Q4 2022 Amplitude Inc Earnings Call
Both strategy and execution several point solutions that claim amplitude as a competitor did not even make it into the report.
Amplitude received five awards across <unk> 2023, Best Software Awards. We also ranked number one in 10 categories within the G to winter 2023 report, including number one product analytics solution for the 10th quarter in a row.
While early I'm excited by the progress we're making in go to market, we have better alignment between marketing sales and customer success. For example, improved collaboration between marketing SDR and revenue operations is leading to increased productivity on demand generation.
We've always been exceptional at selling into product and product managers, we continue to up level, our relationships, there and extend to data leaders driving larger land deals.
We're better connecting amplitude with value for our customers leading to stronger executive engagement. We've also created an executive sponsor program for our top 50 accounts that will be key to retention and expansion.
We've also enhanced our approach to amplitude on amplitude our product team is always use amplitude, but we've taken it one step further and created amplitude dashboard for our go to market team. This is helping us better serve our customers.
I am excited to welcome Kristina Johnson as our new Chief Human Resources Officer, Christina spent the last seven years at after leading our global people and places function as the company grew from 500 employees to more than 6000.
Christina is great perspective about how to build high performing teams and has seen the journey, we're embarking on she's an amazing leader and I'm excited to partner with <unk>.
Post market closed, we also announced a CFO transition after four incredible years that amplitude Wong will be leaving the company.
I'm welcoming former four scout executive Christopher Harms as our new CFO and you will all have the opportunity to get to know him in the coming months, one will remain at amplitude and in term to ensure a seamless transition.
We're continuing to win customers across many industries and in every part of their digital maturity journey. Some big new customers. In Q4 include fandom, Philip Morris Malwarebytes Black rightful coffee and standard chartered. We also had notable customer expansions in Q4, including Fox Broadcasting.
NTT Docomo.
Syngenta gusto and com.
One way I'm really excited about this quarter stand them the world largest stand platform, reaching more than 350 million unique visitors per month and hosting one on 250000 wikis fandom is the number one source for information on pop culture gaming TV and film.
Tandem's decision was driven by the forced migration of Google analytics their director of business intelligence insight analytics led the evaluation in this highly competitive deal against legacy point solutions. Ultimately amplitude was selected due to three key reasons.
First our seamless integration of product and marketing analytics, which was perfect for fandoms vary advertising content and editorial needs.
Second our self serve value proposition, where we were the natural solution for technical and non technical teams.
Third our pace of innovation and scalability fandom is a media brand aggressively growing their data volume across Gamespot Metacritic, and many other destinations, making amplitude the right future proof solution.
Fandom will use amplitude to drive impact for one of their key business metrics pie and content changes to revenue. This will include taking a deeper look at video content. What users are engaging with the most and how product changes impact that behavior.
Publishing and editorial teams, we'll also use amplitude as a centralized source of truth for their site data I'm really excited that we get to play a part in their transformation and growth.
All birds, which makes a popular sustainable shoe and clothing line started working with us in Q4 after deciding to move off of Google analytics, Although it's kicked off a search for a new digital analytics platform.
Amplitude stood out as a superior solution because of our experience both with E Commerce and international business use cases.
Now <unk> will be able to dive into what triggers lead to repeat shoppers globally there'll be able to understand user behavior on their catalog of website and pull insights across multiple geographies at once they plan to use amplitude analytics across product analytics data engineering marketing growth in information security teams to build a comprehensive view.
Of their users this will set them up to increase conversion and customer lifetime value.
We're focused on expanding beyond digital natives, while early we're showing good progress here with the Q4 expansion with one of the largest media companies in the world.
Before amplitude is product and data team used to meet once a week the product team would come to that meeting with a list of questions and a data team will spend the next week digging through data and Adobe to get answers.
Following week with data team would come to the meeting with answers and the cycle will continue.
After adopting amplitude the time it took to answer those questions went from a weak two seconds. This helped his team was so much faster as product team can now run experiments independently in the number of requests. It's data team received has decreased by 50% and you can spend more time on higher impact work.
Okay.
I remain very optimistic about the future of our category and amplitude continued role as a leader in digital analytics as I've said before I view. This time as a great opportunity for us to make bold bets and strengthen our market position.
