In trying to decide what I want to do with Amplitude I took a careful listen and read of the Earnings Call today. One thing stood out that has concerned me and I would be very curious about your take on it.
In the very first question, the analyst referenced their last quarter conversation about how they had not seen the expansion in 2Q repeated in 3Q.
He then asked: “So what did you expect to turn around that didn’t, obviously…and how do you rectify that?”
The CFO responded but really didn’t answer the question, so the analyst tried again with the CEO, refining it further:
“Is it (i.e. the lack of expansion) a go to market issue or a product approach that you take to try to rectify this?”
And this was the CEO’s response:
"I think, you know, to be clear, I mean so 2021 phenomenal year, real breakout year for us, 63% revenue growth 54% customer growth. I think what’s key to understand is to Vuong’s point the precise timing, this is an evangelical sale. And so the precise timing of these expansions can fluctuate. And so great example of that is you know, called Venmo in PayPal. So Venmo has been a customer with us for a really long time. And then when they got acquired by PayPal, it took a few years for PayPal to adopt the religion of digital optimization of data driven product of, Hey, we’re going to track metrics in our product and understand and use those metrics in order to figure out how to drive revenue throughout our products.
And so, it’s not a rip-and-replace where it’s like, okay, here’s a clear thing. And you swap it out. It’s more an adoption of a new type of religion. And so to that point, I think the – I have a lot of confidence that, that’s the right way to run your product business. And there’s no question that that religion is happening, we’re seeing, I mean, if you had asked me a few years ago, Hey, would Toyota be a customer? I’d be like ah they’ll probably take a while. But we’re seeing that happen in both tech and non-tech companies. The question I think is just, what’s the precise timing of that adoption of this new way of building product."
THIS IS MY QUESTION:
Does this give you the impression that they either don’t know what is causing the problem or they don’t know how to rectify the problem or the problem will fix itself as companies get religion?
Isn’t this the place where we would like the CEO or CFO to say something like:
We see the same thing you are asking about and we have diagnosed the problem with these fluctuations as being x, y and z and these are the 3 steps that we plan to take to rectify it.
I am new at this so maybe my expectations are out of place. Would appreciate your take on this.