Earnings Call Transcript - AMPL Q1 2025

John Streppa, Head of Investor Relations

Good afternoon, everyone. And welcome to Amplitude's First Quarter 2025 Earnings Conference Call. I'm John Streppa, Head of Investor Relations. And joining me today are Spenser Skates, CEO and Co-Founder of Amplitude, and Andrew Casey, Chief Financial Officer. During today's call, management will make forward-looking statements, including statements regarding our financial outlook for the second quarter and full year 2025, the expected performance of our products, our expected quarterly and long-term growth, 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 are 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. Additional information regarding these non-GAAP financial measures and a reconciliation between these GAAP and non-GAAP financial measures are included in our earnings press release, and the supplemental financial information, which can be found on our Investor Relations website at investors.amplitude.com. With that I'll hand the call over to Spencer.

Spenser Skates, CEO and Co-Founder

Thanks, John. Good afternoon, everyone, and welcome to Amplitude's first quarter 2025 earnings call. Today, I'll go through three key areas. First, our Q1 results and the reacceleration of our business; second, our platform strategy and how we are winning the enterprise; and last, product innovation and customer stories. Let's start with our Q1 results. We exceeded the midpoint of our revenue and operating loss guidance. Our first quarter revenue was $80 million, up 10% year-over-year. Annual recurring revenue was $320 million, up 12% year-over-year and up $8 million from last quarter. Non-GAAP operating loss was $2.1 million. Customers with more than $100,000 in ARR grew to 617, an increase of 18% year-over-year. We are reaccelerating the business. We are growing through platform deals and focusing on the enterprise. We are also continuing to improve churn. 2025 is the year of the platform. Every company needs data they can trust, understanding of their customers, and ways to take action. During Q1, we saw more enterprise customers embracing our full digital analytics platform, leading to stronger multi-product attach rates, more multi-year deals, and wider usage across teams. Multi-product customers now make up 30% of our installed base and 64% of our total ARR. We are seeing strong enterprise momentum overall. We landed new customers like Hertz and the Economist Group, and almost two-thirds of our ARR base comes from enterprise customers. These deals are bigger and more likely to expand in the future. We have also created a new strategic enterprise accounts team to focus on our top 30 customers and top 30 prospects. That effort is already paying off in Q1 with stronger executive relationships and more multi-product wins. We are making steady progress on churn and are past the worst of it. Our dollar-based net retention reached 101% in Q1, up 5 points from its lowest level in Q2 of last year. As the macro remains challenging, our priority is helping customers derive value from the Amplitude platform as quickly as possible. Moving on to product innovation. When we spoke during Q4 earnings, we had just launched our newest product, Guides and Surveys. Guides and Surveys helps customers deliver in-product guidance and feedback that is deeply personalized, a far cry from static pop-ups. It is built on our analytics foundation and is a prime example of how to move from insights to action quickly. Since then, there has been a phenomenal response. We have seen faster adoption and more incremental ARR in the first quarter than for any other new product to date, including experiment and session replay, which were very successful in their own right. We have already displaced a number of point solutions and legacy tools with Guides and Surveys, and it is becoming a core element of our platform story. We are getting better at adding to the Amplitude platform. In Q1, we also shipped self-serve data deletion, heat maps, session replay for mobile, and session replay everywhere. Now session replay is embedded across the entire Amplitude platform, including analytics, experiments, and guides and surveys. Last year, we saw the increased influence that marketing leaders had on enterprise deals. To be successful, marketers need to look at the same user data, evaluate the end-to-end customer journey, and leverage capabilities outside of analytics in the same platform. Legacy marketing solutions are not set up to do that. We are making two announcements next week specifically for marketers. First, on Wednesday, May 14, we are launching a series of platform updates that enable marketers to understand conversion, product adoption, customer lifetime value, and retention. Our goal is to eliminate the blind spots created by traditional marketing analytics tools. Second, we are joining Twilio at SIGNAL, their annual user conference also on Wednesday to announce that Amplitude is now Segment's recommended analytics platform. To give you a better idea of what we're releasing, I'd like to show you our latest marketing updates in action. For this demo, I'm an e-commerce marketer looking to increase customer purchases. This screen shows my advertising performance. There are pre-built metrics on the screen from impressions to customer acquisition costs and return on ad spend, so I can best understand my best and worst performing channels. I also see a problem. I'm getting thousands