Thank you everyone for joining us at the Morgan Stanley TMT conference. My name's Elizabeth Porter. I'm an analyst on the U.S. Software Equity Research team. I am very pleased to have with us today Amplitude CEO, Spenser Skates. We are taking audience Q&A. There'll be some mics going around at the end. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. With that, Spenser, thank you so much for joining us for the second year in a row after your guys' direct listing in the fall of 2021. Just to kind of kick it off, you know, could you give us an overview of the company and what was the problem that you were trying to solve for customers when you founded Amplitude? Yeah. Before Amplitude started, we actually, me and my co-founder, Curtis, worked on this company named Sonalight, which was a voice recognition application. Think of it as a version of Siri for Android phones. One of the things that was really clear to us at the time was the way we should be building product was by looking at the customer journey, seeing what customers used, what they liked, what they didn't like. One of our top questions at the time, we wanted to figure out how much the accuracy of the voice recognition algorithm mattered for long-term customer engagement and retention. It was just, you know, I know it was obvious to us that this is the way you should be building a product. When we looked out there on the market at the time, there was nothing out there that could give you answers to those questions. I remember Facebook had come out with a famous study at the time that they found that the number one predictor of long-term engagement was how many friends you added. If you added seven or more friends in the first 10 days, you had an 85% chance of being a long-term successful user, and if you didn't, it was less than half that, and I remember looking at all the different tools on the market, Google Analytics, Adobe, Mixpanel, like tons and tons of tools, no one was able to answer that question. Like a lot of engineers with hubris, we ended up saying, "Oh, let's, you know, how hard can it be? Let's go ahead and build this ourselves." We ended up shutting down Sonalight about a year into it, but when we showed other companies what we were able to see, they were like, "Oh, we need this exact same sort of thing ourselves." That was the start of Amplitude in 2012. We launched the company in 2014, took it public in 2021, and here we are. Great, so w ith this whole digital product, like optimization, seeing what a digital product is, what do I need to do to make it better, you know, that's clearly most applicable to tech native companies. Many of these companies were definitely the ones that helped accelerate Amplitude's growth. Those are also some of the companies that are having some of the hardest times right now kind of tightening their belt on costs. Can you just help us understand a little bit more about your end market exposure, kind of the revenue that you guys have to these smaller tech native companies that might be feeling the pressure versus the non-tech side and how demand is trending in each of those buckets? For sure, we have some headwinds in the business. No question about that. I think what you see with Amplitude is we had massive growth in 2021 as a result of how many digital natives we had on Amplitude, and we're seeing headwinds this year, both on the expansion insurance side, as we go into 2023. You know, I kind of make two big points on it. The first is that, you know, as you're talking with these customers that are experiencing short-term headwinds, whether they're having to go through layoffs or other budget pressures, their expectation is that they are gonna grow with us long term. It's not like, you know, they expect to continue to reduce spend or, you know, switch off to something else. Their expectation is that their usage of Amplitude will grow with us long term. The other thing I'd say is we're starting to see a lot more traction from traditional companies for the first time. You know, Q4, we had large expansions with Fox Broadcasting. We had NTT Docomo, w e had another one with one of the largest media conglomerates. That's one of the things that we're seeing. Every single company out there is becoming a tech company in terms of that's where its customers are, that's where it's driving revenue, that's where the growth- Mm-hmm ... area of its business is, and so when they want something that gives them visibility and control of that's when they're looking to Amplitude, and so I think we're starting to see that transition happening more and more as we go through, as we go through time. I think one of the other big data points that we saw for the first time is that companies are willing to adopt us big and from the start. We had several large seven-figure lands for the first time in 2022, and that's not something we had done before in Amplitude's history. People are starting to get the importance and value of this category. What they're looking to us to really teach them is the how. How do you