Q2 2022 Amplitude Inc Earnings Call
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.
Clearly from those described in the statements further information that could cause actual.
Our results to differ is included in our filings with the Securities and Exchange Commission.
Youre 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 in today's call I 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.
<unk> prepared in accordance with GAAP a reconciliation between these GAAP and non-GAAP financial measures is included in the earnings press release, which can be found on our Investor relations website at investors Dot aptitude Dot com.
With that I'll hand, the call over to Spencer.
Thank you <unk> and Hello, everyone.
We appreciate you tuning in for our Q2 2022 earnings call.
Amplitude had a great second quarter.
We're seeing many opportunities for growth in our early market.
We closed our second quarter with $58 $1 million in revenue up 48% year over year and above the high end of our guidance.
Our dollar based net retention rate was also strong at 126%.
And as Youll hear from Wong, we're also raising our top and bottom line guidance for the year.
We hosted 500 product leaders in person at amplify our annual user conference.
Great to see so much of the product and data community there in person for the first time in three years.
At amplify we made our biggest set of product announcements in company history.
This included a brand new product amplitude CDP and lots of new features in our core analytics product.
We also hired our first ever company President Thomas handset Tom.
Thomas will lead all of our go to market efforts and help us reach the next stage of maturity.
There's a lot to be proud of for Q2, but we are just getting started at amplitude.
Our vision is to help every company build better products through data.
We are a digital analytics platform that gives self serve is visibility into the entire customer journey.
When teams understand how people are using their product they can deliver better product experiences.
With amplitude they can understand what product features are working where users are getting stuck and what actions lead to the right outcomes.
Nothing is more critical to driving digital revenue growth.
Amplitudes digital analytics platform is made up of three products.
Amplitude analytics, which provides real time digital product data and is the core of everything else, we offer amplitude CDP, which creates a single source of truth for customer data and amplitude experiment, which powers runs and analyzes product tests.
Amplitude is fundamentally different from legacy analytics solutions legacy analytics focus on page views instead of understanding the end to end customer journey.
They're not self service for an organization. If your company is building a digital product you need amplitude to know, what's driving impact and what to build next.
Amplitude success is driven by three mega trends that are impacting every business.
The first is digital transformation companies have made massive investments in digital products and now they need to show a return on that spend amplitude helps companies optimize their digital products to drive revenue.
The second is data driven products companies are moving from an intuition based development process to a data driven one amplitude makes that switch possible.
The third is product led growth.
<unk> businesses view of the product itself as their number one revenue driver amplitude connects the product you build to revenue and business outcomes.
We havent elite engineering team that puts rapid innovation at the core of everything it does.
At amplify we announced our biggest set of product launches in company history.
Product innovation at amplitude remains the most important priority for the long term and how we create and sustain value for our shareholders.
We believe our most valuable innovations have come from when an engineer with deep technical expertise is combined with a strong understanding of the customer problem.
We launched four new features that improve the value of our core analytics product, which is foundational to everything we do.
The one I'm most excited about is campaign reporting.
This enables teams to understand which acquisition channels users are coming from and how marketing programs impact product goals.
The second is metrics and lets users tie customer behaviors directly to business outcomes, not just product ones like sales and customer lifetime value.
The third is our new data tables, which allow customers to measure multiple kpis and a single view. This is critical for advanced analysis and reporting because it enables side by side analysis.
The last is experiment results experiment results allows companies to use their own AB testing infrastructure, while they analyze the results and amplitude.
This makes our experimentation capabilities more accessible to large enterprises, who prefer to use their own feature flagging infrastructure.
We also launched a brand new product at amplify amplitude CDP or customer data platform.
Now companies can collect analyze and activate customer data in a single platform.
Amplitude recommend our audience segmentation and targeting capability will be folded into our CDP and become an add on for it.
Our goal with entering the CDP space is to make it easier to start with amplitude.
We never want the need for a CDP to be blocker and amplitude CDP provides an easy entry point for companies to get started with us.
We want to reduce duplicative spending for our customers. So they are not paying different vendors for CDP and analytics.
Amplitude CDP has the benefit of being integrated with our analytics product, which allows you to use the same tools to manage data across both products.
While there are a number of benefits to using amplitude CDP, we're agnostic as to whether customers use our cdp's or third party cdp's, we want customers to keep their data wherever it best fits their use case, we will continue to work with other cdp's in the same way we have before amplitude is already at the top.
Estimation for many other cdp's.
Launching amplitude CDP allows customers another choice as the CDP space becomes commoditized.
We welcome Thomas Hansen, as our first ever President last month to help us get to the next stage of growth.
He will lead amplitudes go to market efforts.
This includes sales customer success marketing partnerships and revenue operations.
Thomas is track record speaks for itself, having led multiple businesses towards $1 billion in revenue and his roles as CFO of UI path.
Crow and COO at carbon Black and senior leadership roles at Dropbox and Microsoft.
