Amplitude, Inc. (AMPL) on Q3 2021 Results - Earnings Call Transcript
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Jason Starr: 00:00 Hello everyone, welcome to Amplitude's third quarter 2021 earnings webcast. I'm Jason Starr, Amplitude's Vice President of Investor Relations. Joining me are Spenser Skates, CEO and Co-Founder of Amplitude; and Hoang Vuong, the company's Chief Financial Officer. 00:15 During today's call, management will make forward-looking statements, including statements regarding our financial outlook for the fourth quarter and full-year twenty twenty one, the expected performance of our products, our expected quarterly and long-term growth, accelerated investments and our overall future prospects. 00:32 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 Security and Exchange Commission, 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. financial measures used on today's call are expressed on a non-GAAP basis. 01:07 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. 01:35 With that, I'll hand the call over to Spenser.
Spenser Skates: 01:39 Awesome, thank you, Jason, and good afternoon, everyone. Thank you all for joining us on our first earnings call since our direct listing in September. I'm really excited to give everyone here the latest updates since we went public. We're proud of the business that we built and I'm really looking forward to the conversation. So, I'm going to start today's discussion with an overview of our Q3 financial performance, and then I'll also have a refresher on our business model, market opportunity and Digital Optimization System. 02:07 I'm also going to review the traction that we saw with customers in a quarter. I'm really excited to share some stories there as they use Amplitude to drive their product strategy, growth, and business overall. I'll conclude with an update on some new initiatives that we're doing this quarter, including a partnership and integration with Snowflake, the launch of our first annual product report, and the opening of our EU data center. I'll then turn it over to our CFO Vuong, who's going to walk through our financials in detail on provide guidance for Q4 and the full year twenty twenty two. 02:37 Alright. Let's go ahead and get into it. Amplitude had a good third quarter, reflecting the rapid acceleration of the digital world and great execution by our team, revenue grew seventy two percent year on year to forty five point five million, stronger than expected and showcasing the strength and customer adoption of digital optimization. We have several new notable customer wins, which I'll go into in a little bit. 02:59 Existing customer demand for Amplitude was also strong with expanding customer usage and solid traction with our new products recommend an experiment. This was further demonstrated by a dollar base net retention rate of one hundred and twenty one percent, which improved two hundred basis points year on year. 03:17 Before diving further into the results, as many folks here are new to Amplitude’s story, I wanted to provide some additional background on our business, products, and market opportunity. 03:26 Our vision at Amplitude is to help every company build better products through data. We are pioneering a new category of software of digital optimization, which connects product data directly to the business. Companies that spent the last decade transforming their business with digital products, and today, digital products don't just support the business, they are the business. The most successful companies are using product data to drive growth revenue and competitive advantage. 03:53 So last decade of digital transformation was all about IT transformation, reinventing the back office. The next era of digital transformation is about digital optimization. Accelerating innovation and growth for digital products. Digital optimization transforms product strategy from an intuition based process to a data driven one, it uses event data to understand every behavior of our action taken in the product, discover which behaviors drive better business outcomes and answer the strategic question, how do our digital products drive our business? 04:24 As digital products have become a core business driver, the revenue center within companies is shifting from these sales and marketing functions to the product organization. This fee change is resulting in the growing trend of product led organizations and the rise of the Chief Product Officer within the C-suite. 04:43 Organizations that are realizing, excuse me, organizations are realizing that to connect with their customers, operationalize around product event data, and make better strategic decisions they need a digital optimization system like Amplitude. Similar to how sales force became a system of record for sales organizations, and Adobe became the system of record for marketing, we believe that Amplitude can become the system of record for product, representing a thirty seven billion dollar market opportunity. 05:10 We've recognized from the start that data should drive business outcomes. Our digital optimization system is the cockpit to manage measure and optimize the business value of digital product innovation. Our system helps product data, engineering, design, marketing and customer teams to leverage self-served analytics, adapt products based on user behavior, an experiment to create impactful experiences for customers. 05:32 The Amplitude digital optimization system brings together a new depth to customer understanding with speed of action to optimize experiences. We have three products that operate as an integrated solution. The first is Amplitude analytics. Amplitude analytics provides teams with fast, self-service insights in the customer behavior, and is the number one ranked product analytics solution according to G2. 05:55 I'm pleased to announce that we continue to hold our number one leadership position in the G2 fall report which was released in September. The second product is Amplitude experiment, which was launched in Q2 of this year. It is an integrated end to end experimentation solution that enables teams to deliver impactful product experiences for the customers through and control future releases. 