Q2 2023 Amplitude Inc Earnings Call

Hello, everyone welcome to attitudes second quarter 2023 earnings Conference call I'm Yeltsin Chu Vice President of Investor Relations, joining me expense escapes CEO and co founder of attitude and Criss harms the company's Chief Financial Officer.

During today's call management will make forward looking statements, including statements regarding our financial outlook for the third quarter and full year 2023, the expected performance of our products, our expected quarterly and long term growth investments and overall future prospects.

These forward looking statements are based on current information assumptions and expectations and are subject to risks and uncertainties some of which are beyond our control that could cause actual results to differ materially from those described in these statements.

Further information on the risks that could cause actual results to differ are included in our filings with the securities and Exchange Commission.

You are cautioned not to place undue reliance on these forward looking statements and we assume no obligation to update these statements after today's call except as required by law.

Certain financial measures used in today's call are expressed on a non-GAAP basis. We use these non-GAAP financial measures internally to facilitate analysis of our financial and business trends and for internal planning and forecasting purposes. These non-GAAP financial measures have limitations and should not be used in isolation from or as a substitute for financial information.

In accordance with GAAP a reconciliation between these GAAP and non-GAAP financial measures is included in our earnings press release, which can be found on our Investor relations website at investors that attitude dot com with that I'll hand, the call over expensive.

Thanks, Al and good afternoon, everyone.

Welcome to our second quarter earnings call.

Appreciate you taking the time to join us.

I'll be talking about three topics, our Q2 results and an update on our execution.

The progress, we're making with platform and product innovation.

And our competitive landscape and customer adoption.

Let's start with a summary of the Q2 financials.

Closed the second quarter with $67 8 million in revenue up 17% year over year.

This is above the high end of the guidance we gave in Q1.

Annual recurring revenue was $268 million.

Our total customer count increased to 2344 customers non.

non-GAAP gross margin improved to 77, 5% up three percentage points year over year.

This contributed to our first non-GAAP profitable EPS quarter.

We generated record operating cash flow of $20 4 million and positive free cash flow of $19 3 million.

With this result, we expect to be firmly in free cash flow positive territory as a company going forward.

<unk> of raising the bar and.

I'm pleased with the progress, we're making here as a team.

We're focused on what we can control.

This means operating responsibly against our growth outlook, while leaning into the massive opportunities that lie ahead.

Our mission is to help companies build better digital products and experiences I'll.

I'll take this opportunity to provide a clear framework for ongoing efforts.

The first pillar is what we call when simple shorthand for how we're making it easier for everyone to get started with amplitude.

Many companies need more help getting started and driving digital maturity today's customers demand an experience. That's effortless offers fast time to value and meet them where they are.

One key facet of wind simple is improving the user experience and we've been hard at work there.

Last border, we talked about early positive feedback around our new chart creation fluent layouts.

We introduce more improvements in Q2, including industry specific templates and a new homepage experience, we are striving to make amplitude easier to adopt.

We've doubled the conversion rate of users finding insights from templates.

<unk> continuing week on week improvements in uptake.

In some cases, we've seen users create their first amplitude sharp 40% faster.

The second pillar is when the enterprise as part of her path to 1 billion and beyond you're focused on meeting the needs of traditional enterprises, we are leading with use cases, taking a value based selling and delivery approach and expanding the audience as we focus on.

Product behavioral data is important to everyone in the organization marketing teams can target the right customers engineering teams can identify bugs and data teams can make detailed recommendations all from product signals.

You're already seen this approach bear fruit it drove one of our largest ever expansions in the quarter with an enterprise customer that's been with us since 2015.

The third is when the category.

Every business with a digital product and additional experience for its customers needs to know more about what those customers love what causes them to get stuck and what keeps them coming back.

<unk> vision for the future state is one where real time operationalize product data is mission critical shaping dynamic and adaptive digital products and experiences.

The lines between product web and marketing analytics are blaring and the spaces will start to converge come.

Companies of all shapes and sizes are finding that legacy approaches cannot sufficiently address the universal needs of acquisition retention and monetization.

Everyone wants to understand their customers better amplitude tells you exactly what your customers do and how they behave when you represent the best way to listen to your customers and age of digital transformation.

The center of gravity continues to shift toward product as more companies realize this we have the strategic highground in this convergence and intend to leave this massive category.

Underpinning those three pillars is wind together glue that binds it all.

The systems and processes that helped us grow from 10 million in revenue to where we are today will not be the ones that take us to 1 billion and beyond we are systematically up leveling every area of our business. So we can deliver exceptional value for our customers when our customers when we win.

Against that strategic backdrop, let's turn our attention to product development progress in Q2.

Our platform approaches resonating with customers, we are benefiting from vendor consolidation, an increasing number of companies chose to land with a combination of analytics experiment and see peace in the first half of 2023.

Cfo's had been given a mandate to marsalis mercilessly target duplicative or inefficient spent.

