Digital optimization company Amplitude (AMPL 0.41%) recently reported its first-quarter 2022 earnings on May 4. Its software helps companies gather insights on their digital products, like data analytics on steroids.

However, most investors don't know much about the stock, other than it dropped nearly 50% after the company reported its last quarter. So, how did investors receive Amplitude's Q1 2022 earnings amid an ongoing bear market in growth and tech companies?

Thanks to a seemingly solid quarter for the young company, the stock seems to be holding up much better this time. Three things jumped out that made me optimistic about the stock's long-term prospects, and here they are.

1. Strong customer activity

Headline numbers are important, and I think Amplitude did well for the quarter. Revenue grew 60% year over year to $53 million, while its earnings-per-share (EPS) of minus $0.07 was three cents better than the analyst consensus. However, long-term investors should look beyond headlines to see the inner workings of how a company is doing.

Analyst gathering insights on a digital interface.

Image source: Getty Images.

Amplitude claims to be pioneering a new type of enterprise software, souped-up analytics for digital products, to help other companies make strategic decisions using real-time data. With such a new business concept, I am looking at the types of customers paying to use it.

Fortunately, Amplitude seems to be winning over some impressive brands and companies. Notable customer activity in 2022 Q1 included wins with Brinks, Hopper, RetailMeNot, and expansions with Venmo (Paypal), Block, and The Weather Channel. Amplitude's paying customers grew 49% year over year to roughly 1,700. When you consider a company like Twilio that has 268,000 active accounts, Amplitude seems very early in its journey.

Amplitude did disclose the loss of Twitter as a customer on the earnings call, which decided to try and build a similar solution internally. However, I am not worried about that because few companies want to dedicate the time and money to try and replicate what Amplitude does -- management stated on the call that they believe Twitter was an exception, not the rule.

2. New product traction

Amplitude has built its company around its core offering, which it calls Amplitude Analytics. The company has recently begun to roll out its second and third products, Amplitude Recommend and Amplitude Experiment. 

Recommend applies machine learning to its analytics, helping companies develop results tailored to them. Experiment allows customers to test and tinker with solutions before rolling them out.

CEO Spenser Skates alluded to the progress the new products have made, receiving their first enterprise significant wins, in which IBM and DropBox adopted Experiment into their operations:

"... in IBM's case, it was really driven by the goal of just running more experiments. They were at like five or six experiments a quarter, and they wanted to increase the number of experiments, they were able to execute to 30 or 40 ... And so I think it was really a breakout quarter for the Experiment product from my standpoint because I think before we have mainly seen it was commercial SMB teams, maybe an enterprise using it for a side use case here and there. But in both of those cases, it was like, hey, we are going to move our main experimentation muscle on to Amplitude Experiment. And so I think that gives me a lot of confidence over the long term that we will continue to see more enterprise customers like that."

The company's net revenue retention rate improved to 126% from 123% just the prior quarter, indicating that customers are spending more the longer they use Amplitude. Investors will want to keep an eye on management's comments about how customers adopt Recommend and Experiment in future quarters.

3. Financials to endure volatility

It's no secret that we are in a hazardous environment for growth and technology stocks right now. It's impacted share prices, but rising interest rates make it harder for growing companies to raise money. That's why having a solid balance sheet is so important in times like now.

Amplitude currently has $300 million in cash and equivalents on its balance sheet; the good news is that it burned just $7 million from the prior quarter. If the business can keep its cash burn under control like this, Amplitude should have plenty of cash to endure this rough patch.