Data analysis company Amplitude (AMPL -2.51%) operates in a new area of business software called Digital Optimization, where companies use data to guide their business decisions about digital products. The stock fell below its direct listing price of $50, sliding throughout this bear market after its IPO in September 2021.
The company recently hosted a conference and management unveiled new products and integrations for the company’s software. These new products could be key to boosting returns for investors. Here’s why.
New products and integrations cover more bases
Amplitude Analytics is the company’s flagship product. His pitch to businesses 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 about digital products.
AlphabetGoogle Analytics is arguably Amplitude’s main competitor. But management says Google Analytics is a closed system that shows you a standard data format and is difficult to customize. On the other hand, Amplitude gives customers a lot more freedom.
But Alphabet is one of the biggest companies in the world. it has more brand power and more software works with it. Amplitude must rely on its flagship product to offer a complete solution to its customers.
The company offers new products such as “Recommend” and “Experience”, and has just unveiled “Amplitude CDP”, a customer data platform that will help companies learn more about the trends and trends of its customers by integrating first-party data directly from Amplitude’s core product. .
Additionally, Amplitude announced a partnership with a data warehousing company Snowflake to allow Snowflake users to integrate their data with Amplitude’s platform. More data generally provides more accurate results, so it’s encouraging to see Amplitude bring new products and partnerships to market.
What could create revenue growth
Amplitude has reported four quarters since its IPO, and the company continues to grow. The number of the company’s customers increased from 1,280 in the second quarter of 2021 to 1,701 in the first quarter of 2022, an increase of 33%. The net revenue retention rate increased from 119% to 126% over the same period, indicating that customers are spending more. Revenue grew 60% year over year in the first quarter of 2022.
However, the vast majority of this information still comes from Amplitude Analytics; CEO Spenser Skates noted in the first quarter 2022 earnings call that the company recently landed its first two major deals for its Experiment product from IBM and drop box.
Amplitude has grown so far with virtually no new product contributions, so investors could see revenue growth accelerate if Amplitude can successfully sell its customer base.
Stocks quoted on the rise
The stock traded above $87 at its high before falling to $13 per share, and it is currently trading at $18. This was likely due to the onset of the current bear market, and the stock’s price-to-sales ratio became a fraction of what it was, now below 9.
Such a price drop might give the impression that Amplitude is in financial difficulty, but this is far from reality. The company burned just under $10 million last quarter, but has about $300 million in cash on its balance sheet and no debt.
Meanwhile, Amplitude is increasing its revenue and launching new products and partnerships. The stock’s market capitalization has fallen to $2 billion, a size small enough that it could generate significant investment returns if the company can continue to grow in the years to come.
Start-ups are always risky, but falling stock prices help offset that risk. Time will tell if Amplitude’s new products are successful, but a financially sound and growing business is a great starting point for a long-term investor.