actually go along that journey? What is it I need to do in terms of setting up and adopting the software and training my workforce to use it? Mm-hmm. Got it. Before we dig more into the business, you know, I wanted to touch on some of the management changes- Yes ... that have happened. You guys have made a series of changes from CFO, president, chief commercial officer, just to name a few. How would you describe the new leadership team? What are some of the biggest changes that you guys are looking to implement? I've been really focused over the last year on getting the right executive team to set up Amplitude from the growth from where we are today to $1 billion in revenue and beyond. I think Amplitude, you know, in 2021, we had one of the most phenomenal growth rates out there. In a lot of ways, the business out-scaled our ability to build a great organization around it. That's what I've been really focused on over the last year. I'm really excited. We brought in Thomas in July of last year as President to run all of go-to-market end to end, so marketing, sales, customer success, revenue ops. He's done a great job making changes within that team and up-leveling for the capabilities that we need to have at this level of maturity. We just welcomed Chris two weeks ago. Chris, do you wanna maybe wave to folks, say hi? We're very, very excited to bring Chris on board. As I think about how do we set up the business to systematically grow, you know, to attack, you know, traditional companies, to broaden outside of digital natives, to up-level how we tie the value and the use cases, I think there's a huge amount of opportunity for us to do that. I'm really excited about the team I've gotten in place. Great. Going back, you mentioned Thomas kind of rethinking about some of the go-to-market initiatives. We know that there are some of the headwinds in the smaller kind of digital natives businesses. Is there anything that you guys can do or are doing from a go-to-market perspective to focus more on some of those traditional, more broad-based enterprises where you mentioned seeing some new wins and those are areas that just might not be as under pressure in the current macro? Yeah. I mean, I think we've already seen us successfully take down a few specific verticals. One of the patterns that we see is that you take down a lighthouse account within a particular vertical, and that allows you to win others. I'll give two quick examples. For those of you who've met earlier today, you may have heard me say these already. F irst is within the media vertical. I think we've had a lot of success there. NBC was an early customer of Amplitude's four years ago, and one of the big questions they were looking for Amplitude was: How do I get more subscribers to Peacock, our streaming service? One of the things they found out through Amplitude was that the key factor was whether you watched multiple TV shows, so multiple different TV shows within the same 24-hour window. If you did that, then you were really likely to convert to a subscriber, and if you didn't, you were much less likely. That was a huge signal for them about how they design the user experience, the app, their recommendations for what you saw when you first came on. We took that same playbook, we brought that to tons of other companies. We brought that to Fox Broadcasting. We brought that to HBO. We brought that to Discovery, so we've seen, you know, media's been one of the verticals that we've seen some really good success in the traditional companies. One of the other ones I'll point to is quick service restaurants. Chick-fil-A was an early customer of ours. You know, they've been one of the more successful ones in driving digital transformation in their business. One of the use cases for Amplitude that they had was: How do I recommend the right upsell to a customer during a checkout process so they increase their total purchase size? How do I recommend fries or a milkshake based on what you previously ordered? We're now an integral part of how they do that. We've since then taken that playbook to a number of other companies in the quick service space. You look at Burger King, you look at Popeyes, you look at Zaxby's. These are all now Amplitude customers adopting that same sort of playbook. I think there's tremendous opportunity for us to repeat that within lots of different traditional companies, whether, you know, you look at retail and e-commerce, whether you look at financial services, whether you look at healthcare. It's really, really early days for us there. I think one of the transitions that I think that the executive team that I've put in place will be bringing to Amplitude that I'm very excited about is: How do you talk about those use cases that I just went through in a customer point of view or customer language? Like, I'm an engineer, I tend to think more about, like, features and functions. Like, oh, thinking about funnels or retention or cohorts, but that's not the sort of language and the value that these customers get excited about when