Amplitude, Inc. (AMPL) Earnings

Management highlights

### Strategic Positioning & AI Transition - The company has completed its transition to an AI-native platform, focused on enabling customers to build and operate AI-native products at scale, with more than 40 AI-native customers already paying over $100,000 annually. Enterprises now represent 68% of total ARR, with new agreements signed in the quarter with major brands including Paramount, Jaguar Land Rover, and Domino's Pizza. - The three integrated product segments close the full product development loop for AI-native businesses: Amplitude analytics provides deep user behavior insights, Statsig delivers enterprise-grade feature flagging and experimentation, and Wave automates end-to-end product improvement recommendations. - The company expects a long-term structural change to its cost profile: higher AI inference costs will increase cost of goods sold, but AI-driven automation will reduce operating expense growth, allowing the company to maintain planned operating leverage and target a 20%+ long-term operating margin. ### Product Innovation Highlights - AI-powered analytics capabilities are already driving high usage: Global Agent achieves 75% root cause discovery accuracy for customer questions, with 1.3 million weekly interactions and a 1 percentage point monthly improvement in accuracy. Over 40% of all product insights now come from AI agents, and custom agents can automate recurring analytical workflows and push results directly to third-party tools. - Wave, the company's new AI-native product development platform, automatically synthesizes data from across user behavior, experimentation, session replay, and customer feedback sources to generate product improvement recommendations, create implementation plans, and even generate code for changes. An internal example delivered an 80% reduction in search failures on Amplitude's documentation site without requiring engineering, design, or product management resources. - Statsig, acquired to expand the platform, runs natively on all major cloud data warehouses, includes advanced statistical tools to speed up decision-making, and supports gradual feature rollouts with automatic rollback capabilities, and is already the experimentation infrastructure of choice for leading AI companies including OpenAI. ### Commercial Updates - The new simplified pricing and packaging strategy is performing ahead of expectations: 70% of ARR closed in Q2 was on the new model, up from 25% in Q1, and 28% of total ARR is now on the new model. The new structure is driving higher average ARR per customer, higher multi-product attach rates, longer contract durations, and greater revenue durability. - Customer usage of the platform (measured by data usage relative to customer entitlement) is at an all-time high, driven by AI feature adoption and the new pricing model. Total remaining performance obligations grew 35% year-over-year to $483 million, with long-term RPO growing 47% YoY, indicating strong future revenue visibility. - The Statsig integration is complete, with all urgent operational issues resolved. The company is now focused on deepening product integration with the core Amplitude platform and cross-selling Statsig to the existing Amplitude customer base, which is the largest near-term cross-sell opportunity.

Guidance

- For Q3 2026, management expects revenue of $105.6 million to $108 million, representing 21% year-over-year growth at the midpoint. Non-GAAP operating income is expected to be between $2.5 million and $4.5 million, and non-GAAP net income per share is expected to be between 2 cents and 3 cents, assuming 133 million weighted average fully diluted shares outstanding. - For full year 2026, management has upwardly revised guidance compared to prior estimates, now expecting full year revenue of $407.2 million to $411.2 million, representing 19% year-over-year growth at the midpoint. Full year non-GAAP operating income is also revised upward to a range of $6.3 million to $9.3 million, with non-GAAP net income per share expected between 6 cents and 8 cents, assuming 137.1 million weighted average fully diluted shares outstanding. - The 20%+ long-term annual revenue growth target remains in place, with management noting that 20% is the bare minimum, and the company is aiming for 30%+ annual growth long-term as the platform expands. - The long-term target of 20%+ operating margin is maintained, with gross margins expected to stabilize in the low 70%s in the near term and improve over time as Statsig hosting optimizations are completed and operating expenses are reduced as a percentage of revenue.

