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Slack Technologies S-1 Reveals $250 Million AWS Cloud Deal

San Francisco-based Slack, which announced in February that it had submitted a confidential draft registration statement with the SEC, plans to go public via a direct listing on the New York Stock Exchange instead of through a traditional initial public offering of its shares.

Slack Technologies will pay at least $250 million over five years to Amazon Web Services for cloud computing, according to a new regulatory filing today.

In its S-1 filing, the cloud-based workplace messaging company has an agreement to pay AWS a minimum of $50 million per year from May 2018 through July 2023 for cloud services -- for a total minimum commitment of $250 million under the five-year deal, according to its registration statement filed with the U.S. Securities and Exchange Commission today. Those terms came under an amendment to its existing agreement with AWS in April 2018.

Slack’s remaining minimum payment obligation with AWS was $212.5 million as of Jan. 31. The company said it uses AWS data centers located only in the United States.

San Francisco-based Slack, which announced in February that it had submitted a confidential draft registration statement with the SEC, plans to go public via a direct listing on the New York Stock Exchange instead of through a traditional initial public offering of its shares.

Launched in 2014, Slack has more than 10 million daily active users at 600,000-plus organizations who send in excess of 1 billion messages sent per week, according to its regulatory filing. Those users spend more than 50 million hours in active use of Slack in a typical week through a free or paid subscription plan. Slack said it has more than 88,000 paid customers, while more than 500,000 organizations use its free subscription plan. Its customers include software companies such as Autodesk and Oracle, consumer retail companies such as LVMH and Everlane, financial services companies such as Liberty Mutual and government entities such as NASA Jet Propulsion Laboratory.

Slack reported revenue of $105.2 million, $220.5 million and $400.6 million for fiscal years 2017, 2018 and 2019, respectively, representing year-over-year growth of 110 percent and 82 percent. It sustained net losses of $146.9 million, $140.1 million and $138.9 million in those years.

The company noted its continued business investments to capitalize on its market opportunity.

“Our net losses have been decreasing as a percentage of revenue over time, as revenue growth has outpaced the growth in operating expenses,” the company said.

Last August, Slack announced an additional $427 million funding round under a deal that valued the company at more than $7.1 billion. It previously had raised $841 million.

Slack follows ride-sharing company Lyft and image-sharing social media platform Pinterest in announcing its AWS cloud deal terms in its registration statement.

Lyft last month disclosed a commitment to spend at least $300 million on AWS services from 2019 through 2021, with a minimum of $80 million in each of the three years. Pinterest, which also uses only AWS, has a six-year deal that requires it to spend at least $750 million on cloud infrastructure services through July 2023, according to its S-1 regulatory filing submitted to the SEC last month.

Meanwhile, The Information, a technology news website, yesterday reported that technology giant Apple dramatically cut its expenditures for cloud computing from AWS last year by nearly 50 percent -- to approximately $370 million from $775 million in 2017. CNBC previously had reported that Apple is spending more than $30 million per month for cloud computing from AWS, putting it on track to spend upward of $360 million this year for the services.

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