Amplitude, Inc.

Hello, everyone. Welcome to Amplitude's fourth quarter and full year 2024 earnings call. I'm John Struppa, head of investor relations. Joining me today are Spencer Skates, CEO and co-founder of Amplitude, and Andrew Casey, chief financial officer. During today's call, management will make forward-looking statements, including statements regarding our financial outlook for the first quarter and full year 2025, the expected performance of our products, our expected quarterly and long-term growth, investments, and our overall future prospects. These forward-looking statements are based on current information, assumptions, and expectations and are subject to risks and uncertainties, some of which are beyond our control, that could cause actual results to differ materially from those described in these statements. Further information on the risks that could cause actual results to differ is included in our filings with the SEC You are cautioned not to place undue reliance on these forward-looking statements, and we assume no obligation to update these statements after today's call, except as required by law. Certain financial measures used on today's call are expressed on a non-GAAP basis. We use these non-GAAP financial measures internally to facilitate analysis of our financial and business trends and for internal planning and forecasting purposes. These non-GAAP financial measures have limitations and should not be used in isolation from or as a substitute for financial information prepared in accordance with GAAP. A reconciliation between these GAAP and non-GAAP financial measures is included in our earnings press release, which can be found on our investor relations website at investors.amplitude.com. With that, I'll hand the call over to Spencer.

Thanks, John. Welcome to Amplitude's Q4 and full 2024 earnings call. I'm going to go through three key areas today. First, our Q4 results and the reacceleration of our business. Second, how we are going after a market opportunity and why 2025 is the year of the platform for Amplitude. Last, product innovation, progress on winning the enterprise, and customer stories. Q4 outperformed on all key metrics. Our fourth quarter revenue was $78 million, up 9% year over year. Annual recurring revenue was $312 million, up $13 million from last quarter. Non-GAAP operating income was $0.2 million. Customers with more than $100K in ARR grew to $591, an increase of 16% year over year. In 2024, we exited the year with over 299 million in revenue. We grew ARR by more than 10% and we generated almost 12 million in free cashflow for the year. Amplitude is re-accelerating. We're continuing to see progress on our strategy of win simple, win the enterprise, win the category and win together. Customers are embracing our platform. Churn is beginning to stabilize and we see a path to accelerating our double digit growth. I'm proud of the Amplitude team for everything they delivered in 2024. Let's look at 2025. 2025 is the year of the Amplitude platform. Every company needs data they can trust, an understanding of their customers, and ways to take action. That is exactly what Amplitude delivers. First, we help customers get trusted data into Amplitude. This is table stakes in digital analytics. Then we help companies understand what their customers are doing and why using analytics and session replay. This is what we do better than anyone else in the world. Then we enable our customers to take action based on those insights using our activation, experimentation, and guides and surveys products. Companies do not want standalone point solutions. Thomas and I spoke with hundreds of executives over the past year. Every single one is interested in going beyond analytics to Amplitude's platform. I want to take you through what the platform actually looks like in action. So you're a product manager. They use Amplitude Analytics to discover that users are getting stuck at a certain point in the signup flow. You then use amplitude session replay to identify the confusing part of the flow. You then use amplitude feature experimentation to test which new signup flow works better. You realize your users need more help, so you add an in-product guide with amplitude guides and surveys. All of these use cases are more powerful when used together in one integrated platform. Product innovation is the biggest driver of long-term growth at Amplitude. We're continuing to expand our platform with new products that work better together. I want to walk you through some of the highlights from 2024. We had two new products to market. In February, we relaunched Session Replay. Customers like Questrade and TicketSwap use it to understand the user journey, identify issues, and improve in-product experiences. In October, we launched web experimentation. Customers like RBC Life Insurance, Double Good, and Hard Rock Digital use it to A-B test websites with a WYSIWYG editor without needing to rely on engineering. We also made major improvements to the platform. We launched enterprise-grade features like data access controls and data mutability, building our