A few things really stand out to me about Thomas he is an exceptional ability to develop and hire great leaders.
He also has experience scaling companies that amplitude stage of growth towards a 1 billion in revenue.
Most importantly, Thomas as someone who embodies the cultural values that we've built amplitude around humility ownership and growth mindset I have been impressed by his level of empathy as well as its ability to navigate who amplitude is as a company in his short time here so far.
In Q2 amplitude was named a strong performer in the Forrester wave customer analytics technologies report.
We received perfect scores on eight criteria. This includes product vision performance customer journey analytics next ex experience analysis user personas and more.
Amplitude also ranked number one in eight categories in the G. Two summer 2020 to report we ranked number one in product analytics for the eighth quarter in a row, we ranked number one in mobile app analytics for the third quarter in a row and we also ranked number three in digital analytics for the sixth quarter in a row. These are big Validators for our.
Our leading position in the market.
Organizations of all types are increasingly understanding the importance of taking a data driven and product led approach.
Some big wins in Q2 include you Ipass Groupon and Dino.
You might recall that last quarter, we talked about how Google analytics is shifting its customers to a new platform.
We continue to view that as an opportunity to introduce many of their customers to the power of amplitude.
I'm happy to say that this catalyst helped drive two of our biggest lands in Q2 amplitudes sophistication and ability to go beyond the surface level metrics truly resonated with them.
I think we're early on in attacking this opportunity.
Our land and expand strategy continues to pay off we had several notable customer expansions in Q2, including web flow Chick Fil, a jersey Mikes Al Jazeera U S and Cisco innovation.
Companies need to prioritize their digital product experiences regardless of the environment.
A great example of an enterprise win as Groupon, the global online marketplace for services and experiences after relying on another tool for the last year and a half the groupon team realized it needed a better digital analytics solution that could handle it as heavy of that volume and return inquiries in seconds.
That's why Groupon selected amplitude analytics now its product engineering analytics and marketing teams are using amplitude to build better customer and merchant experiences.
Jersey Mikes, the sub sandwich restaurant with more than 2200 locations across the U S has been an amplitude customer since 2019.
After overhauling its app to drive online sales the Jersey, Mike's team needed a better way to get the right messages and promotions in front of the right people.
A big portion of its daily online sales are driven by my mikes loyalty members. So it used amplitude to identify which customer cohorts would be the most likely to join US loyalty program based on average order value and number of items purchased.
With that insight the Jersey, Mike's team was able to serve tailored messaging and incentives to that cohort in order to drive more loyalty program sign ups.
And in Q2, it renewed and expanded its work with US to include amplitude recommend.
<unk> the world's largest first data party data platform for insights activation and measurement purchased amplitude analytics in Q2.
In the past <unk> used a combination of log based data and customer feedback to inform product roadmap decisions and allocate developer resources.
But its team was ready for a more sophisticated approach.
Now <unk> product engineering and customer successful organizations are using amplitude to access actionable customer data and make more informed decisions.
Tag Hoyer, the luxury watchmaker owned by Fortune 500 company Lv MH started working with amplitude at the end of last year to better understand the performance of its connected smartwatch.
In Q2 tag Hoyer expanded its partnership with amplitude by adding amplitude recommend.
By using amplitudes advanced audience segmentation capabilities the tag Hoyer connected team can make better decisions that benefit the end customer.
I know the topic on everyone's mind is the current economic environment.
I'll give you my high level view and I'll, let <unk> speak to it in more detail.
I am encouraged by the continued demand im seeing for amplitude based on customer conversations.
On expansions once up and running our customers tell us that we are a mission critical part of their technology stack.
We saw several $1 million plus expansion this quarter and drove more multiyear deals. This is very strong validation of amplitudes value even in challenging times.
We've said the exact timing of expansions is hard to predict that remains a work in progress for us.
We've seen an outsized benefit for many companies leaning into their digital efforts over the past several years.
We're cognizant of our exposure to some specific businesses, namely Covid beneficiaries crypto and early stage startups.
As it relates to the new business, we are playing in and helping shape and earlier category of software.
This is a process that takes time and focused education within the market.
Product analytics continues to be seen as a strategic must have by many despite this it should be no surprise that new buying decisions are taking longer and are subject to more approvals in this environment. Some regions and industries that have been notably more challenged than others, specifically parts of Europe and within the SMB market.
<unk>.
We are operating with the assumption that will be more difficult going forward for early stage startups and smaller companies.
Long term amplitude is a must have for any organization.
I've never been more excited about our market opportunity, we see more validation today than ever before amplitude is one of the ways that customers can do more with less in a world where that incremental dollar is harder to come by.
I want to share how we are managing the business in the current macro.
Given our vantage point, we were early and taking a conservative approach to the year, we have been selective on both hiring and investment.
We're confident in our ability to continue to execute in this environment.
We are driving sustainable growth, we're continuing to make strategic bets and product innovation to further our competitive differentiation on.
