Everybody, thanks for joining day one of Citi's Tech Conference. My name is Tyler Radke. IT Co-head the U.S. Software sector here at Citi. For this session, we have Amplitude, we have Criss Harms, the CFO, and Yaoxian Chew is in the audience from investor relations. So, it'd be great maybe just to you. You recently joined, I think, two quarters ago. It'd be great to have you give your perspective on why you decided to join Amplitude. Certainly, you've been in the software space for a while. What attracted you to the company? And just give us a you know, quick overview on your time here.
Yeah. Look, I've been on the beach for a good two years and looked at a lot of companies. Looked at a lot. Amplitude got my attention because it, it is a vision, it is a, it is a role in a market that I absolutely believe, and it resonated with me. Which is, if I think today, if I think into the future, five years, if I think 10 years into the future, I've yet to imagine any customer that doesn't have some form of digital product or digital customer experience. I can't imagine any leadership team, operating teams going, as part of our on all play: "You know what? We shouldn't do it on a digital approach. We shouldn't do it in the highest contribution profit." Like, those conversations are not happening.
It's just a matter of all of those traditional companies engaging with their customer sets, their targets, through some digital experience, and in some cases, it is their digital product. That I found that so compelling, right?
Yeah.
And then I sat and I go, "Okay, which companies are best positioned to be the winner in that space?" And reached out to my tech friends and sourced out what their assessments were of Amplitude, and they're like: "It is a great product. This is—it's a real value for so many of the digital native companies that have digital products. It is a mission-critical solution set.
Yeah.
And I was like: "Great, okay. Market makes a ton of sense, technology leader." Then I was like: "I want to meet, you know, meet with Spencer, the Founder." This would have been my first Founder, CEO role in a while. Meet Thomas Hansen, who would come on as President, and make an assessment. Could the value I bring to the table, would this team appreciate it? Do I feel like I would work well with Thomas and Spencer, shaping the pieces to make Amplitude the winner in this market space? And those three were all very big positive checks for me.
Yeah.
And so, yeah, came on board in February.
Awesome. Well, maybe for investors who aren't super familiar with Amplitude.
Yeah.
Relatively new company, and you know, there's folks listening on the line as well. If you could just kinda articulate what Amplitude does, where it sits within the broader analytics-
Yeah
O r front office space, just to drive it home for folks.
Yeah. So we, we're a digital analytics platform that delivers kind of a self-serve visibility to our customers, so they can understand their customers, while those end customers are on their journey. Whether that is a digital product, which is the software, or the digital kind of customer experience. Now, those buzzwords, if they don't resonate with you immediately, they didn't with me either. But here are three examples that kind of solidified it for me, and I like using these examples. So Atlassian is a really big customer of Amplitude. It's been with the company a long time. Its core product is a software product, right? Their go-to-market motion, predominantly product-led growth. You buy that software, you interact with Atlassian through their website, through all of their mobile engagements and others, right? It is a digital product surrounded by a digital customer experience.
But we also have Chick-fil-A. They sell chicken. They're always gonna sell chicken. But if you want to buy it online, you want to go to their kiosk, that's a digital customer experience. We help them get their customers maximize their cart value, right?
Yeah.
Does Tyler like a shake? Does Tyler like a shake and a fries?
Right.
Like, let's make sure we're prompting those up for him.
Mm-hmm.
Let's help Chick-fil-A in that, maximizing the digital customer experience. I like to list out traditional companies, so I like to close out with Ford Motor Company.
Yeah.
Right? Their, their cars have digital. They're interacting with their car owners through the Ford app. We help them in understanding how to optimize that digital experience.
Yeah.
That's what it means to be a digital product, digital experience. And a recognition that that is a, it's a customer behavior. It is a... From the moment you're touching some aspect of that digital footprint and all the decisions you make, both the page and links that you go through and how you interact, our ability to capture that customer pattern, find where the weak spots are in a very quick, real-time, illuminate for them the different areas that probably are subject to what we would call a good A/B experiment test. This is a soft area of your customer behavior. Use our experiment capability and product to go, does option A work better or option B, right? Run them in different tests.
