400
% Q/Q 10% -13% 1% -8% -53% 2% -47% 48% 22% 6% 11% 6%
% Y/Y 230% -11% -62% -56% -77% -63% -3% 0% 110% 50%
Net New Customer Contribution $5,987 $7,516 $8,306 $9,068 $30,877 $3,055 $3,756 $1,725 $3,700 $12,236 $3,600 $4,085 $4,988 $6,105 $18,778
% Q/Q 10% 26% 11% 9% NM -66% 23% -54% 114% NM -71% 13% 22% 22% NM
% Product Revenue 14% 13% 12% 11% 12% 3% 3% 1% 2% 73% 2% 2% 2% 2% 74%
$ chg q/q $527 $1,529 $789 $762 NM ($6,013) $702 ($2,031) $1,975 NM ($100) $485 $903 $1,118 NM

Assumes On Demand remains

3 On Demand approximately 3% of revenue
SNOW: Snowflake Inc. 1Q20 2Q20 3Q20 4Q20 FY 1Q21 2Q21 3Q21E 4Q21E FY 1Q22E 2Q22E 3Q22E 4Q22E FY
Drivers APR JUL OCT Jan 2020 APR JUL OCT Jan 2021E APR JUL OCT Jan 2022E
On Demand Customer Contribution $855 $1,735 $2,769 $4,122 $9,480 $3,055 $3,756 $4,500 $5,500 $16,811 $4,582 $5,635 $6,750 $8,250 $25,216
% Y/Y 386% 466% NM 257% 117% 63% 33% 77% 50% 50% 50% 50% 50%
% Product Revenue 2% 3% 4% 5% 4% 3% 3% 3% 3% 3% 2% 2% 3% 3% 3%
$ chg q/q $127 $879 $1,034 $1,353 NM ($1,067) $702 $744 $1,000 NM ($918) $1,053 $1,115 $1,500 NM

Estimated Product Revenue $42,766 $57,818 $69,213 $82,432 $252,229 $101,817 $125,216 $135,581 $165,509 $528,123 $196,377 $228,692 $268,110 $305,357 $998,535
% Q/Q 17% 35% 20% 19% NM 24% 23% 8% 22% NM 19% 16% 17% 14% NM
% Y/Y 126% NM 138% 117% 96% 101% 109% 93% 83% 98% 84% 89%
$ chg q/q $42,766 $15,052 $11,395 $13,219 $19,385 $23,399 $10,365 $29,929 $30,867 $32,315 $39,417 $37,247

Source: Company reports, Piper Sandler estimates

Snowflake Inc. Page 26 of 41
SNOW | Hyper-Growth Could Continue Well Beyond FY22E
Growth of $1M customers and international traction could sustain hyper-growth trajectory to beyond FY22E
SNOW: Snowflake Inc. FY 1Q20 2Q20 3Q20 4Q20 FY 1Q21 2Q21 3Q21E 4Q21E FY 1Q22E 2Q22E 3Q22E 4Q22E FY
NON-GAAP Income Statement (000s) 2019 APR JUL OCT Jan 2020 APR JUL OCT Jan 2021E APR JUL OCT Jan 2022E

Revenue Mix
Product Revenue 99% 98% 96% 95% 94% 95% 94% 94% 94% 94% 94% 92% 93% 93% 93% 93%
Professional Services Revenue 1% 2% 4% 5% 6% 5% 6% 6% 6% 6% 6% 8% 7% 7% 7% 7%

Y/Y Growth
Product Revenue 224% 227% 143% 127% 164% 138% 117% 96% 101% 109% 93% 83% 98% 84% 89%
Professional Services Revenue 333% 996% 1604% 1581% 1174% 645% 215% 138% 100% 175% 134% 127% 138% 119% 129%

Product Revenue $95,683 $42,766 $57,818 $69,213 $82,432 $252,229 $101,817 $125,216 $135,581 $165,509 $528,123 $196,377 $228,692 $268,110 $305,357 $998,535
Professional Services Revenue $983 $939 $2,521 $3,799 $5,260 $12,519 $6,998 $7,929 $9,042 $10,520 $34,489 $16,400 $18,000 $21,500 $23,000 $78,900
Total Revenue $96,666 $43,705 $60,339 $73,012 $87,692 $264,748 $108,815 $133,145 $144,622 $176,029 $562,611 $212,777 $246,692 $289,610 $328,357 $1,077,435
% Q/Q NM 19% 38% 21% 20% NM 24% 22% 9% 22% NM 21% 16% 17% 13% NM
% Y/Y NM 226% 237% 155% 139% 174% 149% 121% 98% 101% 113% 96% 85% 100% 87% 92%
$ chg in product q/q $6,401 $15,052 $11,395 $13,219 $19,385 $23,399 $10,365 $29,929 $30,867 $32,315 $39,417 $37,247

Total Gross Profit $46,826 $20,531 $33,103 $44,638 $54,419 $152,691 $67,774 $84,173 $90,206 $111,992 $354,145 $140,084 $167,845 $196,795 $224,980 $729,704
% Gross Margin 48.4% 47.0% 54.9% 61.1% 62.1% 57.7% 62.3% 63.2% 62.4% 63.6% 62.9% 65.8% 68.0% 68.0% 68.5% 67.7%

Product GM % 57.6% 55.1% 60.8% 65.4% 66.0% 62.8% 66.0% 66.6% 67.0% 69.0% 67.3% 71.0% 73.0% 73.0% 73.0% 72.6%
Basis points chg q/q (528) 568 455 65 (2) 62 40 200 200 200 - -

Pro-Services GM % 941.7% -324.4% -81.5% -15.7% 0.2% -45.4% 8.5% 9.8% -7.0% -21.0% -4.3% 4.0% 5.0% 5.0% 9.0% 6.0%

