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Lyft’s $300 Million Deal With AWS: 5 Things You Need To Know

Ride-hailing company Lyft Inc. this month provided an unusual window into its relationship with Amazon Web Services.

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AWS Partner: Nothing Out Of The Ordinary

Simon Anderson, founder and CEO of Los Angeles-based AWS partner Mission, said: “I don’t see anything out of the ordinary related to Lyft’s disclosures on AWS expenditures and risks. Lyft likely has an enterprise discount agreement with AWS for three years, and AWS services are designed to be resilient and redundant.”

Hyoun Park, CEO and chief analyst at Amalgam Insights, agrees the contract is not fundamentally unexpected, but does a “good job in benchmarking what a cloud agreement should look like for a rapidly growing company.”

“That 4 (percent) to 5 percent range of dedicated cloud-based infrastructure spend is not unusual for a tech-focused company like Lyft and should be seen by the channel as a goal for building up cloud infrastructure deals,” Park said.

For Lyft, the big advantage of the contract is not having to worry about an cloud infrastructure provider over the next three years as it continues to pursue hypergrowth, according to Park.

“In general, any company growing 30 percent year-over-year does not have time to put on the brakes and build their own infrastructure or to spend significant time pulling up private cloud facilities,” he said. “Given Lyft's continued growth, this contract could end up being a $500 million-plus deal over the next three years. That $300 million mark is just bit of a safety net, but something that Lyft should quickly (go) through in the first 18 to 24 months of the deal.”

Under its previous March 2018 agreement with AWS, Lyft’s purchase commitments to the cloud provider totaled at least $150 million through June 2021, according to the filing.

Lyft’s agreement with AWS remains in effect until either party cancels it, but AWS only can terminate it “for convenience” after March 31, 2022 and must comply with advanced notice requirements.

“In the event that our agreement with AWS is terminated, or we add additional cloud infrastructure service providers, we may experience significant costs or downtime in connection with the transfer to, or the addition of, new cloud infrastructure service providers,” Lyft disclosed.

Lyft said it had $8.1 billion in ride bookings last year, $2.2 billion in revenue -- a 103 percent increase from 2017 -- and a net loss of $911.3 million.

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