Understanding that behavior and then being able to not just, not just analyze it, but then be able to drive action and changes in how the product is shaped, the digital customer experience is shaped, right? All things that companies have been doing ever since we got onto the web... But we're able to do it for the first time in kind of a single application, in a self-serve model, where it's the product manager, or the person in the marketing organization, or the person in the data organization. They're asking the question, they're getting the answer, and they're doing it really quickly. Whereas the legacy solutions have always been a combination of, I have some solution, whether it's Google Analytics, whether it's something homegrown, and I have a question, I want insight.
And so I reach out to my data scientist and my machine learning teams or the engineers assigned, and I ask the question, and then they give me an answer back a week later, and I'm like: "Great, I've got my answer. Now I ask my next question." Right? We take things that used to take days or weeks or even months and condense it down to seconds and minutes. So the utility has always been there. We've just condensed it and made it real time to make it much more, much more actionable. Excuse me.
Yeah. So maybe just talking about the growth trajectory. I mean, clearly there's a lot of, you know, tailwinds, the shift to digitization. You talked about some large, established brands who are making that journey, like
Yep
Chick-fil-A and Ford.
Yeah.
But, you know, growth rates have come down considerably.
Yeah
At Amplitude, you know, relative to two years ago. You've talked about some churn
Mm-hmm
I n your customer base.
Yeah.
Could you just talk about the dynamics there? And are you anticipating that this is kind of short-lived and things bounce back next year? Or how-
Yeah, yeah.
What's kind of your outlook on this slowing growth?
Yeah. So I'm going to start with a segmented view, right? The simple. We serve large enterprises. We're in multiple product line business units in big companies. We serve the commercial space, and we serve the SMB, which is really more synonymous with venture capital technology startups, right? So we sell our solution up and down the stack.
Mm-hmm.
What makes Amplitude a little bit more unique is, then I would cut it by another segment, which is vertical across those. What we would call a digital native versus a traditional company, right? Chick-fil-A, traditional company. IBM, you could argue, traditional company. But Atlassian, digital native. PayPal, digital native. Square, digital native, right? Right, those companies have been built around their technology solution, whereas a more traditional company is, is moving in and expanding as part of an omni-channel. Amplitude made great inroads, had huge growth rates, because digital natives ran to Amplitude, and the pandemic just threw fuel on that fire, right? How do I communicate with people without it being people in the middle? And had a great, tremendous growth rate, really driven by, it's fair to say, a class of early adopters, which you characterize as digital native.
But the really large market opportunity, and the one that we're really starting to focus about how we capture, traditional companies who are running some form of digital customer experience or digital product.
Mm-hmm.
That one's much more nascent in its market.
Mm-hmm.
We find ourselves a little bit in that lull that Geoffrey Moore would have characterized. We just happen to be in the $216 million public company range, but that's it. I always like to go back and remind myself and the people that we talk to, remember where I started. Can you envision any traditional company not having a major footprint in this area?
Mm-hmm.
Can you imagine any of them not wanting to understand why are customers staying with them, right? How do they acquire their customers? How do they monetize, using my Chick-fil-A example, right? All of that insight is fundamental, and we're just working through some of those broader market dynamics.
Mm-hmm
At one level. The second level is, look, we've got work to do on our go-to-market. Simple things. We ran a direct selling, enterprise selling motion up and down the customer stack. That's not a good way to go after the low end of the market. We were slow to get our own product-led growth motion, our own no-touch sales model into play to go after that market. But we're about there. We'll have it in Q4. And so there's things that we're doing within Thomas Hansen and Nate Clark's area on the sales, as well as in the marketing, to really focus our attention on enterprises. Recognizing in those enterprises, there's multiple personas. I already hit upon product managers, data leaders, and marketing people. Those being the core, but you have ancillary on the sides.
Speaking to them in their language, and what's of value to them, and that's stuff we need to craft and become much more crisp on. Here's the really positive thing on that I'd like to remind people. We talk about we have really large footprints in these, in these customers. Some of them are getting close to eight digits. Like, we are really large spend for a company of our size with these companies. We're still a small spend relative to their overall, but it's a meaningful, right?
Mm-hmm.
I see every Global 2000 as the potential to have that kind of ACV with us.
Mm-hmm.
But to do that... Well, let me back up. But most of those customers, we didn't, we didn't lead them there. They knew what they wanted to do.
Mm-hmm.
They pulled us along. They drove, and a big part of what we're doing is starting to institutionalize that knowledge and figuring out how to convey it to the next set of: Look, here's how your journey should be, and here's how you should think about leveraging all of the products to solve what you want to do.