I am confident in our ability to consistently innovate and provide value for our customers throughout this macroeconomic environment and beyond.
Persistence trumps everything else and I believe we will come out of the cycle stronger by raising the bar for execution and investing in our product for the long term, we are well positioned to drive durable growth in the cap in a category where the opportunity is just beginning to unfold.
Thank you for your interest in amplitude I'd now like to turn it over to <unk> to walk through the financial results.
Thank you Spencer good afternoon, everyone fourth quarter.
Revenue was $65 3 million up 32% year over year.
For the full year 2022 revenue was $238 1 million an increase of 42%.
Customer count was up 25% year over year to 1994.
Dollar based net retention was 119%.
We have 480 customer with over 100000 up 25% year over year, and representing about 75% of total revenue and 30 customer above a $1 million and IRR.
Here's some color on Q4 results.
New bookings were fairly balanced between land and expand.
In Q4, we had two land deals over $1 million showing more companies are starting to understand the criticality of part of data for every modern enterprise.
This contrast, with zero land deals over $1 million in all of 2021.
We also had our largest experiment expansion ever as customers mature and more team unite around product data, we see greater adoption of the entire digital analytic platform.
Fermentation to CDP.
We're seeing an increase in a number of early stage opportunities as our demand Gen efforts ramp up.
However, customer general level caution has increased in Q4.
Saw more deal shrunk or pushed out than we did in Q3 at budget scrutiny intensified.
Churn both full and partial continues to be elevated in Q4 across the board.
Customer continues to navigate the whiplash from Covid induced pull forward at a current focus combining their belts.
Geographically revenue from the U S increased 28% year over year to $40 million in Q4 or 61% of total revenue.
International revenue increased 39% to $25 2 million or 39% total revenue.
Total <unk> increased to $248 2 million up 46% year over year.
Current <unk> also increased to $190 6 million up 39% year over year.
Our approximately 77% of total RPM.
As a reminder, <unk> growth over fiscal year 2022 has been helped by an increasing mix of multi year deals.
Don't keep increasing the mix of multiyear deals <unk> growth in 2023 will be negatively impacted.
Next I'll be discussing non-GAAP results for Q4 going forward.
As a reminder, our GAAP financial results along with reconciliation between GAAP and non-GAAP results can be found in our earnings press release and supplemental financial on IR website.
Gross margin in Q4 was 74% improving 250 basis point year over year and.
12 efficiency infrastructure costs and continue to scale.
During our IPO process, we stated our long term goal of 75% we plan to achieve the likely exceed that goal in the near term.
Sales and marketing expense was 45% of revenue compared to 44% of revenue in Q4 2021.
R&D expense was 21% of revenue compared to 20% of revenue from Q4 2021.
We delivered an operating loss of $4 7 million or negative, 7% compared to a loss of <unk> 5 million or negative 10% in Q4 2021.
We consciously moderated operating expenses throughout the year, that's an environment shifted we are committed to balancing growth and profitability.
Net loss per share was <unk> <unk> based on $113 1 million shares compared to a loss of <unk> <unk> with $107 9 million shares a year ago.
Cash cash equivalents in marketable securities were 301 7 million at the end of Q4.
Free cash flow for the quarter was a negative $5 9 million or negative 9% of revenue compared to a negative $12 2 million or negative <unk>, 25% of revenue in the corresponding prior year period.
For the full year 2022 free cash flow was negative $11 2 million or negative 5% of revenue a significant improvement versus negative $34 9 million or <unk>, 21% in 2021.
Now onto our outlook.
Our guidance assumes the macroeconomic environment continues to be weak throughout the year.
Lay offs and budget cuts are an unfortunate reality across many digital natives.
We believe that churn expansion budget pressure will persist through 2023.
For the first quarter, we are expecting revenue between 64% and $66 million, representing an annual growth rate of 22, 5% at the midpoint.
Q1 reflects two less days in Q4, which account for approximately $1 5 million a sequential headwinds.
non-GAAP operating margin of negative 13%, 14% we.
We held our sales kickoff in January weighing on margins in Q1.
non-GAAP net loss per share to be between six and eight.
Assuming shares outstanding of approximately $114 9 million.
