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What changed in Amplitude, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Amplitude, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+300 added−331 removedSource: 10-K (2024-02-20) vs 10-K (2023-02-16)

Top changes in Amplitude, Inc.'s 2023 10-K

300 paragraphs added · 331 removed · 237 edited across 6 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

119 edited+37 added−34 removed308 unchanged
Biggest changeIf the market for SaaS applications develops more slowly than we expect or declines, our business would be adversely affected. Our success will depend to a substantial extent on the widespread adoption of SaaS applications in general, and of SaaS applications that look to solve aspects of digital analytics.
Biggest changeIf we are unable to realize the anticipated benefits from our restructuring plan, or if we experience significant adverse consequences from the workforce reduction, our business, financial condition, and results of operations could be materially adversely affected. If the market for SaaS applications develops more slowly than we expect or declines, our business would be materially adversely affected.
In future periods, our revenue growth could slow or our revenue could decline for a number of reasons, including slowing demand for our Digital Analytics Platform, increased competition, changes to technology, a decrease in the growth of our overall market, or our failure, for any reason, to manage our growth effectively or continue to take advantage of growth opportunities.
In future periods, our revenue growth could slow or our revenue could decline for a number of reasons, including slowing demand for our Digital Analytics Platform, increased competition, changes to technology, a decrease in the growth of our overall market, or our failure, for any reason, to manage our growth effectively or to continue to take advantage of growth opportunities.
In particular, we intend to continue to invest significant resources in: • development of our Digital Analytics Platform, including investments in our research and development team, the development or acquisition of new products, features, and functionality, and improvements to the scalability, availability, and security of our platform; • our technology infrastructure, including expansion of our activities in third-party data centers that we may lease, enhancements to our network operations and infrastructure, and hiring of additional employees; • sales and marketing; • additional international expansion, in an effort to increase our customer base and sales; and • general administration, including legal, accounting, and other expenses.
In particular, we intend to continue to invest significant resources in: • the development of our Digital Analytics Platform, including investments in our research and development team, the development or acquisition of new products, features, and functionality, and improvements to the scalability, availability, and security of our platform; • our technology infrastructure, including expansion of our activities in third-party data centers that we may lease, enhancements to our network operations and infrastructure, and hiring of additional employees; • sales and marketing; • additional international expansion, in an effort to increase our customer base and sales; and • general administration, including legal, accounting, and other expenses.
Real or perceived errors, failures, or bugs in our platform could materially adversely affect our business and growth prospects. Because our platform is complex, undetected errors, failures, vulnerabilities, or bugs may occur, especially when updates are deployed.
Real or perceived errors, failures, vulnerabilities or bugs in our platform could materially adversely affect our business and growth prospects. Because our platform is complex, undetected errors, failures, vulnerabilities, or bugs may occur, especially when updates are deployed.
Any of these circumstances could materially adversely affect our business, financial condition, and results of operations.
Any of these circumstances could materially adversely affect our business, financial condition, and results of operations.
As a result of these foreign currency exchange rate fluctuations, it could be more difficult to detect underlying trends in our business and results of operations.
As a result of these foreign currency exchange rate fluctuations, it could be more difficult to detect underlying trends in our business and results of operations.
The dual class structure of our common stock has the effect of concentrating voting control with our existing stockholders, executive officers, directors, and their affiliates, which limits your ability to influence the outcome of important transactions and to influence corporate governance matters, such as electing directors, and to approve material mergers, acquisitions, or other business combination transactions that may not be aligned with your interests.
The dual class structure of our common stock has the effect of concentrating voting control with our existing stockholders, executive officers, and directors and their affiliates, which limits your ability to influence the outcome of important transactions and to influence corporate governance matters, such as electing directors, and to approve material mergers, acquisitions, or other business combination transactions that may not be aligned with your interests.
We cannot predict whether our dual class structure, combined with the concentrated control of our stockholders who held our capital stock prior to the listing of our Class A common stock on the Nasdaq Capital Market, including our executive officers, employees, directors, and their affiliates, will result in a lower or more volatile trading price of our Class A common stock or in adverse publicity or other adverse consequences.
We cannot predict whether our dual class structure, combined with the concentrated control of our stockholders who held our capital stock prior to the listing of our Class A common stock on the Nasdaq Capital Market, including our executive officers, employees, and directors and their affiliates, will result in a lower or more volatile trading price of our Class A common stock or in adverse publicity or other adverse consequences.
As a result of Russia’s invasion of Ukraine, governmental authorities in the United States, the European Union, and the United Kingdom, among others, launched an expansion of coordinated sanctions and export control measures, including, for example: • blocking sanctions on some of the largest state-owned and private Russian financial institutions (and their subsequent removal from the Society for Worldwide Interbank Financial Telecommunication (“SWIFT”) payment system); • blocking sanctions against Russian and Belarusian individuals, including the Russian President, other politicians, and those with government connections or involvement in Russian military activities; • blocking sanctions against certain Russian businessmen and their businesses, some of which have significant financial and trade ties to the European Union; • blocking of Russia’s foreign currency reserves and prohibition on secondary trading in Russian sovereign debt and certain transactions with the Russian Central Bank, National Wealth Fund, and the Ministry of Finance of the Russian Federation; • expansion of sectoral sanctions in various sectors of the Russian and Belarusian economies and the defense sector; • United Kingdom sanctions introducing restrictions on providing loans to, and dealing in securities issued by, persons connected with Russia; • restrictions on access to the financial and capital markets in the European Union, as well as prohibitions on aircraft leasing operations; • sanctions prohibiting most commercial activities of U.S., U.K., and E.U. persons in the so-called People’s Republic of Donetsk and the so-called People’s Republic of Luhansk (and, with respect to the E.U., the areas of Kherson and Zaporizhzhia not controlled by the Ukrainian government), with all of these new restrictions largely tracking prior prohibitions relating to Crimea and Sevastopol; • enhanced import and export controls and trade sanctions targeting Russia’s imports of technological goods, including E.U. and U.K. prohibitions on exporting a wide range of “industrial” goods to Russia (and on importing a large number of “revenue-generating” goods from Russia).
As a result of Russia’s invasion of Ukraine, governmental authorities in the United States, the European Union, and the United Kingdom, among others, launched an expansion of coordinated sanctions and export control measures, including, for example: • blocking sanctions on some of the largest state-owned and private Russian financial institutions (and their subsequent removal from the Society for Worldwide Interbank Financial Telecommunication (“SWIFT”) payment system); • blocking sanctions against Russian and Belarusian individuals, including the Russian President, other politicians, and those with government connections or involvement in Russian military activities; • blocking sanctions against certain Russian businessmen and their businesses, some of which have significant financial and trade ties to the European Union; 33 • blocking of Russia’s foreign currency reserves and prohibition on secondary trading in Russian sovereign debt and certain transactions with the Russian Central Bank, National Wealth Fund, and the Ministry of Finance of the Russian Federation; • expansion of sectoral sanctions in various sectors of the Russian and Belarusian economies and the defense sector; • United Kingdom sanctions introducing restrictions on providing loans to, and dealing in securities issued by, persons connected with Russia; • restrictions on access to the financial and capital markets in the European Union, as well as prohibitions on aircraft leasing operations; • sanctions prohibiting most commercial activities of U.S., U.K., and E.U. persons in the so-called People’s Republic of Donetsk and the so-called People’s Republic of Luhansk (and, with respect to the European Union, the areas of Kherson and Zaporizhzhia not controlled by the Ukrainian government), with all of these new restrictions largely tracking prior prohibitions relating to Crimea and Sevastopol; • enhanced import and export controls and trade sanctions targeting Russia’s imports of technological goods, including E.U. and U.K. prohibitions on exporting a wide range of “industrial” goods to Russia (and on importing a large number of “revenue-generating” goods from Russia).
Our restated certificate of incorporation and our amended and restated bylaws provide that: (i) unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if such court does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware) will, to the fullest extent permitted by law, be the sole and exclusive forum for: (A) any derivative action or proceeding brought on our behalf, (B) any action asserting a claim for or based on a breach of a fiduciary duty owed by any of our current or former directors, officers, other employees, agents, or stockholders to us or our stockholders, including, without limitation, a claim alleging the aiding and abetting of such a breach of fiduciary duty, (C) any action asserting a claim against us or any of our current or former directors, officers, other employees, agents, or stockholders arising pursuant to any provision of the Delaware General Corporation Law or our restated certificate of incorporation or amended and restated bylaws or as to which the Delaware General Corporation Law confers jurisdiction on the Court of Chancery of the State of Delaware, or (D) any action asserting a claim related to or involving us that is governed by the internal affairs doctrine; (ii) unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America will, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act and the rules and regulations promulgated thereunder; (iii) the exclusive forum provisions are intended to benefit and may be enforced by us, our officers and directors, the financial advisors to any offering giving rise to such complaint, and any other professional or entity whose profession gives authority to a statement made by that person or entity and who has prepared or certified any part of the documents underlying the offering; and (iv) any person or entity purchasing or otherwise acquiring or holding any interest in our shares of capital stock will be deemed to have notice of and consented to these provisions.
Our restated certificate of incorporation and our amended and restated bylaws provide that: (i) unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if such court does not have subject matter 42 jurisdiction thereof, the federal district court of the State of Delaware) will, to the fullest extent permitted by law, be the sole and exclusive forum for: (A) any derivative action or proceeding brought on our behalf, (B) any action asserting a claim for or based on a breach of a fiduciary duty owed by any of our current or former directors, officers, other employees, agents, or stockholders to us or our stockholders, including, without limitation, a claim alleging the aiding and abetting of such a breach of fiduciary duty, (C) any action asserting a claim against us or any of our current or former directors, officers, other employees, agents, or stockholders arising pursuant to any provision of the Delaware General Corporation Law or our restated certificate of incorporation or amended and restated bylaws or as to which the Delaware General Corporation Law confers jurisdiction on the Court of Chancery of the State of Delaware, or (D) any action asserting a claim related to or involving us that is governed by the internal affairs doctrine; (ii) unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America will, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act and the rules and regulations promulgated thereunder; (iii) the exclusive forum provisions are intended to benefit and may be enforced by us, our officers and directors, the financial advisors to any offering giving rise to such complaint, and any other professional or entity whose profession gives authority to a statement made by that person or entity and who has prepared or certified any part of the documents underlying the offering; and (iv) any person or entity purchasing or otherwise acquiring or holding any interest in our shares of capital stock will be deemed to have notice of and consented to these provisions.
Our restated certificate of incorporation and amended and restated bylaws include provisions that: • authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our Class A common stock; • require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent; • specify that special meetings of our stockholders can be called only by our board of directors; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors; • establish that our board of directors is divided into three classes, with each class serving three-year staggered terms; • prohibit cumulative voting in the election of directors; • provide that our directors may only be removed for cause; • provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; and • require the approval of our board of directors or the holders of at least 66 2/3% of our outstanding shares of voting stock to amend our bylaws and certain provisions of our certificate of incorporation.
Our restated certificate of incorporation and amended and restated bylaws include provisions that: • authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our Class A common stock; • require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent; • specify that special meetings of our stockholders can be called only by our board of directors; 41 • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors; • establish that our board of directors is divided into three classes, with each class serving three-year staggered terms; • prohibit cumulative voting in the election of directors; • provide that our directors may only be removed for cause; • provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; and • require the approval of our board of directors or the holders of at least 66 2/3% of our outstanding shares of voting stock to amend our bylaws and certain provisions of our certificate of incorporation.
Our effective tax rate could increase due to several factors, including: • changes in the relative amounts of income before taxes in the various jurisdictions in which we operate that have differing statutory tax rates; • changes in tax laws, tax treaties, and regulations or the interpretation of them, such as the Tax Cuts and Jobs Act, the Coronavirus Aid, Relief, and Economic Security Act, and the Inflation Reduction Act; • changes to our assessment about our ability to realize our deferred tax assets that are based on estimates of our future results, the prudence and feasibility of possible tax planning strategies, and the economic and political environments in which we do business; • the outcome of current and future tax audits, examinations, or administrative appeals; and • the effects of acquisitions.
Our effective tax rate could increase due to several factors, including: 37 • changes in the relative amounts of income before taxes in the various jurisdictions in which we operate that have differing statutory tax rates; • changes in tax laws, tax treaties, and regulations or the interpretation of them, such as the Tax Cuts and Jobs Act, the Coronavirus Aid, Relief, and Economic Security Act, and the Inflation Reduction Act; • changes to our assessment about our ability to realize our deferred tax assets that are based on estimates of our future results, the prudence and feasibility of possible tax planning strategies, and the economic and political environments in which we do business; • the outcome of current and future tax audits, examinations, or administrative appeals; and • the effects of acquisitions.
Despite our efforts to implement these protections, these measures may not protect our business or provide us with a competitive advantage for a variety of reasons, including: 31 • our failure to obtain patents and other intellectual property rights for important innovations or maintain appropriate confidentiality and other protective measures to establish and maintain our trade secrets; • uncertainty in, and evolution of, legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights; • potential invalidation of our intellectual property rights through administrative processes or litigation; • any inability by us to detect infringement or other misappropriation of our intellectual property rights by third parties; and • other practical, resource, or business limitations on our ability to enforce our rights.