On go to market, we're focused on driving awareness of our category and solutions and maturing our efforts in efficiency.
We've always had good instincts for how to help our customers those instincts are critical in helping us navigate the coming period.
We are building a world class team here at amplitude has an early company, helping to shape the category I am confident our best days remain ahead.
You for your interest in amplitude I'd now like to turn it over to Wang to walk through the financial results.
Thanks, Spencer and thanks again to everyone for joining us today we.
We had a strong second quarter with revenue of $58 1 million up 48% year over year boosted by large expansion early in the quarter.
Paying customers were up 43% year over year to 1836 <unk>.
Based on our retention was strong solid at 126%.
We also achieved a new milestone we generated $8 2 million in free cash flow, our best quarter ever.
Now as a reminder event volume plays an important role in determining our subscription pricing.
He then volume can fluctuate.
And last year, we saw very robust growth as COVID-19 accelerated digital adoption.
Today customer facing a more challenging and uncertain operating environment certain businesses, namely Colby beneficiaries crypto and early stage startups our theme of volatility.
We're managing the business using key metrics like SaaS Magic number row, 40 and quota team.
Combine this with the current economic environment, we think it is prudent to lower our risk appetite on investments in the <unk>.
Half of the year.
This means we'll be more conservative with head count growth.
And thanks to our diversified customer base and product value. We are confident we can navigate the environment and come out even stronger.
Our long term opportunity is huge customer overall demand for <unk> remains strong and we are still very early in our market.
For example, the consumer Internet company that benefited from the acceleration of digital during Covid sign a multi year million dollar plus expansion deal this quarter, because they embraced product led growth despite economic concerns.
Geographically revenue from the U S increased 40% year over year to $35 5 million in Q2 or 61% of total revenue.
And international revenue increased 63% to $22 6 million or 39% of total revenue.
The war in Ukraine is impacting our European business, we're no longer going after new business in Russia, but we're also seeing some delay in Europe .
Total <unk> increased $227 6 million up 64% year over year in.
And current <unk> also increased to $170 2 million up 46% year over year.
Our strong growth in <unk> reflects solid execution in Q2 and customer growing commitment amplitude.
We wanted to drive more multiyear deal and we continue to see this increased steadily in the last 18 months.
I'll be discussing non-GAAP results for Q2 going forward.
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.
Our web site.
Gross margin was a record breaking 74% up 360 basis point year over year.
This was boosted by a credit from our hosting provider for reaching certain product milestones.
We have made a lot of progress in the gross margins and expect to continue to operate in a range of 71% to 74% in the near term.
Turning to operating expenses in the quarter.
Sales and marketing expense was 53% of revenue compared to 49% of revenue in Q2 2021.
This was primarily due to our amplify comment where we hosted the 1500 customers and partners in Las Vegas.
It was a fantastic event.
We also evaluate our spend in first half noted, we can do better with sales and marketing efficiency.
This will be a focus area in the second half.
We are continuing our investment in core product analytics by adding to experiment and CDP.
These investment increase our R&D spend to 22% of revenue we.
We are still hiring but at a more measured pace.
Our higher level of investment.
It resulted in an operating loss of $9 million or negative, 15% compared to a loss of $4 2 million or negative 11% in Q2 2021.
Net loss per share was <unk> based on 111 million shares.
<unk> to a loss of 15 with $29 7 million shares a year ago.
Cash and cash equivalent were $310 million at the end of Q2 up from $307 4 million at the end of the prior fiscal year.
This was driven by our best ever positive free cash flow of $8 2 million or 14% of revenue compared to negative 15% in the year ago period.
The beat in free cash flow was driven by a few large renewals that happened earlier in the quarter, allowing us to bill and collect for them in Q2 versus Q3.
I will again reiterate our approach we're balancing growth and profitability long term, we have never been a growth at any cost company, that's simply not in our DNA.
Our focus is on sustainable growth.
We are mindful of this but we invest when the digital analytics market.
By the way it makes sense for us and that's because of our favorable unit economics and strong balance sheet.
At the same time, we are committed to improving operating margins every year.
Or a medium term goal of breakeven operating margins and positive 10% free cash flow.
Now for our third quarter guidance, we expect revenue between 59, five and $65 million.
Representing an annual cooperate a 32% at the midpoint.
non-GAAP operating margin of negative 16% to 17%.
non-GAAP net loss per share to be between 7% and <unk>.
Assuming shares outstanding of approximately $112 1 million.
For the full year 2022.
We are raising our revenue guidance to 232 and $236 million for an annual growth rate of 39% to 41%.
This is higher than our prior range $229 million to $235 million.
We expect non-GAAP operating margins between negative 15% to 16% a significant improvement versus our prior guidance of negative <unk>, 19% to 20%.
And we expect non-GAAP net loss per share to be between 34 and 36.
Assuming it fares outstanding of approximately 111 6 million.