lead as the enterprise digital analytics platform. We also launched Amplitude Made Easy to help users get started and see value in record time. This led to a 40% increase in self-service signups and a 40% increase in the number of new self-service users sending data. Finally, we launched Snowflake Native Amplitude and an out-of-the-box HubSpot integration to make it easier to bring data into Amplitude. We're going to do more in 2025. Last week, we launched Guides and Surveys. We got this product to market only four months after the acquisition of Command AI. Guides and Surveys helps companies deploy in-product guides, tours, and surveys with just a few clicks. Amplitude's Guides and Surveys product provides a significantly better end-user experience than the average product in market. I want to actually show you a demo of all of this now. I'm going to first start by actually showing you how terrible the average guides and surveys product is. So with the average guides and surveys product, you get tons of annoying pop-ups. As a user, your experience is now worse, not better. We call this the pop-up party. Nobody wants this experience and it is not effective for product engagement. Now, I'm going to show you a demo of Amplitude's approach because I want you to see how much better it is. Instead of showing every pop-up to every user by default, we customize what is shown based on what the user is doing in the product. So in this demo, we can see that the user is confused. Their mouse is moving all over the screen because they don't know what to do next. We detect this confusion, and then we ask them what they're trying to accomplish. They let us know, and then we show them in the UI where they can complete the task. This is a tailored interaction that results in a better user experience and higher user engagement. The CEO of European email builder BeFree told us that the ability to guide users through their product in a personalized and data-driven way was the main reason for choosing Amplitude. While it is early, we are already seeing strong demand. During launch day last week, we had a record-breaking number of new signups to Amplitude. We also had some customers buying guides and surveys in Q4 before the product was even launched. A shout out to James, Vinay, and the entire former Command AI team for bringing this product to market so quickly. There is a lot more on the product launch horizon this year, including some exciting AI products. We're going to be sharing more details at our investor day in New York on March 10th. We believe our pace of innovation will continue to build Amplitude's lead as the enterprise digital analytics platform. I wanted to also share what we're doing in go-to-market to win the enterprise. The biggest change for 2025 is that we've created a new strategic enterprise accounts team to focus on our top 30 customers and top 30 prospects. This team is responsible for a significant portion of our ARR. This segment allows us to focus our resources in a more concentrated way on our larger customers. In the last year, we've nurtured stronger executive relationships, which has helped drive higher gross bookings. We now have relationships with C-level and VP levels at almost every large amplitude customer. We've developed smarter account targeting models to help land the right customers and ensure we're building pipelines specifically in the enterprise. This paid off in a big way in 2024 and in Q4 in particular. Lastly, we built out our enterprise sales, product and professional services capacity and have fully staffed teams across the field. Our platform strategy plays a role again here. In Q4, 67% of the new land ARR in our largest targeted accounts came from multi-product deals. However, 75% of our customers still use just one Amplitude product. Our data shows that those who use a product beyond analytics derive greater value, invest more into Amplitude overall, and retain 10 percentage points higher than those who are analytics only. The potential expansion upside for us is big. On customers, we had a great quarter for new and expansion deals in the enterprise with RBC Insurance, Hard Rock Digital, Thrive Market, Western Union, AllTrails, Philip Morris, Calm, Abridged AI, Ultramodal Mobile, MercadoLibre, and many more. I want to talk in detail about three of our customers today. One is MercadoLibre, the company leading the shift to online commerce in Latin America. With over 60 million buyers last quarter, including 7 million new users, they needed a way to turn their first party data into business impact. By adopting Amplitude Analytics, MercadoLibre empowered its teams to move faster, make smarter decisions, and drive deeper engagement. Over 5,000 employees at MercadoLibre now actively use Amplitude, with more than half going beyond dashboards to actively query user data and uncover insights. Building on this success, MercadoLibre is now expanding into feature experimentation and amplitude activation, replacing multiple internal tools with our integrated platform. This shift allows them to test and optimize new features, personalize