Amplitude, Inc. (AMPL) Q3 2021 Earnings Call Transcript

Amplitude, Inc. (AMPL -5.22%)
Q3 2021 Earnings Call
Nov 09, 2021, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Jason Starr

Hello, everyone, welcome to Amplitude's third quarter 2021 earnings webcast. I'm Jason Starr, Amplitude's vice president of investor relations. Joining me are: Spenser Skates, CEO and co-founder of Amplitude; and Hoang Vuong, the company's chief financial officer. During today's call, management will make forward-looking statements, including statements regarding our financial outlook for the fourth quarter and full year 2021, the expected performance of our products, our expected quarterly and long-term growth, accelerated 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. A reconciliation between these GAAP and non-GAAP financial measures is included in our earnings press release, which can be found on our investor relations website at investors.amplitude.com. With that, I'll hand the call over to Spenser.

Spenser Skates -- Chief Executive Officer and Co-Founder

Thank you, Jason, and good afternoon, everyone. Thank you all for joining us on our first earnings call since our direct listing in September. I'm really excited to give everyone here the latest updates since we went public. We're proud of the business that we've built, and I'm really looking forward to the conversation.

So I'm going to start today's discussion with an overview of our Q3 financial performance, and then I'll also have a refresher on our business model, market opportunity and digital optimization system. I'm also going to review the traction that we saw with customers in the quarter. I'm really excited to share some stories there as they use Amplitude to drive their product strategy, growth and business overall. I'll conclude with an update on some new initiatives that we're doing this quarter, including a partnership and integration with Snowflake, the launch of our first annual product report, and the opening of our EU data center.

I'll then turn it over to our CFO, Hoang, who's going to walk through our financials in detail and provide guidance for Q4 and the full year 2022. All right. Let's go ahead and get into it. Amplitude had a good third quarter, reflecting the rapid acceleration of the digital world and great execution by our team.

Revenue grew 72% year on year to $45.5 million, stronger than expected and showcasing the strength and customer adoption of digital optimization. We had several new notable customer wins, which I'll go into in a little bit. Existing customer demand for Amplitude was also strong, with expanding customer usage and solid traction with our new products, recommend and experiment. This was further demonstrated by a dollar-based net retention rate of 121%, which improved 200 basis points year on year.

Before diving further in results, as many folks here are new to Amplitude's story, I wanted to provide some additional background on our business, products and market opportunity. Our vision at Amplitude is to help every company build better products through data. We are pioneering a new category of software called digital optimization, which connects product data directly to the business. Companies have spent the last decade transforming their business with digital products.

And today, digital products don't just support the business. They are the business. The most successful companies are using product data to drive growth, revenue and competitive advantage. So last decade of digital transformation was all about IT transformation, reinventing the back office.

The next era of digital transformation is about digital optimization, accelerating innovation and growth through digital products. Digital optimization transforms product strategy from intuition-based process to a data-driven one. It uses event data to understand every behavior or action taken in the product, discover which behaviors drive better business outcomes, and answer the strategic questions, "How do our digital products drive our business?" As digital products have become a core business driver, the revenue center within companies is shifting from the sales and marketing functions to the product organization. This sea change is resulting in the growing trend of product-led organizations and the rise of the chief product officer within the C-suite.

Organizations are realizing that, to connect with their customers, operationalize around product event data and make better strategic decisions, they need a digital optimization system like Amplitude. Similar to how Salesforce became the system of record for sales organizations and Adobe became the system of record for marketing, we believe that Amplitude can become the system of record for product, representing a $37 billion market opportunity. We've recognized from the start that data should drive business outcomes. Our digital optimization system is the cockpit to manage, measure and optimize the business value of digital product innovation.

Our system helps product, data engineering, design, marketing and customer teams to leverage self-serve analytics, adapt products based on user behavior, and experiment to create impactful experiences for customers. The Amplitude Digital Optimization System brings together a new depth of customer understanding with speed of action to optimize experiences. We have three products that operate as an integrated solution. The first is Amplitude Analytics.

Amplitude Analytics provides teams with fast self-service insights into customer behavior and is the No. 1 ranked product analytic solution according to G2. I'm pleased to announce that we continue to hold our No. 1 leadership position in the G2 fall report, which was released in September.

The second product is Amplitude Experiment, which was launched in Q2 of this year. It is an integrated end-to-end experimentation solution that enables teams to deliver impactful product experiences for the customers through A/B test-and-control feature releases. The third product is Amplitude Recommend, also released in Q2 of this year. It is a no-code personalization solution that helps teams increase customer engagement by intelligently adopting digital products and campaigns to every user based on their behavior.

We believe there are several attributes that make the Amplitude Digital Optimization System unique. First, the Amplitude behavioral graph is a proprietary user-oriented database that we built from the ground up to support the real-time interactive queries that power our suite of applications. Existing databases are unable or struggle to answer questions about our user journey due to the sophistication of modern digital products and the complexity of user behaviors across devices and channels. By partitioning the data on a per-user basis, the behavioral graph allows customers to quickly answer complicated questions about their user journey, provides novel approaches to normalizing, classifying and partitioning behavioral data, and is a fundamentally new way of joining and making sense of complex end-user and product data.

