      Tomasz Tunguz Blog · 2022-10-28
      · 1315d
    

Cloud Infrastructure Growth Deceleration: Q3 2022 Market Slowdown Analysis

Tomasz Tunguz analyzes Q3 2022 earnings from Microsoft, Google, and Amazon to identify weakening software market fundamentals. Infrastructure revenue growth has declined 25% over six months, with cloud platforms averaging 33% growth compared to 44% a year prior, signaling broader economic headwinds. Software company valuations are expected to compress further from 4.9x to approximately 4.2x forward revenues.

12 metrics· Cited 0× in the knowledge base ·Open source ↗

Metrics in this report

Amazon Web Services CAGR

27-40%%

range across 6 quarters

Q-5 through Q0

Combined Cloud Revenue Base

50+billion $ per quarter

minimum

Microsoft, Google, Amazon combined

Google Cloud Platform CAGR

35-54%%

range across 6 quarters

Q-5 through Q0

Incremental Customer Spend

12billion $

total

Q3 2022 across three providers

Infrastructure Revenue Growth

33%%

average

Q3 2022 across Microsoft Azure, GCP, AWS

Microsoft Azure CAGR

35-51%%

range across 6 quarters

Q-5 through Q0

Prior Year Cloud Growth Rate

44%%

mean

Annual growth one year prior

Projected Median SaaS Multiple

4.2x forward revenue

after 15% decline

Forward projection

Public Software Multiples

4.9x forward revenue

current as of article date

Q3 2022

SaaS Multiple 12 Months Prior

15x forward revenue

historical high

12 months before Q3 2022

Software Multiple Decade Low

3.3x forward revenue

historical low

Last decade

Year-over-year Growth Decline

25%%

median decline

Six-month period