of visitors, but less than 5% of customers make purchases. Why is that? Instead of guessing or needing to switch to another point solution, I can use Amplitude's heat maps to find out more. This visual shows my website with hotspots representing customer activity. I can understand where users are engaging and where they're getting stuck. I just found out that this top banner here gets a ton of clicks. I'd like to experiment with new messaging to see if that will drive more purchases. I can do this all on the same screen in Amplitude. I highlight and click the banner, and then I can launch an experiment. What you see now is the visual editor. I can select elements like the banner, update the copy with a new promo code, and go ahead and deploy that experiment. Finally, still within Amplitude, I see my experiment results. Users who see the new banner messaging are converting at a higher rate. What you just saw is not possible with any other tool out there, only Amplitude. We want Amplitude to be the default platform for marketers everywhere. At Investor Day, we shared our vision for Amplitude AI agents. Our agents turn Amplitude into a team of experts you lead. These agents are monitoring your data, looking for changes, doing a root cause analysis, watching sessions, forming a hypothesis, suggesting experiments, taking your feedback, shipping changes, monitoring the impact, and then repeating the cycle over again. On June 10th, we're hosting an event in San Francisco, where we'll announce the closed beta of agents. We will welcome other leading AI companies on stage with us and show some product demos of what Amplitude Agents can do, including agents that automatically and iteratively use analytics and session replays for deep analysis to find the root cause of issues. Agents that automatically create hundreds of variants of the same website to see which performs the best, agents that automatically create user guides to walk customers through your product. This is the first agent in the data space that is doing anything meaningful beyond code and SQL generation. Our customers are excited about it too. Agents won the top voted new product at multiple of our customer advisory boards this year. Let us know if you'd like an invitation to the June 10th event; I'd love to see you there. We had a great quarter for new and expansion deals with enterprise customers, including The Economist Group, Hertz, Atlassian, Joe & the Juice, First Horizon Bank, Woop, 1Password, Away, Le Monde, Syngenta, Zocdoc, and Appfire. I want to talk about three of them in more detail. The Economist Group chose Amplitude as its full platform solution to power its digital analytics and experimentation strategy. Like many media organizations, The Economist Group was navigating a complex shift from print to digital and struggling with disconnected tools and low data adoption. Its teams were stitching together insights across analytics providers, warehouses, and other point solutions. This made answering even the most basic customer journey questions time-consuming and inconsistent. The Economist Group adopted analytics, experiments, session replay, and guides and surveys to bring insights and actions together in one place. It now has a single platform to understand how users engage across all its digital properties. Its teams can analyze what drives subscriptions, test experiences in real-time, and build smarter engagement flows. Syngenta is a global ag tech company that helps millions of farmers grow food. Their applications help farmers understand when and how to plant different foods in their local geographies to produce better yields. Syngenta adopted Amplitude in 2021. Today, almost 300 employees use our platform to understand how users differ across regions so they can tailor the experience. In Q1, Syngenta added guides and surveys. Now its team will be able to gather user feedback through NPS and promote key events in a timely targeted way. This will help its team improve user engagement and increase feature adoption. Joe & the Juice, the international juice bar and coffee shop chain, was facing rising demand. The team turned to digital channels and Amplitude to help grow same-store sales. Joe & the Juice realized that this app could be a key tool for driving orders and improving the customer experience at pickup. The team added experiment and activation to its existing Amplitude stack and was able to optimize their customer journey. Joe & the Juice can now personalize the ordering and pickup experience for each individual customer. Having all of its data in one place allows the team to move fast, iterate quickly, and increase order sizes. Before I hand it over to Andrew, I want to reiterate our continued progress in growing Amplitude. We have successfully returned to double-digit revenue growth. We are the complete end-to-end digital analytics platform for the enterprise. Customers can now use Amplitude to replace any point solution on the market, and we continue to expand the platform's features and functionalities at scale. We have also deepened our customer relationships, improved our operational efficiency, and created a sustainable growth business. I am proud of the Amplitude team for their focus and dedication in Q1. While there is always more for us to do, we will continue to execute regardless of any changes in the macro environment. Thank you for your interest in Amplitude. I'll now hand it over to Andrew to walk through our financial results.