Despite our efforts to implement these protections, these measures may not protect our business or provide us with a competitive advantage for a variety of reasons, including: • our failure to obtain patents and other intellectual property rights for important innovations or maintain appropriate confidentiality and other protective measures to establish and maintain our trade secrets; • uncertainty in, and evolution of, legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights; • potential invalidation of our intellectual property rights through administrative processes or litigation; • any inability by us to detect infringement or other misappropriation of our intellectual property rights by third parties; and • other practical, resource, or business limitations on our ability to enforce our rights.
Demand for Amplitude Analytics and our other products and platform functionality is affected by a number of factors, many of which are beyond our control, such as 30 continued market acceptance of our products by customers for existing and new use cases, the timing of development and release of new products, features, and functionality that are lower-cost alternatives introduced by us or our competitors, technological changes and developments within the markets we serve, and growth or contraction in our addressable markets.
Demand for Amplitude Analytics and our other products and platform functionality is affected by a number of factors, many of which are beyond our control, such as continued market acceptance of our products by customers for existing and new use cases, the timing of development and release of new products, features, and functionality that are lower-cost alternatives introduced by us or our competitors, technological changes and developments within the markets we serve, and growth or contraction in our addressable markets.
If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the trading price of our Class A common stock could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities.
If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the trading price of our Class A common stock could decline, and we could be subject to sanctions or investigations by the SEC or 45 other regulatory authorities.
We rely on certain third parties to support our sales and regulatory compliance efforts and can be held liable in certain cases for their corrupt or other illegal activities, even if we do not explicitly authorize such activities. The FCPA also requires 33 that we keep accurate books and records and maintain a system of adequate internal controls.
We rely on certain third parties to support our sales and regulatory compliance efforts and can be held liable in certain cases for their corrupt or other illegal activities, even if we do not explicitly authorize such activities. The FCPA also requires that we keep accurate books and records and maintain a system of adequate internal controls.
Foreign Corrupt Practices Act (“FCPA”), U.S. bribery laws, the UK Bribery Act, and similar laws and regulations in other jurisdictions; • increased financial accounting and reporting burdens and complexities; • requirements or preferences for domestic products; • differing technical standards, existing or future regulatory and certification requirements, and required features and functionality; • burdens of complying with laws and regulations related to privacy and data security, including the E.U.
Foreign Corrupt Practices Act (“FCPA”), U.S. bribery laws, the UK Bribery Act, and similar laws and regulations in other jurisdictions; • increased financial accounting and reporting burdens and complexities; • requirements or preferences for domestic products; 29 • differing technical standards, existing or future regulatory and certification requirements, and required features and functionality; • burdens of complying with laws and regulations related to privacy and data security, including the E.U.
If we are unable to close one or more expected significant transactions with these customers in a particular period, or if an expected transaction is 20 delayed until a subsequent period, our results of operations for that period, and for any future periods in which revenue from such transaction would otherwise have been recognized, may be adversely affected.
If we are unable to close one or more expected significant transactions with these customers in a particular period, or if an expected transaction is delayed until a subsequent period, our results of operations for that period, and for any future periods in which revenue from such transaction would otherwise have been recognized, may be adversely affected.
If we are unable to close one or more expected significant transactions with these customers in a particular period, or if an expected transaction is delayed until a subsequent period, our results of operations for that period, and for any future periods in which 28 revenue from such transaction would otherwise have been recognized, may be adversely affected.
If we are unable to close one or more expected significant transactions with these customers in a particular period, or if an expected transaction is delayed until a subsequent period, our results of operations for that period, and for any future periods in which revenue from such transaction would otherwise have been recognized, may be adversely affected.
If a court were to find the choice of forum provision contained in our restated certificate of incorporation or our amended 43 and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially adversely affect our business, financial condition, and results of operations.
If a court were to find the choice of forum provision contained in our restated certificate of incorporation or our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially adversely affect our business, financial condition, and results of operations.
Additionally, we rely on our network and third-party infrastructure and applications, internal technology systems, and our websites for our development, marketing, operational support, hosted services, and sales activities. If these systems were to fail or be negatively impacted as a result of a natural disaster or other catastrophic event, our ability to deliver products to our customers would be impaired.
Additionally, we rely on our network and third-party infrastructure and applications, technology systems, and our websites for our development, marketing, operational support, hosted services, and sales activities. If these systems were to fail or be negatively impacted as a result of a natural disaster or other catastrophic event, our ability to deliver products to our customers would be impaired.
For all of these reasons, we may not be able to compete successfully against our current and future competitors, which would harm our business. For more information about the competitive landscape in which we operate, see “Part I, Item 1. Business—Competition” in this Annual Report on Form 10-K.
For all of these reasons, we may not be 22 able to compete successfully against our current and future competitors, which would harm our business. For more information about the competitive landscape in which we operate, see “Part I, Item 1. Business—Competition” in this Annual Report on Form 10-K.
Pricing pressures and increased competition generally could result in reduced sales, reduced margins, losses, or the failure of our Digital Analytics Platform to achieve or maintain more widespread market acceptance, any of which could harm our business. Our competitors vary in size and in the breadth and scope of the products and services they offer.
Pricing pressures and increased competition generally could result in reduced sales, reduced margins, financial losses, or the failure of our Digital Analytics Platform to achieve or maintain more widespread market acceptance, any of which could harm our business. Our competitors vary in size and in the breadth and scope of the products and services they offer.
Further, these agreements may not prevent our competitors from independently developing technologies that are substantially equivalent or superior to our platform and offerings. Further, litigation may be necessary to enforce our intellectual property or proprietary rights, protect our trade secrets, or determine the validity and scope of proprietary rights claimed by others.
Further, these agreements may not prevent our competitors from independently developing technologies that are substantially equivalent or superior to our platform and offerings. 31 Further, litigation may be necessary to enforce our intellectual property or proprietary rights, protect our trade secrets, or determine the validity and scope of proprietary rights claimed by others.
There are a number of legislative proposals in the United States, at both the federal and state level, and in the European Union and elsewhere, that could impose new obligations in areas such as e-commerce and other related legislation or liability for copyright infringement by third parties.
There are also a number of legislative proposals in the United States, at both the federal and state level, and in the European Union and elsewhere, that could impose new obligations in areas such as e-commerce and other related legislation or liability for copyright infringement by third parties.
We must continue to innovate to optimize our offerings for these and other public clouds that our customers require, particularly as we expand internationally. Further, the markets in which we compete are subject to evolving industry standards and regulations, resulting in increasing data governance and compliance requirements for us and 22 our customers.
We must continue to innovate to optimize our offerings for these and other public clouds that our customers require, particularly as we expand internationally. Further, the markets in which we compete are subject to evolving industry standards and regulations, resulting in increasing data governance and compliance requirements for us and our customers.
We have in the past provided, and may in the future be required to provide, financial credits and pro rata refunds as a result of not being able to meet these commitments. We have 25 experienced, and may in the future experience, disruptions, outages, defects, and other performance and quality problems with our platform.
We have in the past provided, and may in the future be required to provide, financial credits and pro rata refunds as a result of not being able to meet these commitments. We have experienced, and may in the future experience, disruptions, outages, defects, and other performance and quality problems with our platform.
If we fail to offer a variety of integrations or the integrations that our customers and prospective customers expect and demand, then our Digital Analytics Platform may become less marketable, less competitive, or obsolete, and our business, financial condition, results of operations, and growth prospects could be materially adversely affected.
If we fail to offer a variety of integrations or the integrations that our customers and prospective customers expect 26 and demand, then our Digital Analytics Platform may become less marketable, less competitive, or obsolete, and our business, financial condition, results of operations, and growth prospects could be materially adversely affected.
To the extent that fluctuations in currency exchange rates cause our results of operations to differ from our expectations or the expectations of our investors, the trading price of our Class A common stock could be adversely affected. We do not currently maintain a program to hedge transactional exposures in foreign currencies.
To the extent that fluctuations in currency exchange rates cause our results of operations to differ from our expectations or the expectations of our investors, the trading price of our Class A common stock could be adversely affected. We do not currently maintain a program to hedge transactional exposures in foreign 36 currencies.
Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States. 38 U.S. generally accepted accounting principles (“U.S. GAAP”) are subject to interpretation by the Financial Accounting Standards Board, the Securities and Exchange Commission (the “SEC”), and various bodies formed to promulgate and interpret appropriate accounting principles.
Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States. U.S. generally accepted accounting principles (“U.S. GAAP”) are subject to interpretation by the Financial Accounting Standards Board, the Securities and Exchange Commission (the “SEC”), and various bodies formed to promulgate and interpret appropriate accounting principles.
If we do not successfully maintain and enhance our brand, our business may not grow, we may have reduced pricing power relative to competitors, and we could lose customers or fail to attract potential customers, all of which would materially adversely affect our business, financial condition, and results of operations.
If we do not successfully maintain and enhance our brand, our business may not grow, we may have reduced pricing power relative to 28 competitors, and we could lose customers or fail to attract potential customers, all of which would materially adversely affect our business, financial condition, and results of operations.
Significant estimates and judgments involve those related to revenue recognition, deferred commissions, valuation of our stock-based compensation awards, including the determination of fair value of our common stock, valuation of goodwill and intangible assets, accounting for income taxes, and useful lives of long-lived assets, among others.
Significant estimates and judgments involve those related to revenue 38 recognition, deferred commissions, valuation of our stock-based compensation awards, including the determination of the fair value of our common stock, valuation of goodwill and intangible assets, accounting for income taxes, and useful lives of long-lived assets, among others.
Unauthorized disclosure of, access to, or security breaches of our platform could result in the loss of data, loss of business, severe reputational damage adversely affecting customer or investor confidence, damage to our brand, diversion of management’s attention, regulatory investigations and orders, litigation, indemnity obligations, damages for contract breach, penalties for violation of applicable laws or regulations, significant costs for remediation that may include liability for stolen assets or information and repair of system damage that may have been caused, incentives offered to customers or other business partners in an effort to maintain business relationships after a breach, and other liabilities.
Unauthorized disclosure of, access to, or security breaches of our platform and information technology systems could result in the loss of data, loss of business, severe reputational damage adversely affecting customer or investor confidence, damage to our brand, diversion of management’s attention, regulatory investigations, and orders, litigation, indemnity obligations, damages for contract breach, penalties for violation of applicable laws or regulations, significant costs for remediation that may include liability for stolen assets or information and repair of system damage that may have been caused, incentives offered to customers or other business partners in an effort to maintain business relationships after a breach, and other liabilities.
We often assist our customers in implementing our Digital Analytics Platform (whether through us directly or through a third-party implementation partner), and they may need training in the proper use of our Digital Analytics Platform to maximize its 26 potential and avoid inadequate performance.
We often assist our customers in implementing our Digital Analytics Platform (whether through us directly or through a third-party implementation partner), and they may need training in the proper use of our Digital Analytics Platform to maximize its potential and avoid inadequate performance.
We depend and rely on third-party hosted cloud services and internet infrastructure in order to operate critical functions of our business. For example, our platform and internal tools use computing, storage capabilities, bandwidth, and other services provided by AWS.
We depend and rely on third-party hosted cloud services and internet infrastructure in order to operate critical functions of our business. For example, our 25 platform and internal tools use computing, storage capabilities, bandwidth, and other services provided by AWS.
For example, a settlement may require us to obtain a license to continue practices found to be in violation of a third party’s rights, which may not be available on 32 reasonable terms and may significantly increase our operating expenses. A license to continue such practices may not be available to us at all.
For example, a settlement may require us to obtain a license to continue practices found to be in violation of a third party’s rights, which may not be available on reasonable terms and may significantly increase our operating expenses. A license to continue such practices may not be available to us at all.
A portion of our operating expenses are incurred outside the United States, denominated in foreign currencies, and subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the Euro, British Pound, Canadian Dollar, Singapore Dollar, and Japanese Yen.
A portion of our operating expenses are incurred outside the United States, denominated in foreign currencies, and subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the Euro, British Pound, Canadian Dollar, Singapore Dollar, Australian Dollar, and Japanese Yen.
We incur significant costs as a result of operating as a public company, and our management needs to devote substantial time to compliance with our public company responsibilities and corporate governance practices. 45 As a public company, we incur significant legal, accounting, and other expenses that we did not incur as a private company.
We incur significant costs as a result of operating as a public company, and our management needs to devote substantial time to compliance with our public company responsibilities and corporate governance practices. As a public company, we incur significant legal, accounting, and other expenses that we did not incur as a private company.
Our current and future international business and operations involve a variety of risks, including: • slower than anticipated public cloud adoption by international businesses; • changes, which may be unexpected, in a specific country’s or region’s political, economic, or legal and regulatory environment, including Brexit, armed conflicts, pandemics, terrorist activities, tariffs, trade wars, or long-term environmental risks; • the need to adapt and localize our Digital Analytics Platform for specific countries; • longer payment cycles and greater difficulty enforcing contracts, collecting accounts receivable, or satisfying revenue recognition criteria, especially in emerging markets; • new, evolving, and more stringent regulations relating to privacy and data security and the unauthorized use of, or access to, commercial and personal information, particularly in Europe; • differing and potentially more onerous labor regulations, especially in Europe, where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in these locations; • challenges inherent in efficiently managing, and the increased costs associated with, an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits, and compliance programs that are specific to each jurisdiction; • difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems, and regulatory systems; • increased travel, real estate, infrastructure, and legal compliance costs associated with international operations; 29 • currency exchange rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk of entering into hedging transactions if we choose to do so in the future; • limitations on our ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries; • laws and business practices favoring local competitors or general market preferences for local vendors; • limited or insufficient intellectual property protection or difficulties obtaining, maintaining, protecting, or enforcing our intellectual property rights, including our trademarks and patents; • COVID-19 or other pandemics or epidemics, or other global political, social or macroeconomic events, including the war in Ukraine, that could decrease economic activity in certain markets, decrease use of our products and services, or decrease our ability to import, export, or sell our products and services to existing or new customers in international markets; • exposure to liabilities under export control, economic and trade sanctions, anti-corruption, and anti-money laundering laws, including the Export Administration Regulations, regulations administered by the Office of Foreign Assets Control, the U.S.
