Here's How Much Lyft Spends on AWS
Popular ridesharing platform Lyft officially filed its IPO documents with the SEC last week, giving public investors their first peek at its books. Like many modern tech companies founded in the past decade, Lyft has opted to outsource its cloud infrastructure to third-party providers instead of building a network of data centers for itself. In this case, we're talking about market leader Amazon.com (NASDAQ: AMZN). Ahead of the filing, Amazon Web Services (AWS) had announced that Lyft was "going all-in" on the platform.
Here's how much Lyft has committed to spend on AWS.
The Lyft app, powered by AWS. Image source: Lyft.
Hey, big spender
In its S-1 Registration Statement, Lyft agreed in January to a spending commitment of $300 million between January 2019 and December 2021 on AWS. The ridesharing company is on the hook to spend a minimum of $80 million per year over the next three years and will need to hit the $300 million total by the end of 2021. The obligation replaces a prior spending commitment dating back to March 2018, in which Lyft had committed to spend $150 million through June 2021.
Lyft's primary rival, Uber, is also an AWS customer. Uber had also previously confidentially filed its IPO documents around the same time that Lyft did, so a public version of its S-1 that may detail similar AWS spending commitments could be available soon.
The spending commitments pale in comparison to others that have been disclosed in recent years. Snapchat parent Snap had committed to $3 billion in cloud spending from 2017 through 2021, although that spending is split between two providers: AWS and Alphabet's Google Cloud.
Outages happen, but not too often anymore
Lyft discloses its AWS deal as a risk factor, which is true for any company that relies exclusively on third-party cloud infrastructure. AWS outages do occur, bringing down broad swaths of the internet when they happen.
"We have experienced, and expect that in the future we will experience, interruptions, delays and outages in service and availability from time to time due to a variety of factors, including infrastructure changes, human or software errors, website hosting disruptions and capacity constraints," Lyft writes. "In addition, any changes in AWS' service levels may adversely affect our ability to meet the requirements of users."
Lyft hasn't been hit with an AWS outage in many years though, with the last documented episodes dating back to 2012. The company experienced two outages that year.
@EricJorgenson Sorry! We had a brief server outage last night due to AWS. Wish we could have lyfted you.
— Lyft (@lyft) October 28, 2012
AWS has grown considerably since then, improving capacity, performance, and reliability in the process. The risks associated with AWS are fairly modest as a result. Lyft is just one company that's part of a new generation of tech start-ups that pin their operations on AWS.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Evan Niu, CFA owns shares of Amazon. The Motley Fool owns shares of and recommends GOOGL, GOOG, and Amazon. The Motley Fool has a disclosure policy.