The second differentiator is that we offer a vertically integrated SaaS application that gives actionable insights for non-technical users. Customers can construct complex queries through a simple point-and-click interface to rapidly answer complex behavioral questions about their customers' journey and their product experience. Users also don't need to be technical or know SQL to answer these questions, which enables a more cross-functional usage and data democratization across the teams. It also has powerful collaboration tools built in to allow these teams to share insights for added visibility and productivity to drive more positive business outcomes.

A final critical differentiator of the Amplitude Digital Optimization System is the breadth and depth of our integrations across the technology ecosystem. We take a neutral approach to helping customers export their customer event data into our system. We ingest data through customer data platforms, or CDPS, our own SDK and data warehouses. What I'm excited to announce today is that we launched a new product integration and partnership with Snowflake.

We're combining the power of digital optimization with Snowflake's Data Cloud. Starting today, anyone who uses Snowflake can become an Amplitude customer in just a few clicks. Our bi-directional integration joins together Snowflake and Amplitude, so that our shared customers can break down data silos, enrich customer data sets, and unlock real-time self-service insights. This means every member of an organization can use Amplitude to run lightning-fast queries of Snowflake data on the Amplitude platform.

This integration speeds up time to insight from days to minutes, expands data accessibility and maximizes return on data cloud investments. Making customers successful drives our own success. Our paying customer base continued to expand in the third quarter, increasing 54% year on year to 1,417 customers, driven by strong demand for our products from organizations across a variety of sizes, verticals and digital maturity. Several notable new wins include Macmillan Learning, TripActions, Carvana, OfferUp, Nautilus and Glovo.

We continue to make encouraging progress with the adoption of new products experiment and recommend. I'll expand upon a few customer stories from the third quarter to provide additional context of what drove some of these wins and are increasing value to customers. We continue to gain traction with some of the world's biggest brands. In Q3, a global 100 manufacturer of automobiles, motorcycles and power equipment selected Amplitude as their digital optimization system, moving away from Adobe Analytics.

This company will leverage Amplitude for their core digital products, which allows customers to control and stay connected to their cars from any device wherever they are. With Amplitude, this company will be able to automate and deliver self-serve customer insights to improve customer satisfaction, convert and retain customers, increase revenue and drive long-term brand loyalty. Another Q3 win is Glovo, one of the world's leading delivery platforms based in Europe, which delivers restaurant takeout and groceries to more than 10 million users. In Q3, Glovo chose Amplitude's digital optimization system as part of a seven-figure deal to drive product strategy and move away from a dependency on business intelligence tools to innovate faster.

Amplitude will help Glovo gain a competitive edge by rolling out customer improvements faster, retain more customers, deliver customer journey insights, answer questions about conversions, and enable real-time data access for their team. We're also seeing the power of Amplitude's digital optimization system help with customers' critical business goals and enable them to become more product-led. This leads to more expansion and up-sells within existing accounts and increasing customer adoption with our new products, experiment and recommend. Square, a leading financial services software and payments company, continues to scale and expand their use of Amplitude.

In Q3, they increased access to Amplitude across multiple business units and teams, including engineering, product, marketing, growth, data science and customer success. These teams can now leverage common insights to make critical decisions. They've also added Amplitude Recommend as part of their analytics strategy to drive growth across the business. Square also uses Amplitude's new integration with Snowflake to empower its teams to better engage, understand, engage and delight their customers.

Another great example of expansion is Smart Recruiters, a global leader in enterprise recruitment software. Smart Recruiters began using Amplitude Starter Edition as part of an analytics improvement initiative, driven by their CTO to better understand customer behavior. In December of 2020, they became a paying customer of Amplitude, purchasing Amplitude Analytics. This past quarter, Smart Recruiters also added Amplitude Experiment to learn faster and turn the experience of millions of candidates into a competitive advantage for its customer base of 4,000 companies worldwide.

This will include testing different solutions in U.S. to provide valuable insights to candidates about the jobs they have applied for, or are planning to apply for, and ultimately create a better application experience and increase the chances of hiring for both the candidate and the company. Another great example of an up-sell in Q3 is Spirit Airlines, a leading airline serving United States, Latin America and the Caribbean. Spirit Airlines started with Amplitude in 2019 to collect feedback and gain a deeper understanding of user behavior.

This year, they wanted to drive traffic to their mobile app to increase revenue, ancillary purchases and mobile check-ins. Through Amplitude, they track what users interact with, investigate and identify issues through user lookup and cohorts, proactively monitor data, and track KPIs for executive readouts. Everyone now has access to clear data and actual insights within seconds, allowing them to make product roadmap decisions faster and prioritize bets for their app updates. Amplitude's insights have helped the team increase flight check-ins on mobile, trending ahead of their end of year goal.

