Data analytics company Amplitude (AMPL +1.50%) operates in a new field of enterprise software called Digital Optimization, where companies use data to guide their business decisions around digital products. The stock has fallen below its $50 direct listing price, sliding throughout this bear market after going public in September 2021.
The company recently held a conference and management unveiled new products and integrations for the company's software. These new products could be vital in driving investor returns moving forward. Here is why.
New products and integrations cover more bases
Amplitude Analytics is the company's core product. Its pitch to companies is that digital products like apps, websites, and services, are becoming an increasingly important part of businesses. Amplitude's analytics software tracks a product's users and their behavior, collecting data that companies can use to guide business decisions around digital products.
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Alphabet's Google Analytics is arguably Amplitude's chief competitor. But management claims that Google Analytics is a closed system that shows you a standard data format and is hard to customize. On the other hand, Amplitude gives customers a lot more freedom.
But Alphabet is one of the largest companies in the world; it has more brand power, and more software programs work with it. Amplitude needs to build on its core product to offer a complete solution to its customers.
NASDAQ: AMPL
Key Data Points
The company has new products like "Recommend" and "Experiment", and just unveiled "Amplitude CDP," a customer data platform that will help companies learn more about its customers' trends and tendencies by integrating first-party data right from Amplitude's core product.
Additionally, Amplitude announced a partnership with data-warehousing company Snowflake to enable Snowflake users to integrate their data with Amplitude's platform. More data typically provides more accurate outcomes, so it's encouraging to see Amplitude bring new products and partnerships to market.
Which could create revenue growth
Amplitude has reported four quarters since going public, and the business keeps growing. The company's customer count has grown from 1,280 in Q2 of 2021 to 1,701 in 2022 Q1, a 33% increase. The net revenue retention rate has risen from 119% to 126% over the same time frame, signaling that customers are spending more. Revenue grew 60% year over year in 2022 Q1.
However, the vast majority of this is still coming from Amplitude Analytics; CEO Spenser Skates noted in the 2022 Q1 earnings call that the company recently landed its first two major deals for its Experiment product from IBM and Dropbox.
Amplitude has grown thus far with barely any contribution from new products, so investors could see revenue growth accelerate if Amplitude can successfully upsell its customer base.
Shares priced for upside
The stock traded at more than $87 at its high before falling to $13 per share, and it currently trades at $18. That was probably due to the onset of the current bear market, and the stock's price-to-sales ratio has become a fraction of what it was, now under 9.
AMPL PS Ratio data by YCharts
Such a sharp price decline might give the impression that Amplitude is in financial trouble, but that's far from reality. The company burned just under $10 million last quarter, but has roughly $300 million in cash on its balance sheet and zero debt.
Meanwhile, Amplitude is growing revenue and launching new products and partnerships. The stock's market cap has fallen to $2 billion, a small enough size that it can generate significant investment returns if the company can keep growing over the years ahead.
Young companies are always risky, but the drop in the share price helps make up for that risk. Time will tell if Amplitude's new products succeed, but a financially healthy and growing business is a great starting point for a long-term investor.