06:18 The third product is Amplitude Recommend, also released in Q2 of this year. It is a no code personalization solution that helps teams increase customer behavior, excuse me, increase customer engagement by intelligently adapting digital products and campaigns to every user based on their behavior. 06:38 We believe there are several attributes that make the Amplitude digital optimization system unique. First, the Amplitude behavioral graph is a proprietary user oriented database that we built from the ground up to support the real time interactive queries that power our suite of applications. 06:53 Existing databases are unable or struggle to answer questions about our user journey, due to the sophistication of modern digital products and the complexity of user behaviors across devices and channels. By partitioning the data on a per user basis, the behavioral graph allows customers to quickly answer complicated questions about their user journey. 07:13 Provides novel approaches to normalizing, classifying, and partitioning behavioral data and is a fundamentally new way of joining and making sense of complex end user and product data. The second differentiator is that we operate vertically integrated fast application that gives actionable insights for non-technical users. 07:32 Customers can construct complex queries through a simple point and click interface to rapidly answer complex behavioral questions about their customers journey and their product experience. Users also don't need to be technical or no sequel to answer these questions, which enables a more cross functional usage and data democratization across the teams. 07:54 It also has powerful cooperation tools built-in to allow these teams to share insights for added visibility and productivity to drive more positive business outcomes. A final critical differentiator of the Amplitude digital optimization system is the breadth and depth of our integrations across the technology ecosystem. We take a neutral approach to helping customers export their customer event data into our system. We ingest data through customer data platforms or CDPs, our own SDK and data warehouses. 08:23 What I'm excited to announce today is that we announced, we launched a new product integration and partnership with Snowflake. We're combining the power of digital organization with Snowflakes data cloud. 08:33 Starting today, anyone who uses snowflake can be common Amplitude customer in just a few clicks. Our bi-directional integration joins together Snowflake and Amplitude with their shared customers and breakdown data silos, rich customer data sets, and unlock real time self-service insights. This means every member of an organization can use Amplitude to run lighting facts queries of Snowflake data on the Amplitude platform. 08:55 This integration speeds up time to insight from days to minutes, expands data accessibility, and maximizes its return on data cloud investments. Making customer successful drives our own success. Our paying customer base continued to expand in the third quarter increasing fifty four percent year on year to one thousand four hundred and seventeen customers, driven by strong demand for our products from organizations across a variety of sizes, verticals, and digital maturity. 09:22 Several notable new wins include Macmillan learning, trip actions, Carvana offer and Global. We continue to make encouraging progress with the adoption of new products experiment and recommend. I'll expand upon a few customer stories from the third quarter to provide additional context of what drove some of these wins and are increasing value to customers. 09:44 We continue to gain traction with some of the world's biggest brands. In Q3, a global one hundred manufacturer of automobiles, motorcycles, and power equipment selected Amplitude as their digital optimization system, moving away from Adobe analytics. This company will leverage Amplitude for their core digital products, which allows customers to control and stay connected to their cars from any device wherever they are. 10:06 With Amplitude, this company will be able to automate and deliver self-served customer insights to improve customer satisfaction, convert, and retain customers increased revenue and drive long term brand loyalty. 10:17 Another Q3 win is global, one of the world's leading delivery platforms based in Europe, which delivers restaurant, takeout, and groceries to more than ten million users. In Q3, Global choose Amplitude’s digital optimization system as part of a seven figure deal to drive product strategy and move away from a dependency and business intelligence tools to innovate faster. 10:37 Amplitude will help Global gain a competitive edge by rolling out customer improvements faster, retain more customers, deliver customer journey insights, answer questions about conversions, enable real time data access for their team. 10:50 We're also seeing the power of Amplitude’s digital optimization system help with customers critical business goals and enable them to become more product led. This leads to more expansion and upsells with existing accounts and increasing customer adoption with our new products experiment and recommend. a leading financial services software and payments company continues to scale and expand their use of Amplitude. In Q3, they increased access to Amplitude across multiple business units and teams including engineering, product, marketing, growth, data science and customer success. 11:24 These teams can now leverage common insights to make critical decisions. They've also added Amplitude recommend as part of their analytics strategy to drive growth across the business. also uses Amplitude’s new integration with Snowflake to empower its teams better engage, understand, engage, and delight their customers. 11:40 Another great example of expansion is smart recruiters, a global leader in enterprise recruitment software. Smart recruiters began using applicant Amplitude’s starter addition as part of an analytics improvement initiative driven by their CTO to better understand customer behavior. 11:54 In December of twenty twenty, they became a paying customer of amplitude purchasing analytics. This past quarter, SmartRecruiters also added experiment to learn faster and turn the experience of millions of candidates into competitive advantage for its customer base of four thousand companies worldwide. This will include testing different solutions in U.S. provide valuable insights to candidates about the jobs they have applied for, and for our planning apply for and ultimately create a better application experience and increase the chances of hiring for both the candidate and the company. 