Hello, everyone. Welcome to Amplitude's Second Quarter 2021 Earnings Conference Call. I'm Jason Starr, Vice President of Investor Relations. Joining me are Spenser Skates, CEO and Co-founder of Amplitude; and Hoang Vuong, the company's Chief Financial Officer. During today's call, management will be making forward-looking statements, including statements regarding our financial outlook for the third quarter and full year 2021 and 2022, the expected performance of our products, our expected quarterly and long-term growth, accelerated investments and our overall future prospects. These forward-looking statements are based on current information, assumptions and expectations; and are subject to risks and uncertainties, some of which may -- beyond our control, that could cause actual results to differ materially from those described in these statements. Further information on the risks that could cause actual results to differ is included in our filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements. And we assume no obligation to update these statements after today's call, except as required by law. Certain financial measures used on today's call are expressed on a non-GAAP basis. We use these non-GAAP financial measures internally to facilitate analysis of our financial and business trends and for internal planning and forecasting purposes. These non-GAAP financial measures have limitations and should not be used in isolation from or as a substitute for financial information prepared in accordance with GAAP. A reconciliation between these GAAP and non-GAAP financial measures is included in our earnings press release which can be found on our investor relations website at investors.amplitude.com. With that, I'll hand the call over to Spenser.

Thank you, Jason. And good afternoon to everyone joining us on our first public earning conference call. I am just so excited. So we decided to host this call today to provide investors with additional color on our second quarter results, which were recently included in our recently filed S-1 registration statement. I'm pleased to announce that this became effective today. And as a result, we expect to have our Class A shares begin to trade publicly under the ticker AMPL on September 28 on NASDAQ. We're really proud of these milestones. I'd like to thank our employees, customers and investors who have helped build Amplitude's success. I'll start today's discussion with an overview of our financial performance. Then I'll provide an overview of our business model, market opportunity and digital optimization system. I'll also detail the strong traction we saw with our customers this quarter. And then I'll turn it over to Hoang, who will walk through our financials in detail and provide guidance for Q3 and the full year 2021 and our outlook for 2022. Amplitude had an outstanding second quarter, reflecting the rapid acceleration of the digital world and great execution by our team. Revenue in the second quarter grew 66% year-on-year to over $39 million, showcasing the strength in customer adoption of digital optimization. We ended the quarter with 1,280 customers, up 51% year-over-year. Customer demand for Amplitude was exceptional, further demonstrated by a dollar-based net retention rate of 119%. As many of you are new to Amplitude's story, I would like to provide some additional background on our business, products and market opportunity. Also, as a reminder, we held our Investor Day last week, which provided a thorough review of our business, our product demonstration, our financial model and several presentations by key members of…

All right, thanks, Spenser. And thanks again to everyone joining us today. We had an exceptional second quarter with strong revenue growth, customer expansion and dollar-based net retention. Before I get into the results of the quarter, I thought it would be helpful to provide some background on our business model. We designed our business model to help customers become data-driven in building and optimizing their digital products. We sell our subscription based on the [ product a customer needs ] and the committed event volume. We don't charge based on users because we believe everyone in an organization should have access to actionable insights. As of Q2 2021, over 95% of our revenue is recurring and recognized ratably over the contract term. The remainder consists of overages and professional services related to implementation and training. Most of our contracts are annual, although we do have some multiyear contracts. Now moving on to our financial results. Q2 revenue growth accelerated to $39.3 million, up 66% year-over-year, driven by strong demand for our products. Expansion from existing customers were particularly robust as the team continued to execute well on our land-and-expand strategy. As Spenser mentioned, we had several notable customer wins. And we ended the quarter with 1,280 paying customers, an increase of 51% year-over-year. We maintained our strong dollar-based net retention rate or NRR of 119%, which is consistent with what we reported in Q4 2020. From a geographic standpoint, Q2 revenue from the U.S. was 65% and international was 35% compared to 64% and 36%, respectively, a year ago. Turning to current revenue performance obligations or CRPO. This metric represents the amount of contracted future revenue that has not been recognized, including both deferred revenue and noncancelable contract amount that will be invoiced and will be -- and recognized…

Great. Thanks, Hoang. Now as many of you know, given our expected direct listing next week, we're unable to hold a traditional Q&A session with sell-side analysts. Alternatively, I'm going to ask Spenser and Hoang some prepared questions that we anticipate many investors may have following today's remarks.

