Amplitude, Inc. — Q3 2022 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2022. Amplitude provides a subscription-based SaaS digital analytics platform. Unless noted otherwise, amounts are in U.S. dollars.
Financial performance and position
| Metric | Q3 2022 | Comparable period | Nine months 2022 | Comparable period |
|---|---|---|---|---|
| Revenue | $61.6 million | $45.5 million; +35% | $172.8 million | $117.8 million; +47% |
| Gross margin | 71% | 69% | 70% | 69% |
| Operating expenses | $67.7 million | $68.3 million | $192.4 million | $134.1 million |
| Operating loss | $24.2 million | $36.8 million | $70.8 million | $52.7 million |
| Net loss | $22.5 million | $36.6 million | $69.3 million | $53.1 million |
| Net loss per share, diluted | $0.20 | $0.93 | $0.63 | $1.64 |
Q3 non-GAAP gross margin was 74% (71% prior year); non-GAAP operating loss was $4.9 million versus $2.3 million. These non-GAAP measures exclude stock-based compensation and related payroll taxes, acquired-intangible amortization, and certain non-recurring costs, and should be read alongside GAAP results.
- Cash flow: Q3 operating cash use was $3.1 million and free cash flow use was $3.9 million. For the first nine months, operating cash use was $0.8 million and free cash flow use was $5.3 million, compared with $20.6 million and $22.7 million, respectively, in 2021.
- Liquidity: At September 30, cash and cash equivalents were $247.2 million, restricted cash $0.9 million, and marketable securities $59.3 million. Current assets were $309.1 million versus current liabilities of $123.5 million. Management said available cash should meet working-capital and capital expenditure needs for at least 12 months.
- Debt and obligations: The balance sheet reports no borrowings; it includes operating lease liabilities of $11.5 million in total, of which $3.8 million is current. The filing does not identify other debt.
- Other balance-sheet items: Deferred revenue was $95.5 million, all current; remaining performance obligations (RPO) were $248.1 million. Accumulated deficit was $249.1 million.
Changes and business indicators
- Paying customers increased 35% year over year to 1,913. Dollar-based net retention rose to 123% from 121%.
- RPO increased 63% year over year to $248.1 million, including $183.9 million expected to be recognized within 12 months. RPO is contracted future revenue, not a forecast of revenue for a specific period.
- Revenue outside the United States was 39% in Q3 and 38% for the nine months. No customer accounted for 10% or more of revenue, but one customer represented 17% of accounts receivable at quarter-end.
- Q3 gross margin improved as hosting costs declined as a share of revenue. Sales and marketing expense rose 47% year over year, mainly from headcount, commissions, stock compensation, and marketing investment. R&D rose 17%. G&A fell 51%, primarily because the prior-year quarter included Direct Listing-related professional fees.
- Stock-based compensation was $18.5 million in Q3 and $46.8 million for the first nine months, up from $14.5 million and $20.1 million, respectively. The company had 9.1 million RSUs outstanding at quarter-end.
Outlook, commentary, and risks
- The filing provides no specific revenue or earnings guidance. Management expects to continue investing in product development, sales and marketing, international expansion, and public-company compliance. It expects these expenses to increase in dollars and, in the short term, may increase as a percentage of revenue.
- Management cited customer acquisition and expansion as growth drivers, but noted uncertainty from economic conditions, IT-spending pressure, longer enterprise sales cycles, customer retention, and the timing of renewals and purchases.
- The company terminated certain Russian customer relationships and expects reduced revenue from impacted regions while the Russia-Ukraine conflict and related sanctions continue. Management also discussed ongoing COVID-19-related and macroeconomic uncertainties.
- Key operating risks include competition, dependence on Amplitude Analytics for substantially all revenue, reliance on third-party cloud infrastructure, cybersecurity and service availability, evolving privacy and data laws, and ability to achieve profitability. The company has a history of losses and does not expect U.S. deferred tax assets to be realized at present.
- Legal proceedings arise in the ordinary course; management said it did not believe any known matter was reasonably expected to have a material adverse effect. No material changes to contractual obligations were reported. Disclosure controls were assessed as effective, with no material quarterly change in internal control over financial reporting.
- Amplitude expected to cease being an emerging growth company and become a large accelerated filer on December 31, 2022, bringing additional reporting and auditor-attestation requirements.
Important facts for investors to verify
- Whether customer growth, 123% net retention, and RPO growth convert into recognized revenue and sustained renewals.
- Whether expense growth—especially sales and marketing, R&D, and stock-based compensation—moderates enough to improve GAAP profitability and cash generation.
- Cash consumption, investment maturities and fair-value changes, and the collection of receivables, including exposure to the customer representing 17% of receivables.
- Potential revenue and collection effects from enterprise sales-cycle length, economic conditions, and Russia-Ukraine-related disruptions.
- Potential dilution from equity awards and the dual-class structure: Class B shares carry five votes per share versus one vote for Class A.