Amplitude Inc. Leans Into AI Amid Margin Pressure

Amplitude Inc Class A ((AMPL)) has held its Q1 earnings call. Read on for the main highlights of the call.

Amplitude Inc.’s latest earnings call struck a cautiously optimistic tone, highlighting strong top-line growth and accelerating product momentum even as profitability and margins face near-term pressure. Management leaned into an AI-first narrative, arguing that robust ARR expansion, improving retention and a bold Statsig integration outweigh current drag from higher AI costs and organizational upheaval.

Revenue and ARR Growth

Amplitude reported first-quarter revenue of about $94 million, up 17% year over year and modestly ahead of expectations. Annual recurring revenue exited the quarter at $374 million, also growing 17% and adding $9 million sequentially, underscoring steady demand for the company’s analytics platform despite a choppy software spending backdrop.

Customer Mix and Enterprise Momentum

The enterprise skew of Amplitude’s base continued to deepen, with customers generating more than $100,000 in ARR rising 18% year over year to 727 and jumping by 29 quarter over quarter. Multiproduct penetration is now a defining feature of the model, as over 77% of ARR comes from customers using multiple products and those with five or more products represent 24% of ARR, up from 20% just one quarter ago.

Retention and Expansion

Net dollar-based retention ticked up to 106% from 105%, signaling that existing customers are still expanding their usage even in a disciplined IT-spending environment. Management highlighted cross-sell traction as a key driver, suggesting that the growing portfolio of analytics and experimentation products is deepening Amplitude’s wallet share inside large accounts.

Beat Guidance and Positive Near-Term Outlook

The company topped its own Q1 guidance on both revenue and profitability, giving management confidence to guide for roughly 18% year-over-year revenue growth at the midpoint for Q2. For the full fiscal year, Amplitude now expects about 17% growth at the midpoint, positioning the company as a mid-teens grower while still investing heavily in AI and platform expansion.

Strategic Statsig Partnership and Incremental ARR

A central strategic move this quarter was the decision to bring Statsig’s customers and capabilities into the Amplitude fold, adding around $16 million of incremental ARR beginning in May. Executives framed the deal as an opportunity to broaden the company’s addressable market and cross-sell experimentation and feature management tools, even as integration work and accounting treatment complicate the near-term view of organic growth.

AI Transformation and Product Innovation

Amplitude is pushing hard to rebrand itself as an AI-first analytics company, rolling out new offerings such as Agent Analytics, an AI Assistant and a CLI Wizard aimed at automating insight generation and developer workflows. Management said more than 90% of the code shipped is now written with AI assistance and reinforced the push with key leadership hires and an internal AI-focused initiative to accelerate adoption across teams.

Customer Outcomes and Case Studies

To validate its AI and multiproduct strategy, Amplitude pointed to case studies from customers such as Granola, Smartsheet and Astra Tech’s Botim platform that showed improved retention, engagement and monetization. In one example, a fintech rollout saw service entry rise 4%, engagement lift by up to 3% and transacting users triple in nine months, illustrating how data-driven experimentation can translate into tangible business gains.

Improving Business Signals and Pipeline Metrics

Forward-looking demand indicators also strengthened, with total remaining performance obligations climbing 31% year over year to $427 million and current RPO rising 20%. Management highlighted robust platform sales and early success from new pricing and packaging, noting that about a quarter of ARR is now contracted on the refreshed structure, which should support broader adoption over time.

Gross Margin Compression from Inference Costs

The biggest trade-off in Amplitude’s AI push is showing up in gross margins, which slipped two points year over year to 75% as AI inference costs surged alongside customer adoption and data ingestion. Management signaled that these costs reflect the early stages of AI-led usage and indicated plans to optimize infrastructure over time, but investors will need to watch how quickly efficiency gains can offset higher compute spend.

Negative Free Cash Flow and Net Loss

On the bottom line, Amplitude remained in the red, posting a GAAP net loss per share of $0.02 and a non-GAAP operating loss of $3.1 million, or 3.3% of revenue. Free cash flow was negative $13.2 million, equivalent to negative 14% of revenue and slightly worse than a year ago, underscoring that the company is still in investment mode rather than harvesting cash.

Short-Term Cost to Serve and Integration Pressure

Management acknowledged that the cost to serve customers is rising in the short run as AI usage ramps, burdening both gross and operating margins. The integration of Statsig’s technology and hosting environment, along with transition support teams, is expected to add further pressure before synergies and infrastructure optimization begin to flow through the P&L.

Operating Expense Build and Transition Costs

Operating expenses grew to $73 million, or 78% of revenue, with sales and marketing steady at 45% of revenue but carrying some incremental severance and go-to-market kickoff costs. Research and development spending ticked up to 20% of revenue, reflecting continued investment in AI-driven innovation as the company works to maintain its edge in product analytics and experimentation.

Uncertainty from Rapid Organizational Changes

The leadership did not shy away from acknowledging that rapid change brings execution risk, citing sizeable go-to-market reorganizations, new leadership appointments and a major pricing rollout. Combined with the Statsig transition, these shifts could create short-term disruption in sales execution and customer engagement even as they aim to position Amplitude for stronger, more scalable growth longer term.

Accounting Effects on Statsig’s Near-Term Contribution

While the Statsig arrangement adds roughly $16 million of ARR on paper, fair-value assessments and accounting treatment mean that only a portion of that flows into recognized revenue in the near term. Management cautioned that these factors may blur the immediate picture of organic growth, suggesting investors should focus on ARR and RPO trends to gauge the underlying health of the business.

Forward-Looking Guidance and Outlook

Looking ahead, Amplitude guided Q2 revenue to between $96.9 million and $99.1 million and projected a small non-GAAP operating loss, with a similar range for non-GAAP EPS. For the full year, the company expects revenue of $397 million to $403 million, modestly profitable non-GAAP operating income and low single-digit non-GAAP EPS, while flagging ongoing gross-margin pressure from AI inference costs and integration investments tied to Statsig.

Amplitude’s earnings call sketched a company in the middle of a high-stakes transformation, pairing robust ARR growth and improving retention metrics with a deliberate tilt toward AI and experimentation. For investors, the key question will be whether Amplitude can convert its early AI momentum and the Statsig deal into durable, profitable growth before rising costs and organizational complexity erode the current optimism.