Our current and future international business and operations involve a variety of risks, including: • slower than anticipated public cloud adoption by international businesses; • changes, which may be unexpected, in a specific country’s or region’s political, economic, or legal and regulatory environment, including Brexit, armed conflicts, pandemics, terrorist activities, tariffs, trade wars, or long-term environmental risks; • the need to adapt and localize our Digital Analytics Platform for specific countries; • longer payment cycles and greater difficulty enforcing contracts, collecting accounts receivable, or satisfying revenue recognition criteria, especially in emerging markets; • new, evolving, and more stringent regulations relating to privacy and data security and the unauthorized use of, or access to, commercial and personal information, particularly in Europe; • differing and potentially more onerous labor regulations, especially in Europe, where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in these locations; • challenges inherent in efficiently managing, and the increased costs associated with, an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits, and compliance programs that are specific to each jurisdiction; • difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems, and regulatory systems; • increased travel, real estate, infrastructure, and legal compliance costs associated with international operations; • currency exchange rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk of entering into hedging transactions if we choose to do so in the future; • limitations on our ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries; • laws and business practices favoring local competitors or general market preferences for local vendors; • limited or insufficient intellectual property protection or difficulties obtaining, maintaining, protecting, or enforcing our intellectual property rights, including our trademarks and patents; • health epidemics, or other global political, social or macroeconomic events, including the war in Ukraine and the conflict in the Middle East, that could decrease economic activity in certain markets, decrease use of our products and services, or decrease our ability to import, export, or sell our products and services to existing or new customers in international markets; • exposure to liabilities under export control, economic and trade sanctions, anti-corruption, and anti-money laundering laws, including the Export Administration Regulations, regulations administered by the Office of Foreign Assets Control, the U.S.
We do not have employment agreements with our executive officers or other key personnel that require them to continue to work for us for any specified period; therefore, they could terminate their employment with us at any time.
We do not have employment agreements with our executive officers 43 or other key personnel that require them to continue to work for us for any specified period; therefore, they could terminate their employment with us at any time.
Although we have implemented policies to regulate the use and incorporation of open-source software into our platform, we cannot be certain that we have not incorporated open-source software in our platform in a manner that is inconsistent with such policies.
Although we have implemented policies to regulate the use and incorporation of open-source 32 software into our platform, we cannot be certain that we have not incorporated open-source software in our platform in a manner that is inconsistent with such policies.
In addition to the other risks described herein, other factors that may cause our results of operations or key metrics to fluctuate include: • fluctuations in demand for, or pricing of, our Digital Analytics Platform, including as a result of our introduction of new products, features, and functionality; • fluctuations in usage of our Digital Analytics Platform; • our ability to attract new customers; • our ability to retain existing customers; • customer expansion rates; • investments in new products, features, and functionality; • the timing of our customers’ purchases; • the speed with which customers are able to migrate data onto our platform after purchasing capacity; • awareness of our brand on a global basis; • fluctuations or delays in purchasing decisions in anticipation of new products, features, or functionality developed or acquired by us or our competitors; • changes in customers’ budgets and in the timing of their budget cycles and purchasing decisions; • our ability to control costs, including our operating expenses; • the amount and timing of costs associated with our cloud computing infrastructure, particularly the cloud services provided by Amazon Web Services (“AWS”); • the amount and timing of payment for operating expenses, particularly research and development and sales and marketing expenses; 19 • the amount and timing of non-cash expenses, including stock-based compensation, goodwill impairments, and other non-cash charges; • the amount and timing of costs associated with recruiting, training, and integrating new employees and retaining and motivating existing employees; • the ability to identify and complete, and the effects of, mergers, acquisitions, or strategic partnerships, and the ensuing integration efforts; • general economic, market, and industry conditions (including the current inflationary economic environment, rising interest rates, and a potential recession), both domestically and internationally, as well as economic conditions specifically affecting industries in which our customers participate, and related difficulties in collections; • the potential adverse impact of climate change, natural disasters, health epidemics, including the COVID-19 pandemic, political and social instability, including acts of war or other armed conflicts, such as Russia's invasion of Ukraine, and terrorist activities, on our business, operations, and the markets and communities in which we and our customers and partners operate and the disruption these events may cause to the global economy; • the impact of new accounting pronouncements; • changes in regulatory or legal environments that may cause us to incur, among other things, expenses associated with compliance, particularly with respect to compliance with evolving privacy and data protection laws and regulations, as well as export control, economic and trade sanctions, anti-corruption, and anti-money laundering laws; • the overall tax rate for our business, which may be affected by the mix of income we earn in the United States and in jurisdictions with comparatively lower tax rates, the effects of stock-based compensation, and the effects of changes in our business; • the impact of changes in tax laws or judicial or regulatory interpretations of tax laws, which are recorded in the period such laws are enacted or interpretations are issued and may significantly affect the effective tax rate of that period; • fluctuations in currency exchange rates and changes in the proportion of our revenue and expenses denominated in foreign currencies; • changes in the competitive dynamics of our market, including consolidation among competitors or customers; and • significant security breaches of, technical difficulties with, or interruptions to, the delivery and use of our platform.
In addition to the other risks described herein, other factors that may cause our results of operations or key metrics to fluctuate include: • fluctuations in demand for, or pricing of, our Digital Analytics Platform, including as a result of our introduction of new products, features, and functionality; • fluctuations in usage of our Digital Analytics Platform; • our ability to attract new customers; • our ability to retain existing customers; • customer expansion rates; • investments in new products, features, and functionality; • the timing of our customers’ purchases; • the speed with which customers are able to migrate data onto our platform after purchasing capacity; • awareness of our brand on a global basis; • fluctuations or delays in purchasing decisions in anticipation of new products, features, or functionality developed or acquired by us or our competitors; • changes in customers’ budgets and in the timing of their budget cycles and purchasing decisions; • our ability to control costs, including our operating expenses; • the amount and timing of costs associated with our cloud computing infrastructure, particularly the cloud services provided by Amazon Web Services (“AWS”); • the amount and timing of payment for operating expenses, particularly research and development and sales and marketing expenses; 19 • the amount and timing of non-cash expenses, including stock-based compensation, goodwill impairments, and other non-cash charges; • the amount and timing of costs associated with recruiting, training, and integrating new employees and retaining and motivating existing employees; • the ability to identify and complete, and the effects of, mergers, acquisitions, or strategic partnerships, and the ensuing integration efforts; • general economic, market, and industry conditions (including the current inflationary economic environment, rising interest rates, and a potential recession), both domestically and internationally, as well as economic conditions specifically affecting industries in which our customers participate, and related difficulties in collections; • the potential adverse impact of climate change, natural disasters, health epidemics (such as the COVID-19 pandemic or similar outbreaks of disease), political and social instability, including acts of war or other armed conflicts (including the war in Ukraine and the conflict in the Middle East), and terrorist activities, on our business, operations, and the markets and communities in which we and our customers and partners operate and the disruption these events may cause to the global economy; • the impact of new accounting pronouncements; • changes in regulatory or legal environments that may cause us to incur, among other things, expenses associated with compliance, particularly with respect to compliance with evolving privacy and data protection laws and regulations, as well as export control, economic and trade sanctions, anti-corruption, and anti-money laundering laws; • the overall tax rate for our business, which may be affected by the mix of income we earn in the United States and in jurisdictions with comparatively lower tax rates, the effects of stock-based compensation, and the effects of changes in our business; • the impact of changes in tax laws or judicial or regulatory interpretations of tax laws, which are recorded in the period such laws are enacted or interpretations are issued and may significantly affect the effective tax rate of that period; • fluctuations in currency exchange rates and changes in the proportion of our revenue and expenses denominated in foreign currencies; • changes in the competitive dynamics of our market, including consolidation among competitors or customers; and • significant security breaches of, technical difficulties with, or interruptions to, the delivery and use of our platform.
If we or other SaaS providers experience data security incidents, loss of customer data, disruptions in delivery, or other problems, the market for SaaS applications, including our Digital 21 Analytics Platform, may be negatively affected.
If we or other SaaS providers experience data security incidents, loss of customer data, disruptions in delivery, or other problems, the market for SaaS applications, including our Digital Analytics Platform, may be negatively affected.
On February 24, 2022, Russian military forces invaded Ukraine, and although the length, impact, and outcome of the ongoing war in Ukraine is highly unpredictable, this war has led, and could continue to lead, to significant market and other disruptions, including instability in financial markets, supply chain interruptions, political and social instability, and changes in consumer or purchaser preferences, as well as an increase in cyberattacks, intellectual property theft, and espionage.
In February 2022, Russian military forces invaded Ukraine, and although the length, impact, and outcome of the ongoing war in Ukraine is highly unpredictable, this war has led, and could continue to lead, to significant market and other disruptions, including instability in financial markets, supply chain interruptions, political and social instability, and changes in consumer or purchaser preferences, as well as an increase in cyberattacks, intellectual property theft, and espionage.
In particular, we have entered, and intend to continue to enter, into strategic sales distributor and reseller 27 relationships in certain international markets where we do not have a local presence.
In particular, we have entered, and intend to continue to enter, into strategic sales distributor and reseller relationships in certain international markets where we do not have a local presence.
These problems can be caused by a variety of factors, including infrastructure changes, introductions of new functionality, vulnerabilities and defects in proprietary and open-source software, human error or misconduct, capacity constraints due to an overwhelming number of users accessing our platform simultaneously, design limitations, or denial-of-service attacks or other security-related incidents.
These problems can be caused by a variety of factors, including infrastructure changes, introductions of new functionality, vulnerabilities and defects in proprietary and open-source software, human error or misconduct, capacity constraints due to an overwhelming number of users accessing our platform simultaneously, design limitations, or degradation or denial-of-service attacks or other cyberattacks or security-related incidents.
Litigation 36 might result in substantial costs and may divert management’s attention and resources, which might materially adversely affect our business, financial condition, and results of operations.
Litigation might result in substantial costs and may divert management’s attention and resources, which might materially adversely affect our business, financial condition, and results of operations.
To the extent that economic conditions deteriorate in the United States or abroad, including as a result of inflationary pressures and the responses by central banking authorities to control such inflation, rising interest rates, debt and equity market fluctuations, diminished liquidity and credit availability, increased unemployment rates, decreased investor and consumer confidence, political turmoil, supply chain challenges, natural catastrophes and the effects of climate change, regional and global conflicts, and terrorist attacks on the United States, Europe, the Asia Pacific region, or elsewhere, our customers and prospective customers may go out of business or elect to decrease their budgets, which would limit our ability to grow our business and materially adversely affect our financial condition and results of operations.
To the extent that economic conditions deteriorate in the United States or abroad, including as a result of inflationary pressures and the responses by central banking authorities to control such inflation, rising interest rates, debt and equity market fluctuations, recent and potential bank failures, diminished liquidity and credit availability, increased unemployment rates, decreased investor and consumer confidence, political turmoil, supply chain challenges, natural catastrophes and the effects of climate change, regional and global conflicts, and terrorist attacks on the United States, Europe, the Asia-Pacific region, or elsewhere, our customers and prospective customers may go out of business or elect to decrease their budgets, which would limit our ability to grow our business and materially adversely affect our financial condition and results of operations.
It could also expose us to risks, including an inability to provide our services and fulfill contractual demands, and could cause management distraction and the obligation to devote significant financial and other resources to mitigate such problems, which would increase our future information security costs, including through organizational changes, deploying additional personnel, reinforcing administrative, physical, and technical safeguards, further training of employees, changing third-party vendor control practices, and engaging third-party subject matter experts and consultants and reduce the demand for our technology and services.
Such an event could also expose us to risks, including an inability to provide our services and fulfill contractual demands, and could cause management distraction and the obligation to devote significant financial and other resources to mitigate such problems, which would increase our future information security costs, including through organizational changes, deploying additional personnel, reinforcing administrative, physical, and technical safeguards, further training of employees, changing third-party vendor 24 control practices, and engaging third-party subject matter experts and consultants and reduce the demand for our technology and services.
We must be ready to comply with the existing and any other potential additional measures imposed in connection with the conflict in Ukraine. The imposition of such measures could adversely impact our business, including preventing us from performing existing contracts, recognizing revenue, pursuing new business opportunities, or receiving payment for subscriptions from our existing customers.
We must be ready to comply with the existing and any other potential additional measures imposed in connection with the war in Ukraine. The imposition of such measures could adversely impact our business, including preventing us from performing existing contracts, recognizing revenue, pursuing new business opportunities, or receiving payment for subscriptions from our existing customers.
The CCPA requires companies that process information on California residents to make certain disclosures to consumers about their data collection, use, and sharing practices, allows consumers to opt out of certain data sharing with third parties and exercise certain individual rights regarding their personal information, provides a new private right of action for data breaches, and provides for penalties for noncompliance.
The CCPA requires companies that process information of California residents to make certain disclosures to consumers about their data collection, use, and sharing practices, allows consumers to opt out of certain data sharing with third parties and exercise certain individual rights regarding their personal information, provides a new private right of action for data breaches, 35 and provides for penalties for noncompliance.