Andrew Casey, Chief Financial Officer

Thank you, Spenser, and good afternoon, everyone. I'm pleased with our execution in the first quarter, setting the stage for a strong year as we set out to expand our enterprise customer base and extend the reach of our platform. During our last earnings call, we shared our plans to accelerate the growth of our business and that growth would come with greater leverage. Our first quarter results are another proof point of the improved execution that our teams are exhibiting as both revenue growth and operating income outperformed expectations. The first quarter also showed that we are becoming more strategic partners with our enterprise customers, with total RPO accelerating to 30% growth year-over-year and long-term RPO accelerating to 72% growth year-over-year. We are confident in our strategy as a platform of choice for customers looking to consolidate spend across vendors and believe that we can accelerate our growth without meaningful improvement or clarity in the macro environment. As we explained in our Investor Day, we are focused on two levers to accelerate growth and get more leverage out of our business. First, our sellers are focused on the enterprise customer, which we define as customers with greater than 1,000 employees or over $100 million in revenue. Here, we had a great quarter from both landing new accounts as well as expanding additional accounts. As Spenser highlighted in his remarks, our push to extend into the marketing persona is directly related to this goal. Enterprises are looking across teams to drive additional growth and improve their customer journey. Our platform can give marketers and product owners a single view into that customer journey and offer differentiated data that can help product owners optimize their in-product experience. This gives marketers unique insights into the behavioral aspects of their customers they've never been able to activate before. The second growth lever is to extend the reach of our platform into all of our customers. Again, this quarter was strong with 30% of our customers being on multi-product compared to 21% last year. Our platform works better together, and we will continue to sell the platform across both our current customer base as well as new lands. In the first quarter, 42% of our new enterprise customers landed as multi-product, which is great progress. As we increase our enterprise customer base and expand the adoption of our platform, we are becoming more strategic partners with our customers. Contract duration is a key focus for us as it represents customers' commitments to our roadmap and the value they receive. As we extend the duration of our contracts, we give ourselves greater opportunity to deliver value before renewal. This also provides us greater time to earn the opportunity to expand with customers through sales of additional products. We had a strong renewal quarter, and we managed to extend our average contract duration in many of these renewals. Lastly, I want to touch on our ability to drive greater leverage within our business. I'm pleased with our outperformance in the first quarter from our initial expectation, and we will continue to look for additional opportunities to create greater efficiencies. We are focused on a profitable business model, and we'll continue to make incremental improvements each quarter. Turning to our first quarter results. As a reminder, all financial results that I will be discussing with the exception of revenue are non-GAAP. Our GAAP financial results, along with a reconciliation between GAAP and non-GAAP results, can be found in our earnings press release and the supplemental financials on our IR website. First quarter revenue was $80 million, up 10% year-over-year and 2% quarter-over-quarter. Total ARR increased to $320 million exiting the first quarter, an increase of 12% year-over-year and $8 million sequentially. Here are more details on the key elements. We had a strong new customer quarter, reflecting balance with expansions. However, macro uncertainty will continue to make every new logo challenging. The number of customers representing $100,000 or more of ARR in Q1 grew to 617, an increase of 18% year-over-year. In-period NRR was 101%, a 1 point increase sequentially. NRR on a trailing 12-month basis was 98%. We continue to make progress on improvements in retention and continue to expect NRR will increase throughout 2025 as we drive greater expansion opportunities. Gross margin was 77% for the first quarter, in line with the last quarter. Sales and marketing expenses were 45% of revenue, a slight decrease year-over-year, but up slightly sequentially as we had some one-time events in the first quarter to prepare for the year, such as our sales kickoff. We continue to focus on improving sales efficiencies, driving improvements through our changes in our processes, coverage, and expansion of the enterprise customers. G&A was 15% of revenue, in line with the first quarter of 2024. G&A will continue to be optimized to improve as a percentage of revenue over time. R&D was 19% of revenue, up 1 percentage point sequentially, primarily due to the acquisition of Command AI. Total operating expenses were $63 million, 79% of revenue, up 2 percentage points sequentially, primarily due to the aforementioned increases in sales and marketing and our acquisition of Command AI. Operating loss was a negative $2.1 million or 2.6% of revenue, which was approximately $2.4 million better than the midpoint of our guidance. Net loss per share was zero based on 129.7 million basic shares compared to net income per share of $0.01 with 130.9 million diluted shares a year ago. Free cash flow in the quarter was negative $9.2 million or 12% of revenue compared to negative $1.1 million or 2% of revenue a year ago. This was largely driven by our annual bonus payout, which we expected during the quarter. Going forward, we will shift to a semiannual payment framework, under which the first payment is expected to occur in the third quarter of 2025. Now, turning to our outlook. We have built our business to be more resilient through both our product positioning as a platform of choice when customers are looking to consolidate spend and by focusing on operational excellence, we have oriented the business for positive free cash flow and non-GAAP profitability. We continue to operate our business with a focus on investing in areas that we see real return with ROI for our customers. We are not assuming a positive inflection in the macro environment and believe it will continue to be challenging in the near future. However, we are encouraged by the proof points we are seeing from the strategic changes we've made to our business. We expect that every new logo will continue to be tough and buyer scrutiny has not shifted positive over the past six months. As we get through the larger levels of churn, we continue to address structural issues in our go-to-market motion to influence greater retention and encourage deep adoption of our platform. However, the digital channel remains as important an investment as ever, with companies trying to get deeper connections with their customers. We are building a durable enterprise SaaS business that is enabling us to drive growth as we deliver increasing value to our customers. For the second quarter of 2025, we expect revenues to be between $80.3 million and $82.3 million, representing an annual growth rate of 11% at the midpoint. We expect non-GAAP operating loss to be between negative $2.9 million and negative $0.9 million. And we expect non-GAAP net income per share to be between negative $0.01 and positive $0.01, assuming basic weighted average shares outstanding of approximately 132 million and diluted weighted average shares outstanding of 139 million, respectively. For the full year 2025, we are raising our revenue expectation due to the outperformance in the first quarter to be between $329 million and $333 million, an annual growth rate of 10.5% at the midpoint. We are also increasing our outlook for non-GAAP operating income to be between $0 and positive $5 million, reflecting our focus on growth with leverage. We expect non-GAAP net income per share to be between $0.05 and $0.10, assuming weighted average shares outstanding of approximately 141 million as measured on a fully diluted basis. In addition, today, we announced that our Board of Directors has approved a $50 million share repurchase program that we will use to take advantage of dislocations in our stock price as well as to help manage future dilution. In my second full quarter as the CFO, I am pleased with the early progress we've made. I'm confident in our ability to build a durable growth model by aligning to the right customers, driving the right types of contracts, investing in greater innovation, and building out value for our customers. Our long-term opportunity remains incredibly compelling. With increased discipline and execution, I believe we will be in a great position to capture it. With that, we'll open it up for Q&A. Over to you, John.