In this environment, we continue to see point solutions suffering disproportionately.

Many customers struggled to deliver on the data insights and actions that are so critical to product and engineering teams.

We think that the majority of our base can benefit from the addition of experiment traction here remains encouraging has some of the largest wins and Q2 included experiment upfront.

R. C. D. P solution also continues to mature rapidly with amplitude now close to parity with many C. D. P market leaders in terms of connections.

Our approach to C. P has primarily been about producing friction and duplicative costs for a smaller customers.

Q too we saw increased interest from multiple enterprise customers expressing a need for a holistic solution across data and analytics.

We announced warehouse native <unk> at Snowflake summit in June .

Our warehouse native approach is all about extending what has made amplitude successful being the most open agnostic and trusted way to access and find insights from our customers data.

By providing access to amplitude product insights directly from the data warehouse, we're making it easier for data teams to manage data and for product teams to use those insights constantly.

Companies are taking differing approaches as it relates to governance and storage of their data.

We want to be wherever our customers are along their journey.

We believe this warehouse native option will be a natural onramp for many enterprise customers, who have already made significant investments in their warehouse strategy.

Wow early we also believe this can be additive to our core amplitude value proposition in many ways, including potential new persona as in workloads.

AI developments or an exciting opportunity for us to evolve how users engage with and find value for our platform.

Product teams following iteratively build ship us learn come.

Companies like <unk> have made massive improvements to the building ship phases with AI that made it possible for developers to go for prototypes to production in record time.

And amplitude, we're using AI to improve the use and learn phases.

Hey, I greatly accelerate the ability to get value out of huge quantities of data.

We've amassed one of the largest databases of digital customer behavior in the world.

We spent the past 10 years pioneering the behavioral grass.

We've already helped product teams leverage a I M M. All techniques with a recommendation engine and product Monterey.

Today, we're really excited to introduce amplitude AI a suite of AI powered features here are two highlights.

The first is ask amplitude, which uses AI to shorten the learning curve for anyone getting started with amplitude type in a question like how long does it take for new versus returning users to make a purchase and will show a chart with the answer you need.

The second is data assistant, which uses AI to make data governance effortless. It determines the most important ways to improve your data quality and automate certain updates.

By improving data quality and trust, we're helping customers get value from amplitude faster.

We're also releasing functionality that automates formula creation and sharp naming teams can pick from a variety of suggestions. So they can move fast and stay in control.

These new features will help us accelerated time to value and expand the base of users we speak to enabling us to win simple we.

We believe AI will dramatically improve the caliber of digital products and experiences in amplitude will help make that happen.

I'd like to talk about our second quarter success with customers from multiple industries.

We both landed and grew our relationship with with customers around the world like Cream Beach body Western Union, <unk>, Cloudflare Carter and tax jar.

Other customers this quarter included airlines and supermarket chains.

Clear that the need for amplitude is a universal one.

We expanded with a brand name global sports organization to help drive global fan acquisition growth.

This is a fantastic case study of the opportunity ahead of us as traditional enterprises continue with their digital transformation.

To succeed they needed to unify user data to personalize the fan experienced across digital and non digital properties.

Marketing and product managers needed a shared view of the customer journey and a way to test hypotheses target relevant audiences and Personalised content features.

The organization's direct to consumer arm was already using amplitude, but other teams use a combination of legacy tooling and marketing technologies.

They couldn't scale, which caused major delays and massive engineering required requirements.

Amplitude digital analytics platform was the clear choice for the business and we're excited to help grow this a subscriber base an intern increase the company's broadcast rights to the tune of billions a year.

<unk> is a financial App that provides mobile payments transactions deposit funds cash withdrawals and card services spin has been an amplitude customer since 2020 over the last 18 months. They have upgraded plans added amplitude experiment and most recently in queue to let the competing C. D. P for amplitude they are expanding.

Use of amplitude has enabled them to optimize their user journey manage high user gross and accelerate their presence in the Latin market.

Spin has grown from zero to 5 million users in just one year. Their goal is to double this by December and we want to help them achieve that.

Against the backdrop of a challenging macro were steadfastly positive about our longterm potential and the opportunities in front of us I.

I believe in our ability to deliver in the months and years ahead.

I'm incredibly proud of our entire team for everything they've done so far this year.

With that thank you for your interest in amplitude and now like to turn it over to <unk> to walk through the financial results.

Spencer.

Thanks to everyone joining us today.

Amplitude Q2 results demonstrate steady execution against the challenging environment.

In the face of uncooperative Mac room, we expect to be firmly in free cash flow positive territory as a company going forward. We are intentionally shaping amplitude drive more operating leverage at scale.

We've made strong progress, which I believe will eventually position us Reaccelerating Brooks.

Now onto our second quarter results.

As a reminder, all financial results that I will be discussing with the exception of revenue remaining performance obligations and balance sheet figures are not gap.

