Snowflake and Zoom celebrate shrunken cloud bills as margins swell
Analytics outfit gets there by moving customers to Amazon’s Graviton CPUs
Two big SaaS operations – Snowflake and Zoom – have reported cloud cost cuts boosting their margins.
Snowflake's news is even more dramatic: it's completed a migration of all its customers in AWS to the cloud colossus's homebrew Arm-powered Graviton CPUs.
CFO Mike Scarpelli told investors "more favorable pricing with our cloud service providers" helped the biz to improve margins to 77 percent.
Vidchat darling Zoom, meanwhile, announced non-GAAP gross margin for Q1 of 80.5 percent – an improvement from 78.6 percent in the same quarter of 2022 and the 79.8 percent figure from its previous quarter.
CFO Kelly Steckleberg boasted the org "drove sequential improvement mainly due to optimizing usage across the public cloud and our co-located datacenters."
News of the cloudy cost cuts comes after Amazon Web Services and Microsoft's Azure have, in recent months, experienced the revelation that cloud customers are uncomfortable with their bills.
Microsoft told investors its Azure customers are looking for savings on some workloads, and have stopped signing up for new resources while they sort out their current cloud rigs. AWS recently told a similar story.
Both cloud giants said they’re happy to spend some time helping customers "optimize" their clouds, in the interests of creating long-term relationships with customers.
It looks like those efforts may be paying off for all concerned.
- Intel buys cloud-optimization startup Granulate
- The world was promised 'cloud magic'. So much for that fairy tale
- Why cloud costs get out of control: Too much lift and shift, and pricing that is 'screwy and broken'
- Microsoft: You're not out of love with cloud, you're just 'optimizing' it for a bit
Cloud bills blow out for several reasons – among them overprovisioning by either renting too many servers or selecting overpowered virtual boxes. Shadow IT makes a contribution. The perennial problem of forgetting about resources is another issue.
Clouds also come with costs some users fail to anticipate. NASA infamously uploaded 247 petabytes into AWS so that scientists could access the data, but forgot it would cop the bill when it as downloaded. The Register often hears tales of users adding more and more data to the cloud, then being floored by storage bills.
Clouds and third-party vendors address these messes with tools that identify cloudy resources and find waste. Hyperscale cloud operators also drop prices – sharply – for customers that sign up to long-term deals.
One of AWS's cost-cutting strategies is its Graviton CPUs, which it rents at lower rates than it charges for Intel or AMD processors while asserting users suffer no performance dip. AWS also suggests serverless computing as a big cost-saver. Snowflake may be spending less with Andy Jassy's server rental shop, but AWS would be happiest to see the analytics outfit put that on the record in an earnings statement.
That statement featured product revenue of $590 million for Q1 2024 – up from $394 million for in Q1 2023, but a widening operating loss.
Zoom's revenue hit $1.1 billion for the quarter – a three percent year-on-year increase. Net income was $15.4 million. The vidchat champ reported it now has around 215,900 enterprise customers – nine percent growth from the same quarter last fiscal year. Clearly this whole remote meeting thing is not over. ®