Right.
Right?
Is it, is it a common buyer across companies, or who... like, who owns this function?
Yeah.
'Cause it is a bit of a... Yeah, maybe it's marketing, it's a little bit of product analytics.
Yeah.
But that's still kind of a nascent category in some of these-
It is.
more mature industries.
Oh, yeah. I know.
How are you kind of crafting that?
Yeah, so that's. We have traditionally sold to the product manager.
Mm-hmm.
We sold to the product organization.
Yeah.
Right? To give them great insight quick, so they could shape their product. But as we get in there, like, we've increased the capabilities of our core product, which is analytics, which is the bulk of the revenue today, to serve that marketing user, right? The marketing analytics capabilities. So those individuals can be part of the buying decision and go, "Look, I no longer need to spend that money with Adobe, and I no longer need to spend that money with Google Analytics.
And I definitely have a really compelling TCO, if I don't need to utilize my data scientists to do these things anymore, because I can do it through Amplitude. And then, once I've gotten through the TCO messaging of, "Wow, I can really do some consolidation, what I want to do across product and across data and across marketing," now I've opened up all of these different advanced use cases and capabilities that I couldn't stitch together with Adobe products, and I couldn't do just with Google Analytics. So us institutionalizing that is a big part of then focusing on the enterprise, which we recognize we're still early. It's still the biggest part of the market, and that's what we expect to unlock.
So the combination of the market dynamic that's in play, the combination of what we're doing, kind of in our own go-to-market motions across the enterprise, across PLG, those are all things that we feel are fundamental to unlocking re-acceleration of growth.
Mm-hmm.
The last piece, just to complete the picture, is, yes, at the enterprise space, we have customers that signed contracts with us a couple of years ago, right? We had pandemic dynamics going on. Their ability to hit the bull's-eye on what their customers' demand of their digital products and experiences be, was off, and so we're recalibrating, right? And so whether they use the term downsizing or optimizing or rightsizing, we're recalibrating-
Mm-hmm.
our level of volume that they require from us to fit their needs and kind of where they see themselves going.
Yeah.
And so we've been going through-
Mm-hmm.
some partial churn with those enterprises.
Yeah.
It's been sizable. It's a temporary, transitory element, but it has definitely been a drag on our growth.
Yeah.
And just, just to complete the picture, the other side is in the SMB, the venture capital technology startup. Those have predominantly been churning. Like, they can't afford to survive, and they're cutting every cost that they can and flying blind.
Right.
They're not going to a different solution. They're just trying to survive to their next equity round.
Right.
Those two elements are playing a role in our churn. It's been a drag. For purpose of completeness, like, when we talk about our GDR, we include both of those.
Mm-hmm.
We include both our partial and our full churn number in that. Those have been a drag on our growth.
Yeah.
Some of the positive things that we've talked about, again, that on the re-accelerating growth, is we had a really good Q2. Right? We, we exceeded what we wanted to do, both in a traditional revenue beat as well as the ARR and a new ARR that's implicit in our rest of the year revenue guide.
Yeah.
We did well in Q2, and we raised the revenue for the rest of the year.
Mm-hmm.
So there are really a lot of things that are happening that give me tons of confidence as part of the operating team that we're doing all the right steps to put the building blocks in place to drive a re-acceleration of growth.
Yeah.
I look then to have the rightsizing, optimizing, downsize, kind of working our way through that. We're definitely taking steps to minimize that and making our customers much more aware of Experiment and CDP offerings, and very soon, Session Replay, to help say, "Look, we know you're resetting, but let's also make sure you're entertaining the use of these other products and minimizing the overall impact on the ARR." I don't want to count on a shift in macro wins to our re-accelerating growth. That's why I very focused my response on our operating activities.
Mm-hmm.
But we do know that the macro conditions that are at play are temporary, and I look forward to those becoming tailwinds, tailwinds versus headwinds.
Yeah.
So, long answer to pretty, a lot of moving parts.
Yeah
T o why I'm pretty confident that growth acceleration will be in our future.
Yeah. And you think just in terms of isolating the large enterprise churn, which you probably have good visibility into-
Yeah
Because you're seeing how they're consuming against the commitments. Is that only a 2023 event, or do you think that extends into next year as well?
No, definitely, we explicitly tried to state it in the last guide, and commentary, that I expect it to continue into the first half of 2024.