Financial results along with a reconciliation between gap in non-GAAP results can be found in our earnings press release and supplemental financials on our I R website.

Second quarter revenue was 67.8 million of 17% year over here.

Total a or increase the 268 million an increase of 18% year over year and 6 million sequentially.

Here's more context.

Implicit in the color and revenue guidance, we provided in the prior quarter was projected record high levels of churning Q too.

Those expectations came to fruition consistent with our internal projections of a 50 50 split between full and partial churn.

Uhm note within partial churn, we saw significant optimizations with two large customers.

What are you interested in crypto company, one of which is a large digital native customer.

Within full churn was the expected concentration of accounts and the predominantly technology startups segment and commercial segment.

Two are in queue Tucson rebound from the prior quarter. This was marked by I, particularly large expansion has a longtime customer drastically grew with the scope and volume of their amplitude relationship.

That expand deal was Matthew only one for the quarter, we again saw sequential growth and customers across both are million dollar plus.

100000 dollar plus a C V base.

Accordingly are mixed in Q2 was a little over two to one between expand and Lan New a R. R.

Lastly, with strong execution on our newer products experiment and C. D. P. Together now exceeding 20 million era.

N R. R on a trailing 12 month basis declines sequentially 280 per cent.

N period in our was 101% down from 118% in Q2 2022.

Gross retention this quarter wasn't the mid eighties.

Total our appeal was 246 million uhm eight per cent. Your over your current R. P. O was $192 million flat sequentially, but up 13% year over year and represented approximately 78% of total R. P O.

Gross margin was 77.5% three percentage points year over year and quarter over quarter.

This was primarily due to the restructuring for customer success organization in April and continuing improvements and unit hosting cost.

Sales and marketing expenses were 31 million 445 per cent of revenue down from 53% a year ago.

R&D expenses were $12.9 million or 19% of revenue down from 22% a year ago.

G&A expenses were 9.8 million or 14% of revenue down from 15% a year ago.

Operating loss was a negative 0.8 million or a negative 1% of revenue a 14 percentage point improvement on a year over year basis, and an 11 percentage point improvement on a sequential basis.

Net income per share was two cents based on 126.3 million a fully diluted shares compared to a loss of eight cents with 111 million shares.

<unk>.

All of the operating figures I just conveyed are exclusive of the restructuring charges, we incurred in queue to that approximated $8 million.

Free cash flow was a positive 19.3 million or 29% of revenue a 14 percentage point improvement on a year over year basis.

This free cash flow figure incorporates a negative 3.8 million cash impact.

April restructuring.

Finally, cash cash equivalents and marketable securities were 319 million at the end of Q2.

Now onto our outlook.

For the third quarter, we are expecting revenue between 69.7 and $70.3 million, representing an annual growth rate of 14% at the mid point.

non-GAAP operating income between positive 0.6, and 1.0 million.

<unk> net income per share to be between two cents and three cents assuming shares outstanding approximately $128.3 million as measured on a fully diluted basis.

For the full year, we are raising our 2023 revenue guidance to be between 273.6 and 275.6 million.

An annual growth rate of 15% to 16%.

We expect non-GAAP operating loss between 7.6, and 5.2 million and.

And we expect non-GAAP net income per share to be two cents to four cents assuming shares outstanding of approximately $127.6 million as measured on a fully diluted basis.

As you adjust your models keep in mind the phone.

We finished Q2 better than we expected.

But we still see a very challenging macro environment.

Total to two are our performance was positively impacted by a single large expansion.

We believe renewal dynamics will remain challenging for the rest of the year.

Coming up on a slightly smaller renewal base.

Second half versus first half and this renewable base steps up the first quarter of 2024.

We also think that optimizations will persist into 2024 as our customers continue to deal with their own varying levels of demand.

Restructuring charges will impact free cash flow negatively by approximately 3.4 in Q3.

Starting with August 15th R. S. U listing date, we will begin utilizing more of a withhold the cover approach to taxes, rather than exclusively using the cell to cover approach, which we have done historically.

We estimate using $5 million to $6 million in the cycle at.

At a minimum we intend to continue this approach through the November 2023 cycle, and we'll update you in the future with more specificity on our approach for 2024.

We expect about 3 million of interest income per quarter.

And finally gross margins should remain the 77% to 78% range.

In summary, this quarter was better than expected, but we're not satisfied so pleased to be operating as a free cash flow positive company.

Harder work on improving the business and industrial key areas that we believe will eventually lead to reaccelerating growth.

With that I'll open up a Q&A over to you yeah.

Great could please turn on your microphone and camera when called upon to limit yourself to one question.

Pulling up in the interest of time.

Check into this your first question comes from Koji Aikido Bank of America.

<unk> go ahead please.

Guys. Thanks for taking the questions great great to see you. So the first question here really on kind of the three.

Three growth metrics here looking at our P. Oh, well I guess, it's <unk> you know thinking about the D sell their but the billings was good against a tough cop.