Research and Development $39,648 $18,635 $22,707 $23,253 $24,779 $89,374 $27,336 $31,367 $37,602 $44,007 $140,312 $48,939 $55,506 $62,266 $68,955 $235,665
% of Revenue 41.0% 42.6% 37.6% 31.8% 28.3% 33.8% 25.1% 23.6% 26.0% 25.0% 24.9% 23.0% 22.5% 21.5% 21.0% 21.9%
Sales & Marketing $109,757 $58,436 $68,318 $70,839 $75,005 $272,598 $91,475 $87,291 $101,235 $109,138 $389,140 $141,497 $160,350 $167,974 $172,387 $642,207
% of Revenue 113.5% 133.7% 113.2% 97.0% 85.5% 103.0% 84.1% 65.6% 70.0% 62.0% 69.2% 66.5% 65.0% 58.0% 52.5% 59.6%
General & Administration $29,060 $14,550 $18,965 $17,399 $18,369 $69,283 $21,506 $23,789 $26,755 $29,045 $101,095 $32,555 $35,770 $37,070 $39,403 $144,798
% of Revenue 30.1% 33.3% 31.4% 23.8% 20.9% 26.2% 19.8% 17.9% 18.5% 16.5% 18.0% 15.3% 14.5% 12.8% 12.0% 13.4%
Total Operating Expenses $178,465 $91,621 $109,990 $111,491 $118,153 $609,720 $140,317 $142,447 $165,592 $182,190 $1,240,267 $222,990 $251,626 $267,310 $280,745 $2,262,937
% Y/Y NM 226% 237% 155% 139% 242% 53% 30% 49% 54% 103% 59% 77% 61% 54% 82%
% of Revenue 184.6% 209.6% 182.3% 152.7% 134.7% 230.3% 129.0% 107.0% 114.5% 103.5% 220.4% 104.8% 102.0% 92.3% 85.5% 210.0%
Operating Income ($131,639) ($71,090) ($76,887) ($66,853) ($63,734) ($278,564) ($72,543) ($58,274) ($75,386) ($70,198) ($276,401) ($82,907) ($83,781) ($70,515) ($55,765) ($292,966)
% Margin (136%) (163%) (127%) (92%) (73%) (105%) (67%) (44%) (52%) (40%) (49%) (39%) (34%) (24%) (17%) (27%)

Non-Operating Expenses / (Income) ($8,257) ($3,307) ($2,675) ($2,451) ($2,113) ($10,546) ($2,515) ($580) ($2,000) ($2,000) ($7,095) ($2,000) ($2,000) ($2,000) ($2,000) ($8,000)

Pre-Tax income ($123,382) ($67,783) ($74,212) ($64,402) ($61,621) ($268,018) ($70,028) ($57,694) ($73,386) ($68,198) ($269,306) ($80,907) ($81,781) ($68,515) ($53,765) ($284,966)
Provision (Benefit) for Income Tax $845 $333 $328 $285 $465 $1,411 $115 $1,216 $1,468 $1,364 $4,163 $1,618 $1,636 $1,370 $1,075 $5,699
Tax Rate (%) (0.7%) (0.5%) (0.4%) (0.4%) (0.8%) (0.5%) (0.2%) (2.1%) (2.0%) (2.0%) (1.5%) (2.0%) (2.0%) (2.0%) (2.0%) (2.0%)
Net Income ($124,227) ($68,116) ($74,540) ($64,687) ($62,086) ($269,429) ($70,143) ($58,910) ($74,854) ($69,562) ($273,469) ($82,525) ($83,416) ($69,885) ($54,840) ($290,666)
% Margin (129%) (156%) (124%) (89%) (71%) (102%) (64%) (44%) (52%) (40%) (49%) (39%) (34%) (24%) (17%)

Source: Company reports, Piper Sandler estimates

Snowflake Inc. Page 27 of 41
SNOW | Long-Term Target Model

FY2020E FY2021E Growth Phase

Targeting above 40% for
Product Revenue 164% 109% ~40%
Growth growth phase

Non-GAAP Product
Gross Margin
63% 67% ~75%
Cloud agreements will lead to
GM expansion
R&D 34% 25% ~20%
% of Revenue

S&M
103% 69% ~40%
% of Revenue

G&A
26% 18% ~10%
% of Revenue

Non-GAAP
(105%) (49%) (5%)
Operating Margin

Non-GAAP Potential to be FCF break-

(75%) (25%) (10%)
Free Cash Flow even entering FY23 (CY22)

Source: Company Reports

Snowflake Inc. Page 28 of 41

Section 5
Valuation

Snowflake Inc. Page 29 of 41

SNOW | Valuation Comparisons

Comp Group Comp Group Triple Digit Growth at Scale

Cloud Software (>30% Growers) Cloud Software (>60% Growers)
10/09/20 % y/y 2020 2021 10/09/20 % y/y 2020 2021
Ticker Price Growth EV/S EV/S Ticker Price Growth EV/S EV/S
ZM $492.41 355% 62.8x 44.7x ZM $492.41 355% 62.8x 44.7x
SHOP $1,096.00 97% 48.5x 36.7x SHOP $1,096.00 97% 48.5x 36.7x 10/09/20 % y/y 2020 2021
CRWD $143.57 84% 37.0x 27.0x CRWD $143.57 84% 37.0x 27.0x Ticker Price Growth EV/S EV/S
DDOG $111.79 68% 61.2x 45.2x DDOG $111.79 68% 61.2x 45.2x SNOW $238.00 121% 148.2x 77.4x
SQ $187.28 64% 11.6x 9.1x SQ $187.28 64% 25.4x 18.8x
WORK $31.00 49% 19.3x 14.9x Average 47.0x 34.5x
NET $46.35 48% 32.3x 24.6x
TWLO $306.24 46% 25.8x 20.2x EV/Sales Multiple 121% y/y grower @ $0.5B revenue scale
ZS $151.96 46% 38.6x 29.2x
Average (CY21E)
BILL $113.71 45% 48.7x 39.2x Zoom Video is the only cloud software
DOCU
ESTC
$225.60
$122.30
45%
44%
30.4x
18.9x
23.1x
14.9x
34.7x company growing faster than SNOW
OKTA $236.45 43% 36.2x 27.8x
SMAR $54.28 41% 16.4x 12.7x
RPO growth is even faster at 211% y/y
MDB $259.07 39% 27.5x 21.7x
EVBG $126.50 35% 16.1x 12.8x Signed first $100M multi-year deal in Q2
VEEV $294.12 33% 32.6x 27.2x
Average 33.2x 25.4x Unique product, leadership, and growth
potential warrants taking a longer
EV/Sales Multiple duration period to justify the premium
Average (CY21E) valuation multiple, in our view.

