AWS, Google Cloud and Atlassian Earnings 💰, Generative AI Market Outlook 🤖

AWS Q4 earnings (8 minutes read)

In Q4 2022, AWS segment sales increased 20% year-over-year to $21.4 billion, and operating income was $5.2 billion compared with the previous quarter of 2021.

For the Full Year 2022, AWS segment sales increased 29% year-over-year to $80.1 billion, and operating income was up to $22.8 billion compared with 2021's figure of 18%.

Several customers announced new commitments and migrations from AWS, including Nasdaq completing their migration for a 10% performance improvement; NFL launching an ML/Computer Vision challenge; Yahoo Ad Tech selecting it as its preferred cloud provider; Stability AI also choosing them as its preferred cloud provider; Descartes Labs going all in on Amazon Web Services (AWS); Brookfield Asset Management using it as a preferred cloud provider for renewable energy use globally; Duke Energy collaborating on smart grid solutions; Wallbox migrating to reduce IT costs by 70%; American Family Insurance naming them as the preferred Cloud Provider unlock personalized service & security, etc.

AWS launched several new products, such as Regions in Spain & Switzerland plus India Region, Graviton3E chips, Nitro Cards, and Inf2 instances powered by Inferential two chips. Also launched Amazon Security.

Highlights from the earnings call

Read the full summary here.

• Customers are looking for ways to cost-optimize during uncertain economic times, such as switching to lower-cost products or running calculations less frequently.

• AWS focuses on building relationships with customers that outlast any quarter or year by providing the elasticity needed for companies to scale up when necessary but also give back resources if demand decreases.

• Many enterprises have been migrating towards cloud services due to their ability to reinvent their businesses quickly and change customer experiences easily while still seeing value in these services as they look for ways to save money quickly during this period.

• The company noted that it is difficult to provide certainty on the growth rate of AWS over the next couple of quarters, given current conditions. However, customers remain committed long term despite challenges from certain industries like financial service & crypto trading with reduced spending

Google Cloud Saw a 32% Increase in Revenues in Q4 and Focuses on Profitability (4 minutes read)

Google Cloud segment revenues were $7.3 billion in the fourth quarter, an increase of 32% from the prior year.

Google Cloud Platform (GCP) saw greater revenue growth than Google Cloud overall, driven by increased seat count and average revenue per seat for Google Workspace products.

Consumption slowed in Q4 due to customers optimizing GCP costs amid macroeconomic conditions; this resulted in a $480 million operating loss for Google Cloud during that period.

Google Cloud remains excited about the long-term market opportunity and business trajectory.

Enterprises and governments are turning to Google Cloud for their digital transformation initiatives across verticals and geographies.

While investing for growth, Google Cloud is focused on its path to profitability.

Global Generative AI Market Expected to Reach $53.9 Billion by 2028, with a CAGR of 32.2% (6 minutes read)

The Global Generative AI Market is expected to reach $53.9 billion by 2028, with a CAGR of 32.2% during the forecast period (2022-2028).

Generative AI enables machines to create content using elements like audio recordings, text, and graphics - allowing for more creative and innovative outputs than conventional machine learning can provide.

This technology has opened up new avenues in terms of how people work, play and create - offering exciting opportunities for consumers, companies, governments, and non-profit organizations alike.

Atlassian Announces Second Quarter Fiscal Year 2023 Results (8 minutes read)

Atlassian announced second quarter fiscal year 2023 results, with total revenue of $872.7 million, up 27% from last year.

Subscription revenue was $711 million for the quarter, representing a 40% increase over the prior year's figure.

GAAP operating margin was (11)%, while non-GAAP operating margin was 20%.

Cash flow from operations totaled $150.5 million and free cash flow amounted to $146.5 million for the period; excluding a discrete tax payment of 57M, these figures would have been higher at 207M and 203M respectively as well as increasing free cashflow margins to 23%.

Atlassian has provided its financial targets for the Third Quarter Fiscal Year 2023, with total revenue expected to be in the range of $890 million to $910 million and gross margin estimated at 81% on a GAAP basis and 84% on a non-GAAP basis.

For Fiscal Year 2023, Atlassian expects total revenue growth year-over-year of approximately 25%, cloud revenue growth year-over-year between 35%-40%, and an operating margin estimated at 11% on a GAAP basis or 17% on a non-GAAP basis.

At the end of its second quarter of fiscal year 2023 Atlassian had 253,177 customers with 4,004 net new customers during that period.

In January 2023 Board of Directors authorized share repurchase program up to $1 billion with no fixed expiration date which may be suspended or discontinued at any time by Atlassion discretion depending upon business conditions etc.

More

• The company is adapting to macroeconomic headwinds, helping customers navigate challenging times, and setting itself up for long-term success.

• Atlassian’s competitive position remains unchanged as customers deepen their commitment with increased cloud migrations and longer contracts.

• Investments are being focused on three large markets while balancing against growth overall, rebalancing talent & resources to put focus on top growth initiatives such as cloud migrations, IT service management market & serving enterprise customers.

• The company is investing heavily in “build once run everywhere” platform capabilities & developer productivity; making it easier for enterprise customer migration with a dynamic automated form that matches them to the right team based on answers given; two biggest migrations completed recently resulted in tooling improvements learned from mega-migrators which prove valuable for all sizes of migration efforts.

OneSignal Raises Additional Funds to Enhance Omnichannel Messaging and Orchestration Capabilities (3 minutes read)

OneSignal, a platform that allows marketers to send notifications based on user behavior, demographics, and other signals, has raised additional funds from ServiceNow Ventures. The investment will be used to accelerate OneSignal’s go-to-market initiatives with a focus on enhancing its omnichannel messaging and orchestration capabilities. With more than 6,000 companies on its client list and a strategic partnership with Google Cloud, OneSignal is positioned to help organizations engage better.

The funds from today’s round are intended to expand OneSignal's global footprint and enable them to integrate more use cases. Terence Cheshire of ServiceNow said that enterprises in all industries are finding it harder and more expensive to acquire new customers and retain talent. OneSignal addresses both challenges with personalized notifications that can result in 259% higher engagement than notifications that don’t use customized content.

In addition, OneSignal recently launched Journeys, a visual workflow builder companies can use to create customized user experiences. The company also announced a strategic partnership with Google Cloud in September, allowing developers and marketing teams to easily create a customer engagement experience native to Google Cloud’s environment and purchase OneSignal services through the Google Cloud Marketplace. This investment from ServiceNow Ventures allows OneSignal to continue developing innovative solutions that unlock business potential and help deliver seamless customer experiences.