campaigns, and improve customer loyalty, all powered by the same data. With e-commerce in Latin America at 15% of total transactions, the opportunity is massive. We are proud to support MercadoLibre as they scale, driving innovation and long-term growth. We are also working with more traditional enterprise companies who are incorporating a digital experience across their customer lifecycle. In Q4, we expanded our relationship with one of the world's leading automakers headquartered here in the United States. This customer is fundamentally redefining the driver experience, and Amplitude is helping power that transformation. Historically, their customer data was fragmented across multiple legacy systems. By expanding their use of the Amplitude platform, they are now unifying insights across the entire driver lifecycle, from in-car infotainment to dealership interactions to digital services. With amplitude analytics, their teams can now see how drivers engage with digital features in real time. With feature experimentation, they are testing and refining new in-car experiences before rolling them out at scale. And with amplitude activation, they are delivering personalized interactions that make every drive smarter and more seamless. The result is a more connective, intuitive experience for drivers and a data-driven competitive advantage for the company. Lastly, we are working with the fork. the largest online restaurant booking and discovery platform in Europe and Australia. The Fork serves over 20 million diners monthly and over 60,000 restaurants. The Fork was looking to combine legacy vendors and point solutions into a single platform. Amplitude worked with the team to identify opportunities and workflows across analytics, session replay, and experimentation to reduce their data overhang and accelerate their ability to iterate on both their B2B and B2C applications. The fork can now improve the onboarding process for restaurants, helping to increase subscriptions. It can help those restaurants improve the diner experience, boost first and repeat bookings, and drive reservation revenue. It can also identify reservation patterns and promote them across similar demographics and geographies. As a final note today, I mentioned that churn rates were stabilizing after a relatively tough 2024. A significant majority of our large COVID-era customers have right-sized their contracts. We are seeing signs that the worst of the churn is behind us, but we still have key accounts we need to watch. The macro environment also remains challenging. While we expect churn to keep improving, we anticipate continued pressure in the lower end of the market. Our team is focused on helping customers derive value from amplitude as fast as possible. The best way to reduce churn is to make sure customers succeed. Before I hand it over to Andrew, I wanted to reiterate that I am proud of how the Amplitude team executed last year. We are still early in the digital analytics category, and we are set up to lead it. I'm looking forward to 2025 and beyond. Thank you for your interest in Amplitude. Now over to Andrew to run through our Q4 and 2024 financials in more detail.

Thank you, Spencer, and good afternoon, everyone. I'm pleased with how the team ended the year showing progress against the plan we put in place. Our success is in our hands. We have the right team, right strategy, and right alignment in place to continue strong execution. Our land expand, retain strategy is working as we move up market into the enterprise. And we believe this trend can accelerate. As Spencer laid out, our strategy for 2025 is clear. We are focused on building an extensible platform for our customers that allows them to build mission critical workflows on top of our solution. Our customers creating value with our platform is our number one priority, and we're focused as an organization to increase the value and speed that enterprises can realize with Amplitude. With this, we will continue to iterate on our business model to create a durable growth profile to grow shareholder value over time. When we say enterprise, we are focused on companies that have over 1,000 employees or generate over $100 million in revenue. We'll discuss more about this cohort at our investor day on March 10th, but this cohort is ripe for consolidation from point solutions. Amplitude gives enterprises the ability to have a single source of truth for their data, reducing the need to pivot from one application to another and accelerate their ability to iterate, implement business processes changes quickly. Democratizing analytics within the enterprise is at the core of enterprise decision-making and uniquely positions us to be the consolidator of point product solutions. Our growth algorithm is focused on landing with enterprises, driving rapid time to value, and expanding our use cases. So many customers have deployed a variety of digital technologies to better understand their customers, drive effective marketing, or drive improvements in their digital products, only to discover the pain of managing these environments in the pursuit of driving