25.4x EV/Sales Multiple

(CY23E)
30x

Source: FactSet, Piper Sandler estimates

Snowflake Inc. Page 30 of 41

SNOW | Base and Bull-Case Forecast Assumes 60% and 65% CAGR
Increasing F500 penetration, international expansion and a multi-million dollar opportunities could sustain 60% CAGR

CY26E CY26E
Forecast CY19 CY20E CY21E CY22E CY23E CY24E CY25E CY26E Bull-Case Base-Case
Revenue (B)
Bull-case
Base-case
$265
$265
$585
$564
$1,145
$1,073
$2,061
$1,736
$3,607
$2,778
$5,908
$4,390
$9,000
$6,497
$12,000
$9,500
$12B $9.5B
Bear-case $265 $558 $1,052 $1,650 $2,560 $3,897 $5,580 $7,500

Revenue Grow th (% Y/Y)

+65% +60%
Bull-case 173.9% 121.0% 95.7% 80.0% 75.0% 63.8% 52.3% 33.3% 6-Year CAGR 6-Year CAGR
Base-case 173.9% 113.1% 90.3% 61.8% 60.0% 58.0% 48.0% 46.2%
Bear-case 173.9% 110.8% 88.5% 56.8% 55.2% 52.2% 43.2% 34.4%

FCF Normalized RATIONALE

Bull-case ($199) ($117) ($17) $58 $248 $945 $2,025 $2,940 Our base-case estimates assume the usage-based model
Base-case ($199) ($141) ($23) $39 $153 $637 $1,429 $2,280 with continued penetration within the Fortune 500,
Bear-case ($199) ($153) ($24) $33 $127 $509 $1,129 $1,656 international expansion, and subsequent growth of multi-
million dollar customer opportunities could help SNOW
FCF Margin
maintain a 60% revenue CAGR through CY26E with
Bull-case NM -20.0% -1.5% 2.8% 6.9% 16.0% 22.5% 24.5%
Base-case NM -25.0% -2.1% 2.3% 5.5% 14.5% 22.0% 24.0%
revenue reaching $9.5 billion versus a $0.5 billion run-rate
Bear-case NM -27.5% -2.3% 2.0% 5.0% 13.1% 20.2% 22.1% today. Our bull-case estimates assume accelerating digital
tailwinds could sustain a 65% CAGR with revenue reaching
$12 billion.

Source: Piper Sandler Estimates

Snowflake Inc. Page 31 of 41

SNOW | Establishing a PT of $264
Establishing a price target of $264 applying a target CY26E EV/FCF multiple of 60x, discounted back four years at 10%.

Base Bull Bear

RISKS
CY26E CY26E CY26E • Competition. Snowflake operates in a highly competitive, dynamic
Estimated Revenue (000s) $9,500 $12,000 $7,500 industry with legacy providers, cloud platforms, and new entrants.
Estimated FCF (000s) $2,280 $2,940 $1,656
Legacy competitors include, but are not limited to, Teradata, Oracle,
Estimated % FCF margin 24% 25% 22%
Discount rate 10% 10% 10% IBM, and Cloudera. New entrants, that usually address a smaller part
Duration (years) 4 4 4 of the data stack include, but are not limited to, Delta Lake and
Discounted FCF $1,557 $2,008 $1,131 dremio. Cloud platform competitors include, but are not limited to,
Assumed EV/FCF multiple 60.0x 60.0x 45.0x AWC, Azure and Google. If Snowflake is unable to effectively
Enterprise value $93,436 $120,484 $50,898 innovate and meet customer needs it may have an adverse impact on
Net cash (debt) $815 $815 $815
future results.
FD share count 357 357 357
Annual dilution 0% 0% 0%
• Departure of Key Personnel. The company relies on the experience
Share value $264 $339 $145
% upside 11% 43% -39% and expertise of certain employees and executives, especially with
Implied EV/S (CY22E) 53.6x 58.2x 30.7x experience with cloud database infrastructure and advanced
Implied EV/S (CY23E) 33.5x 33.3x 18.2x analytics. Failure to retain or properly incentivize these employees
Implied EV/S (CY24E) 21.2x 20.3x 13.0x could cause disruptions in business.

• Customer Concentration. While Snowflake has over 3,100

RATIONALE
We assign a price target of $264 using our base-case
revenue forecast of $9.5 billion by CY26E (60% CAGR)
and a normalized free cash flow margin of 24% that could
be realized at model maturity for a 75% product gross
margin model. We assign a target multiple of 60x FCF that
is aggressive but warranted given leadership track record,
scope of opportunity, and hyper growth potential. After
discounting this valuation methodology back four years by
10%, we arrive at a price target of $264.
customers, Capital One Services made up roughly 11% of revenue in
F2020, which the company expects to fall below 10% in F2021. If
Capital One Services has a substantial decrease in consumption or
Snowflake is not able to effectively scale other enterprise customers,
future operating results may be negatively impacted.
• Public Cloud Partnerships. Snowflake relies on third-party service
providers for storage and compute, including some competitors,
whose contracted terms have a direct impact on gross margin. If
Snowflake is not able to negotiate favorable terms there could be an
adverse impact on profitability.

Source: Company Reports, Piper Sandler Estimates

Snowflake Inc. Page 32 of 41

Section 6
Leadership Team

Snowflake Inc. Page 33 of 41

SNOW | Veteran Leadership Team Stacked with A+ Talent
Benoit Dageville
CEO CFO President of Products and Director, co-founder
2007 IPO Dr. Dageville co-founded Snowflake in 2012 as
Chief Technology Officer and Director before

Act 1 3x
moving to President of Products in 2019.