Okay, yeah.
We definitely have contracts from 2022 and some from 2021 that are coming up for renewal, and we know we'll get reset.
Yeah.
Now, with that said, we've also tried to convey kind of a sense of churn magnitude for the back half of 2023, and my expectation is it will likely continue at kind of commensurate levels-
Mm-hmm
I n absolute terms. They'll be a smaller % of the overall renewal base, because our renewal base is much higher in Q1 and Q2-
Right
W hich is interesting to me as an-
Yeah
Enterprise-focused company.
For sure, yeah.
That's just the dynamic of where those contracts are.
Got it. And maybe just as we think about the composition of your customer base today...
Yeah
You know, early on, it was very much digital native heavy, right? You know, the Atlassians, the e-commerce, Fintech-
Yeah
Et cetera.
Yeah.
Where, where are we today? What does that mix look like between traditional versus, you know, digital native?
Yeah, no, it's still, we're still highly concentrated-
Mm-hmm
In digital Native, but as you alluded to, that is up and down the stack.
Yeah.
From enterprise to commercial to SMB. But yes, we are still, as it relates to traditional companies, we've made inroads.
Yeah.
We highlighted a global sports organization in Q2.
Mm-hmm.
Did an expansion with us, now tipping them over seven digits, right? Traditional company.
Yep.
Right. We, we know the plays, we know how to, how to communicate the value of what we do. We just need to do it in a much more scalable level. Look, credit to Nate Clark, who came in as our Chief Revenue Officer in April. He was fundamental to... Both he and Thomas Hansen, but I give Nate a lot of credit. I look forward to Nate. Let me back. He was very fundamental in driving those expansions. I look forward to him replicating that across his leadership and down through the rest of his sales organization.
Mm-hmm.
He knows how to do it. Now, we just need to get it replicated and scaled across the organization. But Q2 is a great example of, yeah, it's real.
Mm-hmm.
This is a real credible, litmus test or test point.
Yeah. Yeah, absolutely. So I wanted to talk about the Generative AI topic-
Mm-hmm.
Because, this was, you know, came up quite a bit on your, your last earnings call.
Yeah.
Maybe for investors that didn't listen, just frame how you're thinking about it for Amplitude.
Yeah.
Are you thinking about monetizing new product SKUs with it, or is this kind of more of a mechanism to drive greater usage and expand the user base of who uses-
Yeah
Amplitude products?
Well, so today we're doing the latter.
Yeah.
Today, we highlighted how we're utilizing Generative AI to drive to simplicity, right? You don't need to create the table. You ask us what you want, and we will give you the table. You want to improve the quality of your information, here's the areas of your data that you should focus on. Using that AI, today's products, to make those workflows easier.
Mm-hmm
More effective. Like, what Spencer's talked about is when we get to a kind of creating a new workflow, creating something that's a magnitude difference, that's the right time to start framing it as a different blade or something we can monetize individually.
Mm-hmm.
Like, I'm gonna come back to win simple. Like, one of the criticisms of Amplitude, and it's very fair, is we very much solve for advanced use cases. Right? Really hard to do, and we do it exceptionally. But we, what we are improving on is doing some of the basics and making it easier.
Mm-hmm.
That wins simple. AI is a great avenue for us to bring value to a user earlier in their development and capabilities, bring it faster. And that's how we're using Generative AI today.
Got it. Okay. And so potentially down the road, it could result in new products, it's just today?
Oh, absolutely. Yeah.
Yeah.
Absolutely.
Yeah. Yeah. Okay. And then going back, you alluded to the second quarter results a number of times, and it certainly was a much stronger quarter than we were expecting.
Yep.
But it sounds like based on the guidance, you're still kind of expecting limited net new ARR growth in Q3, Q4. Maybe just frame why, you know, the trends that you saw in Q2, the favorable trends-
Yeah
... aren't likely to continue in Q3 or Q4, or maybe it's just conservatism.
Combination of all. Look, I, I'm in a cup half full, cup half empty. Cup half full, we overachieved. Against a lower bar, that might be it, but we overachieved my expectations-
Mm-hmm
And what I tried to convey to the street. I don't, I don't want to minimize that we did well, and, but I also do want to highlight that there were two drivers to it, right? Two large expansions, those are often hard to predict, and if they hadn't happened, we still would have had a really good quarter. Just wouldn't have been as good. When I look into the upside potential that's down the pipe, yeah, no, I see it, but I'm not ready to commit to it.