improved business outcomes. Our sellers are focused on positioning the Amplitude platform to uniquely solve this customer pain. They develop deep relationships within their accounts and become strategic value partners within the organization. By becoming strategic partners with our customers, we believe we will drive greater attachment to our platform and create longer-term relationships. We have seen this start to take hold as our RPO continues to accelerate up 29% year-over-year. Now, turning to our fourth quarter results. As a reminder, all financial results that I will be discussing, with the exception of revenue, are non-GAAP. Our GAAP financial results, along with the reconciliation between GAAP and non-GAAP results, can be found in our earnings press release and supplemental financials on our IR website. Fourth quarter revenue was $78.1 million, up 9% year-over-year and 4% quarter-over-quarter. Total annual recurring revenue increased to $312 million exiting Q4, an increase of 11% year-over-year and $13 million sequentially. Here are more details on the key elements of the quarter. We had a strong new customer quarter focused on the enterprise, but the macro environment still remains difficult for new logos. The number of customers representing 100,000 or more of ARR in Q4 grew to 591, an increase of 16% year over year. In-period NRR was 100%, a two-point increase sequentially. NRR on a trailing 12-month basis was 97%. We continue to make progress and improvements in retention and expect NMR to slowly increase throughout 2025 as we drive greater expansion opportunities. Gross margin was 77% for the fourth quarter, in line with Q4 2023. Sales and marketing expenses were 44% of revenue, a slight increase year over year reflecting the investments we've made in enterprise coverage. We continue to focus on improving sales efficiencies, driving improvements through our changes in the processes and coverage, and moving up market towards enterprise customers. G&A was 16% of revenue, up one percentage point year over year, reflecting increases in legal and acquisition-related expenses. G&A will continue to be optimized to improve as a percentage of revenue over time. R&D was 18% of revenue, up two percentage points sequentially, primarily due to the acquisition of Command AI. Total operating expenses were $60 million, 77% of revenue up two percentage points sequentially, primarily due to the aforementioned increases in sales and marketing and our acquisition of Command AI. Operating profit was a positive $0.2 million or 0.3% of revenue, which was approximately $1 million better than our midpoint of our guidance. Net income per share was 2 cents based on 135.7 million diluted shares compared to net income per share of 4 cents with 129.2 million diluted shares a year ago. Free cash flow in the quarter was a positive 1.5 million or 2% of revenue compared to 1.5 million or 2% of revenue a year ago. Now turning to our outlook. We are assuming that the macroeconomic environment continues to be challenging in the near future. However, we are encouraged with the demonstrated progress of our strategic changes. We expect that every new logo will continue to be tough and that buyer scrutiny has not shifted over the past six months. As we get through the larger levels of churn, we continue to address structural issues in our go-to-market motion to influence greater retention and incent deeper adoption of our platform. We are building a durable enterprise SaaS business that will enable us to drive growth as we deliver increasing value to our customers. We plan to reinvest appropriately against our platform opportunity and will not shy away from any big bets where we see favorable outcomes. Now, for the first quarter of 2025, we expect revenue to be between $78.5 and $80.5 million, representing an annual growth rate of 10% at the midpoint. We expect non-GAAP operating loss to be between negative $5.5 million and negative $3.5 million. Reflecting the linearity in our business is we begin a new year with our new product announcements, sales kickoff, and other go-to-market investments. And we expect non-GAAP net income per share to be between negative $0.03 and negative $0.01, assuming basic shares outstanding of approximately $130 million. For the full year 2025, we expect revenue to be between 325 and 331 million, an annual growth rate of 10% at the midpoint. Our outlook for non-GAAP operating income to be between negative 3.5 million and positive 4.5 million, reflecting our focus on growth with leverage. We expect non-GAAP net income per share to be between 5 cents and 10 cents, assuming shares outstanding of approximately 142.1 million as measured on a fully diluted basis. I'm confident in our ability to build a durable growth model by aligning to the right customers, driving the right contracts, investing to drive greater innovation, and building value for our customers. Our long-term opportunity remains incredibly compelling. With increased discipline and execution, I believe we will be in great position to capture it. With that, we'll open it up for Q&A. Over to you, John.