they look at Amplitude. Rather, they get excited about, "How do I increase my video subscribers? Mm-hmm. How do I increase my total cart size during checkout?" adopting some of the storytelling and use cases and all of that to better match these traditional companies. Mm-hmm. Got it. Just going back, so you mentioned Chick-fil-A and kind of this Recommend product, which is a newer product. When you guys first came public, it was really a lot of the revenue was from Amplitude Analytics. Yes. Other solutions like Experiment, which is more of the A/B testing. Recommend, which is now part of your CDP offering. Yes. Those are still pretty early. Yes. You know, can you give us an update on how many customers are multiproduct customers today, and how has the trend towards vendor consolidation started to benefit and accelerate the mix of customers taking more than just one product from Amplitude? I wanna be really clear, it's early. I think the last public thing we shared was that between new products, particularly Audiences and Experiment, we had $10 million in total- Mm-hmm ... bookings at the end of Q3 of last year. Again, you know, versus a revenue base in the $200 million. Yeah ... still very small portion. Mm-hmm ... of the customer base. Analytics has been the primary driver. Now, that all said, a lot of very exciting things happening with Experiment. I think we landed, we did our largest deal ever in Experiment in Q4 of last year, and so that was a really big proof point and breakout moment for that product. We're seeing adoption of both Experiment and CDP. Those are typically between 20% and 50% upsells in the base Analytics, so very exciting. It's still early in that the penetration across the customer base is low. I think in this environment, there is a huge opportunity to drive consolidation. People are not interested in any new spends- Mm-hmm ... by and large. If you can say, "Hey, I can reduce your existing CDP spend off of Segment and mParticle," or, "I can reduce your existing experimentation spend off of Optimizely and LaunchDarkly," that's actually very, very compelling. We're having, you know, we've seen that happen, already a bunch in Q3 and Q4. We're starting to have a lot more of those conversations as we go through this year. I think this is the first. You know, one of the questions I often get from investors is like, "Hey, it's confusing. Everyone says they do something with product and data and user journey and, you know, UX and all of that, you know?" This is one of the first really strong pieces of evidence that we're seeing towards consolidation in the space. Mm. It used to be, if you're a new kind of growth or data leader in one of these companies, you'd come in, and you'd purchase like five or six different tools right off the bat in order to get them to work. I think we're seeing for the first time that, for a bunch of those tools, instead of deciding to go buy a bunch of the best-of-breed stack from multiple vendors, you're actually buying from the same vendor, because that's good enough. The exciting thing is we're the ones that are driving that. You know, we're seeing that consolidate onto Amplitude, and we're not seeing, you know, people consolidate away. Even though it's very early in this category, I think we're seeing the signs that we're gonna be able to drive that over the long term. Specifically with CDPs, you mentioned being able to, you know, take away from a Segment or a Particle and [uncertain]. How often is Amplitude replacing another CDP versus doing more of a greenfield implementation for a client? CDP's a little more nuanced in that, our belief is that the CDP space commoditizes. Mm. Whether people use something internally or whether they use one of the 30 vendors out there or they use us, we're kind of agnostic, too. I think for the ones that are consolidation, for sure, when there's big line items for other tools. Uh-huh ... like some of the ones that you've named, that's a huge motivator for them to come onto an Amplitude. Experiment is, I think, one of the actually more interesting ones because most companies we talk to have an existing budget for A/B testing or experimentation. It's rare that you don't. You have some, whether that's an internal tool and the team around it, whether that's your third-party vendor, you're gonna have something that funds A/B testing and experimentation. That is actually a very compelling sell during this time because, you know, yeah, you can replace that team, you can replace that internal tool, you can replace that with Amplitude, so, you know, one, you get budget consolidation, and two, you get all the benefits of being integrated with your analytics, where you get to target your experiments much better. You can measure your experiments, you know, in a much more accurate way because you have the full data set with analytics. It's kind of a win-win in that you both get reduce. You know, we get to get more dollars from the customer, they get to reduce their overall spend, and then you get all the benefits of having a