As stated earlier, as companies come up on renewables, they are often resetting and optimizing for new expected levels of growth. The substantive portion of these legacy multi-year contracts should be reset by the end of Q2 2024. Taking this into account, ARR re-acceleration should become mechanically easier in the back half of 2024. In summary, Q3 shows our ability to adapt quickly to the new environment. We’re delivering on free cash flow. We’re investing appropriately against opportunities that we expect will drive long-term value. Above all, we’re committed to improving execution. With that, I’ll open for Q&A. Over to you, Yao.
A – Yaoxian Chew: Great. Thanks, Chris. [Instructions] Our first question comes from Koji Ikeda from Bank of America Merrill followed by Elizabeth Porter from Morgan Stanley. Koji, go ahead, please.
Koji Ikeda: Great. Thanks, guys. Thanks for taking the questions. So, in the prepared remarks, you called out Midjourney and a couple of other AI vendors out there. That’s so interesting. I’ll just – question on how to think about the AI category from an app’s perspective. Maybe what is it about this category? Or maybe the right question is, is there something structurally different about the way AI apps are created that makes Amplitude better positioned as a digital analytics company versus others out there?
Spenser Skates: I think the key thing with AI as a way of technological innovation is that it’s all about who has the best user experience for their AI application. Because of that, companies in that category are looking for every single competitive edge they can. That’s what led to Midjourney becoming an Amplitude customer. That’s what led to Character AI becoming an Amplitude customer. That’s what we’ve seen from AI companies in general. I would compare AI to actually previous waves of technological innovation. We’ve seen stuff like VR, crypto, mobile, SaaS. All of the new companies that – those categories created ended up becoming day one Amplitude customers from the very start, starting out with a small – growing with us — us growth with them over time as they continue to scale.
And so, AI is very similar in that way, and the digital product is the only competitive advantage you have. And so for us as a platform, given we’re the best, most sophisticated, now at the launch of the Plus plan, we also have the easiest entry point. There’s no reason for someone to choose anyone else besides an Amplitude. You’re not going to choose some of the legacy MarTech vendors. You’re not going to choose the smaller companies in the space. You’re going to go with Amplitude.
Koji Ikeda: Got it. Thanks, Spenser. On that Amplitude plus, does that potentially open new doors for new types of customers to try out the technology? And I guess how does the upsell process from plus to the broader Amplitude platform work? And then last question on Amplitude Plus is, is there some scale from a revenue perspective that Amplitude Plus customers can grow to?
Spenser Skates: We’ve already seen multiple five-figure sign-ups just straight away from the three weeks the Plus plan has been out. So, already very promising in terms of a new channel for growth for Amplitude, so one that I and the rest of the team are very excited about. I think the key part – so obviously customers can sign up. They can start with free. They can go to the pay plans. They can scale with that pay plan over time. But I think an underrated aspect of it as well is just exposing more people broadly to Amplitude. You get more customers signing up for free because they know, hey, this is only going to be $49 a month or whatever it is if I’m at a certain level. And so, I can figure that out without having to go through a whole sales process and talk to someone.
And it also is a great way to introduce them to some of the enterprise functionality they may want. And so, we’ve already seen plus customers that started on plus and then ended up upgrading to enterprise plans. And so we see multiple instances of that already, even though it’s only been out for a very short amount of time. So absolutely in terms of a new channel. And it’s all about just, okay, no matter where you’re at, if you want to start on free, if you want to just pay by credit card and have that be easy, or if you want to use some more sophisticated features, we’re going to be the best choice in the space.
Koji Ikeda: Got it. Thanks, Spenser. Thank you so much.
Spenser Skates: Thanks Koji.
Yaoxian Chew: Next question, Elizabeth Porter from Morgan Stanley followed by Nicholas Altmann from Scotia.
Unidentified Analyst: Hi, everyone. This is [indiscernible] for Porter. Thank you for taking the question. I wanted to ask on the go-to-market changes. It sounds like leaning into products like growth has been a focus for you as you look to add more customers through a no touch model on free plans and then eventually migrate them to higher value plans over time. So I’m curious if there’s any updates to share here. Are you seeing any progress with this acquisition channel bringing new logos into the funnel? And then what are the key hurdles that you’re seeing converting these customers from free to paid and how are you planning to address this over time?
Spenser Skates: Thank you. Yes, for sure, Fiona [ph]. So again, as I said with Koji, like we are seeing new customers come on to free, right out the gate, come on to paid. And then some of those customers upgrade to the enterprise plans. And so it has been successful launch, even though it’s only been out there for a few weeks at this point. I think that in terms of, yes, for us is just making sure that kind of no matter where you’re at, you’re able to scale with Amplitude over time and that we have the most compelling offering. And so, while we don’t expect the Plus plan to have a massive revenue impact in the short term, we know that just as a new way to acquire customers out there and have them upgraded, it’s going to be a good one.
In terms of obstacles, that’s something that we’ve been working on since prior to the Plus plan. So one of the big things that we saw was one of the gates to be able to get started with Amplitude was what we call activation, so being able to send us data from your product. And so, one of the things that we did as part of the launch of the Plus plan was we introduced new ways to do that from a low code or no code fashion, so, being able to put a Java bookmark let in or being able to transfer your existing Google implementation over. And so that’s actually increased what we call the activation rate, which is from sign-up to data in multiple percentage points through that effort. So that’s been good to see. We’re obviously using Amplitude to look at every single part of that customer journey and figure out where we can optimize.
And there’s still a lot more for us to go.
Unidentified Analyst: Thank you.
Yaoxian Chew: Great. Nick Altman from Scotia, followed by Clarke Jeffries from Piper. Nick, go ahead please.
Nick Altmann: Awesome. Thanks guys. The first one is just on the macro. Appreciate the update. Can you guys just maybe talk about what you sort of saw in October and how November has trended relative to 3Q in terms of whether you’re seeing incremental pressure. Things get a little bit harrier in terms of the macro or things are kind of stable as 3Q?
Spenser Skates: I think we’ve continued to see similar pressures as Chris articulated earlier. It’s not gotten significantly worse. It also hasn’t gotten better. That’s obviously hitting us on the churn side, which we’re not happy about. We’re doing quite a bit to address, but the macro pressures remain consistent. We expect them to rain consistent as we look through the next few quarters. I think as we get into the later half of 2024, we see some of that potentially alleviating. But again, it’s our early to say.
