Amplitude, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; comparisons are with Q1 2023 unless otherwise noted. Amplitude provides a subscription-based SaaS digital analytics platform and reports as one operating segment.
Financial and operating performance
| Metric | Q1 2024 | Q1 2023 | Change |
|---|---|---|---|
| Revenue | $72.6 million | $66.5 million | Up 9% |
| Gross profit / gross margin | $53.7 million / 74% | $47.3 million / 71% | Margin up 3 percentage points |
| Operating expenses | $78.4 million | $76.5 million | Up 3% |
| Operating loss | $24.7 million | $29.2 million | Loss narrowed |
| Net loss | $21.5 million | $26.3 million | Loss narrowed |
| Net loss per share, basic and diluted | $0.18 | $0.23 | Loss per share narrowed |
| Cash from operating activities | $(0.05) million | $(5.1) million | Improved |
| Free cash flow | $(1.1) million | $(5.8) million | Improved |
Revenue increased primarily with 37% growth in paying customers, partly offset by churn among existing customers that marginally exceeded expansion. U.S. revenue was $43.2 million and international revenue was $29.4 million; international revenue represented 40% of the total. Cost of revenue fell 2%, while sales and marketing rose 4% and general and administrative expenses rose 8%. Research and development expense declined 3%.
Cash, cash equivalents, and restricted cash totaled $266.6 million at quarter-end, with a further $50.4 million in current marketable securities. Current assets were $384.1 million and current liabilities were $143.6 million. The balance sheet reports no borrowings; operating lease liabilities totaled $7.1 million. Accumulated deficit was $385.0 million. Management said existing cash and cash equivalents should meet working capital and capital expenditure needs for at least 12 months.
Material changes and business metrics
- Annual recurring revenue was $285 million, up 9% year over year.
- Paying customers increased to 2,970 from 2,175. Customers above $100,000 in ARR rose 6% to 521.
- Trailing-twelve-month dollar-based net retention was 99%, down from 114%; ending net retention was 97%, down from 106%.
- Remaining performance obligations were $250.6 million, up 4% from $240.4 million a year earlier; $197.1 million was expected to be recognized within 12 months.
- Stock-based compensation expense was $21.1 million, up from $20.0 million, and contributed materially to GAAP operating costs. April 2024 subsequent to quarter-end, the company granted employees 5.4 million RSUs with an estimated grant-date fair value of $52.3 million, generally vesting over three years.
Outlook, commentary, risks, and unusual items
- Outlook: The filing provides no quantified revenue, earnings, or cash-flow guidance. Management expects operating expenses to rise in dollars as it invests in product development, sales and marketing, and international growth; it anticipates longer-term expense leverage but notes near-term percentages may fluctuate. Management also expects research and development and sales and marketing expenses to increase in dollars over time.
- Profitability and cash: The company has a history of losses and negative operating cash flows. It reported a Q1 operating cash outflow of $0.05 million; the improvement from 2023 reflected, among other items, timing-related increases in accounts payable and accrued expenses. Cash used for equity-award tax withholding was a significant financing outflow.
- Retention: Net retention below 100% indicates contraction and churn exceeded expansion in the measured customer cohort. The company identifies renewals, customer expansion, and new customer acquisition as key to growth.
- Restructuring: A workforce reduction of approximately 13% was authorized in April 2023. The company reported $8.1 million of related non-recurring charges in 2023 and cautions that expected savings may not be achieved.
- Legal contingency: A putative securities class action filed in February 2024 alleges misleading statements about business and financial outlook during September 2021–February 2022. Defendants deny wrongdoing and intend to defend the case; damages sought are unspecified. The company says it cannot estimate a material loss range, if any.
- Other risks: Key exposures include competition and slower software spending, customer churn, dependence on its core Analytics product, cybersecurity and service availability, privacy and data regulation, AI-related development and legal risks, international and geopolitical conditions, and its dual-class voting structure. Class B shares carry five votes per share versus one for Class A.
- Controls: Management concluded disclosure controls were effective at quarter-end and reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether retention and expansion stabilize, given 99% trailing-twelve-month net retention and 97% ending net retention.
- Whether customer growth and ARR translate into stronger revenue growth and improved GAAP profitability, including after stock-based compensation.
- Whether operating cash flow remains near breakeven without relying on timing-related working-capital benefits; track free cash flow and cash use.
- The timing and realization of the $250.6 million RPO, and how renewals, contract duration, and customer churn affect conversion to revenue.
- The potential financial, legal, and reputational impact of the securities class action and any other material contingencies.
- The dilution implications of outstanding equity awards, the April RSU grant, and the dual-class voting structure.