As a result, Spirit increased their portfolio within Amplitude through a volume-based up-sell in Q3. Beyond these Q3 wins, I'm pleased to announce the opening of Amplitude's European data center in Frankfurt, Germany. European organizations can now experience the power of Amplitude's No. 1 product analytics solution while storing their customer data within the EU in adherence with local data privacy standards.

Amplitude has selected Amazon Web Services to host its data center, given its stringent data privacy and technology standards. Amplitude customers can now achieve product innovation and data privacy compliance at the same time. I'd like to thank everyone at Amplitude, and everyone who's involved in the team for completing this important project, which is our testament to our commitment to our customers' success and the international growth opportunity ahead. Finally, as we've shared, Amplitude has a unique vantage point into product data that offers insights into product and industry trends.

Not only do we enable digital optimization, we can help our customers learn and benchmark from our anonymized aggregated data. To accelerate our customers' product-led journeys, today we launched our inaugural product report 2021. We share our insights into COVID's impact on digital behaviors across industries, predict the next hottest products and demonstrate the evolution of cross-functional data access. Never before have so many digital products been used so frequently.

In fact, our data shows the massive acceleration of daily product usage. Daily active usage of our customers' digital products has grown 54% since January 2020. I encourage you to read the report and learn more about the market trends going on in the product world. In closing, I'm pleased with our Q3 results and proud of our team's continued execution.

We're at the beginning of a significant market opportunity and look forward on the opportunity to continue reporting on our success in the future. Thanks for your interest in aptitude, and I'm now going to turn it over to Hoang to walk through our financial results.

Hoang Vuong -- Chief Financial Officer

Thanks, Spenser, and thanks, again, to everyone joining us today. We had a solid third quarter, with accelerated revenue growth, customer count and higher net retention rate. Q3 revenue came in at $45.5 million, representing 72% annual growth and continuing the momentum we are seeing in digital optimization. As we mentioned on our last call, we had some large expansion in Q2 '21, along with easier year-over-year comp due to the impact of COVID that are contributing to our growth rate.

We ended Q3 '21 with 1,417 paying customers, an increase of 54% year over year versus 51% last quarter, continuing the acceleration of customer growth. Overall, our team continues to execute well on our land-and-expand strategy, improving our dollar-based Net Retention Rate, or our NRR, to 121% and up 200 basis points both sequentially and year over year. As a reminder, this metric is calculated on a trailing 12-month basis. From a geographic standpoint, Q3 revenue from the U.S.

increased 75% year over year to $29.6 million, and international revenue increased 68% to $15.9 million. The U.S. was 65% and international 35% of reported revenue versus 64% and 36% in the prior year. Turning to remaining performance obligations, or RPO.

In Q3, total RPO increased to $152 million, up 79% year over year. Current RPO increased to $125.9 million, up 66% year over year and represents about 83% of total RPO, providing additional visibility into expected revenue in the quarters ahead. Before turning to gross margins, expenses and profitability, please note that I'll be discussing non-GAAP results, going forward. As a reminder, our GAAP financial results, along with a reconciliation between GAAP and non-GAAP results, can be found in our earnings press release and supplemental financial available on our IR website.

Gross margins was 71%, consistent with Q3 2020 and the prior quarter. Moving to operating expenses. For Q3, sales and marketing expenses was $19.4 million, compared to $11 million last year. This was up 76% year over year and represented 43% of revenue, compared to 42% of revenue in Q3 last year.

R&D expense in Q3 was $8.6 million, compared to $4.8 million last year. This represented approximately 19% of revenue, compared to 18% of revenue in Q3 of last year. G&A expense was $6.7 million for the third quarter, compared to $3.7 million in the third quarter of last year. G&A was 15% of revenue versus 14% of revenue last year.

As a result, loss from operations in the third quarter was $2.3 million, compared to a loss of $0.7 million last year, operating margin of negative 5% to negative 3% in the same period last year. As we accelerate investment for growth, net loss was $2.1 million, compared to $0.9 million in the third quarter of 2020. Net loss per share was $0.05 based on 39.3 million shares, compared to $0.03 in the third quarter of 2020, based on 25.1 million shares. As a reminder, earnings per share is calculated based on the weighted average share count and takes into account preferred stock conversion to common and RSUs invested upon our direct listing in September.

Turning to free cash flow. Free cash flow was negative $15.8 million, or 35% of revenue, compared to positive $1.9 million, or 7% of revenue in the third quarter of 2020. Note that Q3 free cash flow also absorbed approximately $10.9 million in direct listing expenses paid in the quarter. Adjusting for this, Q3 2021 free cash flow margin would have been negative 11%.

Turning to our balance sheet. Our cash and cash equivalent was $317.8 million as of September 30, 2021, up from $291.1 million in the prior quarter. This increase is primarily due to our Series F financing and employee stock options exercise. As a reminder, company did not raise any capital during our direct listing.