John Streppa, Head of Investor Relations

Thank you, Andrew. We will now turn to Q&A. For the sake of time, please limit yourself to one question and one follow-up. Our first question will be coming from Scott Berg at Needham, followed by Arjun Bhatia at William Blair. Scott, your line is open.

Scott Berg, Analyst

Hi everyone. Really nice quarter here and thanks for taking my questions. I wanted to follow up on the net new ARR metric in the quarter. It was up $8 million quarter-over-quarter and up 100% year-over-year, especially in a seasonally weak quarter. Can you help us understand the outperformance a little bit from the new sales side? It sounds like your new customer acquisition was pretty good in the quarter, but retention is better as well, and even your cross-sell opportunity is better. It sounds like everything is kind of clicking together. But relative to your expectations maybe 90 days ago, what exactly kind of maybe drove the upside there?

Spenser Skates, CEO and Co-Founder

I think the comparison to last year is important. We experienced significant overbuys and larger contract churns that we have been addressing from 2021 and 2022. Now that we are in 2025, we have mostly moved past those issues. Currently, we are seeing the expected churn rate. This has been the main driver of our performance. Additionally, we achieved some significant enterprise wins and improved our focus and execution, alongside expanding our platform offerings. We now have features like Session Replay, Guides, and Surveys that were not available at this time last year, generating a lot of customer interest. These factors contributed positively as well. I want to emphasize that while we have made $8 million in net ARR, it is a positive step forward, but we still have a long way to go to reach our goals in the coming years.

Scott Berg, Analyst

Helpful. Thanks, Spencer. And then Spencer, you commented on initial traction of, I think it was surveys and guides, which was above expectations or at least above trends on other new products you've launched over the last couple of years. We had conducted a number of customer surveys over the last quarter and trying to help better understand how well this platform kind of newer strategy is resonating with them. And we were actually kind of surprised to hear that a couple of customers, even one that was a repeat buyer wasn't as familiar with these other opportunities there. It's kind of an interesting difference relative to the strength that you had in the quarter there. But how do you improve that market awareness around what you all are doing on the product side today to even drive further success in those expansion strategies?

Spenser Skates, CEO and Co-Founder

Yes. I mean, Scott, that's great that you call out that problem because for the last 10 years, we have been known as an analytics company. And so that is why we've made the point in saying this is the year where we go from analytics to entire platform. And so there's not any magic to it other than continuing to beat the drum and get the word out there. I think the progress we've seen is on new lands. Most enterprise new lands will have a component outside of analytics. So that's great. The place where we still have a lot of work to do, which sounds like was consistent with what you heard was on our existing customer base, where a lot of them, they're used to viewing us in the analytics box. So the easy move is just to renew every year on analytics and not worry about it and continue to grow as they grow their data volume. And so that requires some intentional work on our part to educate them and help them understand, hey, we have experiment. Hey, we have session replay. Hey, we have guidance surveys. Now when we do that, universally, like I can't think of a single customer conversation I've had where someone is not interested in those. It's just a question of timing. So we still have a bunch of work with our existing customer base to both educate them as well as get them on, and that will happen as we go through this year.

John Streppa, Head of Investor Relations

Thank you, Scott. Our next question is from Arjun Bhatia from William Blair, followed by Brent Bracelin from Piper Sandler. Go ahead, Arjun.