If we invest substantial time and resources to further expand our international operations and are unable to do so successfully and in a timely manner, our business, financial condition, and results of operations could be materially adversely affected. The war between Russia and Ukraine could materially adversely affect our business, results of operations, and financial condition.
If we invest substantial time and resources to further expand our international operations and are unable to do so successfully and in a timely manner, our business, financial condition, and results of operations could be materially adversely affected. The war in Ukraine could materially adversely affect our business, results of operations, and financial condition.
Although we recently released our Amplitude CDP and Amplitude Experiment products, we currently derive, and expect to continue for some time to derive, substantially all of our revenue from our Amplitude Analytics product. As such, the continued growth in demand for, and market acceptance, of Amplitude Analytics is critical to our success.
Although we have released our Amplitude CDP and Amplitude Experiment products, we currently derive, and expect to continue for some time to derive, substantially all of our revenue from our Amplitude Analytics product. As such, the continued growth in demand for, and market acceptance, of Amplitude Analytics is critical to our success.
Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. We cannot predict or estimate the amount of additional costs we will incur as a public company or the specific timing of such costs.
Moreover, these rules and regulations increase our legal and financial compliance costs and make some activities more time-consuming and costly. We cannot predict or estimate the amount of additional costs we will continue to incur as a public company or the specific timing of such costs.
In addition to the supply and demand and volatility factors discussed above, sales of a substantial number of shares of our Class A common stock into the public market, particularly sales by our directors, executive officers, and principal stockholders, or the perception that these sales might occur in large quantities, could cause the trading price of our Class A common stock to decline.
Sales of substantial amounts of our Class A common stock in the public markets, or the perception that sales might occur, could cause the trading price of our Class A common stock to decline. 40 In addition to the supply and demand and volatility factors discussed above, sales of a substantial number of shares of our Class A common stock into the public market, particularly sales by our directors, executive officers, and principal stockholders, or the perception that these sales might occur in large quantities, could cause the trading price of our Class A common stock to decline.
Wayfair, Inc. et al (“Wayfair”) , that online sellers can be required to collect sales and use tax despite not having a physical presence in the buyer’s state. In response to Wayfair , or otherwise, states or local governments may adopt, or begin to enforce, laws requiring us to calculate, collect, and remit taxes on sales in their jurisdictions.
(“Wayfair”) , that online sellers can be required to collect sales and use tax despite not having a physical presence in the buyer’s state. In response to Wayfair , or otherwise, states or local governments may adopt, or begin to enforce, laws requiring us to calculate, collect, and remit taxes on sales in their jurisdictions.
We intend to continue to invest to expand our business, personnel, and operations, which may cause our margins to decline, and any investments we make will occur in advance of experiencing the benefits from such investments, making it difficult to determine in a timely manner if we are efficiently allocating our resources.
If economic conditions improve, we intend to continue to invest to expand our business, personnel, and operations, which may cause our margins to decline, and any investments we make will occur in advance of experiencing the benefits from such investments, making it difficult to determine in a timely manner if we are efficiently allocating our resources.
We have experienced and expect to continue to experience rapid growth in our business, personnel, and operations, which has placed, and may continue to place, significant demands on our management and operational and financial resources.
We have experienced, and may continue to experience, rapid growth in our business and operations, which has placed, and may continue to place, significant demands on our management and operational and financial resources.
In the event of a major earthquake, fire, power loss, telecommunications failure, cyberattack, war (including the war in Ukraine), terrorist attack, sabotage, other intentional acts of vandalism or misconduct, geopolitical event, disease, or other catastrophic occurrence, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in our application development, lengthy interruptions in our products, breaches of data security, and loss of critical data, all of which could materially adversely affect our business, financial condition, and results of operations.
In the 44 event of a major earthquake, fire, power loss, telecommunications failure, cyberattack, war or armed conflict (including the war in Ukraine and conflict in the Middle East), terrorist attack, sabotage, other intentional acts of vandalism or misconduct, geopolitical event, disease, or other catastrophic occurrence, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in our application development, lengthy interruptions in our products, breaches of data security, and loss of critical data, all of which could materially adversely affect our business, financial condition, and results of operations.
The trading price of our Class A common stock has fluctuated and may in the future fluctuate substantially in response to numerous factors in addition to the ones described in the preceding risk factors, many of which are beyond our control, including: • actual or anticipated fluctuations in our financial condition, results of operations, or operating metrics and those of our competitors; • changes in our projected operating and financial results or our failure to meet these projections; • failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or variance in our financial performance from expectations of securities analysts; • changes in the pricing of our Digital Analytics Platform; • changes in the anticipated future size or growth rate of our addressable markets; • changes in laws or regulations applicable to our Digital Analytics Platform; • announcements by us or our competitors of significant business developments, acquisitions, or new offerings; • significant data breaches, disruptions to, or other incidents involving, our platform; • our involvement in litigation; • changes in our board of directors, senior management, or key personnel; • the number of shares of our Class A common stock made available for trading; • future sales of our Class A common stock by us or our stockholders; • the trading volume of our Class A common stock; • changes in the anticipated future size and growth rate of our market; 39 • general economic, market, and industry conditions, including economic slowdowns, recessions, inflationary pressures, rising interest rates, financial market fluctuations, and reduced credit availability; • other events or factors, including those resulting from war (including the recent and developing war in Ukraine), incidents of terrorism, pandemics (including the COVID-19 pandemic), elections, or responses to these events; and • whether investors or securities analysts view our stock structure unfavorably, particularly our dual class structure and the concentrated voting control of our executive officers, directors, and their affiliates.
The trading price of our Class A common stock has fluctuated and may in the future fluctuate substantially in response to numerous factors in addition to the ones described in the preceding risk factors, many of which are beyond our control, including: • actual or anticipated fluctuations in our financial condition, results of operations, or operating metrics and those of our competitors; • changes in our projected operating and financial results or our failure to meet these projections; • failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or variance in our financial performance from expectations of securities analysts; • changes in the pricing of our Digital Analytics Platform; • changes in the anticipated future size or growth rate of our addressable markets; • changes in laws or regulations applicable to our Digital Analytics Platform; • announcements by us or our competitors of significant business developments, acquisitions, or new offerings; • significant data breaches, disruptions to, or other incidents involving, our platform; • our involvement in litigation; • changes in our board of directors, senior management, or key personnel; • the number of shares of our Class A common stock made available for trading; • future sales of our Class A common stock by us or our stockholders; • the trading volume of our Class A common stock; • changes in the anticipated future size and growth rate of our market; • general economic, market, and industry conditions, including economic slowdowns, recessions, inflationary pressures, rising interest rates, financial market fluctuations, and reduced credit availability; • other events or factors, including those resulting from war or armed conflicts (including those in Ukraine and the Middle East), incidents of terrorism, pandemics (such as the COVID-19 pandemic or similar outbreaks of disease), elections, or responses to these events; and • whether investors or securities analysts view our stock structure unfavorably, particularly our dual class structure and the concentrated voting control of our executive officers, directors, and their affiliates.
Risks Related to Our Business and Industry We have a limited operating history and have been growing rapidly over the last several years, which makes it difficult to forecast our future results of operations and increases the risk of your investment. Our revenue was $238.1 million and $167.3 million for the fiscal years ended December 31, 2022 and 2021, respectively.
Risks Related to Our Business and Industry We have a limited operating history and have been growing rapidly over the last several years, which makes it difficult to forecast our future results of operations and increases the risk of your investment. Our revenue was $276.3 million and $238.1 million for the fiscal years ended December 31, 2023 and 2022, respectively.
Among other requirements, the GDPR regulates transfers of personal data subject to the GDPR to third countries that have not been found to provide adequate protection to such personal data, including the United States, and the efficacy and longevity of current transfer mechanisms between the E.U. and the United States remains uncertain.
Among other requirements, the GDPR regulates transfers of personal data subject to the GDPR to third countries that have not been found to provide adequate protection to such personal data, including the United States, and the efficacy and longevity of current transfer mechanisms between the EEA and the United States remains uncertain.
Violations of applicable anti-corruption laws could subject us to significant sanctions, including civil or criminal fines and penalties, disgorgement of profits, injunctions, and debarment from government contracts, as well as related stockholder lawsuits and other remedial measures, all of which could adversely affect our reputation, business, financial condition, and results of operations.
Violations of applicable anti-corruption, export controls, or economic, and trade sanctions laws could subject us to significant sanctions, including civil or criminal fines and penalties, disgorgement of profits, injunctions, and debarment from government contracts, as well as related stockholder lawsuits and other remedial measures, all of which could adversely affect our reputation, business, financial condition, and results of operations.
For the years ended December 31, 2022 and 2021, our research and development expenses were 34% and 29% of our revenue, respectively. If we do not spend our research and development budget efficiently or effectively on compelling innovation and technologies, our business may be harmed. Moreover, research and development projects can be technically challenging and expensive.
For the years ended December 31, 2023 and 2022, our research and development expenses were 33% and 34% of our revenue, respectively. If we do not spend our research and development budget efficiently or effectively on compelling innovation and technologies, our business may be harmed. Moreover, research and development projects can be technically challenging and expensive.
As our costs increase, we may not be able to generate sufficient revenue to achieve and sustain profitability. We have experienced net losses in each period since inception. We generated net losses of $93.4 million and $75.0 million for the fiscal years ended December 31, 2022 and 2021, respectively.
As our costs increase, we may not be able to generate sufficient revenue to achieve and sustain profitability. We have experienced net losses in each period since inception. We generated net losses of $90.4 million and $93.4 million for the fiscal years ended December 31, 2023 and 2022, respectively.
An increasing number of states have considered or adopted laws that attempt to impose tax collection obligations on out-of-state companies. Additionally, the Supreme Court of the United States ruled in South Dakota v.
An increasing number of states have considered or adopted laws that attempt to impose tax collection obligations on out-of-state companies. Additionally, the Supreme Court of the United States ruled in South Dakota v. Wayfair, Inc. et al.
Our contracts with customers and other third parties may include indemnification or other provisions under which we agree to indemnify or otherwise be liable to them for losses arising from alleged infringement, misappropriation, or other violation of intellectual property rights, data protection violations, breaches of representations and warranties, damage to property or persons, or other liabilities arising from our platform or such contracts.
We agree to indemnify customers and other third parties, which exposes us to substantial potential liability. 30 Our contracts with customers and other third parties may include indemnification or other provisions under which we agree to indemnify or otherwise be liable to them for losses arising from alleged infringement, misappropriation, or other violation of intellectual property rights, data protection violations, breaches of representations and warranties, damage to property or persons, or other liabilities arising from our platform or such contracts.
As a public company, we are obligated to develop and maintain proper and effective internal control over financial reporting, and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value of our Class A common stock.
As a public company, we are obligated to develop and maintain proper and effective internal control over financial reporting, and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the trading price of our Class A common stock could decline.
Factors that may influence the length and variability of our sales cycle include: • the need to educate prospective customers about the uses and benefits of our Digital Analytics Platform; • the discretionary nature of purchasing and budget cycles and decisions; • the competitive nature of evaluation and purchasing processes; • evolving functionality demands; • announcements or planned introductions of new products, features, or functionality by us or our competitors; and • lengthy purchasing approval processes.
Factors that may influence the length and variability of our sales cycle include: • the need to educate prospective customers about the uses and benefits of our Digital Analytics Platform; • the discretionary nature of purchasing and budget cycles and decisions; • the competitive nature of evaluation and purchasing processes; • evolving functionality demands; • announcements or planned introductions of new products, features, or functionality by us or our competitors; and • lengthy purchasing approval processes. 20 Our increasing dependence on sales to larger organizations may increase the variability of our financial results.
Our operations are international in scope, and we plan further geographic expansion, creating a variety of operational challenges. For the year ended December 31, 2022 and 2021, 38% and 36% of our revenue was generated outside the United States, respectively.
Our operations are international in scope, and we plan further geographic expansion, creating a variety of operational challenges. For the years ended December 31, 2023 and 2022, 39% and 38% of our revenue was generated outside the United States, respectively.
If adequate funds are not available on acceptable terms, we may be unable to invest in future growth opportunities, which could materially adversely affect our business, financial condition, and results of operations.
Additional financing may not be available on terms favorable to us, if at all. If adequate funds are not available on acceptable terms, we may be unable to invest in future growth opportunities, which could materially adversely affect our business, financial condition, and results of operations.
As a result of the COVID-19 pandemic, we may also face increased cybersecurity risks due to our reliance on internet technology and the number of our and our service providers’ employees who are, and may continue, working remotely, which may create additional opportunities for cybercriminals to exploit vulnerabilities.
As a result of our continued hybrid work environment, we may also face increased cybersecurity risks due to our reliance on internet technology and the number of our and our service providers’ employees who are, and may continue, working remotely, which may create additional opportunities for cybercriminals to exploit vulnerabilities.