12:26 Another great example of an upsell in Q3 is Spirit Airlines, a leading airlines covering United States, Latin America, and the Caribbean. Spirit Airlines work with – started with Amplitude in twenty nineteen to collect feedback and gain a deeper understanding of user behavior. This year, they wanted to drive traffic to their mobile app to increase revenue, ancillary purchases, and mobile check-ins. 12:48 Through amplitude, they track what you interact with, investigate and identify issues through user lookup and cohorts, proactively monitor data and track KPIs for executive readouts. Everyone now has access to clear data and actual insights within seconds, allowing them to make product roadmap decisions faster and prioritize bets for their updates. 13:09 Amplitude’s insights have helped the team increase wide check-in and mobile trending ahead of their end of year goal. As a result, Spirit increased their portfolio with an Amplitude through a volume based upsell in Q3. Beyond these Q3 wins, I'm pleased to announce the opening of Amplitude’s European data center and Frankfurt, Germany. 13:31 European organizations can now experience the power of Amplitude’s number one product analytics solutions, while storing their customer data within the EU in adherence with local data privacy standards. Amplitude has selected Amazon Web Services to host its data center, given its stringent data to privacy and technology standards. 13:51 Amplitude customers can now achieve product innovation and data privacy compliance at the same time. I'd like to thank everyone at Amplitude and everyone who’s involved in the team for completing this important project, which is our testament to our commitment to our customer success and the international growth opportunity ahead. 14:07 Finally, as we’ve shared, Amplitude has a unique vantage point into the product data that offers insights into product and industry trends. Not only do we enable digital optimization, we can help our customers learn and benchmark from an anonymized aggregated data. To accelerate our customers product web journeys, today, we launched our inaugural product report twenty twenty one. We share our insights into COVID’s impact and digital behaviors across industries, predict the next hottest products, and demonstrate the evolution of cross functional data access. 14:36 Never before have so many digital products been used so frequently. In fact, our data shows the massive acceleration of daily product usage. Daily active usage of our product – of our customers’ digital products has grown fifty four percent since January twenty twenty. I encourage you to read the report and learn more about the market trends going on in the product world. 14:56 In closing, I'm pleased with our Q3 results and proud of our team's continued execution. We're at the beginning of a significant market opportunity and look forward on the opportunity to continue to reporting our success in the future. 15:09 Thanks for your interest in Amplitude and I'm not going to turn it over to Vuong to walk through our financial results.
Hoang Vuong: 15:16 Thanks, Spencer, and thanks again to everyone joining us today. We had a solid third quarter with accelerated revenue growth, customer count, and higher net retention rates. Q3 revenue came in at forty five point five million, representing seventy two percent annual growth and continuing the momentum we are seeing in digital optimization. As we mentioned our last call, we had some large expansion in Q2 twenty one, while with easier year over year comp, due to the impact of COVID that are contributing to our growth rate. 15:45 We ended Q3 twenty one with one thousand four hundred and seventeen paying customers, an increase of fifty four percent year over year versus fifty one percent last quarter continuing the acceleration of customer growth. 15:57 Overall, our team continues to execute well on our land and expand strategy, improving our dollar base net retention rate, NRR, to one hundred and twenty one percent and up two hundred basis points both sequentially and year over year. 16:11 As a reminder, this metric is calculated on a trailing twelve month basis. From a geographic standpoint, Q3 revenue from the U.S. increased seventy five percent year over year to twenty nine point six million and international revenue increased sixty eight percent to fifteen point nine million. The U.S. was sixty five percent and international thirty five percent of reported revenue versus sixty four percent and thirty six percent in the prior year. 16:36 Turning to remaining performance obligations, or RPO. In Q3, total RPO increased to one hundred and fifty two million, up seventy nine percent year over year. Current RPO increased one hundred and twenty five point nine million, up sixty six percent year over year, and represents about eighty three percent of total RPO, providing additional visibility into expected revenue in the quarters ahead. 17:00 Before turning to gross margins, expenses, and profitability, please note that I'll be discussing non-GAAP results going forward. As a reminder, our GAAP financial results along with a reconciliation between GAAP and non-GAAP results can be found in our earnings press release and supplemental financial available on our IR website. 17:19 Gross margins was seventy one percent consistent with Q3 twenty twenty in the prior quarter. Moving to operating expenses. For Q3, sales and marketing expenses was nineteen point four million, compared to eleven million last year. This was up seventy six percent year over year and represented forty three percent of revenue compared to forty two percent of revenue in Q3 last year. 17:41 R and D expense in Q3 was eight point six million, compared to four point eight million last year. This represented approximately nineteen percent of revenue, compared to eighteen percent of revenue in Q3 of last year. 17:55 G and A expense was six point seven million for the third quarter, compared to three point seven million in the third quarter of last year. G and A was fifteen percent of revenue versus fourteen percent of revenue last year. As a result, loss from operations in the third quarter was two point three million, compared to a loss of zero point seven million last year. Operating margin of negative five percent to negative three percent in the same period last year. 18:21 As we accelerate investment for growth, net loss was two point one million compared to zero point nine million in the third quarter of twenty twenty. Net loss per share was zero point zero five dollars based on thirty nine point three million shares, compared to zero point zero three dollars in the third quarter of twenty twenty, based on twenty five point one million shares. 