For the full year 2023, we're introducing 2023 revenue guidance between 283 and $291 million in annual growth rate of 19% to 22%.
We expect non-GAAP operating margins between negative 6% to 8%.
And we expect non-GAAP net loss per share to be between 11% and 16.
<unk> shares outstanding of approximately $117 5 million.
We believe the bottom end of our guidance is conservative and factors and further deterioration in macro and virus sentiment throughout the year.
Please keep in mind the following.
non-GAAP gross margin should be in the range of 73% to 75% fiscal year 2023, representing more than 300 basis point of improvement versus the past couple of years.
We expect to exit Q4 of 2023 with non-GAAP operating profit.
We expect to reach free cash flow positive for the full year well ahead of our previously stated medium term targets.
Given the pressure we mentioned we do expect the continued declines in net retention rate.
The headwinds we're facing are the natural function of being with an early market and our exposure to digital natives.
We're working through those headwinds and managing our business for efficiency.
We believe nothing has changed about our long term opportunity.
And we remain incredibly well positioned to win initial analytics.
Before we move to Q&A actually wanted to just take a moment to recognize long long I just want to say you have been instrumental to our growth and success over the last four years on behalf of myself and everyone at amplitude. We sincerely. Thank you we wish you all the best.
Thanks, Spencer, it's been a really life changing opportunity and a privilege to be able to contribute to apertures SaaS and growth over the last few years.
I want to thank them anything apathy team I know that will be a $1 billion business. One day, because we have the best product and an awesome culture.
We look forward to your questions over to you Jan.
Great.
These unusual Mike and selling a video when called upon our first question comes from Cogent Nikita and Bank of America, followed by Arjun Bhatia Koji Europe .
Hey, Scott Hey, long. Thanks, Thanks for taking the question Super I appreciate it.
Wanted to kind of dig into the guidance just a little bit more here looking at the guidance for 2023, the midpoint about 25% growth.
Balanced against quarterly billings of 26, and a half showing 12 months billing, 32% and that current RVO a 39%. So it's a really quite a range of growth rates reported versus the guide and just kind of help reconcile kind of the billings performance <unk> performance against that revenue guide.
Appreciate all the color on the macro net revenue retention, but just curious anything else specific to call out maybe from a renewal perspective or vertical perspective that we should be aware about the you guys are considering in that guidance.
Yeah. So <unk>, let me start with that I think that first of all like we said in our prepared remarks, we're kind of assuming that environment that we saw kind of in Q3 and even some deterioration in Q4 kind of can persist throughout the year and so we wanted to make sure that we come out with guidance that to kick off the year that we felt very comfortable with.
Far as the growth numbers youre talking about with billings and so those are obviously all right just a couple of reminders and the one is on the CRP O of lot of that growth is driven by the multi year. Our billing can fluctuate you see kind of like when you look at quarters over quarters and year over year to kind of changed quite a bit and it really depends on kind of when we're doing the billing for.
The linearity of the bookings in software for instance, we had a really strong Q3 in the last quarter and that strong Q3, they actually didn't get build into Q4.
And so you can kind of factor those and when you look at the IPO and billing and once again, we point people to look at the sequential quarter over quarter revenue growth is being probably the best indicator.
Got it got it and then just broadly a question for Spencer or you want <unk>.
And about the current sales capacity and pipeline coverage to reach the 2023 growth targets.
How should we be thinking about that right now and then how should we be thinking about hiring for sales capacity. This year and then broadly hiring within the rest of the organization. Thanks guys for sure.
So first we are set up from a sales capacity for the targets that we've outlined for 2023, I think Thomas and a lot of the leadership. He has brought in has done a great job in setting up ourselves up for success to hit the targets that we do see this year at the same time. We're also obviously very thoughtful about managing the cost side of the business.
In the sort of environment slowing.
Slowing down hiring applying a lot more scrutiny at the margins, making sure that we don't get over our skis. The good thing for amplitude is that's that's.
Always been how we've operated from a cost standpoint, even when things are kind of.
Really hot over the last few years and so it's not as major of an adjustment for us heading into this environment.
Got it thanks, guys. Thanks for taking my questions Best of luck. Thank you. So much great next question Arjun Bhatia from <unk>, followed by Elizabeth poorer promoting semi Arjun.