Yeah.
That's a prudent way to approach how we're going forward.
Mm-hmm.
There's a lot of positives about Q2. But I'd like to see... just like everyone wants to see us, I want to see us repeat that a few times and build patterns.
Right.
Start to drive trends off those patterns.
Yeah. You talked about how the first half of the year was a bit unusual and a lot.
Yeah
A number of large renewals, which typically enterprise software sees it more Q3, Q4-
Yeah
W eighted. But what, what's your sense on just the, the tone of conversations, the macro environment? Is, is second half feeling more like the first half? Is it... Are things getting better or worse? Just, just curious how the, the tone of conversations have, have trended now that we're a couple months into the, the second half of the year.
It's a multifaceted question you just asked, so let me try to hit it from a couple of layers.
Yeah.
One, it's definitely different within Amplitude, right? What we're discovering later in the cycle, right, that, that was happening a lot in the first half. Definitely happening a lot in March. We were. We collectively, I was gaining insight that led to the reset that we provided in May, and a recognition that, we, that visibility was kinda coming to a head in March through a combination of reasons. Our ability to be closer with our customers, engaging in those and minimizing discovery, I felt really good about how Q2 came into shape in that what we predicted internally, we finished really close to it. That's a cup half full. Cup half empty, was a large number. Clearly driven by, well, like two accounts and one specifically in the crypto space, and we called that out.
Us not having had that visibility earlier is a, you know, that was reflective of where we were on the maturity.
Mm-hmm.
Thomas and team have done a phenomenal job increasing our visibility into not just the next two quarters, but the next quarters after that, both with much greater deep inspection, which I benefited from in Q2, and the systematic ways that we're doing it. So our ability to at least see the optimizations that are coming down the pipe much earlier has definitely improved since I arrived in February.
Yeah.
And I've acknowledged I got the benefit from some of the work that had started before I arrived, but kind of came to fruition concurrently with me arriving.
Mm-hmm.
Inclusive to that, like, now we're having conversations to help minimize that. Like I said, if we know you're not fully utilizing the analytics product, totally get it. Let's rightsize. Let's calibrate to where you see your usage for the next year or two. But inclusive in that, you're not utilizing Experiment, and you're not utilizing CDP, and you could, and you should. Those conversations are now happening with more velocity.
Yeah.
So I have reason to sense that the conversations that are happening now with our customers is different in the second half than it was in the first half.
Yeah.
The conversations we're having internally now, very different now than they were in the first half. All of those give us better insight, gets us closer to the customer, gets us better engaged about how we work collectively through it. Because, again, the positive thing about the partial churn in the enterprise, when you're trying to find a partial, so something positive, is they are going to stay with us.
Yeah.
We are mission-critical to what they're trying to do.
Yeah.
We are calibrating based on the volume that they're having with their end customers.
Yeah.
So yeah, it's a much-
Yeah
Different second half of the year.
Okay. So I guess sticking on the theme of changes, right? With you coming in, we talked about some go-to-market things you're doing in terms of changing the segmentation, maybe building out more self-service, and then obviously predictability is very important as a CFO. But yeah, Amplitude, you coming in, is a very young company, right? It's almost like a publicly traded startup in a lot of ways. I guess, what are some of the other changes and other big initiatives you're doing to kind of, you know, operationalize things, you know, from your role?
Yeah, I definitely do not want to air any of that dirty laundry in a transcribed call. So I've been very transparent when people ask me direct questions in the one-on-ones. Look, there's a lot to do.
Yeah.
And, we've made great progress. And both the leadership team, the overall organization, and my team is benefiting from what we've been doing. And, yeah, no, I'm-
Okay
I'm feeling really good about the trajectory that the office of the CFO is on-
Mm-hmm
And what we're able to do in driving business value throughout the... But, and it's just, it's a great partnership across Thomas and myself.
Mm-hmm
and Spencer. I’ve been remiss not including Spencer every time.
Yeah
I said Thomas, but, but yeah, no, we very much see the world the same way. We very much see the steps we need to take.
Mm.
We're very aligned on what the priority and urgency of those steps should be, and the things that we need to say no to in order to make those steps happen as fast as possible.
Yeah.