Please also note that net retention rate is a 12 12 month number we expect it to decline in the near term as a as a reason as of the record expansion from Q2 2021 become part of the base.
Our guidance reflect recent customer compensation spend environment and event volume trends.
For context.
And from the macroeconomic environment resulted in a negative $1 million to $2 million impact on our Q3 revenue and a negative $3 million to $4 million impact on our fiscal 'twenty two revenue guidance.
In summary, we delivered strong Q2 results and we will continue to manage the business for sustainable growth.
Our long term opportunity is more clear today than it's ever been.
With customer it is clear amplitude remains a key priority.
With the new talent, we're bringing in and new products will grow our market.
We are confident that we will continue to execute as we scale.
With that we look forward to your questions.
As a reminder, please keep your questions to one and one follow up if interest time. Our first question will come from Koji Ikeda with Bank of America, followed by Tyler Radke of Citi. Please go ahead.
Yeah.
Yeah, Hey, guys can you hear me, Okay. We can hear you great.
Great.
So just two questions from me you guys brought on Thomas.
How much did you go to market here.
I guess a question maybe for Spencer Wang or Thomas and he is available.
How do we think about kind of the balance focusing on expand versus focusing on on new logo growth over the next 12 to 18 months.
What the prior commentary about a more prudent approach to the sales and marketing spend in the second half. He is new to the organization. So how to think about where he is going to be putting dollars to work from a go to market strategy and I guess Spencer how involved are you going to be or not going forward with any sort of go to market activities are going to be seeing clients out there too.
Just kind of stepping away from that.
So I appreciate the questions <unk> I'll try to I try to get to each one of them. So I'll continue to be involved in go to market I spent a lot of time with customers.
Went to Europe in Q2, and got to hear firsthand from a lot of the product and data leaders out there and they're going to be continue to be involved in key deals in helping shape our go to market.
Thomas joining is really about setting ourselves up from the path from here to $1 billion in revenue and as part of that I'm always looking to mature and improve how we execute from a leadership perspective across the board.
We obviously talked about bringing in Lambert last quarter and that was a huge part of that and then Thomas This quarter is just another part of getting someone who has seen that journey.
Two 1 billion before.
I think from my standpoint, you always get the best results when you combine <unk>.
People, who have seen that journey and who have the experience with great internal talent that has the context from amplitude.
And then in terms of your comment on spend I think to <unk> point, we've never been a growth at all cost company. It's always been we've always been relatively efficient given our size and stage in growth rate and so I think both looking at in the context of the macro as well as having Thomas join in it's not like we are.
<unk> to make any massive changes to how we invest or totally changed its about maturing it to the next stage in terms of how we serve our customers.
And I'm really excited to welcome him to the company to help us drive that.
Okay.
Sorry, I'll add to that Cody a little bit on <unk>.
I think there are two areas, obviously I think on the land side I think there is a huge opportunity and we're currently only at 18 on your customers because I think there is huge opportunity for us on the land side on the expansion side. We've always had really great success. Once a customer really adopt Arctic led growth I think the real opportunity is trying to figure out those early customer how.
Do you increase awareness to relationship so that they get to the point, where it's a no brainer that they need to be product led and empathy is critical to that success and so that beginning motion expansion and the land or a real critical focus areas for us.
Got it got it and then just one quick follow up I appreciate all the commentary on on kind of the prudent approach here in the second half I really appreciate that and Mike.
My question kind of goes the other way what are you maybe kind of looking for in the end markets are maybe the pipeline or or anything else out there would maybe be a green light for you to step on the gas a little bit harder. Thank you.
Yeah, I think we really look for it just like what we are seeing I think we continue our conversation with the customer I think that our awareness and raising that awareness and education. A product led is still an investment that we want to do and that's why amplify is so important I think the signals has become when we hear feedback and more.
Examples where people go I Gotta get now this is critical there is no other way to drive growth in our ROI in world and we believe that obviously that the bathroom. That's when you can make is around investment in product, let grow and so I think when you cross that are call. It a bridge that chasm that point.
That's what we would really continue to extend that speed up again, but I think we always want to be prudent and contingent.
Valuate, our spend to make sure that we're being efficient.
Maybe to say it a different way I think we are making the investments now amplify was obviously a big investment in Q2, just to see the amount of engagement.
Coming out of Covid, and so many people showing up to an in person conference.
Great way to raise awareness on the product side, we're continuing to make investments in new product CDP was just the latest I. Even go Q2 was the largest set of product announcements in company history. So we're still making all the investments across the board I think where we want to be cautious as on the margin. So we definitely don't ever want to get into that growth at all cost company and.
Overspending.
Because thats just not thats just not how we are helping so times like this and a lot of ways.
It's good because we can continue the same approach of investing that we always have while continuing to grow market share.
Got it thanks, guys. Thanks for taking the questions.
Great.
<unk> from Citi, followed by Taylor again, it's from UBS Tyler go ahead.