Awesome, Hey, guys. Thanks for taking the question.
Maybe just I wanted to touch on just the demand environment I know you called out some of the.
The digital natives as being maybe a little bit of a bigger headwind Spencer how do you think about.
What you can do from a go to market perspective to maybe shift the demand a little bit so that you're targeting more traditional industries that are part of the plan is that something that you're already doing just walk us through how those two differ and how you might.
How you might adjust your targeting approach a little bit totally yes, that's something that's very top of mind is making the shift from digital natives to the traditional enterprise I mean, I think we've seen continued traction around that in Q4 as you saw big expands and Fox Broadcasting NTT Docomo and that anonymous media company that we mentioned.
So we're continuing to make progress against that one of the players that I'm really excited about is one of the things. We see is that when you get a lighthouse customer in a vertical that then allows you to get a number of other companies. So we've seen that playbook work for US. If you look at for example media we've had Fox broadcasting out we've had NBC is customers that has helped us land HBO.
Discovery, a bunch of other media brands, St and quick service restaurants, we did that we landed chick Fil a quite a while ago, that's helped us get into RBI and their brands like Burger King and Popeye's and so we want to replicate that play as we go through 2023.
One area I'm excited about is retail we launched a number of E Commerce and card analysis features as went through last year, and so standardizing that playbook and then going after some of the lighthouse folks in that vertical to expand to others and so I think we're seeing continued progress.
And the need for digital analytics and.
And broadening outside of digital natives to the traditional enterprise, but again, we're early and we're early in that in that transition.
Okay Awesome and then it seemed like experiment was.
Big theme in your in your prepared remarks, and I got the sense that there was a little bit of a obviously strong traction in Q4 and its been maybe a step function change, but what's driven the strong traction. There have you made product changes that are starting to resonate is it more of a go to market adjustment and then maybe just remind us.
Are you seeing those lands come in off the bat with experiment plus the core platform or is this more of an expansion sale.
Yeah. So.
An experiment I think <unk>.
Because in a lot of companies there is the existing <unk> testing, our experimentation budget that actually makes it more attractive in a time of macroeconomic pressure and so we ended up exceeding our own internal goals for where revenue from an experiment would be on 2022. As a result, we had a record deal in one of our largest accounts that was a big external expansion and so it's just.
Kind of continuing to build this muscle.
On both.
Making sure we're offering all the latest and best features on experimentation as well deploying that and go to market. Now is still has a long runway to go in terms of penetration across the customer base.
In terms of landing, we're actually seeing that.
Some of our seven figure lands that we did for the first time in 2022 experiment was a big part of those deals and so I think the product is now mature enough where companies are willing to take a big bet on it straight out of the gate.
So thats been a hugely positive proof point.
Awesome. Thank you Spencer Super helpful and best of luck in the future wrong. Thanks RJ.
Great next question Elizabeth Porter from multifamily followed by all of.
Elizabeth please great. Thanks, so much.
You have churn at the low end and also helping customers right sized contracts just contributing to some of the downtown.
And as a read through a lot of those headwinds in Q4 and how much work is really left to do I understand and are the trailing 12 month metric. So we're going to continue to see that pressure through fiscal 'twenty three.
You get a little more color on just the intra quarter.
Yes, I mean, I think first thing to call out as we.
We expected our guidance assumes we expect that to continue as we go through 2023 because of our exposure to digital natives a lot of them, they're going to continue to look for cost savings and.
While we want to maintain the value. We're at I think we also want to work with customers with where they're at.
Few things to call out one on the churn front, we're seeing almost no churn to competitors and so we continue to feel good about our market leadership position in digital analytics.
Second thing is all of those customers do expand do you expect to expand with us over the long term and so they're just looking for some short term health as they're going through layoffs and trying to find additional budget dollars and.
All of that and so we want to we ought to work with them to do that I think the last thing I'd call out is that it's a hyper focus for us as a company and like I'm, not happy with where it's at and I want us to continue to improve how we're doing on the churn front and so we're doing that through a number of things across product and go to market, making sure we get closer to customers, making sure to develop more executive relationship.
And so that we can drive an ROI story.
Rich.
Been better at in 2022, and then launching new services and products that help people implement adopt grow with us over the long term.