So Spenser, I'm going to start with you. Can you expand on your ambition for Amplitude to become the system of record for product organizations? And how do you expect to accomplish that over the next several years? And what else do you need in your product arsenal to improve the odds of success?

Yes. So particularly for folks looking at holding us for a long period of time, this is a really important question. I think it helps to draw some lessons from other SaaS vendors who have been very successful. So if you look at either Salesforce in the sales space or Adobe in the marketing space: They've done a phenomenal job of becoming a system of records for their respective functions. I think the biggest takeaway that we have is that analytics is really the key piece, where if you get those teams, where if you get those functions to operationalize around your analytics and data store as the system of record, what happens is other spend that falls under that functional buyer will start to consolidate. And that's why you've seen those companies be very successful. After you do that, you get ecosystem consolidation. More SIs and partners and other applications end up plugging into you as well. And so at Amplitude we're hoping to replicate the exact same thing for the product organization. So with the product organization specifically, I think what we're seeing in a lot of companies, as I mentioned earlier in the call, is that power is shifting to them as the distribution channel, away from sales and marketing. And if you talk to product leaders and you ask them, "Hey, what's the -- what's either the most important piece in your stack? Or what's the first piece in your stack?" they're always going to be talking about analytics as the foundation. And so given we're the market leader in that category, per G2, and also in the enterprise more generally, I think we're very well set up to become that system of record for enterprise product buyers long term. So we've obviously -- we started…

Good. Thanks, Spenser. Let's shift over to Hoang for a few modeling questions here. First off, what are some of the key operating metrics that you will report on quarterly versus annually?

Thanks, Jason. So on a quarterly basis, we'll provide updates on kind of like our net retention rate, our total paying customers. And we'll also break down our revenue by geography between international and U.S. And then once a year on an annual basis, we'll kind of give an update on total number of customers over $100,000 and number of customers over $1 million.

Great. And then what are some of the key drivers of the model, and what metrics should investors be following? You reported on CRPO. Will you report calculated billings? And will you provide guidance on these metrics?

Yes. So as we look forward, on guidance, we'll provide guidance obviously on revenue, non-GAAP operating income/loss and non-GAAP net income/loss and underlying share count estimates that goes behind that. And so when you look at between current remaining performance obligations versus calculated billings, we really believe that CRPO is actually the better metric to follow and track us, and so we would advise to look at that one.

Great. Next question here: What are some of the assumptions that you've built into your guidance given the acceleration you saw in Q2? And is that sustainable?

Yes. And we're obviously being very mindful that this is our first public earnings call and we're doing our direct listing next Tuesday, so we want to take a very prudent approach to how we're providing guidance. And so we're very pleased with the fact that we're providing guidance at the midpoint of 65% growth year-over-year for Q3, 57% year-over-year growth for the full fiscal year 2021. And then obviously when we look out further, we kind of want to -- we want to look at our current momentum we're having and then kind of be measured still and kind of balancing all that out. And that's why we're giving an outlook of 40% growth or more for the year 2022.

Okay, great. Moving along, we have a few more here. You reported a net retention rate of 119% for Q2. What are the primary drivers for customer expansions in Q2? And how should investors think about the trends in NRR over the next several quarters?

Yes. First, I want to remind folks that our NRR, the metric we share, is a -- basically we can take a point measurement every month. And then it's a weighted 12-month average of those, each point and each month, for the calculation of NRR. And so obviously as we see that, I think that we'll look at -- out kind of -- we are carrying a couple of quarters where we obviously had some impact from COVID, and we should see that kind of obviously improve. As far as some of the primary driver for driving expansion, we're really excited by the fact that, when we look at Q2, we saw expansion coming from multiple angle. We saw folks that are just expanding purely because of their expanding from volume. As Spenser highlighted, we also saw a few customers added Recommend and Experiment. Now I want to be careful that those are still relatively new and still relatively small, but it's really an encouraging sign to see. And then we also saw other customers really adding and expanding it into other product lines and business units. And so there wasn't one massive thing or another. It actually kind of came pretty healthy in terms of the larger expansion coming from [ either just ] volume or people expanding into additional product lines.