Let's now move into our financial expectations for the rest of 2021. Based on the strong third quarter results and the leading indicators that we monitor, we're raising our guidance for the fourth quarter and the rest of fiscal 2021 from our prior guidance. For the fourth quarter of 2021, we now expect revenue to be between $46 million and $47 million, representing an annual growth rate of 55% at the midpoint, compared to our earlier implied expectations of 50% growth. We expect non-GAAP operating loss to be between $9.2 million and $8.2 million, and we expect non-GAAP net loss per share to be between $0.08 and $0.07, assuming shares outstanding of approximately $108.5 million.

And for the full year of 2021, we now expect revenue to be between $163.8 million and $164.8 million, up from our prior expectations of $160 million to $162 million and representing an annual growth rate of 60% at the midpoint. We expect non-GAAP operating loss to be between $18.5 million and $17.5 million, compared to our earlier expectation of a loss of $25 million to $23 million. We expect non-GAAP net loss per share to be between $0.37 and $0.35, compared to prior expectations of a loss of $0.50 to $0.46 and assuming shares outstanding of approximately 51.5 million. Normally, we would not discuss the next fiscal year during our Q3 earnings call.

But because we provided an outlook before our direct listing, we wanted to affirm our belief that we are well-positioned to grow 2022 revenue over 40%. We'll provide more color on our expectations for fiscal year 2022 on our Q4 earnings call. But in the meantime, I would like to note that, for modeling purpose, and as we shared during our investor day, we're expecting to see significant increase our investments to build awareness, sales capacity and products over the next few quarters. In addition, we're planning to do our company kick-off in Q1 2022 and also host our Amplify User Conference in Q2 2022, both of which will be in person versus 2021.

In total, we expect these investments to increase our non-GAAP operating loss margin to over 20% in fiscal year 2022. We believe we're still in the early stages of our market. We want to prudently invest for growth, given our product position and strong unit economics. We are looking forward to continuing our discussions with investors and analysts in the quarters ahead and are excited about Amplitude's continued strong momentum and market leadership opportunity in digital optimization.

With that, I'll turn it back over to Jason to moderate the Q&A session.

Jason Starr

Thanks, Hoang. We will now begin the Q&A portion of our webcast with sell-side analysts. And our first question will come from Elizabeth Elliott from Morgan Stanley, followed by Rob Oliver at R.W. Baird.

Elizabeth? Elizabeth, if you will go ahead and unmute yourself and turn on your camera, please.

Elizabeth Elliott -- Morgan Stanley -- Analyst

Hi, can you hear me now?

Spenser Skates -- Chief Executive Officer and Co-Founder

Yes.

Elizabeth Elliott -- Morgan Stanley -- Analyst

Sound any better?

Spenser Skates -- Chief Executive Officer and Co-Founder

No, why don't we --

Jason Starr

We will go to the next question. Elizabth, We'll try to pull you. I'm not sure what's going on there. So we'll go with Rob Oliver at R.W.

Baird. Rob, if you'll go ahead an unmute yourself and turn your camera on, please.

Rob Oliver -- Baird -- Analyst

Great. Yes, sorry, it kicked me out and brought me back in. So thanks very much. Appreciate it.

And thanks for taking my question. Spenser, just one for you, really clearly strong momentum in the core product, but you guys are also seeing uptick now from recommend and experiment. And indeed, you cited some specific customer wins which were pretty telling. And so, it seems like you've gotten a lot of traction in a pretty short time with those products.

Would love to hear some color around the use cases and what's driving those engagements, and what else you're potentially seeing within your customer base in terms of potential engagement with recommended and experiment. And then, I had a quick follow-up for Hoang.

Spenser Skates -- Chief Executive Officer and Co-Founder

Yes. So to be clear, it's still very early for both recommend and experiment. Q3 is the first full quarter that they've been launched products. And so, yes, still very, very early.

I'm excited to see what sort of impact they're going to have in 2022 and beyond. I'll start off with experiment, and then I'll talk about recommend. With experiment, that one's really exciting to me. I think, that's been one that's been requested by our customer base for many, many years at this point.

The feedback that we've gotten is that A/B testing and analytics really should be together in the same system, and so, so many customers have developed workarounds for it, tried using third-party tools, developed their own in-house tooling to work with Amplitude. And what's exciting to me for this one is that we've just seen tons of examples of companies saying that, hey, let's go ahead and use the experimentation platform. And because first in terms of just where to test, so knowing, OK, here are the different places that I should look for things that I can test; second, in terms of integrating the results back in your analyst platform; and thirdly, being able to target and cohort your users, so being able to say, "Hey, I want to target users only in this geo or fall under this thing." And so, there's just a lot of natural synergies between A/B testing and analytics. And so, definitely really excited about that.