Got it yes, there's a lot of that and then my second one just on the follow up is on cost discipline really encouraging to see that helped offset kind of the impact on the bottom line. So can you just give a little bit more specific about some any actions that you are doing to drive that incremental leverage.
Yeah. So let me start with gross margins and then I'll talk to operating margins one of the innovations that I'm really excited about is we're looking at reducing data costs by a multiple and that should drive us huge leverage on gross margins in the long term <unk> seen that continue to improve.
In the 'twenty, one versus 'twenty, two and then we're expecting to continue to drive that in 'twenty three and beyond.
So thats really obviously really big for a data intensive business like us.
The other thing on just operating the business, we've obviously been much more judicious about adding head count.
Sort of environment and so it hasnt been a massive adjustment for us like it has been for some other companies out there to change the way that we're operating one of the things actually did.
Back in December was I sent a survey out to ample tiers to ask them to step up and look for different ways of cost savings and we actually got 500 responses across the company from everything like Hey, maybe we can get rid of swagger. These sort of parks or maybe we can be more thoughtful about how we approach our catering expense or we can look at the <unk>.
And so it's awesome to see a lot of ample tier step up in that way and so I think I I call that out because its always been part of the Companys ethos.
Great. Thank you so much for shareholders. Great next question, Rob Oliver if we can get you to your current thank you and then followed by.
Tyler Radke from Citi.
Yes, Greg can you hear me Okay, Yes, we can perfect okay, great guys sorry.
Sorry, I'm not actually driving.
[laughter].
Yeah.
So yes.
Yeah.
Sure.
First of all along thanks for everything it's been great working with you first question is for you just on the product led growth model.
I know it's early days here still for you guys and it's been.
Really planned effort here to kind of try to expand at the lower end. It also is likely going to continue to impact deal sizes and so just curious how you guys are thinking about deal sizing I know there is some natural headwinds from the macro but in terms of the move towards the PLD market <unk> opportunity, how we should think about.
Distribution deal sizing throughout 2023, and then I had a quick follow up let me actually take take the first part of that one and I can let long song of the color. So.
So we don't expect revenue impact from the switch to <unk> pricing.
And that's because that's specifically a motion targeted at the lower end of the market and so that's all about increasing distributions, so making it easier both for startups and traditional enterprises to find new paths onto amplitude.
And so again, we don't expect.
Revenue impact in 2023, I think the goal is to get to make it easier for companies to come onto amplitude. When we first talked to a lot of startups and tell them, Hey, where an event based pricing model. There first question back to US is what's an event and so whereas something like how many months of users you have it's something that theyre able to estimate a lot better than forecast and also.
Ties better to value so.
When we grow.
As a business will also grow our contract with amplitude that makes a ton of sense and so again thats purely focused on the distribution angle versus.
Any sort of immediate monetization impacts yeah, Robyn I think instead of two and preparing Mark I think our first primary goal. It has really increased distribution and that comes from obviously getting more customer at the low end, which we weren't even really servicing before you eat annual free are really up to kind of like really higher paid right and so we really want to go after that and we're also.
Seeing really good traction that we saw this in 2022 in terms of going after company that already had large digital footprint right and those side because they have a large digital footprint and now they're like Oh, you guys are.
Known commodity index products, great. We're doing this in house that look for more efficiency that was a better ROI like Hey, let's look at you guys are there and Google analytics and Theyre looking at part of analytics, and so youre seeing some customers who already have a huge digital footprint and are coming over to us and that's indicated by the back of that to land deals over $1 million in Q4.
Like we didn't have any in 2021.
Look at it from an ASP standpoint, we're probably going to have like both ends of the spectrum, we're going to have some really large deal and then we're going to get a lot more from us within the low end, but net net we're going to have more distribution, which is fantastic. Yes. It's all about making sure. We're set up to continue to improve our position as market leader in digital analytics.
Got it okay, yes that makes a lot of sense I. Appreciate it guys and then my follow up Spencer is.
For you so different quarters, but then her seat now for I think three months.
I know earlier, you got a question and you talked a little bit in your prepared remarks about diversification away from.
Tech companies and stuff like that just curious if.
Just.
You might call out maybe some of her.