18:39 As a reminder, earnings per share is calculated based on the weighted average share count and , but first stock conversion to common and invested upon our direct listing in September. 18:50 Turning to free cash flow, free cash flow was negative fifteen point eight million or thirty five percent of revenue, compared to positive one point nine million or seven percent of revenue in the third quarter of twenty twenty. 19:05 Note, that Q3 free cash flow also grew approximately ten point nine million in direct expenses paid in the quarter. Adjusting for this, Q3 twenty twenty one free cash flow margin would have been negative eleven percent. Turning to our balance sheet, our cash and cash equivalents, was three hundred seventeen point eight million as of September thirty, twenty twenty one, up from two hundred and ninety one point one million in the prior quarter. This increase is primarily due to our series of financing and employee stock options exercise. As a reminder, company did not raise any capital during our direct listing. 19:42 Let's now move into our financial expectations for the rest of twenty twenty one. Based on these strong third quarter results in the leading indicators that we monitor, we’re raising our guidance for the fourth quarter and the references to twenty twenty one from our prior guidance. 19:55 For the fourth quarter of twenty twenty one, we now expect revenues to be between forty six million and forty seven million, representing an annual growth rate of fifty five percent at the midpoint, compared to our earlier and prior expectations of fifty percent growth. 20:08 We expect non-GAAP operating loss to be between nine point two million and eight point two million, and we expect non-GAAP net loss per share to be between zero point zero eight dollars and zero point zero seven dollars assuming shares outstanding of approximately one hundred and eight point five million. And for the full year of twenty twenty one, we now expect revenue to be between one hundred and sixty three point eight and hundred and sixty four point eight million, up from our prior expectations of one hundred and sixty to one hundred and sixty two million, and representing an annual growth rate of sixty percent at the midpoint. 20:41 We expect non-GAAP operating loss to be between eighteen point five million and seventeen point five million, compared to our earlier expectation of a loss of twenty five million to twenty three million. We expect non-GAAP net loss per share to be between zero point three seven dollars and zero point three five dollars, compared to prior expectations of a loss of zero point five dollars to zero point four six dollars and assuming shares outstanding of approximately fifty one point five million. 21:08 Normally, we would not discuss the next fiscal year during our Q3 earning call, but because we provided an outlook before our direct listing, we wanted to affirm our belief that we are well-positioned to grow twenty twenty two revenue over forty percent. We'll provide more color on our expectations since fiscal year twenty twenty two on our Q4 earnings call. But in the meantime, I would like to note that for modeling purpose, and as we shared during our Investor Day, we're expecting to see significant increase on our investments to build awareness, sales capacity, and products over the next few quarters. 21:40 In addition, we're planning to do our company kickoff in Q1 twenty twenty two and also host our amplify user confidence in Q2 twenty twenty two, both of which will be in person versus twenty twenty one. In total, we expect these investments to increase our non-GAAP operating loss margin to over twenty percent in fiscal year twenty twenty two. We believe we're still in the early stages of our market, when prudently invest for growth given our product position and strong unit economics. 22:08 We're looking forward continuing our discussions with investors and analysts in the quarters ahead and are excited about Amplitude’s continued strong momentum and market leadership opportunity in digital optimization. 22:19 With that, I'll turn it back over to Jason to moderate the Q and A session.
A - Jason Starr: 22:24 Okay. Thanks, Vuong. We will now begin the Q and A portion of our webcast with sell-side analysts and our first question will come from Elizabeth Elliott from Morgan Stanley, followed by Rob Oliver at Rob Oliver at R.W. Baird. Elizabeth?
Operator: 22:46 Elizabeth, if you will go ahead and unmute yourself and turn on your camera please.
Elizabeth Elliott: 22:53 Hi can you hear me now?
Spenser Skates: 22:58 Yes.
Elizabeth Elliott: 23:10 Sound any better?
Spenser Skates: 23:09 No. Why done we we will go to the next question Elizabeth, we’ll try to pull you. I’m not sure what’s going on there. So, we'll go with Rob Oliver at R.W. Baird.
Operator: 23:23 Rob, if you'll go ahead and unmute yourself turn your camera on please.
Rob Oliver: 23:40 Great. Yes, sorry. It kicked me out and brought me back in. So, thanks very much. Appreciate it. And thanks for taking my question. Spenser, just one for you, clearly strong momentum in the core product, but you guys are also seeing uptick now from recommend and experimenting, indeed you cited some specific customer wins, which were pretty telling, and so it seems like you've gotten a lot of traction in a pretty short time with those products. We'd love to hear some color around the used cases and what's driving those engagements and what else you're potentially seeing within your customer base in terms of potential engagement with recommended experiment and that I had a quick follow-up for Vuong?