And then you also raised a full year revenue guidance, but the revenue guide implies flat.

<unk> revenue growth. So so really how to reconcile all that with what sounds like to be maybe a stabilizing two two slightly improving demand environment. I mean, I I guess what is the key metric to look at here to judge you underlying fundamental growth.

Hershey is always are very good with your math like I focus on the on the 6 million sequential was a very positive upside for us.

But we do acknowledge it was significantly impacted by one large expansion.

We look through the remainder of the year as we consider our focus on the wind enterprises. All they were doing within our operating functions across go to market an R. N D. A G N E.

We.

We we recognize will be in a different operating position in the future, but against the macro conditions of Chern and others. We have continued implicit in our our revenue guide a very neutral performance of new a R. R. A cross Q3 and has a corresponding it back into the queue for rabbit.

I wanted to touch upon that large expansion deal I thought it was pretty interesting is that you called out it was customer since 2015. So so <unk>, maybe talk a little bit more about this customer you know was it.

Department expansion new product expansion.

Maybe more importantly is does this customer optimize in the past year now is coming back to expansion and maybe this is it an early indication or some sort of green shoots that other large customers that have optimizing the past could start coming back to expand with you guys.

Yeah, I think there's a few things to address the one I think it's representative of larger expansions that we've seen in the past you know obviously in 2021 and you saw a number of large expansions just generally across our customer base for customers, who who had been using us for many years and so this was in that vein, where the amount of volume and that's that.

The the scope of the deployment continued to increase and would they wanted to set up an E. L. A so that they didn't have to worry about <unk> further volume increases in the future. We also had a new product introduced as part of this so that was really exciting to see as well and the last thing just to call out very candidly I think we.

Nathan particular, new zero did a really great job of building a really strong relationship with one of the key executives. There that was instrumental unsure of driving this maybe L. A so very very positive signal again, just a single data point I think it speaks to the fraud opportunity that is gonna happen as the macro does come back.

And so you know what's really take the win and we're thinking about how do we be more systematic and scale that motion across our entire go to market team.

Got it thanks Spencer Thanks, Chris.

Next Patrick <unk>, Patrick with it. Please yeah, yeah. Thanks for taking my question I guess first just wanted to touch on the competitive environment of it and leave the no new day to date for Google Analytics was in July and you've got some free to talk about this being an opportunity for Apple's you to take sure.

If you guys have seen any changes to your when rates over the past <unk>, particularly at the macro has remained challenge in banner consolidation continues.

Yeah. So <unk> has been huge for us so there's actually three dates with Google analytics. The free plan Sunset date was July as you mentioned, Google optimize the sunsetting in October and then the enterprise version of Universal analytics is sunsetting next year and so we're gonna expect to see continued customers continue to migrate from Google analytics to amplitude.

You see that show up in a number of ways, obviously call that number of wins last border that was specifically <unk> replacements and then just the increasing customer account probably is another thing that's driven by that we've created I think what we're seeing is the convergence of marketing a product and experienced analytics and so we're gonna <unk>.

<unk> to drive on improving our capabilities, both marketing experienced analytics to that or setup to dry for consolidation the category I think so.

The last thing I'll comment on <unk>, as though even though the sunset date has already happened there are still lots of teams that maybe they're on G. Four but the experienced isn't working out and so there's still a valuating other vendors now and so we're seeing that contribute towards more amplitude evaluations and growth in our business.

Okay I appreciate the prowler sanches very helpful. And then Chris maybe this one's for you guys have raised properly guidance and once again. So it's clear. This is a big focus for you guys internally you've been on the job now for a little over a quarter. So just curious where you see the biggest opportunity to better leverage the expense space. Aside from just the natural benefit you guys will see you at two margin says rubbing your partner says Hey, How're, you think about the trade off between <unk>.

<unk> once you get through the challenging macro improving profitability.

Yeah, No I'll I'll <unk> all good points when.

When we talked about the April restructure that was very much for me restructuring are getting very focused on how we invested and they go to market functions. The changes that Thomas was implementing their the reduction we did on our customer success, obviously its impact on the gross margin impact.

Inclusive and that is you know we've continued to make engineering investments to improve our unit hosting cost.

Some of the changes I've weaved into the queue three in queue for really reflect on an expense structure not unnecessarily decision between investing or dropping into profitability, but more fine tuning kind of my expense calibration of wherever heading cause we think into the future and we're gonna continue to make that trade off.

One of the things I will 0.2, as we did increase our investment and we're continuing to plan to increase our investment into our professional services organization.

A recurring subscription technical account managers as well as more of our implementation professional services capacity and bench one of the pillars that we we.

We focus on is when the enterprise, we recognize kind of a whole product delivery concept for them in the interval rolled in that those those two functions both at the implementation as well as that dedicated technical account person moving forward play will continue to make those choices uhm as you work through our numbers.