Chris Degnan
market-cap and 3x revenue
from IPO until EMC Chief Revenue Officer
Frank Slootman Mike Scarpelli acquisition in 2009 Joined in 2013 and promoted to Chief Revenue
Officer in 2018. Prior to Snowflake, Mr. Degnan
served in various sales roles at EMC.
Christian Kleinerman
CEO CFO Senior Vice President of Product
2012 IPO Joined in 2018 as VP of Product bringing 4
years of experience at Google and 13 years at

Act 2 25x
Microsoft.

Greg Czajkowski
market-cap from IPO and
Senior Vice President of Engineering
10x revenue until CFO
Frank Slootman Mike Scarpelli Joined Snowflake in 2019 as SVP of Engineering
departure in 2019.
bringing 13 years of experience at Google and 6
years at Sun Microsystems.

Dean Klinger
CEO CFO Senior Vice President of Sales, Major Accounts
Joined in 2019 after 8 years at ServiceNow, 3
years at EMC|Data Domain, and 4 years at Cisco.

Act 3 2020 IPO

John Sapone
Senior Vice President of Enterprise Accounts
Joined in 2019 after 4 years at ServiceNow, 3 years
Frank Slootman Mike Scarpelli
at Nimble Storage, and 4 years at Data Domain.

Past performance is not indicative of the future, and a repeat of such performance is not guaranteed.
Sources: Company reports, Piper Sandler

Snowflake Inc. Page 34 of 41

SNOW | Leadership Team
Frank Slootman
1 Chief Executive Officer and Chairman
Mr. Slootman joined Snowflake in 2019 as Chief Executive Officer. Prior to Snowflake Mr. Slootman served as President and
Year at Firm
Chief Executive Officer at ServiceNow for 6 years. Prior to that, Mr. Slootman served as President of Backup Recovery Systems
at EMC following the acquisition of Data Domain. Mr. Slootman holds an undergraduate and graduate degrees in Economics
from the Netherlands School of Economics, Erasmus University Rotterdam.

Michael Scarpelli
1 Chief Financial Officer
Mr. Scarpelli has been Chief Financial Offer since 2019. Prior to joining Snowflake Mr. Scarpelli served as Chief Financial Officer
Year at Firm at ServiceNow for 8 years. Before that Mr. Scarpelli was SVP of Finance and Business Operations at Backup Recovery Systems
Division at EMC and served as Chief Financial Officer at Data Domain Corporation. Mr. Scarpelli holds a B. A. in Economics from
University of Western Ontario.

Benoit Dageville
8 Co-Founder, President of Products and Director
Dr. Dageville co-founded Snowflake in 2012 as Chief Technology Officer and Director, before moving into his current role as President
Years at Firm of the Product division in 2019. Prior to founding Snowflake, Mr. Dageville served in various engineering roles at Oracle including
Architect in the SQL Manageability Group. Dr. Dageville holds a B.S., M.S., and Ph.D. in Computer Science from Jussieu University.

Chris Degnan
5 Chief Revenue Officer
Mr. Degnan joined Snowflake in 2013 serving in various sales roles and was promoted to Chief Revenue Officer in 2018. Prior to
Years at Firm
Snowflake Mr. Degnan served as AVP of the West at EMC, and prior to that serving as VP for the Western Region at Aveska. Mr.
Degnan holds a B.A. in Human Resources from the University of Delaware.

Thierry Cruanes
8 Co-Founder
Mr. Cruanes co-founded Snowflake in August 2012 as the founding architect as was well known to be a leading expert in query
Years at Firm
optimization and parallel execution. Prior to founding Snowflake, Mr. Cruanes spent 13 years at Oracle focused on the optimization
and parallelization layers in Oracle databases. Mr. Cruanes has a PhD in Computer Science with a focus in Database Systems and
holds over 40 patents.
Source: Company Reports, S-1 Filings

Snowflake Inc. Page 35 of 41

 Brent Bracelin
Managing Director | Senior Research Analyst
Cloud Applications & Analytics
Phone: 503-275-8316
Email: Brent.Bracelin@psc.com
SNOW: Snowflake Inc. FY 1Q20 2Q20 3Q20 4Q20 FY 1Q21 2Q21 3Q21E 4Q21E FY 1Q22E 2Q22E 3Q22E 4Q22E FY
NON-GAAP Income Statement (000s) 2019 APR JUL OCT Jan 2020 APR JUL OCT Jan 2021E APR JUL OCT Jan 2022E

Revenue Mix
Product Revenue 99% 98% 96% 95% 94% 95% 94% 94% 94% 94% 94% 92% 93% 93% 93% 93%
Professional Services Revenue 1% 2% 4% 5% 6% 5% 6% 6% 6% 6% 6% 8% 7% 7% 7% 7%

Y/Y Growth
Product Revenue 224% 227% 143% 127% 164% 138% 117% 96% 101% 109% 93% 83% 98% 84% 89%
Professional Services Revenue 333% 996% 1604% 1581% 1174% 645% 215% 138% 100% 175% 134% 127% 138% 119% 129%

Product Revenue $95,683 $42,766 $57,818 $69,213 $82,432 $252,229 $101,817 $125,216 $135,581 $165,509 $528,123 $196,377 $228,692 $268,110 $305,357 $998,535
Professional Services Revenue $983 $939 $2,521 $3,799 $5,260 $12,519 $6,998 $7,929 $9,042 $10,520 $34,489 $16,400 $18,000 $21,500 $23,000 $78,900
Total Revenue $96,666 $43,705 $60,339 $73,012 $87,692 $264,748 $108,815 $133,145 $144,622 $176,029 $562,611 $212,777 $246,692 $289,610 $328,357 $1,077,435
% Q/Q NM 19% 38% 21% 20% NM 24% 22% 9% 22% NM 21% 16% 17% 13% NM
% Y/Y NM 226% 237% 155% 139% 174% 149% 121% 98% 101% 113% 96% 85% 100% 87% 92%
$ chg in product q/q $6,401 $15,052 $11,395 $13,219 $19,385 $23,399 $10,365 $29,929 $30,867 $32,315 $39,417 $37,247

