Amplitude, Inc.

Good afternoon to everyone tuning in for our Q4 and fiscal 2022 earnings call. For those of you who may be newer to our story, Amplitude helps companies build amazing products, drive growth, and win their categories. Our digital analytics platform gives self-service visibility into the entire customer journey. Amplitude helps companies unlock the power of their products and guides them every step of the way. This empowers companies to capture the data they can trust, uncover clear insights about customer behavior, and take faster action. Every C-level exec I talk to wants to keep investing in their product. They believe digital products are their strongest path to growth. The problem is their ability to execute does not match their aspirations. Amplitude changes that. We show you what your customers love, what causes them to get stuck, and what keeps them coming back. These insights are an absolute necessity, not simply nice to haves. Especially in this environment, we believe amplitude is a mission-critical part of every modern stack. We closed 2022 strong. Our fourth quarter revenue was $65.3 million. This was up 32% year-over-year and above the high end of our guidance. Our dollar-based net retention was 119%. We now have almost 2,000 customers, and 480 of those pay us over $100,000 in ARR per year. On top of that, we delivered almost 300 basis points of non-GAAP operating margin expansion year on year. We've always been efficient in building our business. We are in control of our own destiny as we expect to generate positive free cash flow this year. While the environment is getting tougher, we are managing our business well, demonstrated by our beats on top and bottom line guidance. To every amplifier, I am deeply appreciative of all the work you do to make our vision a reality. As we highlighted in last quarter's earnings, we anticipated greater headwinds going into 2023. Things did get harder for us in Q4. We saw more churn among smaller customers, as well as heightened scrutiny and budget pressure. Companies across geographies and industries are expressing caution. These are common themes you're hearing from a lot of software companies. What is more specific to Amplitude is the amount of work we do to support digital natives and early adopters. Being part of an early category is a double-edged sword. Companies that had accelerated our growth are now pulling back the hardest. The whiplash our customers are experiencing is very real. We expect the rolling layoffs and reduced risk appetite to be headwinds in the near term, but these short-term headwinds will pass. Our long-term outlook is still the same. When it comes to product data, companies are in the first heading. We remain in the midst of a massive wave that is changing how companies build, iterate, and improve their products. As the digital analytics market continues to develop, we are seeing positive momentum in both the size and length of transactions. and we've seen companies like Fandom, Allbirds, and Brainly move from Google Analytics to Amplitude. Long term, I expect we will accelerate our growth. We have multiple investments designed to accelerate growth through distribution and monetization in 2023. On distribution, we've been hard at work. I'm going to highlight three big bets. First, product-led growth. We launched a new pricing option in January targeting startups and small businesses. It is based on unique monthly track users, a metric that smaller teams already understand and forecast. This is just one of the many steps in our larger amplitude product-led growth journey, which you will hear more about as the year progresses. Second, taking new user activation to the next level, including navigation and chart control rebuild, no code or single code data ingestion, and the ability to work directly off of a cloud data warehouse. Third, structurally lowering data costs by a multiple, making it easier to scale with us. On monetization, we have a long runway in expanding the use of our analytics in our customer base. We can also add solutions to help our customers build better products. Our success with experiment exceeded our expectations in 2022, and we are still just scratching the surface with customer penetration. We know there are many more such opportunities. The potential for increased monetization of our platform remains in its infancy. We're early, our runway is immense, and we are seeing real validation. I've never been more excited about the opportunity ahead of us. Product innovation will help us drive distribution and monetization. We released more than 100 product updates and features over the course of 2022, more than any other year in the company's history. Our analytics helped us extend into retail and e-commerce. Marketing analytics is driving competitive displacements. We're addressing more data leaders by building tools that minimize data chaos, increase visibility, and improve accessibility across teams. Our new amplitude data capabilities enable teams to holistically manage customer data on our platform. This increases confidence for data teams, improves collaboration, and makes it easier to identify and fix issues. Experiment is now available in our EU data center. We've also introduced more improvements to make it faster to plan and run product tests. As companies look for ways to consolidate spend in this environment, we're seeing more demand for competitive displacements for experiment. IATV, one of the UK's leading broadcasters, added Amplitude Experiment in Q4 to quickly iterate around the launch of their newest streaming platform, ITVX. After building an experimentation culture at one of ITV's brands, BritBox, Lee Marshall, the director of product, is expanding amplitude usage across the larger organization. He said it best. We had no central cross-platform capability. Experimentation is time consuming. Without amplitude, we couldn't measure the real value of our product increments or manage multiple experiments across the base. Industry analysts are recognizing our leadership. Amplitude was named a strong performer in the first Forrester wave for digital intelligence platforms that we took part in. The breadth and depth of our digital analytics platform allowed us to achieve market leading five out of five scores across nine criteria in the wave. Amplitude was