Spenser Skates: 24:32 Yes. So, to be clear, it's still very early for those recommended experiments. This is the first, Q3 is the first full quarter that they've been launched products. And so, yes, still very, very early. I think we're going to, I'm excited to see what sort of impact we're going to have in twenty twenty two and beyond. I'll start up with experiment, and then I'll talk about recommend. With experiment, that one's really exciting to me. I think you talked to – that's been one that's been requested by our customer base for many, many years at this point. 25:03 The feedback that we've gotten is that AV testing and analytics really should be together in the same system. And so, so many customers have developed workarounds for it tried using third party tools, develop their own in-house tooling to work with Amplitude. And what's exciting to me for this one is that we've just seen tons of examples of companies saying that, hey, let's go ahead and use the experimentation platform. 25:31 And because the – first in terms of just where to test, so knowing, okay, here are the different places that I should look for. Things that I can test. Second, in terms of wanting to integrating the results back in your analytics platform, and thirdly being able to target and cohort your users, so being able to say, hey, I want to target users only in this geo or fall under this thing. And so, there's just a lot of natural synergies between AV testing and analytics, and so definitely really excited about that. 26:02 I think we're seeing the earliest traction happen in the commercial business because they're able to change their experimentation, a lot more quickly. We're seeing enterprise wins as well and that's exciting on both fronts. On the recommend front, that's an upgrade of our product that we had and a product that we had earlier called engage, where we could actually deploy cohorts of users. 26:27 One of the really interesting things about that one is that you can do smart recommendations on a per customer basis. So, hey depending on what they’ve previously done, being able to say, okay, hey, I think they're going to be really interested in this feature or this promotion or if I send them a notification that looks like this, they're going to get a lot of value out of that. 26:46 It tends to be the, we have two different flavors of it, what we call level one and level two. So, we've seen a lot of adoption of, kind of the basic version and then a few sophisticated teams embrace the more advanced version that has some of that and all models and stuff like that. So, really excited about those, but again to be clear, those are just launched in Q2. We're only still have only seen one quarter of results from those, but we're really excited about how these have brought us into a full suite of products beyond just the analytics, which we've always been known for.
Rob Oliver: 27:19 Yes, it's exciting. Jason, thanks for allowing me a very quick follow-up. Just, you know the NRR long broke out, you guys have been operating that in a fairly tight range and it's broken out nicely here and obviously trailing metric, but I assume that that's more about just volume increases and analytics and cross sell there – upsell there than it is on cross-sell on the products, but now that we are starting to see it again, it's early, but now that we are starting to see that cross-sell motion work, is that a trend we can expect to perhaps continue in terms of that NRR? Thanks, guys.
Hoang Vuong: 27:59 Yeah, Rob, I think as we look at the, kind of medium long term, we see opportunity to grow net retention rate, both not differently as you mentioned with both volume upsell, but what we consider a horizontal upsell where you're selling two different use cases or additional business unit and product line inside of the company, and then obviously the additional recommend and experiment you just mentioned that just gives us additional firepower to go after existing base. 28:21 And so, the combination of those strength that we're seeing along with you, we mentioned in Q2, we have some really great expansion and then you are coming off of some quarter that had, let's say, less – you know more churn coming from SMB and other from COVID is why we're seeing the increase in net retention rate and we're – our goal is to and keep that well above one twenty.
Rob Oliver: 28:43 Thanks again.
Jason Starr: 28:45 Great, Okay. We're actually going to try and go back to Elizabeth Elliott with Morgan Stanley, and then we'll circle – go next to Taylor McGinnis and UBS afterwards. So, Elizabeth hopefully you're out there and better sound quality?
Elizabeth Elliott: 28:57 Right. Can you guys hear me now a little bit better?
Jason Starr: 29:00 Yes, We can. Great.
Elizabeth Elliott: 29:01 Great. Thanks so much. So, Snowflake integration, can you just provide a little color on how does this expand this dataset that you guys can ingest into Amplitude? And what's the opportunity for new customers coming into the platforms?
Spenser Skates: 29:16 Yes. I think getting data into Amplitude is the biggest challenge from a customer standpoint today. You need dedicated resources, you need engineers to build out that data pipeline, you need categorize in the taxonomy. So, we have a whole process that we help companies do that with. The exciting thing about Snowflake integration is it makes that process a lot faster for customers who already have their data in Snowflake. 29:41 One of the really interesting things we've seen in the Snowflake is, the most predominant used case is actually to put product data into Snowflake. And so, given how widespread usage of Snowflake is, it's a huge opportunity for us to tap into that data stream as opposed to having to instrument that from scratch. So, anyway, so we’ve developed an integration that makes it much more simple so you don't have to do a lot ton of custom engineering work to actually get that data piped into Amplitude. 30:13 We're kind of agnostic to the source. We're not, you can send it to us directly from your servers, you can use a CDP, you can now with Snowflake integration, you can send it for something like Snowflake and so it just unlocks a whole another set of data in a place customers were already trying to collect it and manage it already for Amplitude. 30:31 So, it's early, so we still have, you know we're only, have just started having a few customers in data testing it out, but really excited about that and just, I think it's one of the biggest places from a product data standpoint that has been unlocked because of because of this integration. And so, we'll continue to doing more stuff like that. And the idea is just to make it easier and easier to get set up and starting around Amplitude.