I think, we're seeing the earliest traction happen in the commercial business because they're able to change their experimentation a lot more quickly. But we're seeing enterprise wins as well, and that's exciting on both fronts. On the recommend front, that's an upgrade of a product that we had earlier called Engage, where we could actually deploy cohorts of users. One of the really interesting things about that one is that you can do smart recommendations on a per-customer basis.

So, hey, depending on what they've previously done, being able to say, OK, hey, I think they're gonna be really interested in this feature or this promotion, or if I send them a notification that looks like this, they're going to get a lot of value out of that. It tends to be we have two different flavors of it, what we call Level 1 and Level 2. So we've seen a lot of adoption of kind of the basic version, and then a few sophisticated teams embrace the more advanced version that has some of that and all models and stuff like that. So really excited about those.

But again, to be clear, those are just launched in Q2. We still have only seen one quarter of results from those. But really excited about how these have brought us into a full suite of products beyond just the analytics, which we've always been known for.

Rob Oliver -- Baird -- Analyst

Yes, it's exciting, Jason. Thanks for allowing me a very quick follow-up. Just the NRR Hoang broke out, you guys have been operating that in a fairly tight range, and it's broken out nicely here. And obviously, trailing metric, but I assume that that's more about just volume and increases in analytics and to up-sell there than it is on cross-selling the products.

But now, that we are starting to see it again, it's early, but now that we are starting to see that cross-sell motion work, is that a trend we can expect to perhaps continue in terms of that NRR? Thanks, guys.

Hoang Vuong -- Chief Financial Officer

Yeah, Rob, I think, as we look at the kind of medium-, long term, we see opportunity to grow net retention rate, but not differently, as you mentioned, with both volume up-sell, but what we consider a horizontal up-sell, where you're selling to different use cases or additional business unit and product line inside of the company. And then, obviously, the addition of recommend and experiment, as you just mentioned, that just gives us additional firepower to go after our existing base. And so, the combination of those strengths that we're seeing, along with we mentioned in Q2 we had some really great expansion, and then coming off of some quarters that had, let's say, more churn coming from SMB and other from COVID is why we are seeing the increase in that retention rate. And our goal is to try to maintain that and keep that well above $120 million.

Rob Oliver -- Baird -- Analyst

Thanks again.

Jason Starr

Great. OK. We're actually going to try and go back to Elizabeth Elliott with Morgan Stanley, and then we'll go next to Taylor McGinnis at UBS afterwards. So Elizabeth, hopefully, you're out there and with better sound quality?

Elizabeth Elliott -- Morgan Stanley -- Analyst

Right. Can you, guys, hear me now a little bit better?

Jason Starr

Yes, we can. Great.

Elizabeth Elliott -- Morgan Stanley -- Analyst

Great. Thanks so much. So it's great to kind of see the Snowflake integration. Can you just provide a little color on how does this expand the data sets that you guys can ingest into Amplitude? And what's the opportunity for it to accelerate kind of the new customers coming to the platform?

Spenser Skates -- Chief Executive Officer and Co-Founder

Yes. I think, getting data into Amplitude is the biggest challenge from a customer standpoint today. You need dedicated resources. You need engineers to build out that data pipeline.

You need categorizing the taxonomy. So we have a whole process that we help companies do that with. The exciting thing about the Snowflake integration is it makes that process a lot faster for customers who already have their data in Snowflake. One of the really interesting things we've seen with Snowflake is the most predominant use case is actually to put product data into Snowflake.

And so, given how widespread usage of Snowflake is, it's a huge opportunity for us to tap into that data stream as opposed to having to instrument that from scratch. And so, anyway, so we developed an integration that makes it much more simple so you don't have to do a ton of custom engineering work to actually get that data piped into Amplitude. We're kind of agnostic to the source. You can send it to us directly from your servers.

You can use a CDP. Now, with Snowflake integration, you can send it for something like Snowflake. And so, it just unlocks a whole other set of data in a place customers were already trying to collect it and manage it already for Amplitude. So it's early, so we only have just started having a few customers in beta testing it out, but really excited about that.

And just, I think, it's one of the biggest places from a product data standpoint that has been unlocked because of this integration. And so, we'll continue doing more stuff like that. And the idea is just to make it easier and easier to get set up and started on Amplitude.

Elizabeth Elliott -- Morgan Stanley -- Analyst

Great. And then, just as a follow-up, one of the things you guys are investing a lot in post- the direct listing is just the go-to-market strategy. So could you give us an update on kind of how sales ramping is hiring? And are you seeing any sort of impact from a tight labor market?

Hoang Vuong -- Chief Financial Officer

Yeah. I think, we're doing actually well there as I think Matt remind you during investor day, I think we feel really great about, first, getting the story that we're able to tell both in the market and the customers and the success that we are actually having in terms of winning new customer and expanding customers. I think, all of those actually bode well as you're trying to compete, like you said, in a tight labor market. And we're continuing to see that we are able to grow our sales capacity at this point, so greater than what we're growing on the revenue side.

And that's intentional, given the pause that we took last year prudently. And so, we're looking forward to next year and continue to build out capacity at this point.