ranked in the top three on strategy with Adobe and Salesforce and ranked way above Google on both strategy and execution. Several point solutions that claim amplitude as a competitor did not even make it into the report. Amplitude received five awards across G2's 2023 Best Software Awards. We also ranked number one in 10 categories within the G2 Winter 2023 report, including number one product analytics solution for the 10th quarter in a row. While early, I'm excited by the progress we're making in go-to-market. We have better alignment between marketing, sales, and customer success. For example, improved collaboration between marketing, SDRs, and revenue operations is leading to increased productivity on demand generation. We've always been exceptional at selling into product and product managers. We continue to up-level our relationships there and extend to data leaders driving larger land deals. We're better connecting amplitude with value for our customers, leading to stronger executive engagement. We've also created an executive sponsor program for our top 50 accounts that will be key to retention and expansion. We've also enhanced our approach to amplitude on amplitude. Our product team has always used amplitude, but we've taken it one step further and created amplitude dashboards for our go-to-market team. This is helping us better serve our customers. I'm excited to welcome Christina Johnson as our new Chief Human Resources Officer. Christina spent the last seven years at Okta leading the global people and places function as the company grew from 500 employees to more than 6,000. Christina has great perspective about how to build high-performing teams and has seen the journey we're embarking on. She's an amazing leader, and I'm excited to partner with her. Post-market closed, we also announced a CFO transition. After four incredible years at Amplitude, Wong will be leading the company. I'm welcoming former Forescout executive Christopher Harms as our new CFO, and you will all have the opportunity to get to know him in the coming months. Huang will remain at amplitude and interim to ensure a seamless transition. We're continuing to win customers across many industries and at every part of their digital maturity journey. Some big new customers in Q4 include Fandom, Philip Morris, Malwarebytes, Black Rifle Coffee, and Standard Chartered. We also have notable customer expansions in Q4, including Fox Broadcasting, NTT Docomo, Syngenta, Gusto, and Calm. One when i'm really excited about this quarter's fandom, the world's largest fan platform, reaching more than 350,000,000 unique visitors per month, and hosting more than 250,000 wikis. And it is the number one source for information on pop culture, gaming, TV, and film fandom's decision was driven by the force migration of Google Analytics. Their director of business intelligence and site analytics led the evaluation in this highly competitive deal against legacy and point solutions. ultimately amplitude was selected due to three key reasons first our seamless integration of product and marketing analytics which was perfect for fandom's varied advertising content and editorial needs second our self-serve value proposition where we were the natural solution for technical and non-technical teams third our pace of innovation and scalability Fandom is a media brand aggressively growing their data volume across GameSpot, Metacritic, and many other destinations, making Amplitude the right future-proof solution. Fandom will use Amplitude to drive impact for one of their key business metrics, tying content changes to revenue. This will include taking a deeper look at video content, what users are engaging with the most, and how product changes impact that behavior. Publishing and editorial teams will also use Amplitude as a centralized source of truth for their site data. I'm really excited that we get to play a part in their transformation and growth. Allbirds, which makes a popular sustainable shoe and clothing line, started working with us in Q4. After deciding to move off of Google Analytics, Allbirds kicked off a search for a new digital analytics platform. Amplitude stood out as a superior solution because of our experience both with e-commerce and international business use cases. Now, Albers will be able to dive into what triggers lead to repeat shoppers globally. They'll be able to understand user behavior on their catalog of websites and pull insights across multiple geographies at once. They plan to use amplitude analytics across product analytics, data engineering, marketing growth, and information security teams to build a comprehensive view of their users. This will set them up to increase conversion and customer lifetime value. We're focused on expanding beyond digital natives. While early, we're showing good progress here with a Q4 expansion with one of the largest media companies in the world. Before Amplitude, as product and data team used to meet once a week, the product team would come to that meeting with a list of questions and the data team would spend the next week digging through data in Adobe to get answers. Following the week, the data team would come to the meeting with answers and the cycle would continue. After adopting Amplitude, the time it took to answer those questions went from a week to seconds. This helped its team move so much faster. Its product team can now run experiments independently, and the number of requests its data team received has decreased by 50%, meaning it can spend more time on higher impact work. I remain very optimistic about the future of our category, and Amplitude's continued role as a leader in digital analytics. As I've said before, I view this time as a great opportunity for us to make bold bets and strengthen our market position. I'm confident in our ability to consistently innovate, provide value for our customers throughout this macro economic environment and beyond. Persistence trumps everything else, and I believe we will come out of the cycle stronger. By raising the bar for execution and investing in our product for the long term, we are well positioned to drive durable growth in the cap in a category where the opportunity is just beginning to unfold. Thank you for your interest and amplitude. I'd now like to turn it over to Wong to walk through the financial results.