You'll see that <unk> magic number is not what we want it to be Thomas made and the rest of the team is really focused on operationalizing discipline and really tried any much more return on effort within our go to market motion is that starts to come to fruition, we've talked about but we really put that as the <unk>.

<unk> to our growth into 2024, as we start to be more effective on that that front as well as leveraging our P. L. G motion more on the bottom.

So for US it is very much of making more effective use of the investment levels that we've kind of recalibrated at coming out of the April restructure.

Alright, how 'bout color things yes.

Thank you next.

The next question from development from <unk> phone my tail and Mcginnis would UBS <unk> go ahead. Please.

I don't see <unk> Taylor Tilikum UBS go ahead, please notify Elizabeth <unk>.

Hi, guys. This is Zack Claire Grace I'm for Taylor. So uhm, just wanted <unk> 23 rats, a little more than <unk> uhm Emily back into the <unk> and <unk> I only one per cent. Several three Q is that just conservatism or anything.

For it to you that we should be keeping in ninth.

Yeah, you'll also clearly inclusive in the full your guide was the E R or performance and <unk> and the contribution it's gonna give us to the rest of the year.

And then.

Getting reflective of some of the points, we made on the macro conditions, our expectation on the Q3, a our performance as embedded into our guide is really 880 neutral position, therefore really nominal contribution into the queue for current I would equate almost all of the increase in the revenue.

Guide reflective of what's in the rearview mirror, both from the Q2 revenue B as well as the overall error on performance in a way it will play out through the rest of the year.

Okay helpful. Thank you.

Great next question from Elizabeth <unk>, followed by <unk> Elizabeth go ahead. Please.

Thanks for the question I wanted to follow up on your comment around the convergence of marketing product and experience analytics. So could you give us some color on how does the Mexican users has changed over the last year since the I P. M. And then how does that change your access to budget.

And you're addressing have a larger base anything any fries and current events in the budget that you're right it looks like you're asking.

Yeah for sure. So first I I'd say product has historically been our main persona. Since we started the company and that has been <unk> user base I think the change that we've seen as more and more marketing teams use amplitude. So that was in the single digits. When we first started to think about.

Marketing analytics and now it's in the teams in terms of total percentage of our user base and so we've definitely seen an uptick in because of a marketing analytics capabilities and because of the convergence that that I talked about I think marketing is also essential to win the enterprise I think what we've seen is that particularly in these traditional enterprises.

Marketing tends to control the budget and so it's not just a question of just getting them a product like as an example, I was visiting one of our large media customers in the UK a few months ago and the cheap product officer, there was a huge support or a champion of Boston. They were trying to get us into the mainstreaming out of of the of their media product.

And they had to bring in the CMO as well now after the Cmo's. All we had a bunch of marketing capabilities are like Hey, This is great for signed off on this you know we'd love to expand with amplitude and so I think instead of in the technology industry may starting product and then expand marketing over time I think what we're seeing nutritional enterprises you often go on our land with marketing right away.

And then the last part of your question absolutely allows us to get our budget. So huge huge deal from from that standpoint, I think what we've seen in the last five years has a ton of innovation and the digital analytic space. We've obviously been the leader in that and what you're Gonna see you over the next five years as you're starting to see the signs of consolidation.

Both in terms of analytics experiment C P as well as all along the dimensions of marketing experience analytics. So will continue to come out with more offerings. There. So that we're able to drive that consolidation and come out on top.

Great. Thank you for this all up unlimited <unk> <unk> <unk> <unk>.

How should we think of balance.

Financial modeling anymore.

Featured.

Kind of more customer.

<unk> or is there some sort of a direct monetization dicey Kennedy for sale.

Yeah, we're not doing any direct monetization at this time, it's all about the first pillar I talked about when simple. So how do you make it much easier for customers, who aren't familiar with digital analytics to onboard and get value out of what we do and so the ask amplitude is a great example of that you just type in your question into a Textbox you get an answer back you don't have to do anything.

How to use amplitude you don't have to know anything about your data taxonomy, it's gonna pull the interest of full insight together for you a lot of the stuff around the data management that I talked about also is about making it much easier to manage data at scale and so again, we're not it's it's making a lot of existing things that we do cygnet.

Secondly, easier, particularly for companies that aren't used to using digital analytics.

Thank you.

Next question from 100 Bucks here from Blair Food My account Jeffries from <unk> I can go ahead. Please.

Thanks for your question.

Maybe going back to the C V. P N. The marketing persona Apple can you <unk>, where the amplitude G. D. P. S from a feature parity perspective.

Some of the Standalone see fees are in the market or even other C. D. PS that are part of a broader.

Marketing text back because there are those you know other offerings, there and how have you been navigating kind of switching persona is to get more into the marketing department versus your historical advantage, which has been M product yeah.

Yeah, So on C P.

It's it's close to the the main thing you're evaluating a lot of these companies on this number of connections. So how many different end points can you send data to and as you imagine there's like a long tail of hundreds of different possible and points, we're close to parity with a lot of the leading cdp's that we see out there on that and that's why we saw that switch over from <unk>.