So yeah, I'm feeling, feeling really confident about my role as CFO, helping influence the broader organization and staying away from my own dirty laundry.
Yeah. Okay, that's, that's good. Just going back to the, I guess, sort of a competitive question. I mean, you articulated, I think, you know, the value of this category, right?
Mm-hmm.
Around how modern, you know, digital customer experiences, you need to know what's going on in the product. You want to be able to convert that next purchase or, or-
Yeah
O r drive better customer satisfaction.
Yeah.
I guess the question is, like, A, do people do this in-house? Which some folks do.
Yeah.
Or B, maybe they use somebody else instead of Amplitude. There's a number of other-
Yeah
C ompetitors in the broader product analytics category. So just wondering if you could talk on the differentiation, why folks shouldn't do this in-house, and then how you're differentiated against kind of a broad spectrum of competitors. None are, you know, particularly big, but I think it-
Yeah
I t is kind of a confusing space for a lot of investors.
Yeah. Let me do my best. I'm gonna frame three markets that are converging.
Okay.
And so look, in the product analytics space, it's what you characterize. There's Amplitude and some other competitors, and we have been historically serving the product management functions and helping their digital product and digital customer. And inclusive in that is being able to ask the right questions quickly and get the right insights, you can drive changes within your product, within your customer experience, right? That's implicitly valuable. Within the marketing analytics space, right, Adobe is the big player, but that's where Google Analytics has played, and that is traditionally a combination of those software with people. And same somewhat in the homegrown. And then the third one is really in the experience space. Those three are converging. That's not me saying that-
Mm-hmm
E ven though I that's absolutely my belief, but that's what Gartner's saying... and we're starting to see that. Within our own analytics product, you know, parts of our roadmap were shaped to serve the buyer who's been buying those products and solving it through data analytics, and we're solving it through a homegrown, and making our capabilities valuable to them. I don't want to win the product analytics category. I want to win the combined category of where this is going to be in a few years. To do that, we have to beat Adobe. We have to displace and take advantage of the transition that Google is going-- Google Analytics is going through right now, and they've given us a nice window to take advantage of it, and there'll be a nice tail.
Mm-hmm
O f time to take advantage of that. What I like, that there's a tail and an opportunity to take advantage of that. We are still very early in this market, right? Like I started.
Mm.
There's still a bunch of just homegrown, right, complemented with data scientists. It's too important to not do it faster.
Yeah.
When you think about the role that AI can play into the future, of the combination of an analytics solution that gives you great insight, the combination of an experiment that gives you great A/B testing of what works better, and your ability to shrink that cycle time down and optimize every aspect of that experience and that journey quickly in real time. And/or every time you do a new release of any type of capability and it creates a bug, to be able to find that real quickly, get it identified and corrected, right? The huge potential for how this market's going to unfold, and I want us to be, I want us to be the leader. I want us to be synonymous with a product category-
Mm-hmm
T he same way that Salesforce is, you know, synonymous with CRM, and Workday is synonymous with kinda the human, the human capital side of Workforce management.
Yeah.
I want us to be synonymous with those, and it's still early.
Right. On the Google Analytics point, I know we've heard Amplitude talk about that, I think for over a year now. How far through that, I guess, tailwind are we? Do you expect that this is going to still be out there for a number of more quarters? Just kind of give us your sense of where we are in that, in that opportunity.
Yeah. No, we're in the heart of it. Look-
Yeah
T hey, like the universal and the optimization, all those dates are was July, and then October, and we've got next year.
Mm-hmm.
We're in the heart of it. Like, we are very much internally trying to send messages and go after that customer base right now.
Okay.
Right.
Yeah. And certainly, we've seen the new customer adds have still been pretty strong-
Yeah
A t Amplitude, and-
Yeah
S o it's probably partially a function of, of that.
It is, yeah, and I very much look forward to unlocking that PLG and-
Yeah
O ur ability to just no-touch model-
Yeah
G et them in on a free plan, get them into the plus plan, their first paid, illustrate, evidence that value, drive them up into our growth and enterprise plans. Whether they're a small house SMB technology VC, or whether they're small teams enterprises, like, that's going to unlock a lot for our direct selling organization to do really great things in a much more effective way-
Right
T han what we've done historically.