Thanks, Spencer. Good afternoon, everyone. Fourth quarter revenue was $65.3 million, up 32% year-over-year. For the full year 2022, revenue was $238.1 million, an increase of 42%. Customer count was up 25% year-over-year to 1,994. Dollar-based net retention was 119%. We have 480 customers with AR over 100,000, a 25% year-over-year, and representing about 75% of total revenue, and 30 customers above $1 million in AR. Here's some color on Q4 results. New bookings were fairly balanced between land and expand. In Q4, we had two land deals over $1 million, showing more companies are starting to understand the criticality of product data for every modern enterprise. This contrasts with zero land deals over a million dollars in all of 2021. We also had our largest experiment expansion ever. As customer mature and more team unite around product data, we see greater adoption of the entire digital analytic platform from experimentation to CDP. We're seeing an increase in the number of early stage opportunities as our demand gen efforts ramp up. However, customer general level of caution has increased in Q4. We saw more deals shrunk or pushed out than we did in Q3 as budget scrutiny intensified. Churn, both full and partial, continues to be elevated in Q4 across the board. Customer continues to navigate the whiplash from COVID-induced pull forward to the current focus on tightening their belts. Geographically, revenue from the U.S. increased 28% year-over-year to $40 million in Q4, or 61% of total revenue. International revenue increased 39% to 25.2 million, or 39% total revenue. Total RPO increased to 248.2 million, up 46% year-over-year. Current RPO also increased to 190.6 million, up 39% year-over-year, or approximately 77% of total RPO. As a reminder, CRPO growth over fiscal year 2022 has been helped by an increasing mix of multi-year deals. If we don't keep increasing the mix of multi-year deals, CRPO growth in 2023 will be negatively impacted. Next, I'll be discussing non-GAAP results for Q4 going forward. As a reminder, our GAAP financial results, along with reconciliation between GAAP and non-GAAP results, can be found in our earnings press release and supplemental financial on our website. Gross margin in Q4 was 74%, improving 250 basis point year over year, as we drove efficiency with infrastructure costs and continued to scale. During our IPO process, we stated a long-term goal of 75%. we plan to achieve and likely exceed that goal in the near term. Sales and marketing expense was 45% of revenue compared to 44% of revenue in Q4 2021. R&D expense was 21% of revenue compared to 20% of revenue in Q4 2021. We delivered an operating loss of $4.7 million or negative 7% compared to a loss of $5 million or negative 10% in Q4 2021. We consciously moderated operating expenses throughout the year as the environment shifted. We are committed to balancing growth and profitability. Net loss per share was $0.03 based on 113.1 million shares compared to a loss of $0.05 with 107.9 million shares a year ago. Cash equivalents and marketable securities were $301.7 million at the end of Q4. Free cash flow for the quarter was a negative 5.9 million or negative 9% of revenue, compared to a negative 12.2 million or negative 25% of revenue in the corresponding prior year period. For the full year 2022, free cash flow was negative 11.2 million or negative 5% of revenue, a significant improvement versus negative 34.9 million or negative 21% in 2021. Now, on to our outlook. Our guidance assumes the macroeconomic environment continues to be weak throughout the year. Layoffs and budget cuts are an unfortunate reality across many digital natives. We believe that churn, expansion, and budget pressure will persist through 2023. For the first quarter, we are expecting revenue between 64 and 66 million, representing an annual growth rate of 22.5% at the midpoint. Q1 reflects two less days than Q4, which accounts for approximately 1.5 million of sequential headwinds. Non-GAAP operating margins of negative 13 to 14 percent. We held our sales kickoff in January, weighing on margins in Q1. Non-GAAP net loss per share to be between six and eight cents, assuming shares outstanding of approximately 114.9 million. For the full year 2023, we're introducing 2023 revenue guidance between 283 and 291 million, an annual growth rate of 19 to 22%. We expect non-GAAP operating margins between negative 6 to 8%. And we expect non-GAAP net loss per share to be between 11 and 16 cents, assuming shares outstanding of approximately 117.5 million. We believe the bottom end of our guidance is conservative and factors in further deterioration in macro and buyer sentiment throughout the year. Please keep in mind the following. Non-GAAP gross margin should be in the range of 73 to 75% fiscal year 2023, representing more than 300 basis point of improvement versus the past couple of years. We expect to exit Q4 2023 with non-GAAP operating profit. We expect to reach free cash flow positive for the full year, well ahead of our previously stated medium-term targets. Given the pressure we mentioned, we do expect the continued declines in net retention rate. The headwinds we're facing are the natural function of being within early market and our exposure to digital natives. We're working through those headwinds and managing our business for efficiency. We believe nothing has changed about our long-term opportunity,

and we remain incredibly well positioned to win in digital analytics um before we move to q a i actually want to just take a moment to recognize wong wong i just want to say you have been instrumental to our growth and success over the last few four years on behalf of myself and everyone at amplitude we sincerely thank you we wish you all the best