Total Gross Profit $46,826 $20,531 $33,103 $44,638 $54,419 $152,691 $67,774 $84,173 $90,206 $111,992 $354,145 $140,084 $167,845 $196,795 $224,980 $729,704
% Gross Margin 48.4% 47.0% 54.9% 61.1% 62.1% 57.7% 62.3% 63.2% 62.4% 63.6% 62.9% 65.8% 68.0% 68.0% 68.5% 67.7%

Product GM % 57.6% 55.1% 60.8% 65.4% 66.0% 62.8% 66.0% 66.6% 67.0% 69.0% 67.3% 71.0% 73.0% 73.0% 73.0% 72.6%
Basis points chg q/q (528) 568 455 65 (2) 62 40 200 200 200 - -

Pro-Services GM % 941.7% -324.4% -81.5% -15.7% 0.2% -45.4% 8.5% 9.8% -7.0% -21.0% -4.3% 4.0% 5.0% 5.0% 9.0% 6.0%

Research and Development $39,648 $18,635 $22,707 $23,253 $24,779 $89,374 $27,336 $31,367 $37,602 $44,007 $140,312 $48,939 $55,506 $62,266 $68,955 $235,665
% of Revenue 41.0% 42.6% 37.6% 31.8% 28.3% 33.8% 25.1% 23.6% 26.0% 25.0% 24.9% 23.0% 22.5% 21.5% 21.0% 21.9%
Sales & Marketing $109,757 $58,436 $68,318 $70,839 $75,005 $272,598 $91,475 $87,291 $101,235 $109,138 $389,140 $141,497 $160,350 $167,974 $172,387 $642,207
% of Revenue 113.5% 133.7% 113.2% 97.0% 85.5% 103.0% 84.1% 65.6% 70.0% 62.0% 69.2% 66.5% 65.0% 58.0% 52.5% 59.6%
General & Administration $29,060 $14,550 $18,965 $17,399 $18,369 $69,283 $21,506 $23,789 $26,755 $29,045 $101,095 $32,555 $35,770 $37,070 $39,403 $144,798
% of Revenue 30.1% 33.3% 31.4% 23.8% 20.9% 26.2% 19.8% 17.9% 18.5% 16.5% 18.0% 15.3% 14.5% 12.8% 12.0% 13.4%
Total Operating Expenses $178,465 $91,621 $109,990 $111,491 $118,153 $609,720 $140,317 $142,447 $165,592 $182,190 $1,240,267 $222,990 $251,626 $267,310 $280,745 $2,262,937
% Y/Y NM 226% 237% 155% 139% 242% 53% 30% 49% 54% 103% 59% 77% 61% 54% 82%
% of Revenue 184.6% 209.6% 182.3% 152.7% 134.7% 230.3% 129.0% 107.0% 114.5% 103.5% 220.4% 104.8% 102.0% 92.3% 85.5% 210.0%
Operating Income ($131,639) ($71,090) ($76,887) ($66,853) ($63,734) ($278,564) ($72,543) ($58,274) ($75,386) ($70,198) ($276,401) ($82,907) ($83,781) ($70,515) ($55,765) ($292,966)
% Margin (136%) (163%) (127%) (92%) (73%) (105%) (67%) (44%) (52%) (40%) (49%) (39%) (34%) (24%) (17%) (27%)

Non-Operating Expenses / (Income) ($8,257) ($3,307) ($2,675) ($2,451) ($2,113) ($10,546) ($2,515) ($580) ($2,000) ($2,000) ($7,095) ($2,000) ($2,000) ($2,000) ($2,000) ($8,000)

Pre-Tax income ($123,382) ($67,783) ########## ########## ########## ($268,018) ($70,028) ($57,694) ($73,386) ($68,198) ($269,306) ($80,907) ($81,781) ($68,515) ($53,765) ($284,966)
Provision (Benefit) for Income Tax $845 $333 $328 $285 $465 $1,411 $115 $1,216 $1,468 $1,364 $4,163 $1,618 $1,636 $1,370 $1,075 $5,699
Tax Rate (%) (0.7%) (0.5%) (0.4%) (0.4%) (0.8%) (0.5%) (0.2%) (2.1%) (2.0%) (2.0%) (1.5%) (2.0%) (2.0%) (2.0%) (2.0%) (2.0%)
Net Income ($124,227) ($68,116) ($74,540) ($64,687) ($62,086) ($269,429) ($70,143) ($58,910) ($74,854) ($69,562) ($273,469) ($82,525) ($83,416) ($69,885) ($54,840) ($290,666)
% Margin (129%) (156%) (124%) (89%) (71%) (102%) (64%) (44%) (52%) (40%) (49%) (39%) (34%) (24%) (17%)

Basic EPS NA NA NA NA NA NA ($0.30) ($0.24) ($0.29) ($0.25) ($1.08) ($0.30) ($0.29) ($0.23) ($0.18) ($1.02)
Basic Shares Outstanding (k) NA NA NA NA NA NA 235,100 241,100 260,200 278,400 253,700 278,500 281,900 286,600 290,900 284,475
Source: Piper Sandler estimates and Company Filings
Current disclosure information for this company can be found at:
www.pipersandler.com/researchdisclosures
Last Updated: 10/09/20