Okay. Talking a little bit about the marketing side, you recently announced Amplitude CDP, and you know, obviously, that is kind of more of a marketing function around-
Mm
T he customer record and-
Yeah
A nd all that.
Yep.
Can you talk about the success you've seen there? What... How that's altered the conversation or-
Yeah
Y ou know, just kind of the underlying strategy with that.
Yeah. So it definitely completes the solution set, right?
Yeah.
And, we definitely took it to market to really be a consolidation play in the mid-market, right? To make it easy for consolidation and for those who didn't have their own customer data platform, "Here, we've given you the complete solution." Right, we're gonna, we're leveraging the same data platform that we use across Analytics and Experiment and CDP, right? So we're getting to leverage the value there. And so while we don't break out CDP individually, we did talk about Experiment and CDP collectively in the last earnings call.
Mm-hmm.
We talked about their ARR now collectively tipping over $20 million. Still less than 10% of our total ARR, but a big step up from where it was, I think, in Q3 or Q4, I'd say back half of 2022, when, when we announced that we got to the $10 million point.
Yeah.
And as I tried to highlight earlier, that there is still so much more we can do on the cross-selling those. We have not crossed Nate's organization, and Nate's the one who brought it to my attention, of making our customers aware-
Mm-hmm
O f the different offerings that we have that leverage the core platform, and our ability to both use that to minimize churn, as well as to drive expansion. It's a great play for us. But yes, the CDP is serving the exact role that Spencer and team defined for it when it was built and put out to market.
Okay. And just given the, you know, restructuring, and now you kind of started to see some green shoots and some of the new go-to-market side, how are your thoughts on investing back into the business changed? And, you know, what's kind of the right balance of growth and profitability?
Yeah
T hat you think of for this business?
Forgive me while I answer it a little bit longer and a little bit more comprehensively, but I, I-
Yeah
Will get directly to your question. When I think of our profile, our P&L profile, right? Our margin is. Our gross profit margin is really strong now. Got it up to 77.5%. Explicitly stated, I expect it to be in the 77%-78% range, which is considerably up from the low 70s where it was, right? Definitely making great progress there. On the R&D, we're gonna stay in the 19%-20% range, where we're appropriately calibrated. On G&A, look, we're a sub-$300 million top-line company. G&A runs 15%. We know the economies of scale that will just come from it. We know the industry benchmark about how I should be driving us to get there. All that's left is the middle, which is the sales and marketing.
Now, we restructured it to a level I think is appropriate, and Thomas feels is appropriate. What we're doing is focusing on making those dollars much more effective. For the next six months, we are focused on making that machine work really well. I've talked about PLG, focus on the enterprise, driving value selling, targeting that at personas, talking about disciplined account management, both for landing and for expansion. We are singularly focused on driving our SaaS Magic Number way up from where it is.
Mm-hmm.
When that starts to happen, that's the time we start talking about the trade between growth, increasing growth, and profitability. But for our near term, our profile is kinda where we are, and we're gonna focus on driving the acceleration of growth by making that investment level kind of at its current levels, much more effective.
Okay, great. We got about a minute left, and maybe just to close things off, it'd be great if you could just outline us, you know, you, you couple quarters into the role now, what, what are your, your three biggest initiatives as you close out the year and head into 2023? Or 2024.
Yeah, I know. I love to put my business leader hat on.
Yeah.
Making sure the organization focuses on win simple-
Yeah.
Both in the go-to-market and on the product side. And inclusive in that, we didn't talk much about Warehouse Native Amplitude, but its ability to be a great onboarding for us for a customer set in a very simple play. Winning the enterprise. Very much of making those go-to-market motions very effective and focused, that'll be fundamental. Ultimately, it's winning the category. That will be a combination of both what we're doing on the product roadmap perspective and a recognition that we need to own the CMO. The marketing analytics is the biggest part of the wallet share today. As those converge, our ability to speak to that CMO, deliver value for that CMO, be able to take wallet share from those marketing that's going to Adobe and Google now, those are the things for us to focus on. Those are the things that are initiative.
And then I, being the back-office guy, and with KJ, who runs it, HR and talent acquisition, right? All of that against the winning together.
Yeah.
Right? In a collaborative, like, let's figure out how to do this quick and effective. That's, those are the four things that I'm focused on.
Okay, great. Well, with that, I think we're at time. Thanks much for joining, and-
Thanks, guys.
Thank you everyone for coming.