Amplitude, Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022. Amplitude sells a cloud-based digital product analytics and optimization platform on a subscription basis. Amounts below are in millions of dollars unless otherwise noted.
Financial performance and liquidity
| Metric | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 |
|---|---|---|---|---|
| Revenue | $58.1 | $39.3 | $111.2 | $72.4 |
| Gross profit / margin | $41.1 / 71% | $27.1 / 69% | $78.1 / 70% | $50.0 / 69% |
| Operating expenses | $65.7 | $36.9 | $124.6 | $65.9 |
| Operating loss | $(24.6) | $(9.7) | $(46.6) | $(15.9) |
| Net loss | $(24.6) | $(10.1) | $(46.8) | $(16.5) |
| Net loss per share, basic and diluted | $(0.22) | $(0.34) | $(0.42) | $(0.57) |
| Operating cash flow | $10.6 | $(5.1) | $2.4 | $(5.5) |
| Free cash flow (non-GAAP) | $8.2 | $(5.8) | $(1.4) | $(6.9) |
At June 30, cash and cash equivalents were $310.0 million, restricted cash was $0.9 million, current assets were $366.4 million, and current liabilities were $117.9 million. Deferred revenue was $98.4 million, all current. The company reported no borrowings in the presented balance sheet; operating lease liabilities totaled $12.7 million. Accumulated deficit was $226.6 million. Management said existing cash should cover working capital and capital expenditure needs for at least 12 months.
Remaining performance obligations were $227.6 million, up 64% from June 30, 2021; $170.2 million was expected to be recognized within 12 months. H1 operating cash flow benefited substantially from a $29.1 million increase in deferred revenue, alongside a $46.8 million net loss.
Material changes versus the prior comparable period
- Q2 revenue rose 48% year over year; H1 revenue rose 54%. Management attributed growth primarily to a 43% increase in paying customers and customer expansion.
- Paying customers increased to 1,836 from 1,280. Dollar-based net retention improved to 126% from 119%.
- Gross margin improved to 71% in Q2 and 70% for H1, versus 69% in both prior-year periods, principally as hosting costs declined as a share of revenue.
- Spending outpaced revenue growth: Q2 operating expenses increased 78%, with R&D up 138% and sales and marketing up 70%. H1 total operating expenses increased 89%.
- Stock-based compensation increased to $14.8 million in Q2 and $28.3 million for H1, compared with $3.0 million and $5.6 million, respectively, in the prior-year periods. The increase included expense related to equity awards whose performance condition was met following the 2021 direct listing.
- H1 operating cash flow turned positive from negative in 2021, while H1 free cash flow remained negative. The prior-year H1 financing inflow included $173.3 million from preferred stock issuance; there was no comparable issuance in 2022.
Outlook, commentary, risks, and unusual items
No numeric revenue, earnings, or cash-flow guidance is provided in the supplied filing text. Management expects expenses to continue rising in dollar terms and anticipates near-term increases in R&D and sales and marketing as a percentage of revenue while investing in product development and sales growth. Longer term, it expects those expense ratios to decline and gross margin to improve, but cautions that these outcomes are not assured. The filing states that profitability has not been achieved and may not be achieved.
- Management cited a broadening platform, more than 1,800 paying customers, and product-market recognition; it also noted that substantially all revenue is expected to continue coming from Amplitude Analytics for some time.
- The company terminated certain Russia-related customer relationships and expects reduced revenue from affected regions while the Russia-Ukraine conflict and related disruptions continue. It also cited possible customer payment disruption.
- Macroeconomic risks include inflation, rising interest rates, reduced IT spending, longer sales cycles, and collection difficulties. Other highlighted risks include customer retention, competition, security and service interruptions, privacy regulation, and international expansion.
- Adoption of lease accounting (Topic 842) on January 1, 2022 added $11.6 million of right-of-use assets and $13.2 million of lease liabilities at adoption; management reported no material effect on operations or cash flows.
- In July 2022, after quarter-end, the company granted options and RSUs covering approximately 2.0 million shares in total, with disclosed grant-date fair values of approximately $9.9 million and $18.9 million, respectively.
- The company expected to lose emerging-growth-company status and become a large accelerated filer on December 31, 2022, increasing disclosure and internal-control requirements.
Important facts for investors to verify
- Whether customer growth and 126% net retention persist, and how much revenue growth depends on existing-customer expansion versus new customers.
- Whether operating-expense growth, particularly stock-based compensation and sales and marketing investment, moderates relative to revenue.
- How much positive operating cash flow depends on deferred-revenue billings and collections, and whether free cash flow becomes sustainably positive.
- The timing and conversion of the $227.6 million remaining performance obligations into recognized revenue, including renewal and cancellation terms.
- The financial effect of Russia-related customer disruption, broader economic conditions, and any changes in customer payment patterns.
- Potential dilution from outstanding options, RSUs, employee share plans, and the dual-class voting structure; Class B shares carry five votes per share versus one for Class A.
- Whether the stated 12-month liquidity outlook remains adequate as losses, investment needs, lease payments, and public-company compliance costs evolve.