Arjun Bhatia, Analyst

Thanks, everyone, and congratulations on the strong start. I was really encouraged and excited to hear about some of the marketing products you are launching, Spenser. It sounds like these will roll out in the latter half of the year. As you consider targeting enterprise buyers with this new approach, could you explain how this differs from the CDP-related products you previously tried to market to buyers over the last couple of years? Additionally, how do you plan to measure progress in this area? Is this a product aimed at acquiring new clients or expanding within existing ones? What are your thoughts on that?

Spenser Skates, CEO and Co-Founder

Yes. Marketing analytics utilizes the same core capabilities by tracking user data over time, but from a marketing perspective instead of a product perspective. This means the types of questions asked differ. Currently, we observe that analytics is a land product, and there is a growing number of clients ready to fully transition from Google Analytics or legacy enterprise marketing analytics to Amplitude, rather than switching gradually and using both concurrently. For instance, our Google Analytics Advisory Council recently confirmed their switch, noting that while Amplitude can perform all the functions of Google Analytics, it's not as straightforward, particularly in generating e-commerce reports and calculating customer acquisition costs. They asked if we could provide those features out of the box, similar to what Google Analytics offers. We are addressing those needs this quarter and next to simplify the process. In previous years, we lacked the capabilities necessary for clients to confidently rely on Amplitude as their primary system for managing marketing campaigns. Now, we do have those capabilities and are witnessing early growth in this area. Our focus is on scaling and simplifying the transition, resulting in more clients, not just from product teams, but also from marketing professionals using Google Analytics and other solutions.

Arjun Bhatia, Analyst

That's really helpful. For my next question, I want to focus on the financials, particularly on the operating leverage expected in the second half of the year. I'm interested in understanding the main drivers behind that, as your Q2 guidance suggests a projected operating loss of around $4 million for the first half, which appears to turn into a positive income of up to $5 million for the full year. Is this due to improvements in gross margin, or are there some M&A costs that will be coming off? What should we consider as the key factors influencing this change?

Spenser Skates, CEO and Co-Founder

It's really comprehensive, Arjun. When we developed our plan, we included optimizations in every area, from gross margins and the engineering team continuously improving our platform's performance in our hosting environments to the sales team adding more capabilities and learning to sell the platform more efficiently. This results in gaining new logos and further expansions. Typically, sales productivity decreases from Q4 to Q1, but it tends to increase throughout the year as most sales representatives adapt to their new territories and learn how to sell the new products. Therefore, we will see ongoing efficiencies in the sales and marketing sector. In terms of general and administrative expenses, we are achieving greater leverage from a relatively stable level of spending. Research and development will be the area where we continue to invest when we see opportunities, and we have targeted R&D spending to be 18% to 20% of revenue, which I expect we will maintain.

Arjun Bhatia, Analyst

Okay. Perfect. Thank you, guys.

Andrew Casey, Chief Financial Officer

Thank you, Arjun.

Spenser Skates, CEO and Co-Founder

Thank you.

John Streppa, Head of Investor Relations

Our next question is from Brent Bracelin from Piper Sandler, followed by Jackson Ader from KeyBanc. Brent, go ahead.

Brent Bracelin, Analyst

Thank you. Good afternoon. It's great to see three consecutive quarters of accelerating ARR growth. The new product strategy appears to be effective. Andrew, to start with you, CRPO showed a 19% growth this quarter, which is the highest we've seen in almost two years. You mentioned that enterprise now accounts for nearly two-thirds of ARR. Is that the primary factor behind the CRPO growth? I would appreciate any insights on what contributed to that metric as it stood out to me as unusual. Please explain what influenced that.

Andrew Casey, Chief Financial Officer

Certainly, the focus on enterprise is one that's helping to drive longer-term contract duration with our clients as they come up for either renewal or selling new products into clients. And it's especially profound with those customers who have multi-product because they think about implementing a multi-product over not just a 12-month period, but over a multi-year period to really get the advantages of scale and efficiency that they often purchase Amplitude to go do. So it's certainly one a greater focus on the enterprise customer. But I'd also tell you that we made shifts in our go-to-market where most of our enterprise account executives have full responsibility for all the commercial transactions within their territories. And that means that we put incentive frameworks together and get them focused on driving those multi-year agreements. You know, oftentimes, when they have conversations with clients, clients, especially enterprise clients, they'll want cost predictability over that project period, and they're willing to agree to a longer-term contract duration, which, as you know, gives us that growth in RPO, gives us greater revenue predictability. And frankly, it will help us drive greater sales efficiencies because we're not having to renew all those contracts every year.