Early initiatives on the marketing side anything that stood out to you anything we might expect this year, whether it be reaching out towards new verticals and market stuff like that thank you Tiffany.
Kevin has been awesome and the first few months. He has been here I think the thing I called out with specifically increased collaboration I think pipeline generation Hasnt been a whole company wide effort and so I think she did a great job of driving that getting account executives str's partnerships, even focus on customer success to think about that in addition to marketing we've actually seen.
Seeing that to start to impact improved top of funnel for us as a business and so while it's still very early very excited about the work she has done there.
Great. Thanks, again, guys I appreciate it.
Sure. Thanks, Rob Great next question Tyler Radke from Citi, followed by Nick <unk> from Scotiabank.
Hey, good afternoon, good evening.
Good evening.
Good to see you both.
All the best and hopefully see you soon down the road.
Just going back to the comments you made on churn I wanted to dig into that a little bit more number one.
What's driving the churn is it is it just lower.
Usage of applications kind of driving fewer event volumes is it customers kind of optimizing.
Those applications are or maybe it's lower head count if you could just expand on that and are you.
You're expecting that to get worse, and then more broadly I guess do you do you see any.
Broader changes in terms of the pricing model beyond what you talked about.
On the SMB side.
If you could just comment on how that changes your overall thinking on the pricing today, given what you've seen on the churn side. Thank you, yes for sure.
So, yes pricing and churn the initiatives, we're doing in pricing or separate songs you want a separate those two things first to take the churn piece.
Because of our exposure to digital natives, they're asking us for help in this sort of environment, where they may be shutting down parts of their business. They may be more selective about the sort of data they're tracking.
There is just increased scrutiny and so that leads to either partial churns are full churns, depending on where the business is at.
And so again like I said I'm not happy with where it is that we want to continue focusing on improving it and improving the execution to make sure that we drive improvement in that over the long term.
I think.
I don't know if theres any other color that you add to it.
On your target question, how will it be by 'twenty three I would say that we saw Q3 and Q4 very similar and we kind of forecast and put that into our guidance that it's going to be like that for the remainder of all three.
And I think the other fact that we're seeing in terms that we see it actually coming in all segments and all geographies all vertical and a part of that a little bit to us is that there are definitely big macro impact is causing it to kind of come from that or different.
Any different area, but obviously, we're going to work a lot on that nine entre and.
And then to take.
Tyler to take your question on the pricing front I think the MTO based pricing again, it's specifically focused on the small the low end of the market just to give them another option to easily get started with amplitude. We offer 100000 empty use an unlimited events per MCU for free and then we have an MCU based model up to 8 million monthly tracked users and beyond that you kind of.
Go into a more traditional events based model.
So I think that's kind of the first salvo, we're going to continue to iterate on that we expect more as we go into Q2 and the rest of the year and that's going to be another lever that drives long term distribution and gross of amplitude.
Great.
Going to the go to market. Obviously, there has been some new sales leadership, there and you just came from your sales kickoff I'm wondering on.
What youre doing differently from a vertical ization approach, if you're targeting kind of the.
Obviously, non digital native industries, who might have better budgets. This year, but if you could just kind of expand on.
The go to market strategy, and what Youre seeing there yeah.
Yeah, I mean, a few different things. So the fact that we so I already mentioned the lighthouse customer strategy, where you start in one vertical you win.
Some of the big customers in that and that helps you win the rest of the vertical so we're continuing.
To do that I think another big thing is the executive sponsorship with a lot of these companies you really need to be able to speak to the value and show that you can teach them how to do digital analytics versus folks who are digital natives already are familiar with the sort of technology.
And so that's another big part of it too.
I'd say.
What else what I say on the bridge I think the Forrester wave that was kind of great endorsement a lot of traditional enterprises look to that for what's the greatest the best in digital analytics and so the fact that we've got a top three score on the strategy front. There was was really exciting even though that was the first time, we were in that report.
So I think just on all fronts one of the number the number one thing we hear from those traditional enterprises teach me how to do it and so we want to make sure that we are evolving our go to market to meet them, where they are at kind of help them do the kind of baby steps to really understand how do I use digital analytics, what does it mean for how we operate product how does that change.
<unk>.
