Services Ecosystem ➢ This presentation is for informational purposes only ➢ Data included in this presentation has been obtained from sources believed to be reliable. However, neither Avendus Capital, Inc. nor any of its affiliates have independently verified any of the statistical data included in this presentation ➢ This presentation is not a solicitation to purchase or sell any specific securities ➢ Investment decisions should not be made based exclusively on this presentation alone ➢ The authors of this presentation may have positions in the issuers of securities mentioned in this presentation ➢ Past performance of any of the issuers and/or companies described in this presentation is not a guarantee of future returns 2 » Amazon Web Services (AWS) has been a leader in the Cloud computing space especially in the IaaS & PaaS segments. It has been the pioneer by having the vision to Overview invest in cloud industry ahead of its peers » This report tries to dig further into AWS, its offerings, its benefits compared to traditional on-premise infrastructure and about its various partners » AWS is leading in the fastest growing IaaS segment followed by Microsoft, IBM, Google, Alibaba & SAP Competitor » Salesforce leads the PaaS segment closely followed by AWS & Oracle. Other players include Microsoft, IBM, SAP, ServiceNow, Alibaba Landscape » Overall, largest competing cloud companies include Microsoft, AWS & IBM, followed by Salesforce, Oracle, SAP & Google » It has a plethora of offerings ranging from compute services, storage services, database, networking & content delivery, migration, developer tools, management tools, security, analytics, artificial intelligence, messaging, mobile service, application service, IoT, machine learning & gaming development Offerings & » AWS has launched 1000+ features year on year and become the fastest enterprise IT vendor to hit the 10Bn run-rate Programs » The most used services include Amazon EC2, Amazon S3, Amazon Data Transfer, Amazon SQS, Amazon RDS & Amazon Route 53 » There are 2 programs: Consulting & Technology Partner Program; with sub-programs within each of the two divisions basis partner specialties » Based on program type, 48% are consulting partners & remaining 52% are technology partners » Based on vertical landscape, 60% of the partner are from software & internet industry, 15% from business and consumer services, another 5% each from government, financial services, telecommunication and rest from others Partners » Based on geography, 75% of the partners are from US, 7% from UK, 5% from Canada and rest from others » There are 74 premier consulting partners, of which pure-play AWS service providers include Megazone, 2nd Watch, Logicworks, DLT, Onica, to name a few » Some multi platform, premier AWS service partners include TCS, DXC, Wipro, Accenture, Capgemini, Cognizant, HCL, NRI, Booz Allen, Rackspace, to name a few » Deals have started to pick-up with over 30 deals in the past 24 months; activity is similar to what was seen in the application layer cloud services companies 5-6 years Deal back; strategics are making moves faster compared to Salesforce ecosystems as now they are more clear about the longevity & impact of cloud technologies Activity » Multiples have generally ranged around 4x-6x net revenue; which are higher than seen by Salesforce/Workday partners potentially due to recurring nature of business » Some big PE roll up plays acquiring aggressively include Reliam, 2nd Watch, Apps Associate, Onica, Logicworks, to name a few 3 Section 1: Amazon Web Services Overview 5 Section 2: Industry Landscape 12 Section 3: Why use AWS? 19 Section 4: AWS Offerings 22 Section 5: AWS Partner Programs 26 Section 6: AWS Tiers & Certifications 30 Section 7: AWS Partner Analysis 33 Section 8: Deal Activity 40 AWS Re-Invent 2018 Update 45 4 Section 1: Amazon Web Services Overview » In 2006, Amazon Web Services (AWS) began offering IT infrastructure services to businesses in the GLOBAL NETWORK OF REGIONS & EDGE LOCATIONS form of web services—now commonly known as cloud computing » AWS offers a broad set of global cloud-based products including compute, storage, databases, analytics, networking, mobile, developer tools, management tools, IoT, security and enterprise applications » These services help organizations move faster, lower IT costs, and scale. AWS is trusted by the largest enterprises and the hottest start-ups to power a wide variety of workloads including: web and mobile applications, data processing and warehousing, storage, archive, and many others » Today, Amazon Web Services provides a highly reliable, scalable, low-cost infrastructure platform in the cloud that powers hundreds of thousands of businesses in 190 countries around the world NO. OF SERVICES LAUNCHED PER YEAR 1,430 1Mn Active Amazon S3 peaks 1,000 Customers per at millions of month requests per second 722 516 Infrastructure Region 280 160 80 Edge