Snowflake Inc. Page 36 of 41

 SNOW: Snowflake Inc. FY 1Q20 2Q20 3Q20 4Q20 FY 1Q21 2Q21 3Q21E 4Q21E FY 1Q22E 2Q22E 3Q22E 4Q22E FY
Balance Sheet 2019 APR JUL OCT Jan 2020 APR JUL OCT Jan 2021E APR JUL OCT Jan 2022E
Assets
Current assets:
Cash and cash equivalents $116,541 $125,856 $148,774 $179,138 $127,206 $127,206 $437,560 $138,900 $74,608 $53,686 $53,686 $66,412 $29,070 $29,202 $29,299 $29,299
Restricted cash $6,029 $14,160 $14,622 $14,622 $14,770 $15,289 $14,988 $14,988 $14,988 $14,988 $14,988 $14,988 $14,988 $14,988 $14,988
Short-term investments $492,257 $449,713 $315,642 $290,780 $306,844 $306,844 $372,503 $451,976 $451,976 $451,976 $451,976 $451,976 $451,976 $451,976 $451,976 $451,976
Accounts receivable, net $63,359 $50,943 $107,533 $101,038 $179,459 $179,459 $96,142 $151,210 $149,710 $212,651 $212,651 $171,300 $214,091 $229,591 $305,120 $305,120
Deferred commision expense $11,607 $12,930 $15,664 $19,008 $26,358 $26,358 $26,086 $26,279 $37,182 $53,535 $53,535 $71,535 $82,874 $101,374 $120,998 $120,998
Prepaid expenses and other current assets $9,159 $3,782 $5,459 $8,973 $10,557 $25,327 $18,973 $10,095 $56,595 $56,595 $56,595 $56,595 $56,595 $56,595 $56,595 $56,595
Total current assets $698,952 $657,384 $607,694 $613,559 $665,194 $665,194 $966,553 $793,448 $785,058 $843,431 $843,431 $832,807 $849,593 $883,725 $978,976 $978,976

Long-Term Investments $0 $0 $26,729 $29,058 $23,532 $23,532 $118,917 $295,944 $295,944 $295,944 $295,944 $295,944 $295,944 $295,944 $295,944 $295,944
Property and equipment, net $7,215 $11,111 $21,142 $23,584 $27,136 $27,136 $31,133 $42,766 $60,595 $76,978 $76,978 $89,499 $98,941 $106,956 $112,225 $112,225
Operating lease right-of-use assets $15,541 $162,229 $197,210 $194,688 $195,976 $195,976 $191,409 $187,051 $178,428 $169,375 $169,375 $159,868 $151,312 $143,612 $136,682 $136,682
Goodwill $0 $5,212 $7,049 $7,049 $7,049 $7,049 $7,049 $8,449 $8,449 $8,449 $8,449 $8,449 $8,449 $8,449 $8,449 $8,449
Intangible assets, net $20 $3,777 $5,391 $5,093 $4,795 $4,795 $10,400 $15,695 $15,404 $15,025 $15,025 $14,533 $13,893 $13,062 $11,980 $11,980
Deferred commission expense, net of current portion $32,658 $34,691 $40,989 $48,853 $69,516 $69,516 $68,106 $69,795 $63,639 $58,099 $58,099 $52,835 $48,361 $44,559 $41,326 $41,326
Other assets $9,902 $17,372 $18,920 $18,978 $19,522 $19,522 $22,614 $24,093 $24,093 $24,093 $24,093 $24,093 $24,093 $24,093 $24,093 $24,093
Total assets $764,288 $891,776 $925,124 $940,862 $1,012,720 $1,012,720 $1,416,181 $1,437,241 $1,431,611 $1,491,394 $1,491,394 $1,478,028 $1,490,588 $1,520,400 $1,609,676 $1,609,676

Liabilities and stockholders' equity

Current liabilities:
Accounts payable $8,258 $18,649 $12,746 $19,390 $8,488 $8,488 $5,576 $7,713 $2,713 $4,713 $4,713 $3,285 $3,306 $806 $3,806 $3,806
Accrued compensation costs $28,510 $23,368 $38,955 $41,457 $62,817 $62,817 $57,643 $79,157 $70,657 $89,157 $89,157 $82,586 $87,565 $83,565 $98,415 $98,415
Operating lease liabilities $4,117 $13,805 $16,423 $16,611 $18,092 $18,092 $18,253 $17,204 $16,127 $15,327 $15,327 $14,277 $13,295 $12,325 $11,625 $11,625
Deferred revenue $104,020 $120,263 $174,169 $211,787 $327,058 $327,058 $324,843 $373,585 $466,981 $583,727 $583,727 $671,286 $771,978 $887,775 $1,020,941 $1,020,941
Total current liabilities $144,905 $176,085 $242,293 $289,245 $416,455 $416,455 $406,315 $477,659 $556,478 $692,923 $692,923 $771,432 $876,143 $984,470 $1,134,786 $1,134,786

Operating lease liabilities $12,543 $157,874 $196,382 $192,830 $193,175 $193,175 $188,625 $184,255 $174,560 $167,360 $167,360 $157,910 $149,074 $140,344 $134,044 $134,044
Deferred revenue $2,984 $2,336 $1,854 $2,952 $2,907 $2,907 $2,472 $3,135 $3,135 $3,135 $3,135 $3,135 $3,135 $3,135 $3,135 $3,135
Other Long-Term Liabilities $5,470 $5,080 $7,007 $8,799 $8,466 $8,466 $7,768 $8,544 $8,544 $8,544 $8,544 $8,544 $8,544 $8,544 $8,544 $8,544
Total liabilities $165,902 $341,375 $447,536 $493,826 $621,003 $621,003 $605,180 $673,593 $742,717 $871,962 $871,962 $941,021 $1,036,897 $1,136,494 $1,280,510 $1,280,510

Redeemable convertible preferred stock $910,853 $923,572 $923,572 $936,474 $936,474 $936,474 $1,415,047 $1,415,047 $1,415,047 $1,415,047 $1,415,047 $1,415,047 $1,415,047 $1,415,047 $1,415,047 $1,415,047

Common stock $5 $5 $5 $5 $6 $6 $6 $6 $6 $6 $6 $6 $6 $6 $6 $6
Additional paid-in capital $39,296 $62,374 $82,935 $127,368 $155,340 $155,340 $188,416 $219,046 $219,046 $219,046 $219,046 $219,046 $219,046 $219,046 $219,046 $219,046
Accumlated other comprehensive income $16 $43 $84 $254 $216 $216 $1,495 $1,146 $1,146 $1,146 $1,146 $1,146 $1,146 $1,146 $1,146 $1,146
Acculated deficit ($351,784) ($435,593) ($529,008) ($617,065) ($700,319) ($700,319) ($793,963) ($871,597) ($946,351) ($1,015,813) ($1,015,813) ($1,098,238) ($1,181,554) ($1,251,339) ($1,306,079) ($1,306,079)
Total stockholders' equity ($312,467) (373,171) (445,984) (489,438) (544,757) ($544,757) ($604,046) ($651,399) ($726,153) ($795,615) ($795,615) ($878,040) ($961,356) ($1,031,141) ($1,085,881) ($1,085,881)

