Snowflake explains that Instacart's bills aren't melting – it's called 'optimization'

Data cloud vendor Snowflake has felt the need to publish a clarification following statements on payments from key customer Instacart, which are likely to add up to $100 million over four years.

In the run-up to the grocery delivery services company's IPO, which is hardly setting the heather alight, a filing to the US Securities and Exchange Commission (SEC) revealed payments – and expected payments – to Snowflake, which provides a vital element of Instacart's analytics stack.

The SEC S-1 note said that Instacart "made payments to Snowflake of approximately $13 million, approximately $28 million, and approximately $51 million during the years ended December 31, 2020, 2021, and 2022, respectively, for cloud-based data warehousing services," it said.

"In addition, we anticipate we will pay Snowflake approximately $15 million for cloud-based data warehousing services during the year ending December 31, 2023."

It also said that Snowflake CEO Frank Slootman has served as a member of the Instacart board of directors since January 2021.

Much to the dismay of the SaaS analytics provider, citizens of social media began to ask whether the dramatic drop-off in expected payments for 2023 reflected a decline in usage.

Snowflake felt compelled to step in and clarify the point.

"In the past few days, the scope and trajectory of Instacart's use of Snowflake has been misrepresented by some on social media," it said in an online missive entitled Snowflake and Instacart: The Facts. "Snowflake has partnered closely with Instacart to scale up to meet the company's massive demand growth, and then to optimize for efficiency. Optimizations are undertaken on a workload-by-workload basis, and have been extremely successful."

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It offered an example of how Instacart had "Optimized Snowflake Costs by 50 percent" by way of a recorded presentation from a Snowflake developer summit in June, but was only posted on YouTube a couple of days ago.

The Snowflake statement continued: "As a result of savings through optimization, the Instacart team has been able to expand use cases and workloads on Snowflake. Snowflake is used extensively by nearly every team within Instacart, including the catalog team, machine learning, ads, shoppers, retailers, customers, and logistics organizations. It enables critical workflows such as the experimentation infrastructure, catalog data pipelines and the ML Feature Store.

"Instacart has a large number of active Snowflake users running millions of queries per month across many petabytes of data."

Snowflake said Instacart's actual usage of Snowflake – as opposed to its historical spending – was $28 million in the 2021 calendar year, $28 million in the 2022 calendar year, and in the first half of calendar year 2023, $11 million. "In some social media posts, payment schedules have been incorrectly conflated with actual usage to suggest a large decline in spending – this is not the case," it said.

Commentators were keen to understand why Instacart would be paying for something it was not using, while others explained it might be a combination of advanced payments and future discounts. ®