Brent Bracelin, Analyst

Makes sense. And then Spenser, guides and surveys, sounds like you're off to a strong start. My question here for you is really on what's resonating and motivating these customers to switch from a competitor? Or are they even switching? Is this a price lever, a feature lever? Just trying to better understand why you're seeing such strong adoption early on guides and surveys.

Spenser Skates, CEO and Co-Founder

Let me compare the guides and surveys to previous products, and then I'll discuss what is resonating specifically. This is a more developed product. Before the acquisition, the Command team spent many years building it out, so we weren't starting from scratch. It was just about adapting the existing product to the new platform, which we accomplished in four months. We now have almost everything a competitor’s point solution offers. The only exception is mobile guides and surveys, but we will be releasing that this quarter, removing the reason to choose a competitor. Session replay and experimentation were developed in-house, which means it takes longer for those to reach the same level of maturity. That's the key point. It's also part of the suite product, which I highlighted in my previous demo. This benefits us as well. Regarding displacement, we see significant competitive displacements. There are several attractive aspects. First, the consolidated pricing is a major advantage, as clients can save money by choosing us over others, benefitting all parties involved. Additionally, being able to conduct guides and surveys within your analytics platform and have that data connected is crucial. In my last demo, I demonstrated our ability to detect user confusion, which is possible because we track various analytics data that other solutions may not encompass. This integration provides valuable features and advanced functionalities that standalone offerings lack.

Brent Bracelin, Analyst

Makes sense. Thank you.

John Streppa, Head of Investor Relations

Thank you, Brent. Our next question is from Jackson Ader from KeyBanc, followed by Koji Ikeda from Bank of America. Go ahead, Jackson.

Jackson Ader, Analyst

Thanks, John. Hey, guys, thanks for taking our question. Let's see. I think, Spenser, probably first for you on the marketing side and specifically, the partnership that you signed with Twilio, what makes Twilio the right partner for this to be the relationship going forward?

Spenser Skates, CEO and Co-Founder

I want to discuss our strategy before addressing your question. Overall, we are flexible regarding the location of your data. Whether it's in a Customer Data Platform, your own system, or sent directly to us, we can work with any setup. Specifically regarding Twilio and Segment, we have seen significant overlap in our customer base. Honestly, for several years, we found ourselves competing more than collaborating because we had developed a CDP with similar features. However, this year, we have changed our approach and clarified that our aim is not to dominate the CDP space. We want you to succeed in that area, and we prefer to collaborate, seeing ourselves as the applications that build upon those platforms. It was a perfect opportunity, as we have previously collaborated with Segment and the Twilio team. They align closely with our customer profile, particularly among technology companies and enterprises, making it very logical to announce a more formal partnership next week.

Jackson Ader, Analyst

Okay. And then a quick follow-up on geography. It seems like the rest of the world is lagging, right? I'm curious about what you are seeing there. Is it more macroeconomic pressure outside the US? Or is there something else? What can you do to make that segment a growth driver rather than a laggard?

Spenser Skates, CEO and Co-Founder

I want to be clear. You'll see variation quarter-to-quarter, but everywhere it's early and everywhere it's growing. The US is the most mature, but we're still ending one or two of nine in this market. I'd say within APJ, we're more concentrated in like tech and start-ups and SMBs. In Europe, it's kind of in between the two. I'm actually going to be going out to Australia and Korea and doing a tour on some of our APJ customers, and we're just starting to break in the enterprise in a bunch of places there. And so that's good to see, but it's just earlier. So you'll see variance quarter-to-quarter, and I wouldn't read anything into it.

John Streppa, Head of Investor Relations

Thank you, Jackson. Our next question comes from the line of Koji Ikeda from Bank of America, followed by Taylor McGinnis from UBS. Go ahead, Koji.

Unidentified Analyst, Analyst

Hey. This is George on for Koji. Appreciate you taking our questions here. I kind of had one just as it relates to the buyback announcement and kind of how you think of capital allocation, whether it be buybacks or comparing that to internal investments and kind of what the philosophy is there, if you could kind of touch on that?

Andrew Casey, Chief Financial Officer

Sure. One of the things that I've done since arriving as the CFO is really take a look at our core processes and how we were managing Amplitude, and we're really updating ourselves for scale. And this is just one of those tools that we thought we lacked in order to manage both dilution effectively and to take advantage of dislocations in the market that may be happening. And it's certainly been the case over the last few weeks that we've seen those types of volatile movements that at those low, low prices made a lot of sense for us to invest in our own stock. Now having said that, there's nothing earmarked. It's a pretty broad program. And so I look at it just as a tool for us to use as we go forward when those times occur.

Unidentified Analyst, Analyst

Thank you.