Elizabeth Elliott -- Morgan Stanley -- Analyst

Thank you.

Jason Starr

Thanks, Elizabeth. OK. Our next question will come from Taylor McGinnis at UBS, and then we will be going to Michael Turits at KeyBanc. So Taylor, hopefully, you are out there?

Taylor McGinnis -- UBS -- Analyst

Yes, I am. Hi, guys, congrats on the quarter. So just looking at the 4Q guide, you only raised it slightly, and it implies a quarter-over-quarter growth in the low single digits, which is materially below the strong double-digit sequential growth you guys have reported in the last several quarters. So can you maybe just talk about some of the assumptions that are embedded in the 4Q guide, how the guidance philosophy might be similar or different to what we saw last quarter, and just if there is anything one-time, or how we should think about that 4Q guide?

Hoang Vuong -- Chief Financial Officer

Yeah, thanks for the question. I think, obviously, as kind of a new public company, we wanna be pretty prudent about how we're thinking about the next quarter guide. I would say that the one difference is that, when we gave last quarter guidance, we gave that toward the end of September right before we went our direct listing. And so, we, obviously, had a lot more visibility into that and into what we're doing over the next few weeks, whereas, obviously, now we are a little bit earlier.

And so, I think that, when you think about that additional timeframe, you want to just be a little bit more prudently conservative about where you're looking when you're guiding for the year.

Taylor McGinnis -- UBS -- Analyst

That makes kind of sense. And then, last one for me is just on dollar based on expansion rate. So that, obviously, continues to trend up nicely. But I guess, if you look at your expansion rate, it is lower relative to some other usage-based companies.

So can you just maybe talk about what's driving some of that difference, like how your model might be different; or as we look ahead, how you guys expect that to evolve, going forward?

Hoang Vuong -- Chief Financial Officer

Yeah. I think, the biggest difference is that, because what we're doing with digital optimization, I think the base of our customer early on was more, call it, in the commercial or SMB space in technology in more companies. And so, you do have that mix versus companies that are more strictly on the enterprise side. As we think we mentioned prior, and we'll give an update when we do our annual fiscal year earnings in February, we continue to see great momentum in customers over $100,000 and over $1 million.

And as we kind of shift that business, add in additional products and do those things, I think that we are expecting to kind of maintain a very healthy net retention rate and keep our goal above $120,000.

Taylor McGinnis -- UBS -- Analyst

Awesome, great, thank you.

Jason Starr

Thanks, Taylor. OK. Our next question will come from Michael Turits at KeyBanc, and then he'll be followed by Koji Ikeda at Bank of America. Michaelm are you our there?

Michael Turits -- KeyBanc Capital Markets -- Analyst

Yeah, I'm unmuted. I just run videoing, but video in that case. I think, you can hear me so --

Jason Starr

Hey, Michael, sorry, you're just cutting out right there. Sorry, Michael, you should be able to start your -- great. Thank you so much.

Michael Turits -- KeyBanc Capital Markets -- Analyst

There we go. There we go. Great. Thanks.

On for you, Spenser, and then for Hoang, also. So Spenser, one of the things that really fascinates me is that product analyst seems to be the intersection of a lot of other different areas of product focus. There's some companies that are focusing on product management more broadly, some that are doing digital adoption. There are companies that are approaching this from the perspective.

Even experience management guys have product management experience. So I'd like to know, with you guys really focusing on the analytics base and broadening out from there, how you see that expanding strategically and how you think you'll be competing relative to some of these other companies in other areas that are coming at product from those perspectives.

Spenser Skates -- Chief Executive Officer and Co-Founder

Yeah, yeah, yeah, for sure. Yeah, I think, you see a lot of companies converging on a similar-ish value prop because there is so much value out there in terms of people wanting to use data to leverage that in their product and drive revenue and growth for the business. So I think, that for sure is happening. From our standpoint, it comes back to the differentiators I mentioned earlier.

So first, in terms of we've architected for the ground up from product data. Product data is fundamentally different from different types of data, from other types of data like marketing data or CRM data or log data. And so, it requires a unique type of architecture and approach. And so, we've done that.

When you want to answer questions about, OK, hey, what had the most positive impact on the user journey, or what do my best users have in common, you're coming back. You need certain ways of looking at the product data to make that successful. We've also been developing Amplitude for nine years now, and so have really robust build out SaaS platform that allows people to understand and access that product data. So you've seen that with Amplitude.

We were No. 1 in the product analytics space. And then, it's about taking product analytics and then leveraging our success there into these other categories. Probably the best analogy I've seen is, if you look at what Omniture, and now part of Adobe has done in the marketing cloud, they leverage their strength with their SiteCatalyst analytics product for marketing and then translated that to the success in the whole marketing cloud.

And so, we're taking the same approach with the product buyer.