Elizabeth Elliott: 30:58 Great. And then just as a follow-up, you know one of the things you guys are investing a lot in direct listing is just the go to market strategy. So, can have an update on, kind of how sales is rising its hiring and are you seeing any sort of impact from a tight labor market?
Hoang Vuong: 31:12 Yeah. I think we're doing actually well there. I think about today. I think we truly great about kind of, let’s get into the story that we're able to tell both in the market and to customers, and this is that's what we're actually having in terms of winning new customer and expanding customers. I think all those actually bodes well as you're trying to compete like you said in a tight labor market, and we’re continuing to see that we're able to grow our ourselves capacity at this point. So, greater number we're growing on the revenue side and that's intentional given deposit we took last year prudently and so, we're looking forward to next year and continue to build-out capacity at this point.
Elizabeth Elliott: 31:48 Thank you.
Jason Starr: 31:49 Thanks, Elizabeth. Okay. Our next question will come Taylor McGinnis at UBS. And then we will be going to Michael Turits at Keybanc next. So, Taylor hopefully you are out there?
Taylor McGinnis: 32:00 Yes. I am. Hi guys, congrats on the quarter. So just looking at the 4Q guide, you only raised it slightly and it implies a quarter over quarter growth in the low single digits, which is materially below the strong double digit sequential growth you guys have reported in the last several quarters. So, can you maybe just talk about some of the assumptions that are embedded in the 4Qguide? How the guidance philosophy might be similar or different to what we saw last quarter? And just if there is anything like one-time or how we should think about that 4Q guide?
Hoang Vuong: 32:36 Yes. Thanks for the question. I think obviously we're, as kind of a new public company, we want to be pretty prudent about how we're thinking about the next quarter guide. I would say that the one difference is that when we gave last quarter guidance, we gave that towards the end of September right before we went direct, our direct listing. And so, we obviously have a lot more of visibility into that and into what we're doing over the next few weeks, whereas obviously now we're a little bit earlier. And so, I think that we think about that additional time frame, you wanted to be a little bit more prudently conservative about where you're looking when you're guiding for the year.
Taylor McGinnis: 33:11 That makes kind of sense. And then last one for me is just on dollar based on expansion rates, that obviously continues to trend up nicely, but I guess if you look at your expansion rate, it is lower like relative to some other usage based companies. So, can you just maybe talk about like what's driving some of that difference like how your model might be different or as we look ahead? How you guys expect that to evolve going forward?
Hoang Vuong: 33:36 Yes. I think the biggest difference is that because what we're doing with this organization, I think the base of our customer early on was more call it in the commercial SMB space in technology and more companies. And so, you do have that mix versus companies that are more strictly on the enterprise side. As we think, we mentioned prior and we'll give an update when we do our annual fiscal year earnings in February. 33:36 We'll continue to see great momentum in customers over one hundred k and over one million, and as we kind of shift that business, add in additional products, and do those things, I think that we're expecting to, kind of maintain a very healthy rate, and keep our goal above one hundred and twenty.
Taylor McGinnis: 34:15 Awesome, great. Thank you.
Jason Starr: 34:17 Thanks, Taylor. Okay. Our next question will come from Michael Turits at Keybanc. And then he'll be followed by Koji Ikeda at Bank of America. Michael, you are out there?
Michael Turits: 34:27 Yeah. I’m unmuted. I just run videoing, but video but in that case, I think you can hear me. So…
Jason Starr: 34:40 Hey, Michael, sorry, you’re just cutting out right there.
Operator: 34:47 Sorry, Michael, you should be able to start your – great. Thank you so much.
Michael Turits: 34:50 There we go. There we go. Great. Thanks. One for you Spenser, and for Vuong also. So, Spenser, one of the things that really fascinates me is that the product analyst seems to meet the intersection of a lot of other different areas of product focus. There's custom companies that are focusing on product management more broadly, some that are doing digital adoption, the companies that are approaching us from the perspective, even like experienced management guys have product management and the product experience. So, I'd like to know what you guys really focusing on the analytics space in broadening up from there. How you see that expanding strategically and how you think you'll be competing relative to some of these other companies in other areas that are coming at product from those perspectives?