Okay.
Great. Thanks for taking the question here.
Wanted to ask you a little bit more about your assumptions on the guide and specifically kind of going back to some of the comments <unk> made on on how the quarter played out.
So I guess first is it is it fair to say that the guide implies things getting worse from what you saw in the second part of the quarter or are you assuming those dynamics kind of carry on throughout the rest of the year.
And then I'm just curious in terms of your comment on net retention are you seeing any churn or down sales thats impacting that or is it simply just slower expansion. Thank you.
Thanks, Tyler so forth on our guidance.
The way that we approach guidance Hasnt changed.
We start every quarter and we look at the information that is available and in particular for now we looked at basically what we saw in June and in July and we've.
Actually incorporated that into the guidance and I think that's what you are seeing when we said that the macro environment. We believe it will cause us to kind of reduce our Q3 revenue by $1 million to $2 million and our guidance for the full fiscal year by $3 million to $4 million and so I think we'll continue to reevaluate every quarter, but any potential kind of reconcile like that we've actually already.
Corporate into our guidance.
And the net retention rate question again, just as a reminder, net retention rate is a trailing four quarter number.
Numerous times about the fact that we had some really large expansion in Q2, 2021 that now become completely and well down into the denominator and then also if you remember in Q1, we mentioned that we had a huge turn coming from.
What we took as the as our decision to cease doing businesses in Russia, and so that churn along with the turn from Twitter all of this obviously has a headwind.
So as.
As you can also imply from the fact that we do see some small potential risk to churn in Q3, and Q4 and that's what is impacting some of our guidance number with some of those.
But all that put together, we do feel like there is headwind coming to the trailing 12 month number for net retention rate and so that's why we're saying that net retention rate will decline over the last couple of quarters.
But I will finish off I guess on the last degree where we would think that retention rate is in the long term, we actually have a lot of confidence that our net retention rate and the long term will be about 120 and why do we believe that we're still very early in the in the market. We're only at 1800 customers a lot of those customers are still very early in their <unk>.
<unk> of product left grow and we're also launching new products and so as those customers expand and our product attached to it we're confident that our net retention rate will be healthy in the long term, even though we may have a few headwinds in the near term.
Great.
Could you talk just about what Youre seeing.
The expansion side.
Industries that are outside of these digital native are proven winners any change and expansion trends there.
Eastern your assumptions of those expansion plans. Thank you.
I think on the customer side, we are still continuing to see strong expansion I think in Q2, we had multiple million dollar expansions and so that was a very encouraging sign for me, we actually had a customer that was doing multiple millions that announced the hiring freeze during the quarter.
And my first reaction on that was concerned what ended up happening is they increased spend on amplitude.
Q2, as well as they committed to a two year engagement and so it just spoke again to the long term value that we have and that we are a big part of helping them become number one position in their space.
Great. Thank you.
Thank you next question from Taylor Mckinnis, followed by Nick Altmann, Tim Please.
Go ahead.
Yeah, Hi, thanks, so much for taking my question. So maybe just to go off.
The question that Tyler just asked but you talked a lot about like your exposure to Covid beneficiaries. The startup community can you just quantify.
Exactly what that exposure it looks like for us a little bit better and then just in terms of what's embedded in the second half guide is that the one to 2 million that you talked in <unk> and the additional conservative.
For the rest of the year is that additional conservatism across the constant beneficiaries and startups or is it just one or the other maybe you can operate.
What's driving that.
For sure I appreciate Taylor, let me give some high level of what I'm seeing in our business and then I'll, let <unk> speak to the specifics.
So first on the exposure side, we wanted to make sure to call. It out. However, if you look at our customer base overall, we've always been very diversified across lots of other verticals. So b to B media Fintech quick service restaurants lots of things that are not have the same level of exposure and so we feel good about our ability to continue to grow <unk>.
Heartless of what happens with that segment of customers.
The second thing is within those areas that do those customers that do have that exposure. We are still seeing that were existential to those customers and so for a lot of smbs are for a lot of crypto companies or for Covid beneficiaries.
We are going to be one of the largest spends because were so important to how they succeed and drive revenue growth through their digital product and so we end up being one of the last things shut down whenever they have challenges and so I feel good about our position even within those companies.
Taylor, Thanks, and first I wanted to make clear our guidance incorporate not just any potential with a term that we may see from any of the.
The segment that we're talking about whether that'd be crypto or early stage funding are adequate or the Cobra beneficiary, but also any kind of impact were having from the fact that we're no longer doing new businesses in Russia. If we're seeing any kind of deal delay or slow down potentially that's coming from Europe . So even new land business. So I think that our guidance reflects all those trends that were kind of <unk>.
<unk> from both June and July , but then to hold sizes is kind of think about it.
I think we're really lucky we actually have a very diversified customer base and I think a lot of time people kind of believe our business a lot bigger in certain segment our concentration than they are so I'll just give you an idea for instance in the early stage funding.
