Airbnb's IPO filing suggests it could spend at least $1.2 billion with Amazon Web Services by 2027

  • Airbnb publicly revealed its paperwork for an initial public offering on Monday.
  • The filing revealed the company has a contract with a "data hosting services provider" to spend at least $1.2 billion by 2027.
  • While the filing doesn't make that provider's identity explicit, it also says that Airbnb relies "primarily" on Amazon Web Services for cloud computing services to host and deliver the company's platform.
  • Airbnb CEO Brian Chesky this summer suggested the company was looking for opportunities to "get more efficient" when it came to Amazon Web Services.
  • The company may have reached a deal with AWS to do so. Airbnb said it initially agreed to spend $1.2 billion through 2024, but the data hosting provider agreed to extend the terms until 2027.
  • Are you an Amazon Web Services employee? Contact reporter Ashley Stewart via encrypted messaging app Signal (+1-425-344-8242) or email ([email protected]).
  • Visit Business Insider's homepage for more stories.

Airbnb publicly revealed its paperwork for an initial public offering on Monday, revealing the company has a contract with a "data hosting services provider" to spend at least $1.2 billion by 2027.

While the filing doesn't explicitly disclose the name of the data hosting services provider in question, it reads elsewhere that Airbnb relies "primarily" on Amazon Web Services for cloud computing services to host and deliver the company's platform. Indeed, the company has been a heavy AWS user since early in its existence.

Airbnb declined to comment.

Amazon typically secures multi-year cloud contracts asking customers to commit to a spending minimum amount on cloud services over a certain period in exchange for a discount. Signing those deals often yields a discount over the sticker price for cloud services — good for AWS because it provides a steady, stable revenue source over the course of years, while also disincentivizing customers from shopping around.

In practice, that means that if a customer uses less cloud computing capacity than their contractually-agreed minimum, they pay the difference back to AWS. 

Originally, the filing says, Airbnb committed to spending at least $1.2 billion through 2024, but the data hosting provider agreed to extend the terms of the contract until 2027, meaning Airbnb can spend less on cloud services each year and still meet its commitment. Airbnb disclosed in the filing cost of data hosting services decreased $63.5 million between the nine months ending Sept. 30, 2020 and the same period the year before.

This IPO filing comes towards the end of a difficult year for Airbnb: The COVID-19 pandemic hit its core short-term rental business hard, particularly early on, leading to a steep drop in revenue. While the company has show signs of bouncing back, thanks to a surge in local travel, it also posted a loss of about $700 million in the first nine months of 2020.

Airbnb CEO Brian Chesky this summer suggested the company was looking for opportunities to "get more efficient" when it came to its use of Amazon Web Services, as it looked to streamline its spending in the pandemic-driven downturn. "The business is definitely pretty lean at this moment," he told CNBC at the time.

Regardless, Airbnb isn't the only company to structure a deal with a cloud provider in this way. Workplace chat app Slack recently, for example, this summer revealed a commitment to spend at least $425 million on Amazon Web Services in the next five years. It's because of these contracts that we get a window into how much companies spend on cloud services.

Most companies don't disclose cloud spending, but publicly traded firms tell investors when they agree to multi-year deals committing to spending a minimum amount with a cloud provider.  Business Insider recently pored over earnings statements and other securities filings to compile a list of company's current public commitments to cloud providers.

Do you have insight to share? Contact reporter Ashley Stewart via encrypted messaging app Signal (+1-425-344-8242) or email ([email protected]).\

Axel Springer, Insider Inc.’s parent company, is an investor in Airbnb.

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