Segment performance

Amplitude operates three integrated product segments: Amplitude Product Analytics, Statsig Feature Flagging & Experimentation, and Wave AI Product Development. Overall company quarterly revenue reached $100.9 million, up 21% year-over-year and 8% quarter-over-quarter. Total annual recurring revenue (ARR) hit $410 million, growing 22% year-over-year, with $17 million of incremental ARR coming from the recently acquired Statsig business (exceeding the prior expectation of $16 million). Enterprises account for 68% of total ARR, 80% of total ARR comes from customers with multiple products, 26% of ARR comes from customers with five or more products (up 2x year-over-year), and 48% of all customers now hold multiple products. Pro forma net dollar retention for the quarter was 105%. Overall gross margin hit 71% for the quarter, down 4 points year-over-year and sequentially, driven by higher AI inference costs and the Statsig acquisition; the Statsig segment currently has a gross margin in the low 50%, with a long-term target of 70%+ after hosting environment optimizations are completed. Non-GAAP operating expenses totaled $73 million (72% of revenue), with sales and marketing at 39% of revenue (down from 44% YoY), G&A at 13% of revenue (down 1 point YoY), and R&D at 21% of revenue (up 3 points YoY due to investment in scaling Statsig). Free cash flow was a record $23.7 million (24% of revenue), up from $18.2 million (22% of revenue) YoY.

Risks & headwinds

- Higher AI inference costs from growing customer adoption of AI capabilities are putting near-term pressure on gross margins, which will remain in the low 70%s for the foreseeable future until cost efficiencies are realized. - The Statsig business, acquired recently, currently runs on a separate cloud hosting environment from the core Amplitude business, and optimizations to improve its low 50% gross margin to the 70%+ target will take time to implement. - Customer awareness of the full Amplitude platform (including Statsig, Wave, and new AI capabilities) remains low, requiring significant investment in sales enablement and customer education to unlock full cross-sell potential, which may slow near-term revenue growth. - The company is still in the early stages of commercializing Wave, and there is no guarantee that the product will achieve market adoption or meet long-term revenue expectations.

Analyst Q&A

• Q: Will Wave lead companies to shift from bespoke task-specific agents to Amplitude's full AI-native product development platform, and how will this impact the company's target buyers and addressable market?

  A: Wave operates at a higher level than custom task-specific agents, continuously scanning all customer data to identify friction and recommend product improvements, while Amplitude's custom agents handle regular recurring analytical workflows. The company observes that AI-native development is causing engineering, product management, and design roles to converge into a single AI builder persona, changing how product development work is done but not changing the executive budget owner for digital product development. Wave automates manual interpretation of product data, making the entire product development process more efficient while expanding the overall value of Amplitude's platform.

• Q: How does management plan to deliver margin leverage while facing cost of goods sold pressure from rising AI inference costs?

  A: Strong RPO growth provides high visibility into future committed revenue, improving planning accuracy, and new product and pricing initiatives are strengthening the sales pipeline. For the Statsig business, the first priority was completing integration without service disruption on its existing Google Cloud hosting environment; now that integration is done, the company is actively working on cloud and hosting optimizations to improve Statsig's current low 50% gross margin toward the 70%+ target. The company is also continuously pursuing operating expense efficiencies across all functions to offset near-term gross margin pressure.

• Q: How does the cross-sell opportunity between Amplitude and Statsig break down, and what is the long-term impact?

  A: The largest near-term cross-sell opportunity is introducing Statsig to existing Amplitude customers, as traditional Amplitude customers look to adopt AI-native development processes that require engineering-first experimentation infrastructure. While Statsig customers do show interest in Amplitude's analytics capabilities, the larger opportunity by volume and ARR is bringing Statsig to Amplitude's larger existing install base. As of the acquisition, only 80 of 400 existing Statsig customers were already using Amplitude, leaving a large untapped cross-sell opportunity estimated at hundreds of millions of dollars long-term.

• Q: If Wave is a full end-to-end product development solution, why do customers still need Amplitude's other products?

  A: Wave acts as an insight and recommendation layer that relies on raw data collected by other products: it draws behavioral data from Amplitude analytics and experiment result data from Statsig to generate recommendations. While the company plans to make Wave data-source agnostic long-term, Amplitude's existing products serve as the core data collection layer for most customers, and more integrated data sources produce better Wave outputs. Amplitude's large unique dataset of product behavior across thousands of companies allows Wave to generate higher quality recommendations than competitors, as it can reference proven best practices for different verticals and use cases.