At a company that represents a little bit less than 15% of our current revenue today.
On the crypto side, that's about a little bit less than 5% of our revenue today.
All the beneficiaries and much harder call. It break out because you have a b to B enterprise software in there or you have consumer Internet companies and there you also have financial and payments company in there and I think that's obviously a pretty big swath.
Big segments and big industry, what we see there is that is not it's not all in one bucket you have certain customers in that in that call. It COVID-19 beneficiary, there are actually still growing.
What may not be as strong as it was early last year, but they're still growing pretty well and then you have others that were.
Slow and then you have others that do have a small contraction that theyre seeing but net net we kind of added that altogether and.
And we think our exposure there combined with the new business combined with some of the gluten Spansion is exactly what we reflected in the guidance.
Perfect and then just as a.
I'll follow up on the CRP outgrowth, it looks like that decelerated pretty materially in the quarter I think part of that is a function of you know some of the larger expansions that you.
Flagged earlier.
But can you just talk about how much of that is really just lapping some of the expansion activity last year versus maybe some of the macro things that you highlighted and just as we look ahead anything to keep in mind from a seasonality perspective that might change relative to last year as we think about the second half of the year in that in that.
Hi.
Yes, Tyler Great question I do think that our CPO growth is actually still a strong I mean, obviously has come down from the 60 that that it was in prior quarter I think that is a reflection of that.
Our business in some of the large expansion that happened early last year kind of acting both as a base.
Kind of where we are I think that as we look at the cutting the guide I would also call out that we had about $10 million or so in early renewal expansion, which we think are awesome and great. Because we wanted to make sure our customer that they need to that we knew in advance as early as possible but that.
Result in about $10 million or call. It billing our collection that we would normally they expected in Q3 to pull into Q2 and that is a.
Part of the reason why we obviously generated $8 million in free cash flow for the quarter also.
Great. Thank you next question the open discussion.
Followed by Jefferies Piper Nick.
Turning to guidance.
Yeah, Hey, thanks, guys.
Earlier, you sort of alluded to how you're keeping a close eye on the event volume side of the equation.
I'm just wondering could you quantify how much of the revenues really tied to sort of the event volume side of a contract versus the platform fee side.
Yes, sure Nick first of all the way that we determine our pricing is we look at both the product and event volume together and that basically come into the pricing of your subscription as a reminder, we're not a consumption based model for revenue, we take the subscription pricing and we recognize it ratably over.
The period of that contract and so the combination of all of the event and the product and divided by bathroom.
Okay. Okay. That's helpful. And then I guess, maybe just a little bit more of a higher level question for Spencer.
You guys have sort of expanded the product portfolio nicely over the past couple of years you just made a segue into CDP I guess my question is what sort of gives you the confidence as to why these other products sort of outside core analytics can become meaningful growth drivers and why not just sort of focus more on.
On the core analytics offering given that's sort of the bread and butter of the business and perhaps a little bit of a more attractive Tam.
I think first and foremost we are always going to be playing offense. When it comes to product innovation, whether thats in our core where we do really well and product analytics or whether thats. In these new products. I think is part of the journey of getting to $1 billion in revenue.
Almost every SaaS company has that has gone through that journey does get into multiple products and so it's important for us to start flexing our muscles and that early.
Obviously announced CDP that play was less about driving more.
Expansion dollars for amplitude as it was about lowering the barrier to entry and removing reasons for why people can't get started with amplitude now.
And so a lot of the features within CDP or already people are already using on the analytic side and so.
That was just the packaging from our customers, where it's all about how they think about those pieces of value and consuming in and digesting them on the experiment side I think even though it's only a year and I think we've seen a lot of really strong synergy.
<unk> analytics, an experiment I think theres just a lot of we saw a lot of big expansions in Q1.
<unk>.
We also.
It's been a pleasant surprise to me at how much value someone gets of just having those two things together and so as I see the space play out for the long term, there's kind of a suite of products that kind of all end up combining under the same umbrella from a customer side and we want to make sure to meet the customer needs.
We're hearing from there and so it's all driven from the request that we hear from them and so I think what we have to do on the product side is make sure that we're always having the dominant position with an analytics, while still continuing to innovate on these new areas.
Yeah.
Great. Thanks.
Sure.
Thank you Clark.
Europe next followed by Arjun Bhatia.
Please.
Thank you.
Since we're coming out of amplify I think what struck me was the number of features that Youre building to help marketers better utilize amplitude and the commentary around 15% of power users being marketing users today, which was interesting.
Could you help us frame, how significant marketing the marketing department could be in the long term opportunity and what functionality do you see as maybe commoditized or two overlapping with the marketing automation players that you may stray away from.
Yeah. So.
The goal of launching campaign reporting as well as some of the other marketing analytics is to make it easier for customers to transition from things like Google analytics onto amplitude I think almost every product and engineer out there news and has context, what Google analytics says and so the easier that we can make that transition for them by offering the.
