What happened

Shares of Amplitude (AMPL -0.21%) were sliding this week after the cloud-based software stock focused on digital optimization posted disappointing results in its first-quarter earnings report and lowered its revenue guidance for the year.

According to data from S&P Global Market Intelligence, the stock was down 14.2% this week as of Friday at 11:11 a.m. ET.

So what

Amplitude, which provides data analytics tools so companies can track, understand, and improve the performance of their digital products, went public in September 2021. Shares initially popped, but like other software stocks, it's been hit hard by the macroeconomic slowdown in software spending, revenue growth has slowed, and its valuation has fallen significantly. 

Its first-quarter earnings report showed the company continuing to struggle with those headwinds. Revenue growth slowed to 25%, reaching $66.5 million, which topped the consensus at $65.5 million. The dollar-based net retention rate came in at 106% in the quarter, showing that existing customers increased their spending by just 6%, a reflection of widespread layoffs in the tech sector and a more cautious spending environment.

Amplitude continued to deliver solid customer growth with paying customers, up 28% to 2,175, and it added 181 in the first quarter, or a sequential increase of 9%.

On the bottom line, it narrowed its adjusted loss per share from $0.07 to $0.04, which was ahead of the analyst consensus at a $0.06 loss. 

In what seemed to be a reference to the recent layoffs the company issued, CEO Spenser Skates said: "Amplitude is just scratching the surface of that opportunity, and we're systematically up-leveling every part of our business to set us up for success long term. We're now better positioned to navigate the current environment while fully leaning into the opportunities ahead."

Now what

The company announced layoffs in early April, cutting its global workforce by 13% in an effort to accelerate its push to profitability and reflect the slowdown in demand. 

Along with that, it lowered its revenue guidance for the full year but raised its bottom-line forecast.

The company now expects revenue of $266 million to $269 million for 2023, up just 12% at the midpoint. On the bottom line, it sees an adjusted per-share profit of $0.02 to $0.04.

Investors seemed more concerned about the top-line slowdown, as the stock fell on the report, but the expected profitability is a good sign.

Over the long term, Amplitude is making investments in AI that should help drive growth in the business, and the macroeconomic headwinds should eventually fade. Still, with single-digit growth expected for the duration of the year, it's clear why the software stock is down this week.