And we're gonna see continuing to see customers use it as an option on C. D. P. In particular were not as religious about saying Hey, you gotta be on the Apple two C. P. For US is just offering another option to get data. Our belief is that date is just gonna live in tons of different places in the enterprise whether that be C. P. Whether it's hot data warehouse by that thing Turnell store or what have you and so the more.

We can work with the better better and the more we can commoditize data access the better.

In terms of what sorry, what <unk> what was your question on the marketing side.

To just get access to the marketing persona, Tennessee M. O vs. Historically, you can find more to product teams. Yeah. I think we're seeing it more of a requirement within traditional enterprise to get into marketing right away as I mentioned earlier and so I think that's why we're kind of developing those things I think we've seen.

<unk>, our user base within marketing and go up from the single digits now where it where you know in the teens in terms of total percentage of end users who are in the marketing function that allows us to capture our budget. It's an hour and I think the recognition from our side is that the power center hasn't shifted fully to product within these non tech companies and so you'll have to come in right.

Off the bat, making the marketing team happy with an end to end customer view not just product anymore.

Okay got it that makes sense and then maybe just the broader question. It seems like as as we're looking at future resolved because we're looking at the forecast.

It seems there's an impact from a small number of customers right that might dry volatility one way or the other can you touch on the customer concentration at a high level and.

Look through the remainder of the year.

Do you see other potential five dollar customers that could have an impact on your forecast one way or another diet, it's just harder to thinking about that for for the rest of the year. Yeah. I mean, I think relative to most other companies that are size, we definitely have a lot of million dollar customers and so that leads to.

The concentration volatility that that you outlined Arjun I think you know I was part of two of those you know obviously cryptos been tough space and so that was reached slippery sizing by that customer that was also part of the other re sizing by the technology company that that Chris mentioned I think in both those cases those customers are look you know they went through layoffs are looking for.

Short term help on the budget side and they just need to make those changes amplitude usage at at those customers actually to Boston. So that's been great to see I think they expect to continue to grow with us over time in the long term. So that's very positive thing. It's this is just kind of more short term volatility as their readjusting their expectations of us and customer gross.

We've looked at stuff for both Q3, and Q4 and we kind of expect those right savings to continue as we go through this year I think you choose the single largest order in terms of total dollars off for a new also that's gonna be hit the hardest from insurance standpoint. So you know I don't think we'll see the exactly the the you know to choose give me the high point from an absolute dollar standpoint, but.

We'll see similar stuff happening in queue. Thank you for and we kind of already big that in.

Alright very helpful. Thank you.

Great next question from Kung drive through some Piper float my pump right from few Davidson can I. Please go ahead. Please.

Hello. Thank you for taking the question Spencer I wanted to ask about.

The AI technologies that you are announcing and maybe more broadly.

Which do you think it's a larger opportunity in terms of the solution set today, whether it's a conversational interface or or something that's more along the data management lines.

Imagine amplitude has been using machine learning it for a long time and really the step function.

The language natural language processing side as though just wanted to get your thoughts on you know what it means no longterm and then I have a fall progressed.

So I don't have all the clear answers encouraged so here's the contribution but let me give you our current thesis on the space. So the first thing to understand is we have one of the largest datasets and behavioral data in the world and if you think about what AI is really good at it is really good at extracting in summarizing insight from large volumes of data and so I think it is the <unk>.

<unk> you need to supercharge, what analytics does whether that's from the instrumentation fighting just making sure you're collecting the right data whether that's the taxonomies side I'm, making sure you're categorizing, whether that's the insight generation or whether that's turning that insight interaction with experiments and things like that so I think AI impacts all of it right now if you look at how companies.

Beverage analytic saw human based for each of those steps I outlined I think a I can get orders of magnitude more leverage for all of them and so I think you're gonna see a transformation of the space with a I uhm now or very very early days and it the thing I'm excited about is where the first company and digital analytics to come out with N E. L. M.

Based technology that improves it. So you know I already mentioned the highest amplitude I mentioned the data taxonomy tools I mentioned that the formula suggestions and the chart named suggestions and so I'm like you know I think that's a first step, but there's gonna be a lot more behind that I I think longterm. It's all about how can you operationalize this data in different places across the <unk>.

Business and I think a I is going to accelerate our ability to do that across all the different France, and so I think you know there's an order of magnitude more value that can be generated versus the manual stopped that people go through today. So very very early but I think it's gonna be a really important part of the future of digital analytics.

Absolutely and then Chris I just wanted to ask.

About <unk>, if you could give us sort of any expectations on how that would you know trend maybe over the near term how cost basis as being factored in and so you.

You know, maybe we have a little bit more of a conversation about GAAP operating profitability. You've mentioned that were told to cover but I I was just wondering if you could.

<unk>.

Maybe lay out the stock based <unk>.