Michael Turits -- KeyBanc Capital Markets -- Analyst

Great. Thanks, Spenser. And then, Hoang, to come back to the guide question, and I thought interesting and helpful response from you on visibility and when you reported this time versus last time, so maybe be a good opportunity to walk through the degree of visibility that you have on, call it, the next-quarter basis. How much is coming off the balance sheet? How much do you have in terms of linearity that you feel that you can see at this point? Because, again, I think that low single-digit is very different than what you put up this quarter.

Hoang Vuong -- Chief Financial Officer

Yes. I think, again, we look at what we quoted for RPO and CRPO. I think, we do actually have pretty good visibility from that standpoint. I think, the exact revenue timing is just, again, if you think about last quarter, we reported out or talked about it with about a week left in the quarter.

So for us, we knew we already had most of it there. We wanted to make sure that we were correct about that. Here, we still pretty much have about two months left. And so, it's really more about the timing risk and how much is still left in the quarter and trying to make sure that we are being prudent about that.

And so, I think, as we kind of get into a cadence where we're reporting more regularly, and this time we've used that same kind of consistency, but I do think there was a little bit of a uniqueness given the timing of the direct listing and how close it was to the end of our last quarter. And so, it just didn't make sense at a point when we only had a week left and what we already knew at that point in time.

Michael Turits -- KeyBanc Capital Markets -- Analyst

OK, thanks, Hoang.

Jason Starr

Thanks, Michael. And our next question will come from Koji Ikeda at Bank of America, and then we'll go to Arjun Bhatia at William Blair. 

Koji Ikeda -- Bank of America Merrill Lynch -- Analyst

Hey, guys. Thanks for taking my questions. Apologies, I'm having a little bit of issues on my video here. So got a question on the new customer adds in the quarter, really, really nice.

They were at 137. Is that a company record? I think, that's up quite a bit, both on absolute net adds compared to last quarter and last year, too. So is there anything we should be thinking about in the third quarter that would drive such a nice net new adds number?

Hoang Vuong -- Chief Financial Officer

No. I think, we mentioned we did have an acceleration in total new customers. So your math is right. I think, that it's just showing that we're in that early stage of that market, and we're beginning -- both the awareness and the people understanding both the power of what we do in digital optimization and how they can leverage that as they move away from and get past, I should say, the digital transformation period.

We are seeing that uptick, and we'll continue to look forward to adding those new customers and kind of the growth that they will bring. So I think, you saw that last quarter, and we continued to do this quarter.

Koji Ikeda -- Bank of America Merrill Lynch -- Analyst

Got it. Thanks, Hoang. And maybe a question for you or for Spenser. On the competitive front, we are beginning to hear more and more about other digital product analytic vendors out there.

Maybe can you give us an update on the competitor front, and who, if any, are you seeing during your sales cycles out there?

Spenser Skates -- Chief Executive Officer and Co-Founder

Yes. So I think, candidly, I'd be curious to hear you who you've seen, Koji, but we haven't seen a ton in product analytics within our kind of core target buyer, which is in the enterprise. I think, like any SaaS company, you see a bunch of folks at the low end in SMB and commercial. That's something that we're always watching carefully to make sure that we're always maintaining our No.

1 position and continuing to build on it. I think, in terms of, I'd say, within the enterprise, the biggest competition is other ways of solving the same problem, so either teams building it in-house through a BI tool or something like that, or trying to force-fit marketing analytics. So there's not been that much that's changed, at least from our standpoint, in terms of on a deal basis and with customers in terms of what they're choosing for product analytics in the enterprise.

Koji Ikeda -- Bank of America Merrill Lynch -- Analyst

Got it. Thanks so much, guys. Thanks. Appreciate it.

Jason Starr

Thanks, Koji. Our next question will come from Arjun at William Blair, and then we'll wrap up with Tyler Radke at Citi. Arjun?

Arjun Bhatia -- William Blair -- Analyst

Awesome. Thanks, guys. Thanks, Jason. Spenser, maybe one for you.

I want to follow up on Michael Turits' question about this just broader kind of customer experience space. And I want to maybe get your perspective on what role, if any, you think, qualitative customer feedback from a product perspective, what role that plays in kind of Amplitude's future vision, if any, and if there's any plans that you have to maybe incorporate that into your roadmap, over time.

Spenser Skates -- Chief Executive Officer and Co-Founder

Yes. We don't have any plans when it comes to qualitative feedback. I think, qualitative feedback is an important signal or channel for product leaders to be able to understand their customers. We're very much focused on the quantitative.

If it has to do with the user journey and product data related to it, that's what we wanna be best-in-class with, and so being the system of record for that and everything. Obviously, it's an overlapping buyer, and so there could be a future where that's interesting to us. But right now, we are very focused on everything within digital optimization and kind of the core of product data.

Arjun Bhatia -- William Blair -- Analyst

OK, understood. And then, just as you think about the product roadmap over time, I think you've laid out maybe a goal of launching one to two new products a year. So two questions on that. Maybe, first, if you think about, in broad strokes, if there's any kind of sense that you can give us of where you intend to focus those product investments over the next year or so? And then, two, when you think about monetization, should we perceive that to be directly those new products to be directly monetized upfront? Or would you wait until there's a critical mass of adoption until you start focusing on monetization?