How I'm used to building product before and so we're kind of we're evolving what we're doing and go to market to match that whether it's sales customer success marketing kind of the whole thing.
Thanks, so much thanks.
Thanks Tyler.
Next question development through Scotia, followed by clearing from UBS.
Hey, guys. This is John <unk> on for Nick and Thanks for taking my question.
You guys talked about in the past how implementation.
Maybe to turn customers from choosing amplitude in the current climate.
Can you give us an update as to whether that.
That is still a headwind to new customer bookings and if so is there anything you guys are doing to provide a solution for a quicker implementation.
Totally yeah I appreciate the question John So absolutely remains a top focus for us in 2023, a bunch of the big bets that I highlighted on the distribution side in my prepared remarks spoke to this so one of the things I'm really excited about is no code implementation or single line of code implementation for amplitude engineering resources means one of the.
A major blockers to get up and running so if you aren't able to secure those how can you just get started and track it yourself, if you're a product manager so I'm really excited about that.
Amplitude that's needed to a data cloud data warehouses, another big bet.
That we're in the process of getting out there this year and that will also help a lot of these enterprises already have.
This behavioral user behavioral data within a cloud data warehouse, rather that snowflake or big quarry or are some of the others and so being able to work directly off of that data.
As another big way to provide a path to getting up and running quickly with amplitude.
And then the other thing I'd call out on the go to market side as we just introduced our premium services packages for the first time in Q4.
And so that was great because that allows us to be much more hands on with customers, who need it versus kind of our more one size fits all fits all through the implementation process. So it remains a top priority for me in 2023 to continue to work on that and drive it down.
Awesome. Thanks.
Earlier. This year you made some changes to start Jerry can you just talk about what the reception has been so far with customers and maybe your level of confidence in converting some of those customers into <unk> customers, yes. So we're already seeing.
A number of the changes that we made on the MTA pricing front result in more upgrades to paid plans because and as well as more confidence in getting started with a free version one of the blockers that we heard before is that okay. It might be free to start up to $10 million events, but what happens when we get beyond that I have no idea, how youre pricing scales, whereas when you're on a monthly tracked.
User model, that's much more predictable and so you're not worried about exactly how much data you're tracking you have much better visibility into where your number of monthly users is going to be so both in terms of just getting more people onto the free plan that's been great as well.
It's early but we've seen conversions increase now I want to I do want to go back to what <unk> said, which is that again. This is really focus on distribution at the low end. So it's not like we expect it to make a material impact to revenues in 2023.
It's really.
What will happen, though is that as you just get more and more of the market on us as digital analytics those accountable can grow in later years.
The only thing I'll add to that too is that not only we're seeing an increase in conversion, but we're also seeing an increase in just the sign of free.
So you're actually seeing that and just following the initial interest which is which is actually really the bigger piece of that for us.
Great. Thank you next question collaborators from UBS, followed by Michael <unk> from Keybanc. Please go ahead.
Awesome. Thanks Congrats.
Congrats and best of luck I just wanted to ask a couple on the guide so.
When we look at the full year guide it it only assumed a couple of points difference right from the <unk> guide so that kind of assumes growth flattening out.
So you know as if macro gets worse, how conservative would you say that guidance and maybe is there anything embedded.
You know the guidance philosophy, changing with the CFO chefs just anything that you could provide on that.
We want them to.
Excellent.
I'd say no change in guidance philosophy, I think we've assumed the environment stays bad now things get worse or things get way better obviously, we may have to make adjustments but.
Based on everything we're seeing we wanted to make sure to put together.
Guide for the year that reflected kind of the headwinds that we're seeing.
And particularly for for digital natives.
I think yes, and then in terms of CFO transition look I want to make it clear to folks on this call.
I own that ultimately as CEO and so we want to make sure to be consistent about how we guide and setup Christopher for success. When he joins so that we're not having to make major changes in how we operate the business and again I'll go back to the prepared remarks in terms of that.
Guidance, we assume the same level of deterioration at our midpoint and then we actually stress testing we did at the low end, assuming let's say things got worse.
Like you said on the back of turns out like that.
Can knock on wood, hopefully it doesn't get worse and all that but we wanted to make sure that we provided the guidance <unk> given the uncertainty out there.
Okay, perfect and then if I could just ask.
