Day: March 24, 2019

AWS And Its Appearance In Other Companies’ (IPO) Filings

Following upon a previous post about all those tech companies’ rush to Nasdaq, a group of companies have filed S-1 the past weeks, including Lyft, Pinterest and Zoom.

Plus the previous filings from companies such as Snap, we could get a glimpse into the empire of AWS… as the infrastructure of the current tech industry and all these companies’ commitments to pay Amazon.

Several examples. Starting with Pinterest:

    • 2018 revenue $775.9 million
    • 2018 cost fo revenue $241.6 million
    • Total commitment: at least $750 million in 7 years, from July 2017 to June 2023, first year of $125 million
    • Remaining $441.1 million as of Dec.31 2018
    • On average used: $206 million/yr [estimation: (750-441.1)/1.5=206]

Lyft

    • 2018 revenue $2,157 million
    • 2018 cost of revenue $1,243 million
    • Total commitment: at least $300 million in 3 years, from Jan 2019 to Dec 2021, each year at least $80 million
    • On average used: $60 million/yr [estimation: (144-24)/2=60]

Snap

    • 2018 revenue $ 1,180 million
    • 2018 cost of revenue $799 million
    • Total commitment: at least $1.1 billion in 6 years, from Jan 2017 to Dec 2022, ($90.0 million in 2018, $150.0 million in 2019, $215.0 million in 2020, $280.0 million in 2021, and $349.0 million in 2022)
    • On average used: $60 million/yr
    • Snap relies more on Google Cloud: at least $2 billion in 5 years, Jan 2017 to Dec 2021, at least $400 million/yr
    • estimated usage: at least $530 million/yr in 2018

AWS achieved a revenue of $25,655 million in 2018, equivalent to the usage of ~48 Snap combined.

It will be interesting to see how AWS is going to renew/grow those contracts (should be easy, considering the friction to change a cloud provider) and how those companies will negotiate those terms, as more providers are as legit.

And when tech companies are using a blend of private cloud and those services, how AWS and others are going to fill the revenue “hole/gap”.

After all, the Cost of Revenues (partially due to AWS) will be limited by the Revenues (of internet companies); the growth heavily rely on new usages and the overall revenue of all internet companies.