The restrictions also include bans on the export of large numbers of “luxury” items to Russia (and in some cases also to Belarus), tighter controls on exports and reexports of dual-use items, stricter licensing policy with respect to issuing export licenses, and/or increased use of “end-use” controls to block or impose licensing requirements on exports, as well as higher import tariffs; • the closure of airspace to Russian aircraft; and • ban on imports of Russian oil, liquefied natural gas, and coal to the United States and on “new investment” in Russia’s energy sector (often with similar bans being enacted in the United Kingdom and the E.U.); • ban on imports of Russian fish, seafood, and preparations thereof, alcoholic beverages, non-industrial diamonds, and gold to the United States; • a ban on “new investment” in the Russian Federation by a U.S. person, which may be interpreted broadly (with a similar prohibition also enacted by the United Kingdom); • bans on the provision of certain professional services, including accounting, trust and corporate formation, auditing, and management consulting services, among others; and • bans on the provision of services related to the worldwide maritime transportation of seaborne Russian oil, if purchased above a specific price cap. 34 As the conflict in Ukraine continues, there can be no certainty regarding whether the governmental authorities in the United States, the European Union, the United Kingdom, or other countries will impose additional sanctions, export controls, or other measures targeting Russia, Belarus, or other territories.
The restrictions also include bans on the export of large numbers of “luxury” items to Russia (and in some cases also to Belarus), tighter controls on exports and reexports of dual-use items, stricter licensing policy with respect to issuing export licenses, and/or increased use of “end-use” controls to block or impose licensing requirements on exports, as well as higher import tariffs; • the closure of airspace to Russian aircraft; • ban on imports of Russian oil, liquefied natural gas, and coal to the United States and on “new investment” in Russia’s energy sector (often with similar bans being enacted in the United Kingdom and the E.U.); • ban on imports of Russian fish, seafood, and preparations thereof, alcoholic beverages, non-industrial diamonds, and gold to the United States; • a ban on “new investment” in the Russian Federation by a U.S. person, which may be interpreted broadly (with a similar prohibition also enacted by the United Kingdom); • bans on the provision of certain professional services, including accounting, trust and corporate formation, auditing, and management consulting services, among others; and • bans on the provision of services related to the worldwide maritime transportation of seaborne Russian oil, if purchased above a specific price cap.
For example, historically high levels of inflation and rising interest rates in the United States have begun to affect businesses across many industries, including ours, by increasing the costs of labor, employee healthcare, components, and freight and shipping, which may further constrain our customers’ or prospective customers’ budgets.
For example, high levels of inflation and rising interest rates, as recently experienced in the United States, may impact businesses across many industries, including ours, by increasing the costs of labor, employee healthcare, components, and freight and shipping, which may further constrain our customers’ or prospective customers’ budgets.
Similar laws have been passed in Virginia, Colorado, Connecticut, and Utah and have been proposed in other states and at the federal level, reflecting a trend toward more stringent privacy legislation in the United States. The enactment of such laws may have potentially conflicting requirements that would make compliance challenging.
Similar laws have been passed in other states and are continuing to be proposed at the state and federal level, reflecting a trend toward more stringent privacy legislation in the United States. The enactment of such laws may have potentially conflicting requirements that would make compliance challenging.
As of December 31, 2022, we had an accumulated deficit of $273.2 million. We expect our costs and expenses to increase in future periods.
As of December 31, 2023, we had an accumulated deficit of $363.5 million. We expect our costs and expenses to increase in future periods.
We intend to continue to make investments to support our business, which may require us to engage in debt or equity financings to secure additional funds. Additional financing may not be available on terms favorable to us, if at all.
We may require additional capital to support the growth of our business, and this capital might not be available on acceptable terms, if at all. We intend to continue to make investments to support our business, which may require us to engage in debt or equity financings to secure additional funds.
In addition, the Organisation for Economic Co-operation and Development has initiated a base erosion and profit shifting project that seeks to establish certain international standards for taxing the worldwide income of multinational companies.
In addition, over the past several years, the Organisation for Economic Co-operation and Development (the “OECD”) has been working on a base erosion and profit shifting (“BEPS”) project that seeks to establish certain international standards for taxing the worldwide income of multinational companies.
If our channel partners are unsuccessful in selling access to our Digital Analytics Platform, or if we are unable to enter into arrangements with or retain a sufficient number of high-quality channel partners in each of the regions in which we sell access to our Digital Analytics Platform and keep them motivated to sell access to our Digital Analytics Platform, our business, financial condition, results of operations, and growth prospects could be adversely affected.
If our channel partners are unsuccessful in selling access to our Digital Analytics Platform, or if we are unable to enter into arrangements with or retain a sufficient number of high-quality channel partners in each of the regions in which we sell access to our Digital Analytics Platform and keep them motivated to sell access to our Digital Analytics Platform, our business, financial condition, results of operations, and growth prospects could be materially adversely affected. 27 If our marketing strategies are not effective in attracting new customers and retaining existing customers, our business and ability to grow our revenues would be harmed.
We have discovered and expect we will continue to discover software errors, failures, vulnerabilities, and bugs in our platform and anticipate that certain of these errors, failures, vulnerabilities, and bugs will only be discovered and remediated after deployment to customers. Software errors, failures, vulnerabilities, and bugs in our platform could materially adversely affect our business and growth prospects.
We have discovered and expect we will continue to discover software errors, failures, vulnerabilities, and bugs in our platform and supporting information technology systems, and anticipate that certain of these errors, failures, vulnerabilities, and bugs will only be discovered and remediated after deployment to customers.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe intend to procure additional space in the future as we continue to add employees and expand geographically. We believe our facilities are adequate and suitable for our current needs and that, should it be needed, suitable additional or alternative space will be available to accommodate our operations.
Biggest changeWe may procure additional space in the future as we continue to add employees and expand geographically. We believe our facilities are adequate and suitable for our current needs and that, should it be needed, suitable additional or alternative space will be available to accommodate our operations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe believe that we are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, results of operations, financial condition or cash flows.
Biggest changeWhile we do not believe the ultimate resolution of pending legal matters is likely to have a material adverse effect on our financial position, the results of any litigation or other legal proceedings are uncertain and as such the resolution of such legal proceedings, either individually or in the aggregate, could have a material adverse effect on our business, results of operations, financial condition or cash flows.
Item 3. Leg al Proceedings. From time to time, we may be subject to legal proceedings and claims in the ordinary course of business.
Item 3. Leg al Proceedings. From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. On February 14, 2024, a putative securities class action (the “Putative Class Action”) was filed in the United States District Court for the Northern District of California captioned Fagan v.
Removed
The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. Item 4. Mine S afety Disclosures. Not Applicable. 46 PART II
Added
Amplitude, Inc., et al., Case No. 3:24-cv-00898, naming us, our Chief Executive Officer, and former Chief Financial Officer as defendants. The lawsuit is purportedly brought on behalf of all those who purchased or acquired our common stock between September 21, 2021 and February 16, 2022.
Added
The complaint alleges claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on allegedly false or misleading statements related to our business and financial outlook. The lawsuit seeks unspecified damages and other relief. The defendants intend to deny the allegations of wrongdoing and vigorously defend against the claims in the Putative Class Action.
Added
In addition to the matters discussed above, from time to time, we are party to litigation and other legal proceedings in the ordinary course of business.
Added
The Company records litigation accruals for legal matters, which are both probable and estimable.
Added
For legal proceedings for which there is a reasonable possibility of loss (meaning those losses for which the likelihood is more than remote but less than probable), the Company has determined that it does not have material exposure, or it is unable to develop a range of reasonably possible losses.
Added
Although no assurance may be given, the Company believes that it is not presently a party to any litigation of which the outcome, if determined adversely, would individually or in the aggregate be reasonably expected to have a material and adverse effect on the business, operating results, cash flows, or financial position. Item 4. Mine S afety Disclosures.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeStock Performance Graph This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC, for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act.
Biggest changeSecurities Authorized for Issuance under Equity Compensation Plans See the section titled “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for information regarding securities authorized for issuance. 48 Stock Performance Graph This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC, for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act.
The graph uses the beginning market price on September 28, 2021 of $50 per share as the initial value of our Class A 47 common stock. As discussed above, we have never declared or paid a cash dividend on our Class A common stock and do not anticipate declaring or paying a cash dividend in the foreseeable future.
The graph uses the beginning market price on September 28, 2021 of $50 per share as the initial value of our Class A common stock. As discussed above, we have never declared or paid a cash dividend on our Class A common stock and do not anticipate declaring or paying a cash dividend in the foreseeable future.
The following graph compares (i) the cumulative total stockholder return on our Class A common stock from September 28, 2021 (the date our Class A common stock commenced trading on the Nasdaq Capital Market) through December 31, 2022 with (ii) the cumulative total return of the Nasdaq Composite Index and the Nasdaq Emerging Cloud Index over the same period, assuming the investment of $100 in our Class A common stock and in both of the other indices on September 28, 2021 and the reinvestment of dividends.
The following graph compares (i) the cumulative total stockholder return on our Class A common stock from September 28, 2021 (the date our Class A common stock commenced trading on the Nasdaq Capital Market) through December 31, 2023 with (ii) the cumulative total return of the Nasdaq Composite Index and the Nasdaq Emerging Cloud Index over the same period, assuming the investment of $100 in our Class A common stock and in both of the other indices on September 28, 2021 and the reinvestment of dividends.
Our Class B common stock is neither listed nor publicly traded. Holders of our Common Stock As of February 8, 2023, there were 31 holders of record of our Class A common stock and 37 holders of record of our Class B common stock.
Our Class B common stock is neither listed nor publicly traded. Holders of our Common Stock As of February 14, 2024, there were 27 holders of record of our Class A common stock and 32 holders of record of our Class B common stock.
We do not expect to declare or pay any cash dividends in the foreseeable future. Securities Authorized for Issuance under Equity Compensation Plans See the section titled “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for information regarding securities authorized for issuance.
We do not expect to declare or pay any cash dividends in the foreseeable future.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeNon-GAAP Loss From Operations and Loss From Operations Margin Year Ended December 31, 2022 2021 Loss from operations $ (96,562 ) $ (74,149 ) Add: Stock-based compensation expense (1) $ 68,297 $ 39,667 Acquired intangible assets amortization $ 2,017 $ 1,651 Direct listing expenses $ — $ 18,191 Non-GAAP Loss from Operations $ (26,248 ) $ (14,640 ) Non-GAAP Loss from Operations Margin (11 )% (9 )% (1) Stock-based compensation expense-related charges include employer payroll tax-related expenses on employee stock transactions. 54 Free Cash Flow and Free Cash Flow Margin Year Ended December 31, 2022 2021 Net cash used in investing activities $ (89,393 ) $ (1,498 ) Net cash provided by financing activities $ 5,831 $ 222,643 Net cash used in operating activities $ (5,384 ) $ (31,713 ) Less: Purchase of property and equipment $ (3,632 ) $ (1,529 ) Capitalization of internal-use software costs $ (2,177 ) $ (1,693 ) Free Cash Flow $ (11,193 ) $ (34,935 ) Free Cash Flow Margin (5 )% (21 )% Components of Results of Operations Revenue We generate revenue primarily from sales of subscription services for customers to access our platform.
Biggest changeNon-GAAP Income (Loss) From Operations and Income (Loss) From Operations Margin Year Ended December 31, 2023 2022 (in thousands) Income (loss) from operations $ (102,520 ) $ (96,562 ) Add: Stock-based compensation expense (1) $ 89,472 $ 68,297 Acquired intangible assets amortization $ 1,413 $ 2,017 Restructuring and other related charges $ 8,142 $ — Non-GAAP Income (Loss) from Operations $ (3,493 ) $ (26,248 ) Non-GAAP Income (Loss) from Operations Margin (1 )% (11 )% (1) Stock-based compensation expense-related charges include employer payroll tax-related expenses on employee stock transactions, but exclude stock-based compensation costs included in Restructuring and Other Related Charges. 55 Free Cash Flow and Free Cash Flow Margin Year Ended December 31, 2023 2022 (in thousands, except percentages) Net cash provided by (used in) investing activities $ 9,317 $ (89,393 ) Net cash provided by (used in) financing activities $ (4,936 ) $ 5,831 Net cash provided by (used in) operating activities $ 25,630 $ (5,384 ) Less: Purchase of property and equipment $ (1,279 ) $ (3,632 ) Capitalization of internal-use software costs $ (1,904 ) $ (2,177 ) Free Cash Flow $ 22,447 $ (11,193 ) Free Cash Flow Margin 8 % (5 )% Components of Results of Operations Revenue We generate revenue primarily from sales of subscription services for customers to access our platform.
We recognize professional services revenue as services are delivered. Cost of Revenue Cost of revenue consists primarily of the cost of providing our platform to our customers and consists of third-party hosting fees, personnel-related expenses for our operations and support personnel, and amortization of our capitalized internal-use software and acquired developed software.
We recognize professional services revenue as services are delivered. Cost of Revenue Cost of revenue consists primarily of the cost of providing our platform to our customers and consists of third-party hosting fees, personnel and related expenses for our operations and support personnel, and amortization of our capitalized internal-use software and acquired developed software.
Personnel-related expenses are the most significant component of operating expenses and consist of salaries, benefits, stock-based compensation expense, and, in the case of sales and marketing expenses, sales commissions. Operating expenses also include an allocation of overhead costs for facilities and shared IT-related expenses.
Personnel and related expenses are the most significant component of operating expenses and consist of salaries, benefits, stock-based compensation expense, and, in the case of sales and marketing expenses, sales commissions. Operating expenses also include an allocation of overhead costs for facilities and shared IT-related expenses.
Our primary uses of cash from operating activities are for personnel-related expenses, marketing expenses, and third-party hosting-related and software expenses.
Our primary uses of cash from operating activities are for personnel and related expenses, marketing expenses, and third-party hosting-related and software expenses.