Total liabilities and stockholders' equity $764,288 $891,776 $925,124 $940,862 $1,012,720 $1,012,720 $1,416,181 $1,437,241 $1,431,611 $1,491,394 $1,491,394 $1,478,028 $1,490,588 $1,520,400 $1,609,676 $1,609,676
Source: Piper Sandler estimates and Company Filings
(figures in $ thousands)

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 SNOW: Snowflake Inc. FY 1Q20 2Q20 3Q20 4Q20 FY 1Q21 2Q21 3Q21E 4Q21E FY 1Q22E 2Q22E 3Q22E 4Q22E FY
Statement of Cash Flow 2019 APR JUL OCT Jan 2020 APR JUL OCT Jan 2021E APR JUL OCT Jan 2022E

Operating Activities:
Net Loss ($178,028) ($83,809) ($93,415) ($88,057) ($83,254) ($348,535) ($93,644) ($77,634) ($103,678) ($104,668) ($379,624) ($124,980) ($132,655) ($127,707) ($120,411) ($505,753)
Depreciation and amortization $1,362 $609 $755 $893 $1,265 $3,522 $1,522 $2,240 $2,912 $3,786 $10,460 $4,921 $6,398 $8,317 $10,812 $30,448
Amortization of operating lease right-of-use assets $3,172 $5,353 $6,603 $7,778 $7,978 $27,712 $8,125 $8,212 $8,623 $9,054 $34,013 $9,506 $8,556 $7,700 $6,930 $32,693
Amortization of deferred commissions $5,674 $3,206 $3,686 $4,516 $5,578 $16,986 $7,226 $6,840 $6,156 $5,540 $25,762 $5,263 $4,474 $3,803 $3,232 $16,772
Stock-based compensation $22,409 $16,016 $18,451 $22,958 $20,974 $78,399 $20,445 $18,204 $28,924 $35,206 $102,779 $42,555 $49,338 $57,922 $65,671 $215,487
Net accretion of discounts on investments ($5,011) ($2,495) ($1,748) ($906) ($310) ($5,459) ($53) $279 $0 $0 $226 $0 $0 $0 $0 $0
Impairment of a strategic investment $0 $0 $0 $0 $0 $0 $2,500 $0 $0 $2,500 $0 $0 $0 $0 $0
Other $221 $194 $753 $329 $200 $1,476 ($175) $1,724 $0 $0 $1,549 $0 $0 $0 $0 $0
Changes in Assets & Liabilities
Accounts Receivable ($51,421) $12,199 ($56,871) $6,479 ($78,676) ($116,869) $82,701 ($55,572) $1,500 ($62,941) ($34,312) $41,351 ($42,790) ($15,500) ($75,529) ($92,469)
Deferred commission expense ($36,344) ($6,562) ($12,718) ($15,724) ($33,591) ($68,595) ($5,544) ($8,722) ($10,903) ($16,354) ($41,522) ($18,000) ($11,339) ($18,500) ($19,625) ($67,463)
Prepaid expenses and other ($9,091) ($2,059) ($3,226) ($3,571) ($1,955) ($10,811) ($8,946) $7,494 ($46,500) $0 ($47,952) $0 $0 $0 $0 $0
Accounts payable $5,170 $9,853 ($5,853) $6,566 ($9,450) $1,116 ($2,857) $14 ($5,000) $2,000 ($5,843) ($1,429) $21 ($2,500) $3,000 ($908)
Accrued expenses $20,811 ($7,741) $17,218 $4,891 $20,626 $34,994 ($5,155) $16,148 ($8,500) $18,500 $20,993 ($6,572) $4,979 ($4,000) $14,850 $9,258
Operating Lease liabilities ($2,537) $2,978 ($412) ($8,618) ($7,403) ($13,455) ($7,587) ($9,817) ($10,773) ($8,000) ($36,177) ($10,500) ($9,817) ($9,700) ($7,000) ($37,017)
Deferred Revenue $79,631 $15,595 $53,424 $38,716 $115,226 $222,961 ($2,650) $49,405 $93,396 $116,745 $256,897 $87,559 $100,693 $115,797 $133,166 $437,215
Net Cash Used in Operating Activities ($143,982) ($36,663) ($73,353) ($23,750) ($42,792) ($176,558) ($6,592) ($38,685) ($43,842) ($1,132) ($90,251) $29,676 ($22,142) $15,632 $15,098 $38,263

Purchases of PP&E ($2,058) ($1,640) ($9,707) ($3,157) ($4,079) ($18,583) ($2,033) ($4,715) ($19,250) ($18,590) ($44,588) ($15,750) ($14,000) ($14,000) ($13,000) ($56,750)
Capitalization of software development ($1,958) ($557) ($1,064) ($1,319) ($1,325) ($4,265) ($2,189) ($981) ($1,200) ($1,200) ($5,570) ($1,200) ($1,200) ($1,500) ($2,000) ($5,900)
Cash paid for acquisitions, net ($3,250) ($3,064) $0 $0 $0 ($6,035) $0 $0 $0 $0 $0 $0
Purchase of intangible assets 0 $0 $0 $0 $0 $0 ($6,000) ($184) $0 $0 ($6,184) $0 $0 $0 $0 $0
Investments, net ($358,626) $45,090 $109,143 $23,670 ($10,246) $167,657 ($161,782) ($257,484) $0 $0 ($419,266) $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0 ($6,314) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Cash Used in Investing Activities ($362,642) $39,643 $95,308 $19,194 ($15,650) $138,495 ($172,004) ($269,399) ($20,450) ($19,790) ($481,643) ($16,950) ($15,200) ($15,500) ($15,000) ($62,650)

