Technology

Airbnb obtained a cloud contract extension earlier this 12 months because the pandemic raged

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Brian Chesky, Chairman and Co-Founder of Airbnb Inc., speaks during lunch at the Economic Club of New York on the New York Stock Exchange (NYSE) in New York, United States on Monday, March 13, 2017.

Michael Nagle | Bloomberg | Getty Images

With the coronavirus pandemic hurting travel companies earlier this year, Airbnb received an extension from a data hosting provider to a cloud spend commitment that can help manage costs.

Airbnb originally had a $ 1.2 billion commitment with AWS over the next five years in late 2019. At some point that year, however, the companies agreed to extend the agreement to eight years, according to the prospectus. That means Airbnb is willing to spend an average of $ 150 million a year instead of $ 240 million a year on these services.

It's a helpful pillow this year as people are more reluctant to go on vacation or work trips. It is not yet clear when personal and business travel will return to pre-pandemic levels.

Airbnb announced the adjustment in the prospectus for the IPO, which became publicly available on Monday. Airbnb did not name the provider directly, but said elsewhere in the filing that its main hosting provider is Amazon.

Amazon provides remote computing and data storage capabilities for many companies that have gone public in recent years, including Slack and Snowflake. By adapting the conditions, it can be ensured that one of the names that have been advertised for so long does not switch to competitors such as Microsoft or Google or that one of its suppliers faces inappropriate challenges.

In May, when the pandemic was in full swing, Airbnb announced it was cutting 25% of its workforce. Airbnb's revenue declined 24% sequentially in the first quarter, and declined 60% in the second quarter, according to the report filed on Monday. Revenue recovered in the third quarter, although it was still declining on an annualized basis.

The first AWS services became available in 2006, and Airbnb has been using AWS since 2008. Airbnb's payments, search, reservations, messaging and content moderation capabilities have drawn on AWS resources, among other things, Airbnb executives said during discussions at AWS conferences to invent.

In the nine months that ended September 30, Airbnb hosting costs were reduced by $ 63.5 million year over year, helping Airbnb's cost of sales decrease by 26%. According to Airbnb, the change resulted from "better contract management and the use of our third-party cloud services".

Airbnb declined to comment on the change. Amazon did not immediately respond to a request for comment.

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Katherine Clark