Investing Activities Net cash used in investing activities of $89.4 million for fiscal 2022 consisted of $83.2 million of purchases of marketable securities, $2.2 million of capitalized internal-use software development costs, $3.6 million in purchases of property and equipment, and $0.4 million of cash paid for acquisitions, net of cash acquired.
Net cash used in investing activities of $89.4 million for fiscal 2022 consisted of $83.2 million of purchases of marketable securities, $2.2 million of capitalized internal-use software development costs, $3.6 million in purchases of property and equipment, and $0.4 million of cash paid for acquisitions, net of cash acquired.
Non-GAAP loss from operations margin is calculated as non-GAAP loss from operations divided by total revenue. We exclude stock-based compensation expense and related employer payroll taxes, which is a non-cash expense, from certain of our non-GAAP financial measures because we believe that excluding this item provides meaningful supplemental information regarding operational performance.
Non-GAAP income (loss) from operations margin is calculated as non-GAAP income (loss) from operations divided by total revenue. We exclude stock-based compensation expense and related employer payroll taxes, which is a non-cash expense, from certain of our non-GAAP financial measures because we believe that excluding this item provides meaningful supplemental information regarding operational performance.
Financing Activities Net cash provided by financing activities of $5.8 million for fiscal 2022 primarily consisted of $6.9 million in proceeds from the exercise of stock options offset by $1.1 million of net cash used through sales of common stock to cover tax-related amounts that were remitted to the respective taxing jurisdictions in excess of cash received during the period.
Net cash provided by financing activities of $5.8 million for fiscal 2022 primarily consisted of $6.9 million in proceeds from the exercise of stock options offset by $1.1 million of net cash used from sales of common stock to cover tax-related amounts that were remitted to the respective taxing jurisdictions in excess of cash received during the period.
Investing for Growth Our investment for growth encompasses multiple critical areas, including product expansion, our sales force, sales support, partner ecosystem, and our international presence. We continue to evolve our technology to ensure that we are best serving our customers’ needs.
Investing for Growth Our investment for growth encompasses multiple critical areas, including product expansion, our sales force, sales support, partner ecosystem, and our international presence. We continue to evolve our technology and product offerings, to ensure that we are best serving our customers’ needs.
Free Cash Flow and Free Cash Flow Margin We define free cash flow as net cash used in operating activities, less cash used for purchases of property and equipment and capitalized internal-use software costs. Free cash flow margin is calculated as free cash flow divided by total revenue.
Free Cash Flow and Free Cash Flow Margin We define free cash flow as net cash provided by (used in) operating activities, less cash used for purchases of property and equipment and capitalized internal-use software costs. Free cash flow margin is calculated as free cash flow divided by total revenue.
We believe that non-GAAP gross margin and non-GAAP loss from operations margin provide our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations.
We believe that non-GAAP gross margin and non-GAAP income (loss) from operations margin provide our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations.
We expect to maintain this full valuation allowance in U.S. jurisdictions for the foreseeable future as it is not more likely than not the deferred tax assets will be realized based on our history of losses. 56 Results of Operations The following tables set forth our results of operations for the periods presented and as a percentage of our revenue for those periods.
We expect to maintain this full valuation allowance in U.S. jurisdictions for the foreseeable future as it is not more likely than not the deferred tax assets will be realized based on our history of losses. 57 Results of Operations The following tables set forth our results of operations for the periods presented and as a percentage of our revenue for those periods.
See “Risk Factors–Risks Related to Our Business and Industry–Our operations are international in scope, and we plan further geographical expansion, creating a variety of operational challenges.” Key Business Metrics We review a number of operating and financial metrics, including the following key metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions.
See “Risk Factors–Risks Related to Our Business and Industry–Our operations are international in scope, and we plan further geographic expansion, creating a variety of operational challenges.” Key Business Metrics We review a number of operating and financial metrics, including the following key metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions.
We exclude non-recurring costs from certain of our non-GAAP financial measures because such expenses do not repeat period over period and are not reflective of the ongoing operation of our business. We use non-GAAP gross margin and non-GAAP loss from operations margin in conjunction with traditional U.S. GAAP measures to evaluate our financial performance.
We exclude non-recurring costs from certain of our non-GAAP financial measures because such expenses do not repeat period over period and are not reflective of the ongoing operation of our business. 54 We use non-GAAP gross margin and non-GAAP income (loss) from operations margin in conjunction with traditional U.S. GAAP measures to evaluate our financial performance.
The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, as well as related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances.
The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances.
We continue to make investments in our sales and marketing organization, and we expect sales and marketing expenses to remain our largest operating expense in dollar amount.
We continue to make strategic investments in our sales and marketing organization, and we expect sales and marketing expenses to remain our largest operating expense in dollar amount.
The period-to-period comparison of financial results is not necessarily indicative of financial results to be achieved in future periods. The following discussion and analysis are for the year ended December 31, 2022, compared to the same period in 2021, unless otherwise stated.
The period-to-period comparison of financial results is not necessarily indicative of financial results to be achieved in future periods. The following discussion and analysis are for the year ended December 31, 2023, compared to the same period in 2022, unless otherwise stated.
Recent Accounting Pronouncements See Note 1 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information regarding recent accounting pronouncements. 65
Recent Accounting Pronouncements See Note 1 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information regarding recent accounting pronouncements. 64
A time-elapsed method is used to measure progress because the Company’s obligation is to provide continuous service over the contractual period and control is transferred evenly over the contractual period. Accordingly, the fixed consideration related to subscription revenue is recognized ratably over the contract term beginning on the date access to the subscription product is provisioned.
A time-elapsed method is used to measure progress because our obligation is to provide continuous service over the contractual period and control is transferred evenly over the contractual period. Accordingly, the fixed consideration related to subscription revenue is recognized ratably over the 63 contract term beginning on the date access to the subscription product is provisioned.
The following Non-GAAP Financial Measures and related Non-GAAP reconciliations are for the year ended December 31, 2022, compared to the same period in 2021, unless otherwise stated.
The following Non-GAAP Financial Measures and related Non-GAAP reconciliations are for the year ended December 31, 2023, compared to the same period in 2022, unless otherwise stated.
Our future capital requirements will depend on many factors, including revenue growth and costs incurred to support our platform, including growth in our customer base and customer usage, increased research and development expenses to support the growth of our business and related infrastructure, and increased general and administrative expenses to support being a public company.
Our future capital requirements will depend on many factors, including revenue growth and costs incurred to support our platform, including growth in our customer base and customer usage, increased research and development expenses to support the growth of our business and related infrastructure, and increased general and administrative expenses to support being a publicly-traded company.
As we acquire new customers and existing customers increase their use of our platform, we expect that our cost of revenue will continue to increase in dollar amount.
As we acquire new customers and existing customers increase their use of our platform, we expect that our cost of revenue will increase in dollar amount.
Finally, we see opportunities to expand offices and headcount internationally to better service targeted international markets where we believe we have significant opportunity to accelerate existing traction and success. For the years ended December 31, 2022 and 2021, 38% and 36% of our revenue was generated outside the United States, respectively.
Finally, we see opportunities to expand offices and headcount internationally to better service targeted international markets where we believe we have significant opportunity to accelerate existing traction and success. For the years ended December 31, 2023 and 2022, 39% and 38% of our revenue was generated outside the United States, respectively.
GAAP revenue on an annualized basis, as it is an operating metric that can be impacted by contract start and end dates and renewal rates. No single customer accounted for more than 4% of our revenue in the years ended December 31, 2022 and 2021.
GAAP revenue on an annualized basis, as it is an operating metric that can be impacted by contract start and end dates and renewal rates. No single customer accounted for more than 3% and 4% of our revenue in the years ended December 31, 2023 and 2022, respectively.
Discussion and analysis for the year ended December 31, 2021 compared to the year ended December 31, 2020 may be found in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 17, 2022.
Discussion and analysis for the year ended December 31, 2022 compared to the year ended December 31, 2021 may be found in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 16, 2023.
Our ability to expand within our customer base is also demonstrated by our strong dollar-based net retention rate. As of December 31, 2022 and 2021, our dollar-based net retention rate across paying customers was 119% and 123%, respectively. Key Factors Affecting Our Performance We believe that the growth and future success of our business depends on many factors.
Our ability to expand within our customer base is also demonstrated by our strong dollar-based net retention rate. As of December 31, 2023 and 2022, our dollar-based net retention rate (TTM) across paying customers was 101% and 119%, respectively. Key Factors Affecting Our Performance We believe that the growth and future success of our business depends on many factors.
Non-GAAP Financial Measures and related Non-GAAP reconciliations for the year ended December 31, 2021 compared to the year ended December 31, 2020 may be found in the section 52 titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 17, 2022.
Non-GAAP Financial Measures and related Non-GAAP reconciliations for the year ended December 31, 2022 compared to the year ended December 31, 2021 may be found in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 16, 2023.
Our pricing model is based on both the platform functionality required by our customers as well as committed event volume. An event could be any action that a user takes in a digital product, such as ‘Create account’, ‘Add to cart’, or ‘Share photo’.
Our pricing model is based on both the platform functionality required by our customers as well as committed volume of events or monthly tracked users ("MTUs"). An event could be any action that a user takes in a digital product, such as ‘Create account’, ‘Add to cart’, or ‘Share photo’.
Pursuant to the terms of the contract, we are required to spend a minimum of $267 million over the five-year term of the contract. As of December 31, 2022, we had $227 million remaining on this commitment.
Pursuant to the terms of the contract, we are required to spend a minimum of $267 million over the five-year term of the contract. As of December 31, 2023, we had $174 million remaining on this commitment.
Factors that could cause or contribute to these differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” under Part I, Item 1A in this Annual Report on Form 10-K. Our fiscal year ends December 31.
Factors that could cause or contribute to these differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” under Part I, Item 1A in this Annual Report on Form 10-K.
ARR should be viewed independently of revenue, and does not represent our U.S. GAAP revenue on an annualized basis, as it is an operating metric that can be impacted by contract start and end dates and renewal rates.
ARR should be viewed independently of revenue, and does not represent our U.S. GAAP revenue on an annualized basis, as 52 it is an operating metric that can be impacted by contract start and end dates and renewal rates. ARR is also not intended to be a forecast of revenue.
See “Risk Factors—Risks Related to Our Business and Industry—We may require additional capital to support the growth of our business, and this capital might not be available on acceptable terms, if at all.” Cash Flows The following table shows a summary of our cash flows for the periods presented: Year Ended December 31, 2022 2021 (in thousands) Net cash used in operating activities $ (5,384 ) $ (31,713 ) Net cash used in investing activities $ (89,393 ) $ (1,498 ) Net cash provided by financing activities $ 5,831 $ 222,643 Operating Activities Our largest source of operating cash is cash collection from sales of subscriptions to our paying customers.
See “Risk Factors—Risks Related to Our Business and Industry—We may require additional capital to support the growth of our business, and this capital might not be available on acceptable terms, if at all.” Cash Flows The following table shows a summary of our cash flows for the periods presented: Year Ended December 31, 2023 2022 (in thousands) Net cash provided by (used in) operating activities $ 25,630 $ (5,384 ) Net cash provided by (used in) investing activities $ 9,317 $ (89,393 ) Net cash provided by (used in) financing activities $ (4,936 ) $ 5,831 Operating Activities Our largest source of operating cash is cash collection from sales of subscriptions to our paying customers.
As of December 31, 2022, we had 480 customers that each represented greater than $100,000 in ARR and 30 customers that each represented greater than $1 million in ARR, demonstrating the mission critical nature of our platform to help customers succeed in the new digital age.
As of December 31, 2023, we had 511 customers that each represented greater than $100,000 in ARR and 39 customers that each represented greater than $1 million in ARR, demonstrating the mission critical nature of our platform to help customers succeed in the new digital age.
We define non-GAAP loss from operations and non-GAAP loss from operations margin as U.S. GAAP loss from operations and U.S. GAAP loss from operations margin, respectively, excluding stock-based compensation expense and related employer payroll taxes, amortization of acquired intangible assets, and non-recurring costs, such as Direct Listing costs.
We define non-GAAP income (loss) from operations and non-GAAP income (loss) from operations margin as U.S. GAAP income (loss) from operations and U.S. GAAP loss from operations margin, respectively, excluding stock-based compensation expense and related employer payroll taxes, amortization of acquired intangible assets, and non-recurring costs such as restructuring and other related charges.
We have invested, and expect to continue to invest, in our sales and marketing efforts to drive customer acquisition. As of December 31, 2022 and 2021, we had 1,994 and 1,597 paying customers, respectively, representing an increase of 25% year-over-year.
We have invested, and expect to continue to invest, in our sales and marketing efforts to drive customer acquisition. As of December 31, 2023 and 2022, we had 2,723 and 1,994 paying customers, respectively, representing an increase of 37% year-over-year.
In comparison, we had 385 customers that each represented greater than $100,000 in ARR and 29 customers that each represented greater than $1 million in ARR for the years ended December 31, 2021. Customers that each represented greater than $100,000 in ARR accounted for approximately 75% and 73% of our total ARR as of December 31, 2022 and 2021, respectively.
In comparison, we had 480 customers that each represented greater than $100,000 in ARR and 30 customers that each represented greater than $1 million in ARR for the years ended December 31, 2022. Customers that each represented greater than $100,000 in ARR accounted for approximately 74% and 75% of our total ARR as of December 31, 2023 and 2022, respectively.
In many cases, customers will proactively expand their contract within the contract term, generally increasing event volume and platform capabilities to expand existing or address new use cases. Substantially all of our customer contracts have a subscription period of one year or longer.
