The soon-to-IPO company is on the hook for $400 million a year with Google — equal to the search giant’s estimated 2015 cloud revenue.
Snap Inc. is one of Google’s biggest cloud customers. The question is, just how big?
The startup, which has filed paperwork for an IPO, signed a $2 billion contract with Google last week that pays the search giant $400 million a year over the next five years.
At the time, Snap’s business accounted for about 10 percent of Google’s $400 million cloud business, or about $40 million. If those figures are accurate, Snap’s cloud costs will have increased tenfold in two years.
If Google’s cloud business jumped by the same rate, that would put revenue from the line of business at $4 billion. That’s a big jump, but still a far cry from Amazon Web Services’ roughly $10 billion in revenue.
RBC Capital previously reported an estimated run rate revenue of $1 billion for Google’s cloud business, according to analyst Mark Mahaney.
But if Google hasn’t matched that growth rate, then Snap’s value to the search giant has only increased — it’s not only paying more, it accounts for a bigger part of Google’s cloud sales.
Google declined to comment for this post. If you have any insight, we’d love to chat. This reporter can be reached at email@example.com.
Additional reporting by Kurt Wagner
Subscribe to the Recode Newsletter
Recode – All Go to Source
Author: Tess Townsend
Powered by WPeMatico