Amplitude (NASDAQ:AMPL) Surprises With Q1 Sales But Stock Drops 12.2% On Weak Guidance

Petr Huřťák /
2023/05/09 4:11 pm EDT

Data analytics software provider Amplitude (NASDAQ:AMPL) reported Q1 FY2023 results topping analyst expectations, with revenue up 25.3% year on year to $66.5 million. However, guidance for the next quarter was less impressive, coming in at $66.9 million at the midpoint, being 2.91% below analyst estimates. Amplitude made a GAAP loss of $26.3 million, down on its loss of $22.2 million, in the same quarter last year.

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Amplitude (AMPL) Q1 FY2023 Highlights:

  • Revenue: $66.5 million vs analyst estimates of $65.2 million (1.9% beat)
  • EPS (non-GAAP): -$0.04 vs analyst estimates of -$0.06
  • Revenue guidance for Q2 2023 is $66.9 million at the midpoint, below analyst estimates of $68.9 million
  • The company dropped revenue guidance for the full year, from $287 million to $267.5 million at the midpoint, a 6.79% decrease
  • Free cash flow was negative $5.84 million, compared to negative free cash flow of $5.87 million in previous quarter
  • Net Revenue Retention Rate: 114%, down from 119% previous quarter
  • Customers: 2,175, up from 1,994 in previous quarter
  • Gross Margin (GAAP): 71.1%, up from 69.7% same quarter last year

"Every business with a digital product needs digital analytics," said Spenser Skates, CEO and co-founder of Amplitude.

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 impressive over the last two years, growing from quarterly revenue of $33.1 million in Q1 FY2021, to $66.5 million.

Amplitude Total Revenue

This quarter, Amplitude's quarterly revenue was once again up a very solid 25.3% year on year. But the growth did slow down compared to last quarter, as the revenue increased by just $1.22 million in Q1, compared to $3.64 million in Q4 2022. 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 15% year on year to $66.9 million, slowing down from the 48.1% year-over-year increase in revenue the company had recorded in the same quarter last year. Ahead of the earnings results the analysts covering the company were estimating sales to grow 19.6% over the next twelve months.

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Customer Growth

You can see below that Amplitude reported 2,175 customers at the end of the quarter, an increase of 181 on last quarter. That is a fair 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 Q1 Results

With a market capitalization of $1.34 billion Amplitude is among smaller companies, but its more than $214.1 million in cash and the fact it is operating close to free cash flow break-even put it in a robust financial position to invest in growth.

We were very impressed by Amplitude’s very strong acceleration in customer growth this quarter. And we were also happy to see it topped analysts’ revenue expectations, even if just narrowly. On the other hand, it was unfortunate to see that Amplitude's revenue guidance for the full year significantly missed analysts' expectations. Overall, this quarter's results could have been better. The company is down 12.2% on the results and currently trades at $10.2 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.