Amplitude (NASDAQ:AMPL) Beats Q4 Sales Targets But Full Year Guidance Underwhelms

Radek Strnad /
2023/02/15 4:11 pm EST
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Data analytics software provider Amplitude (NASDAQ:AMPL) announced better-than-expected results in the Q4 FY2022 quarter, with revenue up 32% year on year to $65.3 million. However, guidance for the next quarter was less impressive, coming in at $65 million at the midpoint, being 2.2% below analyst estimates. Amplitude made a GAAP loss of $24 million, down on its loss of $21.9 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) Q4 FY2022 Highlights:

  • Revenue: $65.3 million vs analyst estimates of $63.6 million (2.63% beat)
  • EPS (non-GAAP): -$0.03 vs analyst estimates of -$0.04
  • Revenue guidance for Q1 2023 is $65 million at the midpoint, below analyst estimates of $66.5 million
  • Management's revenue guidance for upcoming financial year 2023 is $287 million at the midpoint, missing analyst estimates by 2.01% and predicting 20.6% growth (vs 44% in FY2022)
  • Free cash flow was negative $5.87 million, compared to negative free cash flow of $3.89 million in previous quarter
  • Net Revenue Retention Rate: 119%, down from 123% previous quarter
  • Customers: 1,994, up from 1,913 in previous quarter
  • Gross Margin (GAAP): 70.5%, up from 68.9% same quarter last year

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 two years, growing from quarterly revenue of $30.1 million in Q4 FY2020, to $65.3 million.

Amplitude Total Revenue

And unsurprisingly, this was another great quarter for Amplitude with revenue up 32% year on year. Quarter on quarter the revenue increased by $3.64 million in Q4, which was in line with Q3 2022. This steady quarter-on-quarter growth shows the company is able to maintain a strong growth trajectory.

Guidance for the next quarter indicates Amplitude is expecting revenue to grow 22.5% year on year to $65 million, slowing down from the 60.3% year-over-year increase in revenue the company had recorded in the same quarter last year. For the upcoming financial year management expects revenue to be $287 million at the midpoint, growing 20.6% compared to 42.3% increase in FY2022.

In volatile times like these we look for robust businesses with strong pricing power. Unknown to most investors, this company is one of the highest-quality software companies in the world, and their software products have been the default standard in critical industries for decades. The result is an impressive business that is up an incredible 18,152% since the IPO. You can find it on our platform for free.

Customer Growth

You can see below that Amplitude reported 1,994 customers at the end of the quarter, an increase of 81 on last quarter. That's in line with the customer growth we have seen last quarter but a bit below what we have typically seen over the last year, suggesting that sales momentum may be slowing a little.

Amplitude Customers

Key Takeaways from Amplitude's Q4 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 $1.79 billion and more than $230.5 million in cash, the company has the capacity to continue to prioritise growth over profitability.

It was good to see Amplitude deliver strong revenue growth this quarter. On the other hand, it was unfortunate to see that Amplitude's revenue guidance for the full year missed analysts' expectations and that customer growth has been slowing down a little. Overall, this quarter's results could have been better. The company is flat on the results and currently trades at $16.74 per share.

Amplitude may have had a tough quarter, but does that actually create an opportunity to 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.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

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