Yeah, I I do know that it peaked as a percent of revenue in this last quarter. It has been trending up <unk>.

32, 33% rate, obviously looking to have that kind.

Kind of tale off with time I have not spent a lotta time on the kind of forward looking outlook really calibrating kind of just where we've been obviously, making changes we figure out how we're how we're using cash to withhold the cover you alluded to if there's.

I'll, just say Clark I'll go do more into the forward looking at it has not been one of the areas that prioritized this last quarter.

Thanks very much.

Next question <unk> Davidson, followed by <unk> Com right go ahead. Please.

Either a quick right on for <unk>, you you mentioned vertical adaptation of the platform. Maybe you could just talk about what that means in your in your <unk> picture is for how the platform can evolve over time and.

Then maybe just in addition to that I had to go to market <unk>.

Changes in order to policy.

Yeah. So I think you know there's obviously various degrees of Verticalization, we're taking the very first step which is how can we take the existing amplitude product and offer templates and guides for people from specific vertical industries like media R e-commerce or financial services or beat a beep so that the instrument a bunch of stuff and then we have.

A bunch of dashboard that come right out of the box I think that's a <unk> for me that's both the part of the wind simple as well as when the enterprise allow those customers are looking for guidance from us like they don't even know what questions to ask out of the data. So hey tell me the 20th Vance I should instrument entremet those that I can get lots of different charts and insights out of <unk>.

Without having to really thinking figure out that all of that on my own and so very very excited about that I think.

Thomas and made.

And the very Earth, <unk>, where where before even really thinking about that candidly I think that's gonna be kind of a many year thing in terms of refocusing Salesforce, we're still too small to really specialized for vertical standpoint, uhm, we've done it one off in different territory as as an example, you know having a easier in New York have a constant you know having a few a E.

Have a concentration of financial services customers and things like that so that you have a specialized in that business problems and use cases of the specific vertical but we're we're quite far off from you know doing anything more drastic there so that will be kind of many your journey as we continue to grow and get more advanced in our motion.

Okay. Thank you all my other question Fringe appreciate it great next question Teller Maggie from city full of by Michael <unk> Go ahead. Please.

Yeah. Good afternoon. Thanks for taking the question. So I wanted to ask you Spencer about the amplitude warehouse made of offering that you talked about maybe you could just give us some more examples like what are the the new types of use cases.

And users that you're seeing with that product and kind of what's the what <unk>. What is it streamlined what is that kind of unlocked for ya.

So the key thing so let me explain what it is and I'll explain why we've done it and how it fits in the strategy Uhm. The key thing with warehouse native is that there's been a lot of companies that have decided to use the cloud data warehouse as their source of truth four product behavioral data and so in that world. It's.

Much easier if you have an application that already runs natively on top of snowflakes and plugged in directly to that data set without having to you know send the data or the amplitude. So we just have a native application running with an a snowflake instance directly on top of that data that allows you to get all of the a lot of the digital intellects functionality that we have right out of the box and so it's.

Think of it as you know it takes 10 per cent of the time to get set up if you already have stayed in a data warehouse then with the traditional process of aptitude and the foundation.

Strategically in terms of why we're doing it I think there's there's two big things. The first is that our expectation is that data is just going to live in lots of different places cloud data warehouses is gonna be one of them. So the more prolific we are with the data sources that we work with the more we're gonna win the the overall space in the easier it is going to be.

Get to take out all the help it to you. So it's all about meeting customer where they're at the second thing is that warehouse native and I don't want to make this clear because there's been a little confusion on this is that it's an on ramp to the more advanced capabilities. You can think of it like a light version of amplitude and then over time as you want more speed as you want more functionality and flexibility.

Great to the more sophisticated versions of amplitude overtime and so really it's a distribution play to tap into currently snowflakes customer base, but we'll get to more of the card data warehouses over time and that will again enable us to work with whatever your data sources warehouse C D P et cetera.

Okay, so kind of broadening out beyond the the product persona to with with those yeah.

<unk> a lot of a lot of so some companies the data persona is driving the evaluation of this and so it <unk>. It helps us fit for those sort of customers yeah for like data <unk> organization. So you're a product led organizations you're barking like a organizations you have data led organizations you know it varies by <unk>.

Three and company size and this is an offering that's really great for ones that have where the data leader has a ton of influence.

And for Christmas I wanted to ask you a follow up I appreciate all the color around the the dynamics in the corner between the expansions in insurance.

I guess as we think about renewal rates today, I think you talked about 85 per cent, which is you know below kind of where where your target level is how do you think about that recovering you know in the back half and then as we go into 24, it sounds like you're still expecting some optimizations, but does that go back into the low nineties.

And then just given the momentum you're seeing in terms of new customers and expansion do you think the business can accelerate simply from improving renewal rates without kind of thing that improvement in expanses well.

Well, we we definitely want both I definitely expect both but yeah, let's talk about the renewals uhm since we talked about the you know his history with the the two customers large ones that did the optimizations this year.