consolidated tool. Got it. I wanted to touch on technology partnerships and how that really fits into your growth algorithm. Yes. You mentioned there was a Snowflake partnership that was announced in back in 3 Q 2021, and one of the highlights you called out was just that it accelerates the process of getting data into Amplitude. I wanted to ask you, what are the other opportunities for technology partnerships that are similar to the Snowflake partnership? You know, how have you seen that impact the financials in terms of just expanding the amount of data that you can get into Amplitude and the spends that customers have with you? Yeah. The biggest challenge by far is, you know, every customer you talk to wants to do this, you know, philosophically. Like, they get it. You know, this is where stuff is going. Their question is, "How? Mm-hmm. How quickly can I get there? The thing that's really exciting about Snowflake and all the cloud data warehouses, where you look at BigQuery or Databricks or some of the others, is that a lot of customers already have the customer journey data within these tools. Instead of having to re-instrument and do a line of code wherever you wanna track the customer journey, you actually have it already. How can you take that data and pipe it to Amplitude? Now, we already do a bunch of that today, where there are a few hundred customers that use integration between us and Snowflake to send data from Amplitude to Snowflake or Snowflake to Amplitude to get started. The part I'm really excited about is that we actually just, on our last earnings call, we announced that we're gonna be building Warehouse-native Amplitude for the first time, where we actually sit on top of the Snowflake data. Mm. That makes the implementation or adoption barrier much lower for Amplitude, and you get started much quicker without having to deploy any engineering resources at all. That, for sure, is the biggest one. I think beyond Snowflake, I think, you know, as we start to invest more in that and grow off of that, you know, we'll be looking at some of the other cloud data warehouses as well. I think, you know, in terms of other, you know big technology integrations, it's not from an adoption standpoint, but Braze has been pretty good for us. Mm-hmm. Like, we're often adopted alongside each other. Yep ... and the customers that we work with. Got it. I want to move over to competition a little bit. You mentioned when you were first looking to found Amplitude, you had been looking at tools like Adobe and Google Analytics to kind of solve some of the problems, but they just weren't quite cutting it for you. Now, those solutions collect similar data, so just wanted to do double-click into how is what Amplitude doing really different than the Google Analytics, the Adobe Omniture. As Amplitude starts to get into more marketing use cases, what's the risk that you run into those platforms a little bit more? Yeah. We're already actually running into Google Analytics a lot, and it's a great thing for us. Mm-hmm. The more we can make it about us versus Google Analytics versus Amplitude, that's a great place for us to be in. You know, you look at Google Analytics, they have an install base of something like 5 million. Mm ... different installs for their SDK. That's a huge opportunity for us. You know, we're at, like, the 2,000 mark in terms of number of customers on Amplitude. I think, so I think of... Okay, why choose Amplitude over Google Analytics or Adobe, and how's it compare? Google Analytics and Adobe were built for the internet when it was viewed as a marketing channel. All the data structure, the data model, and the questions it's designed to answer are all targeted towards that. They're looking at questions like, "What's my return on ad spend?" You know, "Where are my visitors coming from? What ad campaigns are impacting? What pages are people visiting the most? The questions we're asking are fundamentally different, like how do you get more subscribers to the Peacock app if you're NBC? You can't get that out of Adobe. You can't get that out of Google Analytics. How do you increase cart conversion and checkout conversion if you're Chick-fil-A? You can't get that out of a Google Analytics or Adobe. We view digital, our data model is structured for digital as a product and value delivery itself as opposed to just a marketing channel. That's fundamentally different. Now in terms of, you know, how we're gonna intersect with them, We're seeing a lot of switch overs already from Google Analytics to Amplitude. Yeah. That's been something that's really exciting. A great example is one we just landed in Q4 with Fandom. For those of you who don't know Fandom, it's like one of the largest wikis out there. They allow you to have wikis for like different topics around TV shows or movies or what have you. You know, you might think of them, they're an advertising business model, so very marketing-centric company. A lot of their use cases are like, "Okay, how can I show more ads to my customer base? What pages are performing well?" They actually decided to switch off of Google Analytics to Amplitude because in addition to their marketing questions, they also had a lot of product questions. They wanted to know, "How do I get my creators to create more content? 