Amplitude (NASDAQ:AMPL) Posts Better-Than-Expected Sales In Q4 But Stock Drops 27% On Weak Guidance

Kayode Omotosho /
2022/02/16 4:15 pm EST
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Data analytics software provider Amplitude (NASDAQ:AMPL) announced better-than-expected results in the Q4 FY2021 quarter, with revenue up 75.1% year on year to $49.4 million. However, guidance for the next quarter was less impressive, coming in at $50.5 million at the midpoint, being 1.56% below analyst estimates. Amplitude made a GAAP loss of $21.9 million, down on its loss of $3.97 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 FY2021 Highlights:

  • Revenue: $49.4 million vs analyst estimates of $46.9 million (5.26% beat)
  • EPS (non-GAAP): -$0.05 vs analyst estimates of -$0.08
  • Revenue guidance for Q1 2022 is $50.5 million at the midpoint, below analyst estimates of $51.3 million
  • Management's revenue guidance for upcoming financial year 2022 is $230 million at the midpoint, missing analyst estimates by 2.5% and predicting 40% growth (vs 63.2% in FY2021)
  • Free cash flow was negative $12.2 million, compared to negative free cash flow of $15.7 million in previous quarter
  • Net Revenue Retention Rate: 123%, in line with previous quarter
  • Customers: 1,597, up from 1,417 in previous quarter
  • Gross Margin (GAAP): 68.8%, down from 69.9% 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 incredible over the last year, growing from quarterly revenue of $28.2 million, to $49.4 million.

Amplitude Total Revenue

This was another standout quarter with the revenue up a splendid 75.1% year on year. But the growth did slow down compared to last quarter, as the revenue increased by just $3.95 million in Q4, compared to $9.29 million in Q3 2021. We'd like to see revenue increase by a greater amount each quarter, but a one-off fluctuation is usually not concerning.

Guidance for the next quarter indicates Amplitude is expecting revenue to grow 52.5% year on year to $50.5 million, in line with the 48.2% 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 $230 million at the midpoint, growing 40% compared to 63.2% increase in FY2021.

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Customer Growth

You can see below that Amplitude reported 1,597 customers at the end of the quarter, an increase of 180 on last quarter. That is quite a bit better customer growth than last quarter and quite a bit above the typical customer growth we have seen lately, demonstrating that the business itself has good sales momentum. We've no doubt shareholders will take this as an indication that the company's go-to-market strategy is working very well.

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 $4.81 billion and more than $307.4 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 excited to see that it outperformed Wall St’s revenue expectations. On the other hand, it was unfortunate to see that Amplitude's revenue guidance for the full year miss analyst's expectations and the revenue guidance for next year indicates quite a significant slowdown in growth. Overall, this quarter's results were not the best we've seen from Amplitude. The company is down 27.3% on the results and currently trades at $30.25 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.

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