Historically, overage charges have not made up a significant portion of our revenue. In many cases, customers will proactively expand their contract within the contract term, generally increasing event or MTU volume and platform capabilities to expand existing or address new use cases. Substantially all of our customer contracts have a subscription period of one year or longer.
See below for a description of the non-GAAP financial measures and their limitations as an analytical tool. A reconciliation is also provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with U.S. GAAP.
GAAP, we believe these non-GAAP financial measures are useful in evaluating our operating performance. See below for a description of the non-GAAP financial measures and their limitations as an analytical tool. A reconciliation is also provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with U.S. GAAP.
We expect our sales and marketing expenses to continue to increase in dollar amount but to decrease as a percentage of revenue over the longer term, although the percentage may fluctuate from quarter to quarter depending on the extent and timing of our marketing initiatives.
Although there have been recent cost savings due to our restructuring, we expect our sales and marketing expenses to continue to increase in dollar amount but to decrease as a percentage of revenue over the longer term, though the percentage may fluctuate from quarter to quarter depending on the extent and timing of our marketing initiatives.
We reach customers through an efficient direct sales motion, solution partners, and product-led growth initiatives, including subscription plans to meet the needs of a diverse range of companies. For the year ended December 31, 2022, subscription revenue comprised 97% of our total revenue.
Our Business Model We generate revenue primarily through selling subscriptions to our platform. We reach customers through a direct sales motion, solution partners, and product-led growth initiatives, including subscription plans to meet the needs of a diverse range of companies. For the year ended December 31, 2023, subscription revenue comprised 97% of our total revenue.
We believe that free cash flow and free cash flow margin are useful indicators of liquidity that provide information to management and investors, even if negative, about the amount of cash used in our operations other than that used for investments in property and equipment and capitalized internal-use software costs. 53 Limitations and Reconciliations of Non-GAAP Financial Measures Non-GAAP financial measures are presented for supplemental informational purposes only.
We believe that free cash flow and free cash flow margin are useful indicators of liquidity that provide information to management and investors, even if negative, about the amount of cash used in our operations other than that used for investments in property and equipment and capitalized internal-use software costs.
We anticipate continuing to invest in innovation and technology development, and as a result, we expect research and development expenses to continue to increase in dollar amount but to decrease as a percentage of revenue over the longer term, although the percentage may fluctuate from quarter to quarter depending on the extent and timing of product development initiatives.
Although there have been recent cost savings due to our restructuring, we anticipate continuing to invest in innovation and technology development, and as a result, we expect research and development expenses to increase in dollar amount but to decrease as a percentage of revenue over the longer term, though the percentage may fluctuate from quarter to quarter depending on the extent and 56 timing of product development initiatives.
As of December 31, 2022 and 2021, 28 and 26 of the Fortune 100 were paying customers, respectively, which demonstrates both our traction to date as well as our significant opportunity to continue to penetrate into the largest global organizations.
As of December 31, 2023 and 2022, 26 and 28 of the Fortune 100 were paying customers, respectively, with two of our customers falling out of the Fortune 100 list in the year ended December 31, 2023, which demonstrates both our traction to date as well as our significant opportunity to continue to penetrate into the largest global organizations.
As we continue to invest in our sales efforts, we expect our sales and marketing expenses to continue to increase in dollar amount, and although we believe these expenses as a percentage of revenue will decrease over the longer term, we expect these expenses as a percentage of revenue will increase in the short term as we invest in sales growth.
As we invest in our business, we expect our operating expenses to increase in dollar amount, and although we believe our operating expenses as a percentage of revenue will decrease over the longer term, operating expenses as a percentage of revenue could increase in the short term as we invest in product innovation and sales growth.
Remaining Performance Obligations Remaining performance obligations (“RPO”) as of December 31, 2022 and 2021, including the expected timing of recognition, is as follows: As of December 31, 2022 2021 % Change Less than or equal to 12 months $ 190,595 $ 137,266 39% Greater than 12 months 57,581 32,868 75% Total remaining performance obligations $ 248,176 $ 170,134 46% Our RPO represents the amount of contracted future revenue that has not yet been recognized, including both deferred revenue and non-cancellable contracted amounts that will be invoiced and recognized as revenue in future periods.
Remaining Performance Obligations Remaining performance obligations (“RPO”) as of December 31, 2023 and 2022, including the expected timing of recognition, is as follows: As of December 31, 2023 2022 % Change Less than or equal to 12 months $ 188,456 $ 190,595 (1)% Greater than 12 months 50,962 57,581 (11)% Total remaining performance obligations $ 239,418 $ 248,176 (4)% Our RPO represents the amount of contracted future revenue that has not yet been recognized, including both deferred revenue and non-cancellable contracted amounts that will be invoiced and recognized as revenue in future periods.
We account for revenue contracts with customers by applying the requirements of ASC 606, which includes the following steps: • identification of the contract, or contracts, with the customer; • identification of the performance obligations in the contract; • determination of the transaction price; • allocation of the transaction price to the performance obligations in the contract; and • recognition of the revenue when, or as, a performance obligation is satisfied. 62 Our SaaS subscription agreements with customers enable them to access and send event volume data to our cloud-based platform.
We account for revenue contracts with customers by applying the requirements of ASC 606, which includes the following steps: • identification of the contract, or contracts, with the customer; • identification of the performance obligations in the contract; • determination of the transaction price; • allocation of the transaction price to the performance obligations in the contract; and • recognition of the revenue when, or as, a performance obligation is satisfied.
Net cash used in operating activities of $31.7 million for fiscal 2021 reflects our net loss of $75.0 million, adjusted by non-cash items such as stock-based compensation expense of $34.4 million, and depreciation and amortization of $3.1 million, as well as net cash provided by changes in our operating assets and liabilities of $6.2 million.
Net cash used in operating activities of $5.4 million for fiscal 2022 reflects our net loss of $93.4 million, adjusted by non-cash items such as stock-based compensation expense of $67.2 million, depreciation and amortization of $4.7 million, and non-cash operating lease costs of $3.7 million as well as net cash provided by changes in our operating assets and liabilities of $12.3 million.
Year Ended December 31, 2022 2021 Revenue 100% 100% Cost of revenue 30% 31% Gross margin 70% 69% Operating expenses: Research and development 34% 29% Sales and marketing 55% 51% General and administrative 23% 33% Total operating expenses 111% 113% Loss from operations (41)% (44)% Other income, net 2% * Loss before provision for income taxes (39)% (44)% Provision for income taxes * 1% Net loss (39)% (45)% * less than 1% Note: Certain figures may not sum due to rounding Comparison of Fiscal Years Ended December 31, 2022 and 2021 Revenue Year Ended December 31, 2022 2021 $ Change % Change (in thousands, except percentages) Revenue $ 238,067 $ 167,261 $ 70,806 42% Revenue increased $70.8 million, or 42%, in fiscal 2022 compared to fiscal 2021.
Year Ended December 31, 2023 2022 (in thousands, except percentages) Revenue 100% 100% Cost of revenue 26% 30% Gross margin 74% 70% Operating expenses: Research and development 33% 34% Sales and marketing 56% 55% General and administrative 20% 23% Restructuring and other related charges 3% * Total operating expenses 111% 111% Loss from operations (37)% (41)% Other income (expense), net 5% 2% Loss before provision for (benefit from) income taxes (32)% (39)% Provision for (benefit from) income taxes * * Net loss (33)% (39)% * Less than 1% Note: Certain figures may not sum due to rounding Comparison of Fiscal Years Ended December 31, 2023 and 2022 Revenue Year Ended December 31, 2023 2022 $ Change % Change (in thousands, except percentages) Revenue $ 276,284 $ 238,067 $ 38,217 16% Revenue increased $38.2 million, or 16%, in fiscal 2023 compared to fiscal 2022.
In the last several years, we have generated negative cash flows from operating activities and have supplemented working capital requirements through net proceeds from the sale of preferred stock and common stock. 60 Net cash used in operating activities of $5.4 million for the fiscal 2022 reflects our net loss of $93.4 million, adjusted by non-cash items such as stock-based compensation expense of $67.2 million, depreciation and amortization of $4.7 million, and non-cash operating lease costs of $3.7 million as well as net cash provided by changes in our operating assets and liabilities of $12.3 million.
For the year ended December 31, 2023, we have generated positive cash flow from operating activities; however, in the past several years, we generated negative cash flows from operating activities and have supplemented working capital requirements through net proceeds from the sale of preferred stock and common stock. 61 Net cash provided by operating activities of $25.6 million for fiscal 2023 reflects our net loss of $90.4 million, adjusted by non-cash items such as stock-based compensation expense of $88.3 million, depreciation and amortization of $5.6 million, and non-cash operating lease costs of $3.9 million as well as net cash provided by changes in our operating assets and liabilities of $18.5 million.
Non-GAAP Gross Profit and Gross Margin Year Ended December 31, 2022 2021 Gross profit $ 167,625 $ 115,497 Add: Stock-based compensation expense (1) $ 6,468 $ 1,952 Acquired intangible assets amortization $ 2,017 $ 1,651 Non-GAAP Gross Profit $ 176,110 $ 119,100 Non-GAAP Gross Margin 74 % 71 % (1) Stock-based compensation expense-related charges include employer payroll tax-related expenses on employee stock transactions.
Non-GAAP Gross Profit and Gross Margin Year Ended December 31, 2023 2022 (in thousands) Gross profit $ 204,361 $ 167,625 Add: Stock-based compensation expense (1) $ 7,300 $ 6,468 Acquired intangible assets amortization $ 1,238 $ 2,017 Non-GAAP Gross Profit $ 212,899 $ 176,110 Non-GAAP Gross Margin 77 % 74 % (1) Stock-based compensation expense-related charges include employer payroll tax-related expenses on employee stock transactions.
Subscription arrangements with customers do not provide the customer with the right to take possession of the Company’s software at any time. Instead, customers are granted continuous access to the platform over the contractual period.
Our SaaS subscription agreements with customers enable them to access and send event volume data to our cloud-based platform. Subscription arrangements with customers do not provide the customer with the right to take possession of our software at any time. Instead, customers are granted continuous access to the platform over the contractual period.
GAAP gross profit and U.S. GAAP gross margin, respectively, excluding stock-based compensation expense and related employer payroll taxes, amortization of acquired intangible assets, and non-recurring costs, such as costs related to the listing of our Class A common stock on the Nasdaq Capital Market (the “Direct Listing”). Non-GAAP gross margin is calculated as non-GAAP gross profit divided by total revenue.
GAAP gross profit and U.S. GAAP gross margin, respectively, excluding stock-based compensation expense and related employer payroll taxes, amortization of acquired intangible assets, and non-recurring costs such as restructuring and other related charges. Non-GAAP gross margin is calculated as non-GAAP gross profit divided by total revenue.
The increase in revenue was primarily due to growth of our paying customer base of 25% and revenue generated from our existing paying customers as reflected by our dollar-based net retention of 119% as of December 31, 2022.
The increase in revenue was primarily due to growth of our paying customer base of 37% and revenue generated from our existing paying customers as reflected by our NRR (TTM) of 101% as of December 31, 2023.
Sales and Marketing Sales and marketing expenses consist primarily of personnel-related expenses and expenses for performance marketing and lead generation, and brand marketing. These expenses also include allocated overhead costs and travel-related expenses.
In the short term, research and development costs could increase as a percentage of revenue. Sales and Marketing Sales and marketing expenses consist primarily of personnel and related expenses and expenses for performance marketing and lead generation, and brand marketing. These expenses also include allocated overhead costs and travel-related expenses.
As a result, we expect our general and administrative expenses to continue to increase in dollar amount for the foreseeable future but to generally decrease as a percentage of our revenue over the longer term, although the percentage may fluctuate from period to period depending on the timing and amount of our general and administrative expenses, including in the short term as we expect to incur increased compliance and professional service costs.
Although there have been recent cost savings due to our restructuring, we expect our general and administrative expenses to continue to increase in dollar amount over time but to generally decrease as a percentage of our revenue over the longer term, though the percentage may fluctuate from period to period depending on the timing and amount of our general and administrative expenses, including in the short term.
Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as substitutes for financial information presented under U.S. GAAP. There are a number of limitations related to the use of non-GAAP financial measures versus comparable financial measures determined under U.S. GAAP.
Limitations and Reconciliations of Non-GAAP Financial Measures Non-GAAP financial measures are presented for supplemental informational purposes only. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as substitutes for financial information presented under U.S. GAAP.
We calculate dollar-based net retention rate as of a period-end by starting with the ARR from the cohort of all customers as of 12 months prior to such period-end (the “Prior Period ARR”). We then calculate the ARR from these same customers as of the current period-end (the “Current Period ARR”).
Our net retention rate compares our ARR from the same set of customers across comparable periods and reflects customer renewals, expansion, contraction, and attrition. We calculate dollar-based net retention rate as of a period-end by starting with the ARR from the cohort of all customers as of 12 months prior to such period-end (the “Prior Period ARR”).
The number of customers representing greater than $100,000 and $1 million in ARR demonstrates the strategic importance of our platform and our ability to both initially land significant accounts and grow them over time.
The number of customers representing greater than $100,000 and $1 million in ARR demonstrates the strategic importance of our platform and our ability to both initially land significant accounts and grow them over time. 51 Investments in Platform We believe that our customers will demand additional features and capabilities beyond our current platform offerings to assist them in optimizing their digital products.
