Slack revealed Friday that it joined the parade of companies that renegotiated long-term deals with Amazon Web Services over the last few years as they grew from scrappy startups into established businesses.
In its S-1 registration statement filing ahead of its initial public offering, Slack disclosed that it signed a new five-year deal with AWS with an annual commitment to spend a minimum of $50 million on cloud services. As of the end of January, Slack had $212.5 million left in commitments related to that deal.
Most likely, Slack locked in pricing discounts in exchange for signing a long-term deal, but it’s not clear how much the company saved. Fellow unicorn Pinterest, another prominent example of a startup founded in the last ten years dependent on AWS for growth, disclosed that its cost of revenue fell by around $15 million in the quarter following a renegotiated deal with AWS in 2017 that requires it to spend $750 million by 2023.
It’s hard to directly compare cloud spending across different companies given that different applications can require different types of computing services to run in top condition. However, Slack noted in its list of risk factors affecting its potential IPO that it is only using the U.S. data centers run by AWS, suggesting that it doesn’t have a large a presence outside the U.S. as some of the other recently public AWS customers like like Pinterest and Lyft.
Slack appears to be using AWS for all of its computing needs, and is also taking advantage of availability zones in the U.S. to separate data within the multiple AWS regions it employs, it said in the filing. In an AWS case study, Slack is described as having “a relatively simple IT architecture” based around some of the flagship AWS services like EC2 and S3.
Slack co-founder and CTO Cal Henderson will be giving a talk at our GeekWire Cloud Summit on June 5th in Bellevue about lessons learned scaling the company over the last ten years, and you can find more information about that event here.