Point Of Presence (PoP) 2011 2012 2013 2014 2015 2016 2017 Source: AWS Website 6 » RDS Reserved Database » Amazon DB Instance » RDS Read Replicas » Elastic BlockStore » Amazon Flexible » Lower Outbound Transfer » Amazon » Public Data Sets Pricing SQS payment service » Amazon Glacier launched » EC2 SLA » S3 Versioning feature » Amazon Red-shift launched » EC2 in Europe » S3 in Europe » EC2 High Memory Instance » Amazon » AWS launched in Sydney, » S3 Tiered Pricing » RDS Multi-availability Zone Mechanical Australia » S3 Reduced Redundancy Turk 2005 2006 2007 2008 2009 2010 2011 2012 » AWS Elastic Beanstalk » AWS Multi-factor Authentication » Amazon CloudFront » Amazon Single Email Service » AWS Management Console » EC2 Elastic » AWS launched in Tokyo, Japan » Amazon EC2 » AWS Economics Center » Window Server, » Amazon Route 53 » AWS Security Center MySQL, Oracle & » Digital`Ocean launched » Amazon S3 » EC2 Reserved Instances Jboss » AWS Direct Connect » Simple DB Features » Lower data and » AWS Gov-Cloud » Developer Portal » Amazon RDS Transfer cost » AWS launched in Oregon, third & Forums » Amazon VPC region in US » Amazon Elastic Map Reduce » AWS Import/Export Source: AWS Website 7 » AWS is awarded an ATO » AWS Machine Learning » AWS i3 instances launched which from US Dept. HHS Platform launched are 50% cheaper than i2 instances » AWS Activate launched » AWS acquires ClusterK » AWS surpasses $10 billion revenue » EC2 G2 Instances » AWS becomes a leader in target with over 100 services launched for 3D Design IaaS solution » AWS EC2 CSd instances launch » Amazon Kinesis launch » AWS Snowball launched » Amazon Chime launched » AWS launched in China 2013 2014 2015 2016 2017 2018 » AWS launch in Frankfurt, » AWS Machine Learning » AWS EC2 support for Red Hat Germany Platform launched BYOL launched » Amazon Aurora launch » AWS acquires ClusterK » Amazon Cloudwatch Metric » EC2 Container Service » AWS becomes a leader in Maths launched for real-time launched IaaS solution analytics » AWS Lamda launched » AWS Snowball launched » AWS EdStart global launched Source: AWS Website 8 Figures in $Bn 2013 2014 2015 2016 2017 Overall Revenues 74.5 89.0 107.0 136.0 177.9 AWS Revenues 3.1 4.6 7.9 12.2 17.5 % Growth Rate 69% 49% 70% 55% 43% Operating Expenses 2.4 4.0 6.0 9.1 13.1 Operating Income 0.7 0.7 1.9 3.1 4.3 Sales-Contribution 4% 5% 7% 9% 10% Operating Margin 22% 14% 24% 25% 25% AWS FINANCIALS COMMENTS Figures in $Bn 20.0 12% 17.5 » AWS revenue contribution has increased from 4% to 10% 9% 10% between 2013-2017 and is poised to grow further 15.0 7% 12.2 8% » AWS remains the profit engine for Amazon, which has always 10.0 5% 7.9 operated on thin e-commerce margins. The unit’s operating 4% 4% income of $4.3Bn, while the company as a whole had 4.6 4.3 5.0 3.1 3.1 operating profit of just $347Mn 1.9 0.7 0.7 0.0 0% » Even after series of price reduction on their product their 2013 2014 2015 2016 2017 operating margin stay healthy at ~25% AWS Revenue Operating Income Sales-Contribution Source: AWS Website 9 COMPANIES BY GEOGRAPHY COMPANIES BY EMPLOYEE STRENGTH United States >10,000 2,536 3% 3% 7% 5,000-10,000 1,656 United Kingdom 1,000-5,000 8,068 5% Canada 500-1,000 6,900 7% 200-500 14,199 Australia 50-200 39,235 75% India 10-50 73,470 1-10 1,15,227 Others COMPANIES BY REVENUE SIZE1 COMPANIES BY INDUSTRY Construction >1000M 5,036 6,259 Marketing 6,872 200M-1000M 8,135 Financial Services 7,213 Internet 8,043 100M-200M 6,232 Retail 8,356 50M-100M 9,704 Real Estate 8,410 Nonprofit Organization 9,505 10M-50M 35,003 IT & Services 13,759 0M-1M 54,778 Pharmaceuticals 14,844 Computer Software 27,704 1M-10M 1,55,580 0 10,000 20,000 30,000 40,000 Source: Idatalabs Website 10 Note: 1. Revenue in $Mn IDC WORLDWIDE IAAS VENDOR ASSESSMENT » AWS is poised to triple its size in five years, hitting $60Bn in revenue according to Wall Street firm Jefferies & Co. » 37% of Amazon’s share price is valued based on AWS alone, based on JP Morgan’s research report, showing the immense potential that AWS has » AWS would continue to grow by moving further into the application layer of cloud computing. Currently, it is focused on the infrastructure layer of software only » AWS should make more buys in the security space as security is of the highest importance to its customers as well as the company FORECASTED FINANCIALS Figures in $Bn Q1 2018A Q2 2018A Q3 2018A Q4 2018E 2018E 2019E Revenues 5.4 6.1 6.7 7.2 25.3 34.2 % Growth 45% 35% Operating Expenses 4 5 5 5 19 26 Operating Income 1.4 1.5 1.7 1.8 6.4 8.4 % Operating Margin 26% 25% 25% 25% 25% 25% Source: IDC Website, JP Morgan Research Report, Synergy Consulting 11 Section 2: Industry Landscape IaaS PaaS SaaS Market Size: Market Size: Market Size: 84 27 117 23 102 67 87 19 53 74 15 41 60 12 30 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Key Players: Key Players: Key Players: Source: Gartner Forecast; Avendus Research 13 Note: All figures in $Bn.