Issuance of convertible preferred stock $438,227 $12,719 $0 $11,402 $0 $24,121 $478,573 $0 $0 $0 $478,573 $0 $0 $0 $0 $0
Proceeds from stock options $5,018 $1,747 $1,425 $23,518 $6,658 $33,739 $11,001 $9,864 $0 $0 $20,865 $0 $0 $0 $0 $0
Proceeds from repayment of a promissory note $0 $0 $0 $0 $0 $2,090 $0 $0 $2,090 $0 $0 $0 $0 $0
Repurchase of common stock ($29,644) $0 $0 $0 $0 ($391) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Payments of deferred offering costs $0 $0 $0 $0 ($105) ($2,231) $0 $0 ($2,336) $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0 $0 $0 ($600) $0 $0 ($600) $0 $0 $0 $0 $0
Net Cash Used In Financing Activates $413,601 $14,466 $1,425 $34,920 $6,658 $57,469 $489,469 $9,123 $0 $0 $498,592 $0 $0 $0 $0 $0

Change in Cash ($93,023) $17,446 $23,380 $30,364 ($51,784) $19,406 $310,873 ($298,961) ($64,292) ($20,922) ($73,302) $12,726 ($37,342) $132 $98 ($24,387)
Cash, Beginning of Period $215,593 $122,570 $140,016 $163,396 $193,760 $122,570 $141,976 $452,849 $153,888 $89,596 $122,570 $49,268 $61,994 $24,652 $24,784 $122,570
Cash, End of Period $122,570 $140,016 $163,396 $193,760 $141,976 $141,976 $452,849 $153,888 $89,596 $68,674 $49,268 $61,994 $24,652 $24,784 $24,881 $98,183
Free cash flow ($147,998) ($38,860) ($84,124) ($28,226) ($48,196) ($199,406) ($10,814) ($44,381) ($64,292) ($20,922) ($140,409) $12,726 ($37,342) $132 $98 ($24,387)
% FCF margin (153%) (89%) (139%) (39%) (55%) (75%) (10%) (33%) (44%) (12%) (25%) 6% (15%) 0% 0% (2%)
Source: Piper Sandler estimates and Company Filings
(figures in $ thousands)

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 C O M PA N Y N O T E
O c t o b e r 11 , 2 0 2 0

IMPORTANT RESEARCH DISCLOSURES

Rating and Price Target History for: Snowflake Inc. (SNOW) as of 10-09-2020

300

250

200

150

100
Q3 2018 Q1 Q2 Q3 2019 Q1 Q2 Q3 2020 Q1 Q2 Q3 2021

Created by: BlueMatrix

Notes: The boxes on the Rating and Price Target History chart above indicate the date of the fundamental Equity Research Note, the rating and the price
target. Each box represents a date on which an analyst made a change to a rating or price target, except for the first box, which may only represent the
first Note written during the past three years.
Legend:
I: Initiating Coverage
R: Resuming Coverage
T: Transferring Coverage
D: Discontinuing Coverage
S: Suspending Coverage
OW: Overweight
N: Neutral
UW: Underweight
NA: Not Available
UR: Under Review

Distribution of Ratings/IB Services

Piper Sandler

IB Serv./Past 12 Mos.
Rating Count Percent Count Percent
BUY [OW] 542 60.90 187 34.50
HOLD [N] 333 37.42 63 18.92
SELL [UW] 15 1.69 1 6.67

Note: Distribution of Ratings/IB Services shows the number of companies currently covered by fundamental equity research in each rating category from
which Piper Sandler and its affiliates received compensation for investment banking services within the past 12 months. FINRA rules require disclosure
of which ratings most closely correspond with "buy," "hold," and "sell" recommendations. Piper Sandler ratings are not the equivalent of buy, hold or sell,
but instead represent recommended relative weightings. Nevertheless, Overweight corresponds most closely with buy, Neutral with hold and Underweight
with sell. See Stock Rating definitions below.

Analyst Certification
The analyst Brent A. Bracelin, primarily responsible for the preparation of this research report, attests to the following:

The views expressed in this report accurately reflect my personal views about the subject company and the subject security. In addition, no part of my
compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report.

Piper Sandler research analysts receive compensation that is based, in part, on overall firm revenues, which include investment banking revenues.

Time of dissemination: 11 October 2020 17:02EDT.

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Research Disclosures
Piper Sandler was a registered market maker in the securities of Snowflake Inc. at the time this research report was published.
Piper Sandler expects to receive or intends to seek compensation for investment banking services from Snowflake Inc. in the next 3 months.
Piper Sandler has had a client relationship or has received compensation for investment banking services from Snowflake Inc. within the past 12 months.
Piper Sandler was a managing underwriter of a public offering of, or a dealer manager of a tender offer for, the securities of Snowflake Inc. within the
past 12 months.
All statements in this report attributable to Gartner represent Piper Sandler's interpretation of data, research opinion or viewpoints published as part of a
syndicated subscription service by Gartner, Inc., and have not been reviewed by Gartner. Each Gartner publication speaks as of its original publication
date (and not as of the date of this report). The opinions expressed in Gartner publications are not representations of fact, and are subject to change
without notice.

Affiliate disclosures: Piper Sandler is the trade name and registered trademark under which the corporate and investment banking products and services of
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Rating Definitions
Stock Ratings: Piper Sandler fundamental research ratings are indicators of expected total return (price appreciation plus dividend) within the next
12 months. At times analysts may specify a different investment horizon or may include additional investment time horizons for specific stocks.
Stock performance is measured relative to the group of stocks covered by each analyst. Lists of the stocks covered by each are available at
www.pipersandler.com/researchdisclosures. Stock ratings and/or stock coverage may be suspended from time to time in the event that there is no
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professional trader, while fundamental opinions are typically suited for the longer-term institutional investor.

Overweight (OW): Anticipated to outperform relative to the median of the group of stocks covered by the analyst.

Neutral (N): Anticipated to perform in line relative to the median of the group of stocks covered by the analyst.

Underweight (UW): Anticipated to underperform relative to the median of the group of stocks covered by the analyst.

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Other Important Information

The material regarding the subject company is based on data obtained from sources we deem to be reliable; it is not guaranteed as to accuracy and does
not purport to be complete. This report is solely for informational purposes and is not intended to be used as the primary basis of investment decisions.
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Snowflake Inc. Page 41 of 41