Behavior-tracking software firm Amplitude Inc. couldn’t escape the gravitational forces that have pulled down the entire information technology industry in its most recent quarter, but Chief Executive Spenser Skates said the company’s cost-sensitive culture and strong financial management equip it well for the long term.

“We’re obviously expressing caution as we go into 2023, particularly because of our exposure to digital natives,” Skates (pictured) said in an interview with SiliconANGLE shortly before the company announced its fourth-quarter and full-year earnings yesterday. “We want to make sure that we navigate as smoothly as possible through this year and come out on the other side where we expect to accelerate growth over the long term.”

The company’s success at selling to customers that solely do business online has made Amplitude more vulnerable than most to the industry downdraft, Skates said. “A lot of those companies are going through layoffs and pressure to find spending,” he said. “We’re going to face headwinds there in the short term through less expansion within those accounts.”

Although Amplitude has slowed hiring ,it has no plans to lay off employees and the adjustments it has made to adapt to the current downturn are “not a drastic shift in terms of how we operate,” Skates said. “We’ve always been deliberate about how we manage costs. In many ways this is how we’re used to operating,” he said.

The company booked $238 million in 2022 revenues with “way less headcount than a lot of other companies,” Skates said. Amplitude said it had more than 700 employees in 2021, the last time it published a headcount.

Turning positive

The CEO said the company should hit two key milestones this year, achieving both positive cash flow and positive operating margins. “From there, it’s about setting up to make sure that we’re driving long-term growth,” he said. “I think we’re really early in the digital analytics market.”

Google LLC’s forced migration of users of its Universal Analytics toolset to Google Analytics 4, a process that experts have said is not simple, has been a bonus. Universal Analytics will stop collecting data in less than four months.

“The switchover is really painful,” Skates said. “It’s a cumbersome and intensive process that’s causing everyone to reevaluate what they use for digital analytics. That’s a huge opportunity for us.” New customers signed in the fourth quarter include Fandom Inc., Philip Morris International Inc, Malwarebytes Inc. and Standard Chartered plc.

The 34-year-old CEO said he was particularly gratified by a recent cost-cutting initiative that asked employees to submit suggestions for how to economize. Although most of the leadership team initially opposed the idea, the program drew more than 500 ideas ranging from installing motion sensors in conference rooms to reducing catering costs. “People really stepped up,” he said.

One major change that resulted from employee suggestions was a decision to revamp the company’s annual Amplify customer event into multiple regional events. “We’re able to reach just as many people, but not while having to spend millions and millions of dollars,” Skates said. Investor Benchmark Capital Partners LLC was so impressed with the results that it has shared the process with other companies in its investment portfolio.

Photo: Amplitude