We expect them to continue we were just getting kind of right sized with that on a natural level is that kind of unfold and this temporary period I would expect us to get back to G. D. R. North of 90 per cent just.

Just as we're getting kind of recalibrated on their levels. Because we sent you think this is a temporary.

That will obviously give us some uplift uhm.

Inclusive and that is we're getting deeper with these customers as executive levels. We're we're talking about the value of that experiment brings C. D. P. We're starting to share.

On a product roadmap respected how we will see warehouse native amplitude and others. We think the cross selling motion will be really meaningful part of our experienced this is not just about gonna volume level. So.

Look I look forward to all of that coming to fruition in a short period of time as possible.

I also want to be really clear like macros tough so that's at driving both right sizing and customers as low end, but you know we're not sitting here I'm not happy with where it's at so there's all you know it's a it's a top focus on what we're doing with Thomas and then go to market team.

Great. Thank you.

Alright next question from Michael <unk> and last question from Nicole Myth. Michael Go ahead. Please.

<unk> excuse me. This is Michael <unk> I told him I got much younger [laughter] [laughter], just send out the customer asking the court or are you seeing higher adds to do how recent a M to your pricing change was and we should expect it potentially slow in the back up there or do you think the current level that is relatively sustainable here yeah.

Yeah, I think you're going to see this isn't on an ongoing basis, we've as part of our kind of wind simple efforts. We've made that M. T. You change as you mentioned and that's led to add Big Johnson customer had suppose Q1, and Q2 and I think we'll expect that to continue to persist you know going forward. We're also not.

In terms of the improvements on the product like gross motion, there's quite a bit more of that you Wanna do to improve that and optimize that an apple.

Help us both when the low end of the market and also just having another entry point into similar onboarding process for customers properly.

And then just on the talk about wrapping up professional services I guess, what's driving that does that just vulnerable implementation times at Pine Enterprise I Gotcha, and your perspective, how would you characterize that.

I think we were just under sourced uhm just as we were over sore stomach customer success team. We were under source on the pro services gave it just as an anecdotal example of luck as as we see areas that need incremental investment, we're not gonna hesitate to do that that being fat free cash flow positive.

Gives us a ton of flexibility about what we're doing getting to a non-GAAP E. P. S kind of positive state this last quarter, great milestone and as I said, what kind of guiding the Q3 on a profitability standpoint.

All I all I was trying to indicate there is it when we see the areas that need the incremental investment for your work and I hesitate to do it.

Mmm alright, thank you.

Thank you last question from the <unk> have you this time Nick.

Oh, Yeah, Yeah, Awesome <unk> <unk>.

Just to follow up on question on a renewal Saturday equation. When you look at the <unk> for the enterprise side of the business versus you know more than <unk> business.

Meaningful the Delta there in terms of the the grocery and you're all right.

So I know that I have it I'm visualizing the chart in my head, but I don't want to call it out without having looked at it again when we do the call back I'm happy to give you that spread.

Okay.

And then.

While you were talking about how accurate a second half maybe has lasted renewal base and and to he was actually a pretty significant renewal corner for you guys.

I guess I wanted to ask how you're sort of thinking about renewal, Richard customers and and sort of.

<unk> that you're calling to combat Burger more discount for trying to sign for current deal with like what are you doing on on your side equate them too.

Uhm maintain customer fat and and for Lipitor turned away from the second half yeah, but I mean, there's a there's a there's a ton it's because the top priority from both the product and I go to market standpoint, I think there's a lot of different place. So one is actually going towards longer term contracts, but offering more discounting is is a letter I think even in K.

Pieces of our customers are looking to downtown finding other areas within the business, where we can expand to her across some new products like experiment in C. P. That's actually worked quite effectively and we're gonna continue to do that asthma customers become aware of our offerings in those areas. You know and then cases, where like the crypto company that that we had mentioned.

Where it's just like Hey, you know we had to go through a lay off. This is you just don't have a budget you know we ultimately want if he could longterm partners and so will work with them to figure out to a level on a rate that that makes sense because our expectation is these customers are gonna be with us for a longterm and on both sides. You know we want to they know as they get back to growth and.

We will will grow with them and want to work with them to do that and so I think the the one the other thing I call out is R. Predictability into these cycle has gotten much much better Thomas and Nader does done a fantastic job of driving that we landed pretty much where we expected within Q too and as we loved.

To to Q3 and Q4 those are also within the bounds of of what were you looking at earlier and so I think we've gotten still more to go buy a lot better on the predictability front and so that helps us get in front of it much earlier as well as control. It so that we can make sure to keep those customers.

Great. Thank God for sure great. Thank you with that can seem no further questions in queue, we will be out of the city Global Technology conference and five per cent of the groups Princess Conference in September details will be posted on our website. Thank you very much for attending on two two earnings conference call. You may now disconnect.

Thanks, everyone.

They're recording has stopped.