Enterprise software stocks can get overlooked by investors because they aren't consumer-facing. In other words, everyday people and consumers may never hear about them. But data analytics company Amplitude (AMPL -0.20%) could be an enterprise software stock worth getting familiar with.

The company features solid fundamentals throughout its business. While it won't blow you away with spectacular top-line growth, Amplitude is winning over big-time brands and has a clear path to long-term growth. Here is what you need to know about this rising star.

Following the right crowd

Amplitude is a product analytics company; it operates a software platform that helps companies gather and analyze data about their business to make decisions. For example, a business using Amplitude could run a promotion and get real-time insights into its performance, conversion rates, etc. Amplitude competes with Alphabet, which owns Google Analytics. However, Amplitude claims that its platform is so much more flexible that it's in its own software category it calls Digital Optimization.

Remember that Amplitude's market cap is about $2 billion, a David versus Goliath story considering Alphabet is a trillion-dollar technology titan. But Amplitude's bringing on top-quality brands as customers, including Fox, Teladoc, Zillow, Volkswagen, and Shell, just in the third quarter of this year. CEO Spenser Skates told analysts during the Q3 earnings call that about a third of Amplitude's new customers come from Google Analytics.

Sometimes following the crowd is a bad idea, but it's a little different in enterprise software. When you see a handful of well-known brands, the best companies in their respective fields, gravitating toward a solution, it seems more like a significant vote of confidence in the solution's value. Amplitude's big customer wins could indicate future growth, as other brands might follow suit.

Pristine financials for a growth stock

The current stock market environment hasn't been friendly toward growth stocks; young and growing companies often lose money. That doesn't go over well when the shaky economy or rising interest rates make new funding expensive and hard to get. This broader pressure on growth stocks has impacted Amplitude, which has fallen 82% from its high since going public just last year.

But Amplitude doesn't have the financial woes that many other growth stocks do. Amplitude already barely burns any cash; free cash flow was negative $3.9 million in the third quarter, up from negative $15.8 million in Q3 of 2021. Amplitude's strong margins are no fluke; it had a positive free cash flow of $8.2 million in the previous quarter, Q2 of 2022. Considering Amplitude has $247 million in cash against zero debt, it's hard to see a scenario where Amplitude runs out of money anytime soon.

Stock-based compensation is a bit high; it totaled $46 million through nine months this year, but it's a non-cash expense. Additionally, Amplitude is still newly public, which often involves a lot of stock awards for employees. Look for compensation to shrink as a portion of revenue over time. Long story short? Amplitude has excellent financials to fund its growth efforts for the foreseeable future.

Looking at years of growth ahead

Amplitude's growth opportunities could boost returns for long-term investors. The company now has 1,913 customers, a tiny slice of its addressable market. There are 17.5 million businesses in the United States alone; is it a stretch to believe that Amplitude could someday have 25,000 customers? That's a pretty low bar, even if competition intensifies. Again, the big brands that Amplitude is winning over could foreshadow continued customer growth.

But wait! There's more; Amplitude is becoming a global company. It does about 61% of its revenue in the United States and the other 39% in international markets. Some companies excel in one market and never effectively expand outside of it. But Amplitude is a global company early in its existence, opening up its expansion opportunities even further.

Lastly, Amplitude is innovating; it brought new products, Amplitude CDP and Amplitude Experiment, to market earlier this year. It's still early to see how much traction these get, but a successful core product can create great cross-selling opportunities, just another lever to grow the business. Add all of this up, and you get a young business with various paths to long-term growth. Additionally, the company is flush with cash and isn't losing much money, so you can have some peace of mind holding it through a shaky economic environment. That makes Amplitude a great investment idea for 2023 and beyond.