Contractual Obligations and Commitments As of December 31, 2022, the contractual commitment amounts in the table below are associated with agreements that are enforceable and legally binding. Purchase orders issued in the ordinary course of business are not included in the table below, as our purchase orders represent authorizations to purchase rather than binding agreements.
Purchase orders issued in the ordinary course of business are not included in the table below, as our purchase orders represent authorizations to purchase rather than binding agreements.
The following tables reconcile the most directly comparable U.S. GAAP financial measure to each of these non-GAAP financial measures.
GAAP financial measures and the reconciliations of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measures and to not rely on any single financial measure to evaluate our business. The following tables reconcile the most directly comparable U.S. GAAP financial measure to each of these non-GAAP financial measures.
Cost of Revenue and Gross Margin Year Ended December 31, 2022 2021 $ Change % Change (in thousands, except percentages) Cost of revenue $ 70,442 $ 51,764 $ 18,678 36% Gross margin 70 % 69 % N/A N/A Cost of revenue increased $18.7 million, or 36%, in fiscal 2022 compared to fiscal 2021.
Cost of Revenue and Gross Margin Year Ended December 31, 2023 2022 $ Change % Change (in thousands, except percentages) Cost of revenue $ 71,923 $ 70,442 $ 1,481 2% Gross margin 74 % 70 % N/A N/A Cost of revenue increased $1.5 million, or 2%, in fiscal 2023 compared to fiscal 2022.
The increase was primarily due to an increase of $19.0 million in personnel-related expenses directly associated with an increase in headcount, including an increase in allocated overhead costs. The increase was also attributable to an increase of $12.0 million in stock-based compensation expense and related payroll taxes as a result of increased headcount.
The increase was primarily due to an increase of $12.8 million in stock-based compensation expenses and related payroll taxes and an increase of $8.5 million in personnel and related expenses, including an increase in allocated overhead costs.
Current Period ARR includes any expansion and is net of contraction or attrition over the last 12 months, but excludes ARR from new customers as well as any overage charges in the current period. We then divide the total Current Period ARR by the total Prior Period ARR to arrive at the point-in-time dollar-based net retention rate.
We then calculate the ARR from these same customers as of the current period-end (the “Current Period ARR”). Current Period ARR includes any expansion and is net of contraction or attrition over the last 12 months but excludes ARR from new customers as well as any overage charges in the current period.
We work with almost 2,000 paying customers of various sizes and stages of digital maturity, across many industries, including the teams behind some of the most-beloved digital products in the world.
We work with more than 2,700 paying customers of various sizes and stages of digital maturity, across many industries, including the teams behind some of the most-beloved digital products in the world. We have experienced significant growth in recent years, with approximately 675 employees in seven global offices.
Provision for Income Taxes Provision for income taxes consists primarily of income taxes in certain foreign jurisdictions in which we conduct business. To date, we have not recorded any U.S. federal income tax expense, and our state and foreign income tax expenses have not been material.
To date, we have not recorded any U.S. federal income tax expense, and our state and foreign income tax expenses have not been material. We have recorded deferred tax assets for U.S. federal income taxes for which we provide a full valuation allowance.
Other Income, net Year Ended December 31, 2022 2021 $ Change % Change (in thousands, except percentages) Other income, net $ 3,981 $ 195 $ 3,786 * * Not meaningful Other income, net increased $3.8 million, in fiscal 2022 compared to fiscal 2021.
Other Income (Expense), net Year Ended December 31, 2023 2022 $ Change % Change (in thousands, except percentages) Other income (expense), net $ 13,426 $ 3,981 9,445 237% Other income (expense), net increased $9.4 million, in fiscal 2023 compared to fiscal 2022.
Customers that require the complete analytics tool kit to handle more scale and larger, sophisticated use cases can purchase our Enterprise plan. The Enterprise plan includes everything in the Growth plan as well as additional robust features such as advanced data governance, custom user permissions and roles, automated insights, and more.
And our Enterprise plan is designed for larger organizations that have more sophisticated needs and requirements, and includes everything in the Growth plan as well as additional robust features such as advanced data governance, custom user permissions and roles, automated insights, and more.
The increase was primarily due to an increase of $9.2 million in personnel-related expenses directly associated with an increase in headcount, including an increase in allocated overhead costs, and $8.5 million in third-party hosting costs as we increased capacity to support paying customer usage and growth of our paying customer base.
The increase was primarily due to an increase of $0.8 million in stock-based compensation expense and related payroll taxes, and an increase of $0.3 million in third-party hosting costs as we increased capacity to support paying customer usage and growth of our paying customer base.
Non-GAAP Financial Measures The following table presents certain non-GAAP financial measures, along with the most directly comparable U.S. GAAP measure, for each period presented below. In addition to our results determined in accordance with U.S. GAAP, we believe these non-GAAP financial measures are useful in evaluating our operating performance.
We do not expect to incur additional expenses of any significance related to the Restructuring Plan in future periods. 53 Non-GAAP Financial Measures The following table presents certain non-GAAP financial measures, along with the most directly comparable U.S. GAAP measure, for each period presented below. In addition to our results determined in accordance with U.S.
We then calculate the weighted average of the trailing 12-month point-in-time dollar-based net retention rates, to arrive at the dollar-based net retention rate.
We then divide the total Current Period ARR by the total Prior Period ARR to arrive at the dollar-based net retention rate (“NRR”). We then calculate the weighted average of the trailing 12-month dollar-based net retention rates, to arrive at the dollar-based net retention rate (“NRR (TTM)”).
Year Ended December 31, 2022 2021 (in thousands) Revenue $ 238,067 $ 167,261 Cost of revenue (1) 70,442 51,764 Gross profit 167,625 115,497 Operating expenses: Research and development (1) 80,589 48,251 Sales and marketing (1) 129,962 86,025 General and administrative (1) 53,636 55,370 Total operating expenses 264,187 189,646 Loss from operations (96,562 ) (74,149 ) Other income, net 3,981 195 Loss before provision for income taxes (92,581 ) (73,954 ) Provision for income taxes 796 1,029 Net loss $ (93,377 ) $ (74,983 ) (1) Amounts include stock-based compensation expense as follows: Year Ended December 31, 2022 2021 (in thousands) Cost of revenue $ 6,468 $ 1,951 Research and development 27,855 13,613 Sales and marketing 17,143 7,871 General and administrative 15,757 10,959 Total stock-based compensation expense $ 67,223 $ 34,394 57 The following table sets forth the components of our consolidated statements of operations and comprehensive loss data, for each of the periods presented, as a percentage of revenue.
Year Ended December 31, 2023 2022 (in thousands) Revenue $ 276,284 $ 238,067 Cost of revenue (1) 71,923 70,442 Gross profit 204,361 167,625 Operating expenses: Research and development (1) 90,138 80,589 Sales and marketing (1) 153,714 129,962 General and administrative (1) 54,887 53,636 Restructuring and other related charges (1) 8,142 — Total operating expenses 306,881 264,187 Loss from operations (102,520 ) (96,562 ) Other income (expense), net 13,426 3,981 Loss before provision for (benefit from) income taxes (89,094 ) (92,581 ) Provision for (benefit from) income taxes 1,269 796 Net loss $ (90,363 ) $ (93,377 ) (1) Amounts include stock-based compensation expense as follows: Year Ended December 31, 2023 2022 (in thousands) Cost of revenue $ 7,300 $ 6,468 Research and development 36,643 27,855 Sales and marketing 29,404 17,143 General and administrative 14,085 15,757 Restructuring and other related charges 853 — Total stock-based compensation expense $ 88,285 $ 67,223 58 The following table sets forth the components of our consolidated statements of operations and comprehensive loss data, for each of the periods presented, as a percentage of revenue.
As of December 31, 2022 2021 YoY Growth Paying Customers 1,994 1,597 25 % Dollar-Based Net Retention Rate 119 % 123 % N/A Paying Customers We believe our ability to grow the number of paying customers on our platform provides a key indicator of the demand for our platform, growth of our business, and our future business opportunities.
Paying Customers We believe our ability to grow the number of paying customers on our platform provides a key indicator of the demand for our platform, growth of our business, and our future business opportunities.
These expenses also include product design costs prior to the application development stage, third-party services and consulting expenses, software subscriptions, and allocated overhead costs for overhead used in research and development activities. A substantial portion of our research and development efforts are focused on enhancing our software, including researching ways to add new features and functionality to our platform.
Research and Development Research and development expenses consist primarily of personnel and related expenses. These expenses also include product design costs prior to the application development stage, third-party services and consulting expenses, software subscriptions, and allocated overhead costs for overhead used in research and development activities.
If we are unable to raise additional funds when desired and at reasonable rates, our business, results of operations, and financial condition would be adversely affected.
In the event that additional financing is required from outside sources, we may seek to raise additional funds at any time through equity, equity-linked arrangements, and debt. If we are unable to raise additional funds when desired and at reasonable rates, our business, results of operations, and financial condition would be adversely affected.
We make exceptions for holding companies, government entities, and other organizations for which the GULT, in our judgment, does not accurately represent the Amplitude customer or the DUNS does not exist. 51 Dollar-Based Net Retention Rate We calculate our dollar-based net retention rate to measure our ability to retain and expand ARR from our customers and believe it is an indicator of the value our platform delivers to customers and our future business opportunities.
Dollar-Based Net Retention Rate We calculate our dollar-based net retention rate to measure our ability to retain and expand ARR from our customers and believe it is an indicator of the value our platform delivers to customers and our future business opportunities.
Depending on the circumstances, we often use this as an opportunity to renegotiate a customer contract to ensure they have the right contracted event volume to meet their business objectives. Historically, overage charges have not made up a significant portion of our revenue.
In situations where customers exceed their committed volume in a given period, they incur overage charges that we have the contractual right to bill at our discretion. Depending on the circumstances, we often use this as an opportunity to renegotiate a customer contract to ensure they have the right contracted volume to meet their business objectives.
We have generated losses from our operations as reflected in our accumulated deficit of $273.2 million as of December 31, 2022 and negative cash flows from operating activities for fiscal 2022 and fiscal 2021.
We have generated losses from our operations as reflected in our accumulated deficit of $363.5 million as of December 31, 2023. We generated positive cash flows from operating activities during the year ended December 31, 2023; however, we have historically generated negative cash flows from operating activities.
General and Administrative General and administrative expenses consist primarily of personnel-related expenses for our finance, human resources, information technology, and legal organizations. These expenses also include non-personnel costs, such as outside legal, accounting, and other professional fees, software subscriptions, as well as certain tax, license, and insurance-related expenses, and allocated overhead costs.
These expenses also include non-personnel costs, such as outside legal, accounting, and other professional fees, software subscriptions, as well as certain tax, license, and insurance-related expenses, and allocated overhead costs. We have also incurred certain expenses as part of operating as a publicly-traded company, including professional fees and other expenses.
Examples of ways customers expand the use of our platform include the following: • Customers expand an initial use case by tracking additional events on a digital product to gain greater insight into customer journeys or add additional functionality (e.g. predictive analytics, behavioral reports) to meet the needs of teams across the organization; • Customers expand into new use cases by using our platform for additional digital products in their digital product portfolio and empowering additional teams (e.g. product, marketing, engineering, analytics) responsible for those digital products; and • Customers expand by layering on additional offerings onto our core Analytics offering to power new capabilities to drive business outcomes.
Examples include: • Adding data, users or new functionality to meet the needs of teams across the organization; • Using our platform for additional digital products in their portfolio and empowering the teams responsible for them (product, marketing, engineering, and analytics); and • Layering additional offerings onto core Analytics to power new capabilities and drive additional business outcomes.
The decrease was partially offset by a $4.4 million increase in stock-based compensation expenses and related payroll taxes and an increase of $3.9 million in personnel-related expenses directly associated with an increase in headcount, including an increase in allocated overhead costs.
General and Administrative General and administrative expenses increased $1.3 million, or 2%, in fiscal 2023 compared to fiscal 2022.The increase was primarily attributable to an increase of $2.7 million in personnel and related expenses, including an increase in allocated overhead costs. The increase was partially offset by a decrease of $1.5 million in stock-based compensation expense and related payroll taxes.
In the fiscal year ended December 31, 2022, we billed a majority of these contracts annually in advance with the remainder billed quarterly, semi-annually, or monthly. We offer a variety of plans that are right-sized to match the depth and breadth of our customers’ needs and complexity.
In the fiscal year ended December 31, 2023, we billed a majority of these contracts annually in advance with the remainder billed quarterly, semi-annually, or monthly. We offer a variety of free and paid plans depending on our customers’ needs wherever they are in their analytics journey. For example, we offer a Free plan for early-stage startups and individuals.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of December 31, 2022, we had cash and cash equivalents of $218.5 million and marketable securities, including non-current investments, of $83.2 million. We do not enter into investments for trading or speculative purposes. Our investments are exposed to market risk due to fluctuations in interest rates, which may affect our interest income on cash and cash equivalents.
Biggest changeAs of December 31, 2023, we had cash and cash equivalents of $248.5 million and marketable securities, including non-current investments, of $73.9 million. We do not enter into investments for trading or speculative purposes. Our investments are exposed to market risk due to fluctuations in interest rates, which may affect our interest income on cash and cash equivalents.
Nonetheless, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs. Our inability or failure to do so could harm our business, results of operations, or financial condition. 66
Nonetheless, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs. Our inability or failure to do so could harm our business, results of operations, or financial condition. 65

Other AMPL 10-K year-over-year comparisons