Same set of capabilities that they're already used to and market analytics. The faster that transition can happen. We already saw a number of land speak lands on that in Q2, and we expect to continue to see that more especially as Google analytics starts to sunset Universal analytics going into next year.
I think on the short term I expect the marketing and product spaces to be quite distinct and so we have no plans to go into any of the marketing automation stuff that you might see from a phrase or any of the other folks in the space. In fact, those there are some of our strongest partners and we have a lot of overlap.
In our customer basis, and so we expect to continue to do that I do think over the very long term, we do see the marketing technology space and the product technology space start to converge because from a customer journey standpoint, a customer doesn't care, which they don't think I mean, the marketing experience or am I in the product experience. It's all part of the same John .
And so we're cognizant of that and we want to and that's why we that's why we're offering a bunch on the marketing analytics side as well.
Makes sense and then long.
Operating loss guidance going down from negative 20 to negative 16 that overwhelmingly explainable by the hiring ambitions or was there any kind of benefit to your expectations on gross margin and then how do you think the impact to free cash flow will flow through do you see a similar impact in terms of putting that to free cash.
Yeah, I think going back to that I mean, our overall plan is to make sure that it's helpful for sustainable growth, we feel like we've increased spend and invest in quite a bit in the first half we want to make sure that we're evaluating that and making sure that as Ben is properly invested in the right area. We obviously are still higher.
And still investing we just think that given the macro picture. It is smart to slow that down and so that's slowing down of those growth in terms of investment is what's generating the operating margins versus any kind of real significant improvement in gross margins or anything like that.
<unk>.
Yes, a lot of the gross margin things.
From a scale standpoint, we wanted to pass those benefits onto the customer side as we continue to make improvements there because the more data they have in amplitude the more valuable it is to them and so we don't want.
Then sending data to amplitude to be a blocker.
Alright, Thank you very much thank.
Thank you.
Arjun Europe next followed by Fiona.
Ara go ahead.
Alright, thanks, guys.
Maybe to start off with.
Right now it certainly seems like there's going to be a portion of your customer base, where its going to be more challenging to sell into the SMB customers right. The Cove.
Beneficiaries, what changes do you make in this interim period, where we're still trying to digest, how the macro unfolds in your and your go to market motion be lean more into those traditional businesses, maybe some of the legacy customers that are trying to modernize but something that you can do with your with your pipeline are there any other adjustments.
You're making as you look out at the back half of the year.
I think thats for sure part of it you want to make sure that we're set up to and focused our expansion motions on the customers, we actually do think.
Can expand.
And so on.
On that like so.
That's one big thing I think another big thing is on helping them understand how amplitude can be really valuable at a time like this I think one of the things we talk about I talked about with a lot of Ceos. This this is a great time to cut fat and build muscle and building muscle is all about building long term sustainable growth in your business, which is namely investment and your.
Product and understanding of your customers. So that you achieve better product market fit because the investment there will compound over a really long term investments in things like sales and marketing.
Don't have that same effect in our only <unk>.
The current period, and so I think managing some of those topics, having some of those top tracks with customers to help them understand how we fit into that everything I'm seeing from the current customer conversations that is resonating product digital product is the one place we still continue to see really strong investments even in those companies I think I mentioned earlier, that's one of the <unk>.
<unk> investments in digital products and the infrastructure behind it is one of the last things that gets shut down for a lot of these companies because they understand how important it is for their growth I think another talk track that's been resonating more at the higher end has been consolidation of spend particularly from data engineers and data scientists a lot of these companies have.
Built out really crazy teams on that front and being able to consolidate a lot of those needs into a self service platform like amplitude gives them a huge amount of leverage without having to invest in really heavy.
People resources in order to understand and operationalized product data and so I think it is.
We're obviously conscious of the change.
And how some of these companies may be impacted.
But because we are so substantial kind of no matter, where you are on the spectrum. It really is just helping them. It really is changing our messaging and positioning so that we're feeding into their current priorities.
Okay got it that's very helpful. And then I think in your prepared remarks, you mentioned.
Some deals getting delayed.
With that I couldn't tell what was that specifically related to Europe or is that something that you're seeing more broadly and maybe just at a high level. If you can address that if that's expansion customers new customers, where that's concentrated.
Okay.
It's pretty consistent probably with what you're hearing from other software company I think that you know.
For us what we see is when a customer that's existing and they are expanding we're not really seeing delays to that at the moment at all in fact, they really understand how critical it is how important that's happening I think wynn is potentially a new customer or they're just kind of getting into that first phase of the expansion. There is a higher level of scrutiny and review around.
The ROI to finance and so it's going to more layers of approval.
I do think that like Europe got hit a little bit.
