AMPL q3 earnings - staying excited

Right on time, MarjorieFool<.b> I was just over the weekend composing my thoughts on AMPL which I learned about this past quarter from Bear, Investormookie and runnerguy. What I did was have a ‘cheat sheet’ ready when the earnings came out (mostly Bear’s thoughts on revenue target, and some of my own) and then listened not only to the conference call, but read at a more leisurely pace the earnings call transcript.

Why I invested in AMPL:
After learning about it from the 3 folks mentioned above, I decided that I liked their niche: giving companies insight on how individual customers are interacting with digital product offerings all in the name of creating impactful experiences for customers. A large TAM (37B) and an early stage company with a small market cap (apropos for Bear’s other part of his general thesis this morning) and I initiated a starter position ahead of earnings.

I had Bear’s guestimate handy for reference, and when I saw the numbers come in at about 3.5% over the company forecasts but lower than Bear’s back-of-the-envelope, I too was concerned that perhaps we had a LSPD situation where the market would punish results not up to the Hive Mind standards. But listening to the conference call (and reading the transcript) was key . On it, Skates and Vuong devoted considerable time to explain that q3 revenue numbers weren’t that far off the guide because when they gave that guidance, they were comparatively further along in gathering the receipts for that quarter than they are now relative to the q4 situation. They also described very obviously that as a new public company they were offering conservative, prudent guidance on this their first earnings day of a public company. I believe they were barely even disguising the fact that they were sandbagging q4 and FY 2022 guidance (see below).

Things I learned on the call that helped me stay excited:

New partnership with Snowflake: Anyone who uses Snowflake can be an Amplitude customer in just a few clicks. This is important because one of the barriers to usage is getting customer data into Amplitude. They’re agnostic about where it comes from, but this will make it easier for customers who already use Snowflake and Amplitude believes this is a big chunk of customers.

Paying customer base: +54% y/o (1417 customers) - and accelerating from last quarter (q2 was +51% y/o)

They’re winning business away from companies like Adobe analytics

Revenue of 45.5M is still +15.8% sequentially and 72% y/o

NRR = 121%

RPO: Increased to 152M (+79% y/o)

Gross margin: 71%

Things to watch

Operating expenses increased slightly as a percentage of revenue - not unusual for a company in growth state trying to capture business, but something to keep an eye on nonetheless. FCF was only -15.8M (-35% of rev) compared to 1.9M (+7% of rev) in q3 2020 but at this stage of their life cycle and due to the new public listing, this number will take a quarter or two to stabilize and then I can assess what their FCF is really doing.


q4 and FY2022 guidance was revised upward and as per the discussion above, is conservative I believe:

-46-47M for q4 revenue which would be + 55% y/o at the midpoint is a revision upward from projected 50% growth

FY: 163.8-164.8 up from prior guide of 160-162. Annual growth rate: 60% at the midpoint

Reaffirming that “2022 revenue will grow > 40%”