Real quick on <unk> as well you mentioned expecting to see that decline going forward.
Is there anything more you can provide on any kind of potential Florida weakening macro.
Yeah, just maybe on that as well thank you.
Yes, I mean, obviously, there's a lot there's three big things that go into the net retention rate yourself. This expansion Theres full turn there is partial return and I think that we are seeing that given some of the customers that we saw the biggest expansion in 2021 third or one that's facing the biggest budget scrutiny and budget tightening.
We're actually seeing expansion still being like one of the large factor or the largest factor in kind of pulling back on that retention rates <unk> second and then plus return as a third and so it matters a little bit in terms of where the economy pans out and how much churn we actually continue to see over the next few quarters I think obviously typically because most of the customer contracts are one year our annual <unk>.
Do you need like for full quarter to kind of fully kind of lapped that and then let's see the second half in terms of what that looks like but like I said, our guidance kind of assume that it stays at the same level now even in the second half.
Perfect. Thank you.
Great.
Michael <unk>.
Hey, guys.
Thanks, very much and good luck and look forward to continue to stay in touch.
So Matthew I think when he talked about.
Head count and so <unk> been judicious in the past, but it still was on higher growth in 'twenty two so pretty good expansion of Opex. So can you talk about.
What some of the levers are that you are pulling in order to get the improvement in both operating cash flow margins from a head count perspective.
As well as other cost savings.
Yes, So let me get a little bit more detail.
Actually slow down that the head count hiring as we kind of got more and more into the year.
Part of that was we were actually building for a much larger demand environment and as we kind of saw the signal and sign that the demand environment what's out there.
Get way ahead of our skis and so I think it was into we're actually early into it in 2022, we actually were able to cut back on our hiring quite a bit now in terms of the opex increase wide opex increase year over year. The Opex increase wasn't driven so much by head count as it unless it was driven by now for instance last year. We went back and did our first amplify now with a pretty huge stand from a marketing standpoint.
We're going to evaluate that when we've had this year and go Hey, do we do something that big or do we do something a lot smaller and make sure. It is more tailored geographically I think thats one area. We've identified another big piece of changes from kind of 'twenty two versus 21, well that was our first year of kind of coming back into office traveling entertainment until like that until you have some expense savings that were in 2000.
One that structurally when we change post COVID-19 challenges hit us back in terms of opening up our location of people coming back in and all of that although the activity.
And lesser on the head count side.
Okay. That's that's helpful. So can you just can you describe how you think about head count growth.
Yes, I mean, we're slowing significantly down on head count growth.
I think we feel good about the the big bets I made with the current set of head count as.
As well as on the sales capacity front in terms of being set up for this year. There is always the kind of two questions. I ask are we set up in terms of to drive the revenue and we setup to innovate where we need to and we are in.
So yes, we are really really slowing that down as we go now obviously, if we do see as we do.
When we do see growth pick back up whether that be later this year or next year or in the future.
There'll be a sign that we want to continue and to invest back in the business, but in the short term I think we want to as the revenue grows we want to keep the the cost profile in check.
I'll only add I mean again moving back to our same philosophy of balancing growth and profitability. I think we are really excited that we're going to be doing free cash flow positive for an entire year, we're going to be exiting at a.
non-GAAP operating profit in Q4, but at the same time, our number one goal as mentioned we went to market.
And so.
We still are actually making investment in head count we're still hiring at just the.
Thank you have a really.
Really good ROI, Kate how much harder wondering what back in 2021.
To make sure that we're hiring and adding them, but we ultimately were still want to kind of grow and scale with all of that and I think that that's a balancing act. We go through visit back in 'twenty, one a lot of puts and say Hey, why don't you guys like being more aggressive spending and we would monitor efficiency et cetera same thing here I think that we're also again understand environment, we're going to be looking at cash flow when we look at operating margin.
But we wanted to make sure we didn't like lose the long game.
Oh, that's great.
That's my follow up so that's good for me, it's pronounced thanks very much kessel.
Thank you everyone with that I am seeing no further questions in queue, we will be at the Morgan Stanley Technology Media and Telecom conference in March details will be posted to the IR page of constitutes website at investors <unk> com. Thank you very much for attending our Q4 earnings Conference call you may now disconnect.