Harder earlier in that the good news is that we like and some of the deals for instance that we saw were expecting in June they actually happened in July and so it's more of a delay versus like a cancellation, which again goes to the point, where whatsapp, we're saying I think when you really evaluate what are your company priorities. What are you really trying to do billing those muscle, especially around product.
It comes back it yet we're doing this and so we feel good of our positioning but we do see some of the delays that people that the macro environment is kind of.
Kind of thoughts on other software company too.
Okay.
Thanks for taking the question.
Thank you next question from fewer lines of Morgan Stanley .
Okay.
Thank you for taking my question and I. Appreciate the time, so I wanted to ask a follow up on what Youre seeing in terms of the competitive landscape earlier on the call you mentioned sort of what youre seeing with Google analytics, and the opportunity to kind of take some customers transitioning away from a phenomenon to amplitude. So can you give us a sense of what are the key competitive differentiators that.
Do you see resonating in the market with respect to Google analytics, especially as they kind of take the opportunity to change their <unk> and <unk>.
Phase, one which kind of minutes when <unk> was first to do and then secondarily can you give us any color on what youre seeing in terms of competition with the newer entrants to this market like <unk>.
Yeah. Thank you yeah for sure Taylor.
Sorry, excuse me Fiona.
The on the Google analytics front I think the core of the differentiation is we are focused on helping you understand the end to end journey and so as you go through multiple points in the journey what is the conversion drop off or what are the different paths people are taking whereas if you're looking at a Google analytics. It was very based around a page view model and so.
That allowed you to count how many people are hitting a certain page, but it doesn't allow you to ask questions around how people are navigating through your product and why it is they're doing what they're doing and so I think it's clear that the event based model is going to be the next generation of that and a lot of what <unk> has done to your point is still catching up to that and so I think.
That's a huge opportunity for us I think the other thing with Google analytics is because they are facing a ton of regulatory scrutiny on their ads business.
From an offline for being monopoly there I think there is.
<unk> a lot of pressure from privacy regulators to cut out a lot of what theyre doing on the data tracking side and so I think Google analytics has been a casualty in that and a lot of ways. They are backing away from that business and so that opens up a big opportunity for us.
We saw a bunch of that in Q2, I expect to see a bunch of that as we go into next year.
On the smaller competitor side, I think like any SaaS, our SaaS market, we see a bunch of folks at the low end I don't think Thats really changed as of the last few quarters. It's still a similar picture where you have folks that my specialized in different niches or my specialize in being the low cost person in the low to low cost.
And so I think our advantage of having the most sophisticated digital analytics platform remains.
I think the integration that we have with new products is also a huge advantage.
We're also much more usable by larger teams and so those advantages are really resonating, particularly at larger companies with more complex deployments that have and that have greater needs. When it comes to the depth of the analytics.
Great. Thank you very much for taking my question.
Great next question Patrick Schultz from Baird, followed by Michael who will round it up Patrick go ahead.
Hey, guys, yeah, Thanks, and congrats on a great quarter. So you touched on the international environment is a little bit earlier, but can you also talk about the trends you saw intra quarter, especially within Europe . The trends continue to level off and stabilize at the end of the quarter and into July and then were there any specific geos you would call out as areas of strength either from a land and expanse standpoint.
Yeah, Patrick I would say that the.
Because obviously I think we mentioned again, our pockets free cash flow because we actually had some renewal and expansion from large customer happened really early in the quarter. We actually saw more business. Obviously in amongst April may driven by that I think when it comes to the Atlanta expansion overall in the picture I would say that it actually stayed fairly.
Consistent with <unk> tend to actually have a stronger third month and so for us that kind of continue to play out although like I like I think we discussed there were a few deals, especially in Europe , and even Asia Pac and some in the U S, where we saw a ton of those delayed and again they got pushed out maybe in Q3 and et cetera.
But again some of them are already clothing, now and so we feel good about it but it was more more across the board.
Slightly slower trend towards the end of the quarter.
Great. Thank you guys.
Great last question from Michael of Adobe from Keybanc.
Hey, Thanks, Joe just a follow up for me on the second half conservatism.
More customers to lower their committed volumes with amplitude of like renewal or is the emphasis really round uncertainty of expansion and new customer adds.
Yeah, I think again, when we look at our guidance, we're incorporating probably a little bit of each of those different scenarios that you're talking about.
We do anticipate a few customer potentially reducing their overall commitment that they're trying to buy sites that with their business.
And then we also kind of expect that there are probably some delays that will push outside of our expansion our new business coming in from different segment and region that kind of causes the delay in revenue going into outer quarter, but we've kind of incorporate all of that into our guidance that we provided for both Q3 and a fiscal year.
Great. Thanks, a lot.
With that I am seeing no further questions in queue.
We will be at the Keybanc technology leadership Forum as well as Deutsche Bank's 2022 Technology conference details will be posted to the Investor Relations page amplitudes website at investors constitute dot com.
Thank you very much for attending on Q2 earnings Conference call. You May now disconnect. Thank you everyone. Thanks guys.