Snowflake Sets Terms for $2.7B Public Offering

In what could be the most highly valued initial public offering of the year, data warehouse startup Snowflake is seeking to raise up to $2.7 billion, with additional shares being sold privately to Salesforce and Warren Buffett’s Berkshire Hathaway.

According to a revised prospectus, Snowflake will sell 32.2 million Class A shares to the public at a price between $75 and $85 per share. The price target values the company at between $20.9 billion and $23.7 billion — an increase, at the high point, of more than $11 billion since a funding round in February, when Snowflake was valued at $12.4 billion.

Snowflake’s software allows businesses to store and manage data in the cloud rather than on legacy databases, making it easier for customers to quickly access and analyze critical information across the enterprise.

The investments by enterprise software giant Salesforce and Berkshire Hathaway could provide Snowflake with more than $800 million in additional capital.

In concurrent private placements, the two companies will each acquire $250 million of Snowflake’s Class A shares at the IPO price. Berkshire Hathaway has also agreed to buy another 4 million shares from a Snowflake stockholder in a secondary transaction at the IPO price.

“The Salesforce move is not particularly surprising, as the company has invested in numerous cloud software companies in recent years, including Zoom, Twilio and Dropbox,” CNBC said. “It often sells these shares after they go public.”

But CNBC added that the Berkshire Hathaway investment is “atypical” for the company, noting that Buffett “has built a reputation as a value investor who has made high-profile bets on conglomerates.”

For the fiscal year ended Jan. 31, Snowflake’s revenue jumped 173.7% to $264.7 million while gross profit more than tripled to $148.2 million. The net loss for the year nearly doubled to $348.54 million but for the six months ended July 31, it fell 3.4% to $171.3 million.

Snowflake “has epic growth, improving gross margins and dramatically curtailed losses. The package adds up to one valuable IPO, and something durable enough to tempt Buffett,” TechCrunch said.