John Streppa, Head of Investor Relations

Thanks, George. Our next question comes from the line of Taylor McGinnis at UBS, followed by Clark Wright at D.A. Davidson. Taylor, the floor is yours.

Taylor McGinnis, Analyst

Yeah. Hey, guys. Thanks so much for the time this evening, and congrats on the results. Maybe first one, so Spencer, there's a lot of concerns out there on the macro, and to the extent that we could see a deterioration. So I'd love for you to just comment on what you're hearing from your customers. And as a follow-up to that question, when we think about how Amplitude and its customer base might differ today versus the last slowdown in 2022, I guess, are customers leaner today? There's been a lot of rightsizing and optimization over the last couple of years. So is it possible that risk could be less? And how are you guys, I guess, better equipped to handle any potential headwinds we could see?

Spenser Skates, CEO and Co-Founder

I believe that what hurt us most in 2022 was the excessive optimism of 2021. When I reflect on recent years, I see that this hasn't been the case. We have experienced a more challenging environment, though not exceptionally so compared to historical data. Regarding the impact of tariffs, we haven't noticed significant changes; their effect has been minimal and hasn't altered our customers' purchasing behaviors. We are closely monitoring the situation to ensure we are prepared. We have two key strategies moving forward. First, we are committed to operating efficiently regardless of external conditions and leveraging Amplitude for growth. Regardless of the macroeconomic climate, we can control all aspects related to business acceleration and efficiency, and that will remain our focus. Second, in challenging times, ensuring the success of our digital channel and maintaining a solid data foundation is a priority for the executives I interact with. Even if there are downturns or reduced spending, we believe we are in a strong position.

Taylor McGinnis, Analyst

Perfect. Andrew, on a similar note, it seems like you are on a strong path to accelerate towards mid-teens growth in the future. When considering the possibility of facing some headwinds, do you believe there are sufficient growth drivers that can provide reassurance of continued acceleration, even if the macro environment deteriorates? Are you evaluating different scenarios and the strategies you can implement?

Andrew Casey, Chief Financial Officer

So great question. And I would tell you, we spent a lot of time as we were building out our guidance looking forward into our pipelines, how well our sales team is setting up customers for future expansions, the level of interest we're seeing from our new products. And so those are the things that Spencer was really referring to. We feel very confident in the levers we're pulling to add real value to clients even in a period where there's difficult trade-offs and there's more macro pressure. We think we can offer our customers a value for the money solution that really drives greater value for them through consolidation of existing point products and open their eyes up into how they can drive greater cost efficiencies of some of our new products that are coming out very soon. So certainly, there's a little trepidation with the level of uncertainty in the market. And if uncertainty rains, then invariably, that will have a negative impact on the broader macroeconomic scenario. But we want to use the lens of execution when we set up our guidance, and we feel very confident the things that we're doing are resonating with customers and that we can continue to drive that growth.

John Streppa, Head of Investor Relations

Great. Thank you, Taylor. Our next question comes from the line of Clark Wright from D.A. Davidson, followed by Elizabeth Porter from Morgan Stanley. Clark, go ahead.

Clark Wright, Analyst

Can you discuss the budget scrutiny comments you mentioned and where you might find the funds to unlock some of the cross-selling opportunities that you have been seeing positive results from this quarter?

Andrew Casey, Chief Financial Officer

Yes. The per CFOs that I speak to every day, especially in the larger deals that we get involved with, they're all asking the basic premise of what is the return on investment that I'm going to get from the investment in Amplitude. And that's a logical question for them to ask. And typically, what we go through is both where can we help them reduce license expenses and operating expenses associated with a broad set of technologies they've implemented to solve this problem. And then how can we show them through better leverage of Amplitude that they can gain even greater efficiencies and drive greater revenue. So that scrutiny, I think, just gets harder and harder the more that companies are taxed in ways that like through tariffs or higher interest rates or any time when they're increasing expenses, CFOs, CIOs, Chief Product Officers, Chief Digital Officers, they're all asking the question, how can I get more or less? And I think, we're offering a great solution to do that. So, our sales team is getting better and better at selling the platform. The platform itself shows great ability to drive efficiencies within companies. And so, that's where that comment comes from is that, we just never take our eye off the fact that driving customer value is the most important thing. And I expect that it's going to continue to challenge us.

Clark Wright, Analyst

Got it. I appreciate that clarity. And then in terms of NRR, during the Investor Day, you guys mentioned that some of the expansion in recent quarters really hasn't been driven by higher data volumes. Was that the case in this quarter? And are you assuming no uplift then from data volumes and what that could mean on NRR going forward through year-end?