Spenser Skates: 35:50 Yeah. Yeah, yeah, yeah, for sure. Yeah. I think you see a lot of companies converging on a similar-ish value prop, because there is so much value out there in terms of people wanting to use data to leverage that in their product and drive revenue and growth for the business. So, I think that for sure is happening. 36:12 From our standpoint, it comes back to the differentiators I mentioned earlier. So, first in terms of we've architected for the ground up from product data, product data is fundamentally different from different types of data, from other types of data like marketing data or CRM data or long data. And so, it requires a unique type of architecture and approach. And so, we've done that when you want to answer questions about, okay, what has the most positive impact on the user journey? What do my best users have in common? You're coming back. You need certain ways of looking at a product data to make that successful. 36:45 We've also been developing Amplitude for nine years now, and so have really robust built-out SaaS platform that allows people to understand and access that product data and then, so, you've seen that with Amplitude, we’re number one in the product analytic space and then it's about taking product analytics and then leveraging our success there into these other categories. 37:11 Probably the best analogy I've seen is, if you look at what Omniture and now part of Adobe has done in the marketing cloud, they leverage their strength with their catalyst analytics product for marketing, and then translated that to a success in the whole marketing cloud. And so, we're taking the same approach with the product buyer.
Michael Turits: 37:33 Great. Thanks, Spenser. And Vuong, to come back to the guide question and I thought it’s interesting and helpful response from you on visibility and when you reported this time versus last time, maybe a good opportunity to walk through the degree of visibility that you have on call it the next quarter basis, how much is coming off the balance sheet? How much do you have in terms of linearity that you feel that you can see at this point, because again, I think that low single digit is very different than what you put up this quarter?
Hoang Vuong: 38:04 Yes. I think again, you know, if you look at kind of what we kind of reported for RPO CRPO, I think we do actually have pretty good visibility from that standpoint. I think the exact revenue timing is this again, if you think about last quarter, we reported our – talked about it with about a week less in the quarter. So, for us, we knew we already had most of it there, and we want to make sure that we're correct about that here. 38:22 We still have pretty much have about two months less and so it's probably more about the timing risk and how much is still left in the quarter and trying to make sure that we're being prudent about that. And so, I think as we kind of get into a tangible, we report more regularly this time, and we'll use that same kind of consistency, but I do think there was a little bit of a uniqueness given the timing of the direct listing and how close it was to the end of our last quarter. And so, we didn't want to get so – it just didn’t make sense at a point when we had a weak left and what we are new at that point in time.
Michael Turits: 38:59 Okay. Thanks, Vuong.
Jason Starr: 39:01 Thanks, Michael. And our next question will come from Koji Ikeda at Bank of America. And then we'll go to Arjun Bhatia at William Blair.
Koji Ikeda: 39:11 Hey, guys. Thanks for taking my questions. Apologies having a little bit of issues on my video here. So, got a question on the new customer as in the quarter. Really, really nice there was the one hundred and thirty seven, is that a company record? I think that's quite a bit, both on absolute net adds compared to last quarter and last year too? So, is there anything we should be thinking about in the third quarter that would drive such a nice net new ad number?
Hoang Vuong: 39:37 No. I think like, we mentioned we did have an acceleration in total map is right. I think that it is just showing that we're in that early stage of that market. We're beginning to both the awareness and if you are understanding both the power of what we do in this optimization and how they can leverage that as they move away from and get passed I should say, in the digital transformation period. 40:00 We're seeing that uptake and we'll continue to look forward to adding those new customers and kind of . So, I think you saw that last quarter and we continued it this quarter.
Koji Ikeda: 40:10 Got it. Thanks, Vuong. And maybe a question for you or for Spenser, on the competitive front, we are beginning to hear more and more about other digital product analytics vendors out there. Maybe can you give us an update on the competitor front? And who if any are you seeing during your sales cycles out there?
Spenser Skates: 40:28 Yes. So, I think candidly, I am curious to hear you, but we haven't seen a ton in product analytics. Within our kind of core target buyer, which is in the enterprise. I think like any SaaS company, you see a bunch of folks at the low end in SMB and commercial, that’s something that we're always watching carefully to make sure that we're always maintaining our number one position and continuing to build on it. I think, in terms of I'd say, it was in the enterprise, biggest competition is other ways of solving the same problem. 41:04 So, either teams building it in-house through ABI tool or something like that or trying to force fit marketing analytics. So, we're actually not seeing – there's not been that much that's changed at least from our standpoint in terms of – on a deal basis and with customers in terms of what they are choosing for product analytics in the enterprise?
Koji Ikeda: 41:22 Got it. Thanks so much, guys. Thanks. Appreciate it.
Jason Starr: 41:25 Thanks, Koji. Our next question will come from Arjun at William Blair and then we'll wrap up with Tyler Radke at Citi. Arjun?
Arjun Bhatia: 41:33 Awesome. Thanks guys. Thanks Jason. Spenser maybe one for you. I want to follow-up on Michael Turits question about this just broader kind of customer experience space. And I want maybe get your perspective on what role if any you think qualitative customer feedback from a product perspective, what role that plays in kind of Amplitude’s future vision if any and if there's any plan that you have to maybe incorporate that into your roadmap over time?
