Amplitude(AMPL) - 2022 Q4 - Annual Report

PART I Business Overview Amplitude's subscription-based Digital Analytics Platform helps global customers connect digital products to business outcomes Overview Amplitude's Digital Analytics Platform provides self-service visibility into the customer journey, optimizing engagement, retention, and lifetime value - Amplitude's Digital Analytics Platform serves as the command center for businesses to connect digital products to business outcomes, providing self-service visibility into the entire customer journey[11] - The way companies build digital products is fundamentally changing from intuition-based to data-driven, with product data becoming the next untapped growth lever[12] - Traditional systems (web/marketing analytics, BI, sentiment tools) were not built on product data and lack the scale and real-time insights needed for modern digital products[14] How Amplitude Powers Digital Analytics Amplitude's platform integrates customer data infrastructure, Analytics, Experimentation, Audience Management, and Data Streaming, all powered by its proprietary Behavioral Graph - The Digital Analytics Platform consists of integrated solutions: a customer data infrastructure layer, Amplitude Analytics, Experimentation, Audience Management tools, and Data Streaming tools[18][19] - At the core of the platform is the Amplitude Behavioral Graph, a proprietary behavioral database purpose-built for complex, interactive behavioral queries to identify actions leading to desired outcomes[20] Mission Critical to Our Customers Amplitude serves nearly 2,000 paying customers globally, including Fortune 100 companies, with its platform being mission-critical for driving digital innovation and growth - As of December 31, 2022, Amplitude serves almost 2,000 paying customers globally, including 28 of the Fortune 100[21][53] Key Customer Metrics | Metric | Dec 31, 2022 | Dec 31, 2021 | YoY Change | | :----- | :----------- | :----------- | :--------- | | Customers > $100K ARR | 480 | 385 | +25% | | Customers > $1M ARR | 30 | 29 | +3% | Our Business Model Amplitude generates revenue primarily from subscriptions, employing a 'land and expand' strategy based on platform functionality and committed event volume - Subscription revenue comprised 97% of total revenue for the year ended December 31, 2022[24] - The business model is 'land and expand,' where customers expand initial use cases, new use cases, and additional products after experiencing platform value[24] Dollar-Based Net Retention Rate | Date | Rate | | :--- | :--- | | Dec 31, 2022 | 119% | | Dec 31, 2021 | 123% | Industry Trends The digital-first economy is shifting revenue focus to product-led growth, driven by behavioral data and personalization, necessitating new digital analytics approaches - The revenue center of a business is shifting away from acquisition-focused marketing and sales to retention and expansion through sustained customer engagement within digital products[28] - The approach to building digital products is being reinvented, moving from intuition-based to data-driven, centered on behavioral data, adapting to customers with AI/ML, and leveraging data democratization[29][30] - Existing categories of software (Web and Marketing Analytics, Business Intelligence, Sentiment/Survey-based Solutions) fail to adequately address product data due to its complexity, non-linearity, and scale[34][35][36] The Amplitude Digital Analytics Platform (Detailed) Amplitude's platform is a unified, self-service system for data, analytics, and personalization, enabling data-driven decisions and faster innovation with enterprise-grade security - The platform is a fully integrated, self-service system for data, analytics, and personalization, with intelligence and collaboration built in to help teams innovate faster and smarter[38] - Key system capabilities include Behavioral Data at the Core (Amplitude Behavioral Graph), Built-In Data Management, Real-time Analytics and Insight, Easy Adoption and Collaboration, Powering Data-Driven Action (e.g., ML recommendations, experimentation), and an Enterprise-grade Platform (SOC2 Type-2 and ISO 27001 certified, 99.99% data ingestion uptime)[41][43] Key Benefits to Our Customers Amplitude's system enables customers to make informed product decisions, accelerate innovation, unify teams, and maximize product investment value by transforming cost centers into revenue drivers - The platform enables customers to make the right product bets and accelerate innovation by analyzing user behaviors and understanding drivers of conversion[44] - It unifies teams with common visibility into user behavior and in-product engagement data, fostering better decisions and faster actions[44] - The system maximizes the value of product investments by attributing revenue to specific product efforts, transforming cost centers into revenue centers[44] Our Growth Strategies Amplitude's growth strategies focus on acquiring new customers, expanding existing relationships, extending product leadership, and expanding global reach and partner networks - Growth strategies include acquiring new customers across every industry and stage of digital maturity, leveraging an efficient go-to-market motion[45] - The company aims to expand within its existing customer base through upsell (additional events, functionality, teams, products) and cross-sell (layering on additional products)[45][46] - Plans include extending product leadership with continued investment in the platform and expanding global and partnership reach, with 38% of 2022 revenue generated outside the United States[48] Our Platform and Technology Amplitude's platform ingests, processes, and stores data in its proprietary Amplitude Behavioral Graph, optimized for low-latency, complex behavioral queries with real-time data management and AutoML - Data enters the system via SDKs, server-side, and partner integrations, then undergoes processing and cleanup before being stored in the Amplitude Behavioral Graph[49] - The system is purpose-built for end-user behavior analysis, optimized for low-latency query/response, and includes real-time data management with structured, event-based schema, breadth of digital sources, identity resolution, and data governance[49][50] - The Amplitude Behavioral Graph features complex distributed joins, real-time data observation (lambda architecture), multi-tenancy and scale, and AutoML for automated feature extraction[51] Our Customers Amplitude's customer base grew 25% year-over-year to 1,994 paying customers by December 31, 2022, including 28 Fortune 100 companies Customer Growth and ARR (as of Dec 31) | Metric | 2022 | 2021 | YoY Growth | | :----- | :--- | :--- | :--------- | | Paying Customers | 1,994 | 1,597 | 25% | | Fortune 100 Customers | 28 | 26 | N/A | | Customers > $100K ARR | 480 | 385 | 25% | | Customers > $1M ARR | 30 | 29 | 3% | Sales and Marketing Amplitude employs a multi-pronged go-to-market strategy combining direct sales, product-led growth, and marketing, offering various subscription plans and supported by a partner ecosystem - Employs an efficient, multi-pronged go-to-market strategy combining direct sales, product-led growth initiatives (including subscription plans), and marketing initiatives[55] - Offers Scholarship (free for startups), Starter (free, limited core offerings), Growth (paid, additional features), and Enterprise (complete toolkit, advanced features) plans[56] - Has approximately 50 partners in its ecosystem program, including solutions partners (integrators, consultancies, agencies) and technology partners (integrating software with the platform)[58] Human Capital Management Amplitude's culture is rooted in Diversity, Equity, and Inclusion, centered on values of Humility, Ownership, and Growth Mindset, with 737 global employees as of December 31, 2022 - Company culture is a core driver of business success, rooted in Diversity, Equity, and Inclusion (DEI), with values of Humility, Ownership, and Growth Mindset[60] - As of December 31, 2022, Amplitude had a total of 737 employees, including 156 located outside the United States, with no employees represented by a labor union[62] Research and Development Amplitude's R&D focuses on continuous innovation and platform enhancement, with expenses totaling $80.6 million in 2022, a 67% increase from 2021 - Research and development efforts focus on continued innovation, enhancing platform features and functionalities, and expanding services[63] Research and Development Expenses | Year Ended Dec