Amplitude (NASDAQ:AMPL) Beats Expectations in Strong Q3, Issues Cautiously Optimistic Guidance

Adam Hejl /
2021/11/11 4:54 am EST
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Data analytics software provider Amplitude (NASDAQ:AMPL) announced better-than-expected results in the Q3 FY2021 quarter, with revenue up 72.4% year on year to $45.4 million. Guidance for next quarter's revenue was $46.5 million at the midpoint, 2.7% above the average of analyst estimates. Amplitude made a GAAP loss of $36.5 million, down on its loss of $2.57 million, in the same quarter last year.

Is now the time to buy Amplitude? Access our full analysis of the earnings results here, it's free.

Amplitude (AMPL) Q3 FY2021 Highlights:

  • Revenue: $45.4 million vs analyst estimates of $43.5 million (4.36% beat)
  • EPS (non-GAAP): -$0.05 vs analyst estimates of -$0.14
  • Revenue guidance for Q4 2021 is $46.5 million at the midpoint, above analyst estimates of $45.2 million
  • Free cash flow was negative $5.81 million, compared to negative free cash flow of $5.81 million in previous quarter
  • Net Revenue Retention Rate: 121%, in line with previous quarter
  • Customers: 1,417, up from 1,280 in previous quarter
  • Gross Margin (GAAP): 69.2%, down from 70.5% same quarter last year

"Digital products are powering how businesses operate, go to market and generate revenue,” said Spenser Skates, CEO and co-founder of Amplitude. "We believe we are in the very early stages of a large market opportunity and that Amplitude can help companies of various sizes and digital maturities build great products through data.”

Born out of a failed voice recognition startup by founder Spenser Skates, Amplitude (NASDAQ:AMPL) is data analytics software helping companies improve and optimize their digital products.

Organizations generate a lot of data that is stored in silos, often in incompatible formats, making it slow and costly to extract actionable insights, which in turn drives demand for modern cloud-based data analysis platforms that can efficiently analyze the silo-ed data.

Sales Growth

As you can see below, Amplitude's revenue growth has been exceptional over the last year, growing from quarterly revenue of $26.3 million, to $45.4 million.

Amplitude Total Revenue

This was another standout quarter with the revenue up a splendid 72.4% year on year. On top of that, revenue increased $9.29 million quarter on quarter, a very strong improvement on the $3.07 million increase in Q2 2021, and a sign of acceleration of growth, which is very nice to see indeed.

Analysts covering the company are expecting the revenues to grow 47.4% over the next twelve months, although estimates are likely to change post earnings.

There are others doing even better than Amplitude. Founded by ex-Google engineers, a small company making software for banks has been growing revenue 90% year on year and is already up more than 400% since the IPO in December. You can find it on our platform for free.

Product Success

One of the best things about software as a service businesses (and a reason why they trade at such high multiples) is that customers tend to spend more with the company over time.

Amplitude Net Revenue Retention Rate

Amplitude's net revenue retention rate, an important measure of how much customers from a year ago were spending at the end of the quarter, was at 121% in Q3. That means even if they didn't win any new customers, Amplitude would have grown its revenue 21% year on year. Significantly up from the last quarter, this a good retention rate and a proof that Amplitude's customers are satisfied with their software and are getting more value from it over time. That is good to see.

Key Takeaways from Amplitude's Q3 Results

Since it has still been burning cash over the last twelve months it is worth keeping an eye on Amplitude’s balance sheet, but we note that with a market capitalization of $8.13 billion and more than $317.7 million in cash, the company has the capacity to continue to prioritise growth over profitability.

We were impressed by the exceptional revenue growth Amplitude delivered this quarter. And we were also glad that the revenue guidance for the next quarter exceeded analysts' expectations. Overall, we think this was a strong quarter, that should leave shareholders feeling very positive. But investors likely expected more and the company closed the day down almost 12% and currently trades at $76.48 per share.

Amplitude may have had a good quarter, so should you invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.