Spenser Skates: 42:07 Yes. We don't have any plans when it comes to qualitative feedback. I think qualitative feedback is an important signal or channel for product leaders to be able to understand their customers. We're very much focused on the quantitative, if it has to do with the user journey and product data related to it. That's what we want to be best in class with. And so, being the system of record for that and everything, obviously, it's an overlapping buyer. And so, if it could be a future where that’s interesting to us, but right now, we're very focused on everything within digital optimization and kind of a core of product data.
Arjun Bhatia: 42:46 Okay. Understood. And then just as you think about the product roadmap over time, I think you've laid out maybe a goal of launching one to two new products a year. So, two questions on that, maybe first, if you think about in broad strokes, if there's any kind of sense that you can give us that we intend to focus those product investments over the next year or so? And then two, when you think about monetization, should we pursue that to be directly – those new products to be directly monetized upfront or would you wait until there's a critical massive adoption until you start focusing on monetization?
Hoang Vuong: 43:27 Yes. So, it depends a lot on the product. I think one of the areas that we've been spending a lot of time is on the data front. So, we acquired a data management company earlier this year and we're looking to do a whole bunch more there, both through internally and through potentially acquisitions if the right opportunity comes along for us. And so, we'll be doing a whole bunch more there, Snowflake integration is part of that as well. 43:54 From a monetization standpoint, it really does depend on the product, experiment and recommend are two products that have kind of a very direct monetization path where it's like hey, you getting more value, you unlock, these workflows that you weren't able to do before, and so we're able to charge for them directly. There are other, again, it depends on the product and like for more data centric products though, for example, that's something that we'd be looking more to give away to our customer base to help them get set up and properly use Amplitude, because the ROI on that can rather them have it for free than they give as a charge point, but it varies per product. 44:30 It varies in the perceived value. I think the end goal is less on like, hey, you know we're going to upsell twenty percent from this product and fifty percent from this product and more, hey, we have the full answer in terms of a complete suite that we're able to say hey, we solved the product data problem for you and everything associated with it. And then that's when you can get a real premium on what we're able to charge our customers because you're no longer just self-solving a piece of it, you're saying, you go to the product leader and say, hey, we're solving everything end to end when it comes to managing your digital business.
Arjun Bhatia: 45:05 Perfect. That makes sense. Thank you very much and congrats on the quarter.
Hoang Vuong: 45:09 Thanks Arjun.
Jason Starr: 45:10 Thanks Arjun. And our final question will come from Tyler Radke at Citi.
Jason Starr: 45:15 Hey, Tyler?
Tyler Radke: 45:16 Hey, good afternoon guys. Thanks for taking my question. I wanted to ask you going back to the Snowflake question, I guess first, was this something that you really saw strong demand for from your customers, and Spenser, you mentioned that it sounds like kind of in the final state of the product, customers on Snowflake will kind of be able to deploy Amplitude pretty quickly? So, I'm just curious how you're thinking about that kind of accelerating the pace of new customer acquisitions longer term? Thank you.
Spenser Skates: 45:47 Yeah. We're not forecasting any particular, hey it's going to be this much or that much. I think it's kind of more of a where it's like helps remove a blocker to getting on board with Amplitude and one that I'm pretty excited about just because it's like, we can there's whole new class of customers that really didn't have the opportunity to be Amplitude customers before, but now do, and so, so it definitely is one of the things that will help drive that, but it's not like magic bullet in itself to say, oh, all of a sudden our customer acquisition rate is going double. And so, we'll continue doing things like that in order to make it more frictionless for people to get set up with Amplitude.
Tyler Radke: 46:32 Great. And then you mentioned in one of the, I think customer examples in the annual your prepared remarks just around the displacing an Adobe solution and I'm just wondering kind of what you're seeing in terms of the mix of rip and replacements versus greenfield just where that is staying and how you expect that to evolve? Thank you.
Spenser Skates: 46:50 So, to be clear, I think that's an exciting example because I think that is a huge long term potential for Amplitude as to become particularly as we see the product and marketing functions converge over time. I think in the vast majority of cases though, we'll be coming in alongside in the Adobe or Google analytics or marketing, you know in most organizations, the product in the marketing organizations are quite distinct. So, we'll sell into the product and they'll continue using whatever tools they have. 47:24 And so, I think that's probably more of an exception at this point than it is the before. But in terms of the datasets, overlapping, potentially combining over the long term, it absolutely is a trend there. And so, it's, I think it's a really interesting case, which is why I was excited to share it today.
Tyler Radke: 47:42 Thanks so much.
Jason Starr: 47:44 Great. Thanks a lot Tyler. Okay. And with that, we'll conclude today's discussion. Thanks for being on our webcast today. We look forward to seeing many of you virtually this quarter and hopefully in person next year. Take care.
Spenser Skates: 47:55 Thank you all. Good-bye.
