Snowflake plans $3.5 billion zero-coupon convertible note sale
The data-cloud company will sell two tranches of notes due 2029 and 2031, using the cash to refinance 2027 converts and fund buybacks or acquisitions.
By Tech CEO Daily Staff, Newsroom
· 3 min read
The news
Snowflake said on Monday that it plans to sell $3.5 billion of convertible senior notes in a private placement to institutional buyers. The deal is split into $1.3 billion of notes due October 15, 2029, and $2.2 billion due October 15, 2031. Both carry a 0.00% coupon, meaning Snowflake pays no regular interest. Buyers also get options on up to $500 million more.
The company said the proceeds will pay for capped call hedges meant to limit dilution when the notes convert, repurchase part of its existing zero-coupon notes due 2027, and fund general corporate purposes, which it said could include stock buybacks, acquisitions or strategic investments. Conversion terms will be set at pricing, and Snowflake can settle in cash, shares or a mix.
Shares fell about 4% on the news, according to 24/7 Wall St., with Datadog and Oracle also trading lower on a day when Meta’s enterprise push weighed on software stocks.
The raise comes from a position of operating momentum. Snowflake reported on September 2 that second-quarter product revenue rose 37% to $1.49 billion and lifted its fiscal 2027 product revenue forecast to $6.07 billion. It ended July with about $4.3 billion in cash and investments. The company is still loss-making on a GAAP basis, a point critics raised alongside its stock-based pay.
The numbers
- Offering size
- $3.5B (+ up to $500M options)
- Coupon
- 0.00%
- Q2 FY27 product revenue
- $1.49B, +37%
- FY27 product revenue guidance
- $6.07B
- Net revenue retention
- 126%
Why CEOs should care
For customers, this is a balance-sheet story with product consequences. Snowflake explicitly listed acquisitions as a possible use of the cash,. More deals usually mean more bundled SKUs and more pressure to consolidate spend onto one platform. Before accepting that pitch, check how new capabilities are metered against your existing credit commitments.
The financing also underlines that Snowflake is well funded and growing fast, which reduces vendor-viability risk but also reduces your leverage. With net revenue retention of 126%, the company is expanding inside its existing accounts. Buyers with large renewals should benchmark consumption pricing against Databricks and cloud-native warehouses and push for rate locks on capacity purchases.
What's next
Final pricing and conversion terms should follow within days. Watch whether Snowflake announces an acquisition or a new buyback soon after the deal closes.
Sources
- PrimarySnowflake Announces Proposed Private Placement of $3.5 Billion of 0.00% Convertible Senior Notes— Snowflake
- PrimarySnowflake Reports Financial Results for the Second Quarter of Fiscal 2027 (Exhibit 99.1)— SEC / Snowflake
- ReportSnowflake slides 4% on proposed $3.5B convertible offering; Oracle falls 3%, Datadog drops 4%— 24/7 Wall St.
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