Spenser Skates, CEO and Co-Founder

One of the most important things that we've alluded to both in the Investor Day and as we've introduced new products is the importance of us trying to create a framework under which the marginal incremental cost of data goes down. And that comes from customers increasingly using a broader set of the platform. So, you're going to increasingly see us focus more on selling additional capabilities within the platform and really going after new enterprise customers. In Q1, I would tell you, it was really balanced. We had a great new logo quarter, and we had a good expansion quarter as well, but you didn't see the big multimillion dollar expansions. And the progression that you'll see in both our ARR as a percentage of enterprise customers, as well as that NRR percentage comes when you see those big expansions. And so, we certainly think that we can go drive those. We certainly believe that churn, it's down to the lowest level in 2 years. We think that we can continue to drive the strategic changes and that will result in a progressive improvement in NRR.

Clark Wright, Analyst

Awesome. Thank you.

John Streppa, Head of Investor Relations

Thank you, Clark. Our next question comes from the line of Elizabeth Porter from Morgan Stanley, followed by Nick Altmann from Scotiabank. Go ahead, Elizabeth.

Elizabeth Porter, Analyst

Hi. Thank you very much. I think in the past, we've talked about MarTech stacks kind of coming up to replacement faster and kind of what that opportunity means for Amplitude. And just given some of the macro uncertainty, sometimes we think that businesses are less likely to do big moves just given the trepidation. But on the other hand, there's a big opportunity to save costs. So just curious, how you think that this current cycle kind of may play out and what that means for kind of a faster replacement and opportunity to look at Amplitude?

Andrew Casey, Chief Financial Officer

I think, what I'm seeing just candidly, at least in the accounts I'm in, is they're actually more willing to do big moves in order to do spend replacement. So a great example, I was talking with the Head of Data at Atlassian last quarter. And they were very, very interested in, one, how do we make our cost on the data side scale way better than they have been? And then two, is there an opportunity to consolidate down a whole bunch of the other vendors and get that within a single platform because it's cheaper and it's more effective on a whole bunch of fronts. When we had that conversation, that changed their mentality from one of like, okay, let me just reduce spend overall to, hey, I'm willing to make a move and consolidate a bunch of other items onto Amplitude.

Elizabeth Porter, Analyst

Great to see the additional improvement in net revenue retention. It seems like gross retention has been on the rise for some time. Considering the opportunities for cross-selling and upselling, as well as this consolidation, when do you anticipate seeing those factors influence the net revenue retention and what are some of the variables that will keep it balanced?

Andrew Casey, Chief Financial Officer

I think we're going to see a progressive improvement quarter-to-quarter. I think that's what our plan was. And as you may recall, we talked about that the first quarter of our fiscal '25 is one that would reflect the lowest from a linearity perspective in NRR. And so you continue to see that as our sales team ramps, you'll see more and more new ARR. We're doing a better and better job of reducing both contraction and logo churn. In fact, I would tell you that the big improvement year-over-year was in contraction. Recall that churn, we had a lot of churn that was related to overcapacity buying or customers contracting for more than they could use. Well, as we right-size those contracts, the base becomes smaller and smaller and thus contraction becomes smaller and smaller. So, all those factors are working towards driving improving NRR and GRR. But I think the big movements, as I mentioned earlier, will come when you see those big multimillion expansions in the enterprise space. That's when you see the NRR move more dramatically.

John Streppa, Head of Investor Relations

Okay. Thank you.

Nick Altmann, Analyst

Awesome. Thank you so much.

Andrew Casey, Chief Financial Officer

Thank you.

John Streppa, Head of Investor Relations

Thanks, Nick. Our next question comes from the line of Tyler Radke from Citi. I believe Ashley Kim is on. Ashley, please go ahead.

Ashley Kim, Analyst

Yes. Spenser and Andrew, thank you for the time. I just want to say that it was like a very strong quarter for the $100,000 ARR customer adds. But in terms of the total customer adds, it looked a little bit softer. So I just wanted to ask if you're seeing any changes in the top of funnel or trends among different customer segments, you'd call out just given the more uncertain macro environment trend?

Spenser Skates, CEO and Co-Founder

We emphasize the $100,000 customer additions because the overall customer additions can be misleading. They include lower-tier customers, which doesn't fully reflect our performance. Our focus is on expanding our enterprise segment, which we anticipate will grow to over $1 billion in the long run. Although we still report total customer additions as we have in the past, it is not our main focus.

John Streppa, Head of Investor Relations

Got it. Thank you. That will conclude our first quarter earnings call. Thank you for your time and interest. We are looking forward to connecting with you live over the next couple of weeks at conferences hosted by Needham, Bank of America, Baird, and D.A. Davidson. Thank you for your interest, and take care.