'Cause the more content and the more pages I have, the more I can monetize my user base." They also wanted to know, "How do I recommend the right piece of content based on what you've clicked on and seen previously?" Again, a product question. They actually wanted to have a tool that spanned the user journey, both across marketing and product. That's why they ended up coming on to us from Google Analytics. That was a, that was a huge win. I think evidence that Amplitude can take on those marketing use cases as well as product. Yeah. You guys have seen great success in 2022 just in terms of being able to go up against Google Analytics, and they have an event where they're sunsetting their own product in. Yes ... 2024 that you guys can take advantage of. Just given kind of the success that you've seen in 2022, knowing that there is kind of this timeline out there in 2024 for when that product sunsets, how should investors size kind of this replacement opportunity and what kind of momentum it can bring for Amplitude in 2023? Yeah. We haven't, you know, we haven't guided or broken out specific numbers on Google Analytics, but I think the way I'd characterize it is we've done a lot of one-off replacements of them over the last year, and what we're looking at doing this year is systematically taking them down. One, we just did a marketing campaign in January against them. We launched a new version of our pricing model, MTU pricing, that specifically targeted to make it easier for customers to switch over. We're gonna do more. The idea is to systematize that pipeline. You know, for, you know, frankly, one of the other things, one of the things we joke about is, like, Google is, like, the worst B2B company on Earth. It's very, very easy to go compete against them, you know, if you're trying to take away customers. Great. I'm gonna ask another question or two, and then we'll open it up to the audience for a Q&A. Amplitude does have a subscription-based pro- pricing model. It is based on the volume of events that are being digested through Amplitude. I think one of the things that's been great but also a headwind near term is you've been really proactive in helping customers kind of figure out, how can we both be most efficient in spend and just optimize the data that's running through Amplitude? Can you help us just better understand what are some of the near-term headwinds it presents on the net retention rates, but also kind of the longer term benefit to the customer relationship? Yeah. I think a few things. One, you know, the primary lever is events today, and one of the things we're trying to evolve and why, the reason I'm excited that Thomas and Chris and others here are here at Amplitude is that presents us an opportunity to speak more to value in the pricing model, right? We're not just buying a set of events. We're buying increased shopping cart conversion- Mm-hmm ... or we're buying a lift on our total amount of addressable customers that we can advertise to. I think that's gonna be an evolution, in terms of our model. We've already started to introduce the levers for that, so Experiment was a big part of that. When you're introducing that use case again, that's an uplift on kind of the base, and that gives you kind of another lever to play with on the pricing front. CDP is another one. We're gonna be coming out with more. Mm-hmm. You know, I think I said, I said when we went public that we'll be coming out to two new products a year. Like that remains, that's something that we remain committed to and will allow us more levers. You know, two areas I'd point to in particular, one is vertical specific analytics, so analytics for media companies, analytics for retail and e-commerce use cases, analytics for B2B companies. So that will help us drive more kind of value-based conversations. Then, you know, the last thing that I'd point to on headwinds in terms of the pricing is that, you know, again, it's what I said earlier is, like, those customers do expect to grow with us from a value-based standpoint. It's just that in the short term, they're looking to reduce events or reduce data or reduce the amount they're spending on Amplitude because, you know, the growth that they saw in 2021, you know, it's slowed down this year. Mm-hmm. So. Do we have any audience questions? If 5 million Google Analytics installs all of a sudden go to you, what's the 5 million. Question is, if 5 million Google Analytics installs go to us, I'd say massive. That's the biggest thing, which is how do you get more folks aware of Amplitude? You know, I wanna be clear in that, like, out of those 5 million, you know, they're only monetizing some small percentage of that, you know, a few% of that 5 million. In terms of generating awareness of being the default, you know, I think if you do that, you solve the issue from here to $1 billion and beyond, no question in my mind. You know, I wanna be clear that, like, our expectation is not that all of a sudden we're gonna go replace those 5 million installs. The question is, how much can we get from that channel over the next few years as we continue to grow Amplitude? I guess long term, do you think there's any difference in retention between your legacy tech businesses or that core market versus your non-tech businesses? 