Okay, let's shift over to customers here. Net new customer adds in 1 -- in first half were particularly strong. Do you think this level of new customer activity is sustainable in the back half? And if you lose a customer, what are the typical factors involved in that?

Yes. I think the way that we think about the market, and the market, as been mentioned, is $37 billion and it's quite large, is that we're just in the beginning of moving from kind of the early adopter to the early majority. And I think you're starting to see some signals of that. We're hopeful that -- obviously, that we're in the beginning stage and that's going to get bigger, but we'll let the market kind of tell us how that happens. But at the end of the day, right now what we want to focus on is making the investment to make sure we win the market and make sure we're building the right solutions for all the customers. And so we'll look and see. And we'll kind of, I think -- don't pay so much attention to -- every quarter in terms of customer adds or additions or changes. I think it's really more about the longer term of like we gaining momentum in terms of winning more [ customer ], both enterprise and SMB, and then obviously getting them to expand. As far as why we lose typical customers. Obviously the #1 reason for us is when there's a material change in business, similar to like what happened with COVID in last year, if the company is obviously going out of business or face a material change to their business. That's the #1 reason. And the second reason is when a customer hasn't fully adopted and hasn't reached out to -- enough adoption and yet we've lost a champion inside that account. And so that's another reason why we are working really both from a customer success side and a product side to constantly figure out how do we make sure that it's goes -- as wide reaching as possible in terms of usage and trying to get past what we typically think of like [ weekly learning ] users. And our goal is always to get to at least 5 or more when we're activating an account.

Really helpful. Good color there too. Time for 2 more questions here. And you touched on this in the script and also in the release, but how should investors think about your total share count for market cap purposes as opposed to the weighted average share count included in your guidance for Q3 and fiscal year 2021?

Yes. So the -- for the weighted average share count which is used to calculate earnings, that is basically the amount of common stock that's available. And obviously, I mean, preferred hasn't converted over to common. And there's always the options and other things that are -- haven't converted to common, and then you take the weight of that. So while we do expect obviously the conversion of preferred to common to happen at the end of Q3, when we direct list, you basically only have 1 month of that. And so that's what the calculation [ does ]. That's why we obviously also provided the fully diluted share count, which again when you look at it fully, it's 130 million shares. And then when you exclude the options that have not vested, along with RSUs that still have not been earned, in essence, it's 114 million.

Great. And we'll wrap up on this. This has come up quite often, but you've mentioned you're significantly investing in your growth opportunity. Where are those investments primarily being made?

Yes. We are aggressively investing. And I know this is [ somewhat a kind of still build ] scenario, but we are really investing in all the areas. Let's first start with the sales and marketing. We believe one of the biggest thing that you've got to do when you're in the early adopter is getting our awareness out, making sure that people understand not only what Amplitude does but all the success stories that we have with all the customers. We obviously are investing a lot in building out our sales capacity, but you -- but at the same time on the product development. We mentioned it earlier in the script, in that building out the right solution and having a suite of solution to go after the product leader and the product organization to be their system of record is critical. And so we'll be investing in product development to make sure that innovation happens. And obviously, becoming a public company has its own kind of additional weight and scale that comes along with G&A. So we're growing that out in all 3 functional -- our 3 big buckets of operating expenses. And then on the cost of revenue side, we think that we'll kind of scale it similarly to revenue. So that won't be outsized in terms of gains, but the other 3 -- for the near term, we want to make sure that we're investing in all 3 of sales and marketing, product development and G&A just to make sure that we're doing the right thing to win the market.

Okay, great. Well, with that, we will conclude today's discussion. And as a reminder: We expect our Class A common stock to begin trading on NASDAQ on September 28 under the ticker symbol AMPL. So thank you for being with us on our call today. And we look forward to reporting our success in the quarters ahead.