Hoang Vuong -- Chief Financial Officer

Yes. So it depends a lot on the product. I think, one of the areas that we've been spending a lot of time is on the data front. So we acquired iteratively a data management company earlier this year, and we're looking to do a whole bunch more there, both through internally and through potentially acquisitions, if the right opportunity comes along for us.

And so, we'll be doing a whole bunch more there. Snowflake integration is part of that, as well. From a monetization standpoint, it really does depend on the product. Experiment and recommend are two products that have kind of a very direct monetization path where it's like, hey, you get more value, you unlock these workflows that you weren't able to do before.

So we're able to charge for them directly. Again, it depends on the product. For more data-centric products, though, for example, that's something that we'd be looking more to give away to our customer base to help them get set up and properly use Amplitude, because the ROI on that, it's like we'd rather just them have it for free than think of it as a charge point, but it varies per product. And it varies in the perceived value.

I think, the end goal is less on, hey, we're going to up-sell 20% from this product and 50% from this product, and more, hey, we have the full answer in terms of a complete suite that we're able to say, hey, we solve the product data problem for you and everything associated with it. And then, that's when you can get a real premium on what we're able to charge our customers, because you're no longer just solving a piece of it. You can go to the product leader and say, hey, we're solving everything end-to-end when it comes to managing your digital business.

Arjun Bhatia -- William Blair -- Analyst

Perfect. That makes sense. Thank you very much, and congrats on the quarter.

Hoang Vuong -- Chief Financial Officer

Thanks, Arjun.

Jason Starr

Thanks, Arjun. And our final question will come from Tyler Radke at Citi. Hey, Tyler?

Tyler Radke -- Citi -- Analyst

Hey, good afternoon, guys. Thanks for taking my question. I wanted to ask you, just going back to the Snowflake question; I guess, first, was this something that you really saw strong demand for from your customers? And Spenser, you mentioned that it sounds like, in the final state of the product, customers on Snowflake will be able to deploy Amplitude pretty quickly. So I'm just curious how you're thinking about that accelerating the pace of new customer acquisitions longer term.

Thank you.

Spenser Skates -- Chief Executive Officer and Co-Founder

Yeah. We're not forecasting any particular, hey, it's gonna be this much or that much. I think, it's kind of more of arrow in the quiver, where it helps remove a blocker to getting onboard with Amplitude, and one that I'm pretty excited about just because there's a whole new class of customers that really didn't have the opportunity to be Amplitude customers before, but now do. And so, it definitely is one of the things that will help drive that, but it's not like a magic bullet in itself to say, oh, all of a sudden, our customer acquisition rate is going to double.

And so, we'll continue doing things like that in order to make it more frictionless for people to get set up with Amplitude.

Tyler Radke -- Citi -- Analyst

Great. And then, you mentioned in one of the, I think, customer examples in your prepared remarks just around displacing an Adobe solution, and I'm just wondering what you're seeing in terms of the mix of rip-and-replacements versus Greenfield, just where that is today and how you expect that to evolve. Thank you.

Spenser Skates -- Chief Executive Officer and Co-Founder

Yeah, so to be clear, yes, I think that's an exciting example, because I think that is a huge long-term potential for Amplitude, is to become, particularly as we see the product and marketing functions converge over time. I think, in the vast majority of cases, though, we'll be coming in alongside an Adobe or Google Analytics or marketing. In most organizations, the product and the marketing organizations are quite distinct. And so, we'll sell into the product, and they'll continue using whatever MarTech tools they have.

And so, I think that's probably more of an exception at this point than it is the rule. But in terms of the data sets overlapping and potentially combining over the long term, it absolutely is a trend there. And so, I think, it's a really interesting case, which was why I was excited to share today.

Tyler Radke -- Citi -- Analyst

Thanks so much.

Jason Starr

Great. Thanks a lot, Tyler. OK. And with that, we'll conclude today's discussion.

Thanks for being on our webcast today. We look forward to seeing many of you virtually this quarter and hopefully in person next year. Take care.

Spenser Skates -- Chief Executive Officer and Co-Founder

Thank you, all.

Hoang Vuong -- Chief Financial Officer

Thanks, guys.

Duration: 49 minutes

Call participants:

Jason Starr

Spenser Skates -- Chief Executive Officer and Co-Founder

Hoang Vuong -- Chief Financial Officer

Elizabeth Elliott -- Morgan Stanley -- Analyst

Rob Oliver -- Baird -- Analyst

Taylor McGinnis -- UBS -- Analyst

Michael Turits -- KeyBanc Capital Markets -- Analyst

Koji Ikeda -- Bank of America Merrill Lynch -- Analyst

Arjun Bhatia -- William Blair -- Analyst

Tyler Radke -- Citi -- Analyst

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