'Cause the way I kinda think about it is a tech company has a faster cadence of new products, so therefore more experimentation. But the menu at Chick-fil-A rarely changes. Once you have those questions answered, like what's the reasons you stay on the product? Yeah. That's a great question. I think. The first thing to be clear about is that once you're in the product and you have those use cases, you're not coming out. Part of the thing for us is how do you find additional use cases for that data and additional products to sell that to through over time? I think one of the best analogies I always look to is what Adobe has done as part of Adobe Marketing Cloud. I mean, they've done a phenomenal job. They have a suite of 60 products. You know, they're doing billions of revenue through that. Site Catalyst is a central piece, but they have tons of other pieces, whether you wanna do experimentation, whether you wanna do ads, messaging, you know, user targeting, CMS. Like there's tons and tons of needs. I think that's a good question. I haven't actually thought about differences in net retention. I think you actually get a similar net retention both in digital natives and in traditional companies. Yes, the digital natives are gonna have a faster pace of new products and delivery, but all the same set of needs to be successful in the digital channel exist for traditional companies. Now, I think, like you're always shipping new versions of your app, you're always wanting to know how do those new versions improve or break things? Am I having issues on different geos? There's no end to wanting visibility and control of the revenue coming through your digital channel. I think over the long term, the net retention rates of both digital natives and the traditional companies end up looking quite similar. Great. Thanks. I guess on the topic of Google Analytics, it would be helpful if you could talk about how Google Analytics 4 differs from just the legacy Google Analytics product. I've heard that they're trying to do things more like event tracking. Yeah. It's hard to like, find information, frankly, I'm sure even for their customers. Yeah. on like what that looks like. I guess to the extent you have information on what Google's trying to do with GA4, and how that might be more or maybe less competitive with Amplitude, that'd be helpful. Yeah. GA4 is Google's re-architecting of the Google Analytics platform to get in line with this latest generation of technology. To your point, Universal Analytics, which is their legacy solution, is a pageview-based model, so it thinks about what pages are getting the most clicks, where referrals are coming from, whereas GA4 is all about how do you use events to track the user journey. It's the right architectural model. The problem is, GA4 is a pretty immature product, whereas Universal Analytics, you know, as you imagine, is like a 20-year product, so it's quite fully featured. A lot of the capabilities that are considered basic to have in marketing analytics, GA4 does not have. That's what's... That, among lots of other things, is triggering companies to say, "Hey, do we even wanna go to GA4?" Google actually had to move out the sunset date of Universal Analytics because of the backlash from its customer base that GA4 was not as mature of a product yet. Think of it as like right model, but you know, very, very new product. You know, from my standpoint, that's a huge opportunity for us over the next few years. I just wonder, I Compared to... No, Google Analytics, the purpose of Google Analytics is to drive people to use their moneymaker, their ads product, both in search and web, and s o they don't care about Google Analytics. You know, they're not a B2B company that's going. Yes, like Google Cloud, they're trying to drive that. Google Analytics as a standalone offering, I mean, they care about it, I'd say, less than even their workplace tools. There's a bunch that. Like, if you look at GA Universal. If you look at GA4 migration, if you just Google that and you look at Google's official documentation on how to do it's like a super cumbersome and really intensive, very manual process. You know I know I joke that, you know, Google's a great company to compete with if you're going up to them from a B2B standpoint, and so yeah, in the grand scheme of Google as a company, they don't care about the revenue from analytics at all. That actually brings us on our time. Spenser, thank you so much for joining us today and sharing your insights. Elizabeth, been great to be here. Great. Thank you.