Maximum Displacement for Amplitude Shares?

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A ROIC member asked about our thoughts on Amplitude Inc (AMPL) after the company’s shares dropped nearly 60% in one day following last week’s earnings release. On Friday, the stock rallied 20% but is still below its direct listing reference price of $35.00 back in September 2021.

Key Takeaways

See the earnings release here and the Q4 investor presentation here.

  • Amplitude beat analyst estimates and its own guidance on revenue for the fourth quarter with $49.4 million or 65% growth versus the 56% growth expected.
  • The company also beat net income estimates in the fourth quarter.
  • The market was spooked by lower-than-expected top-line guidance for FY2022.
    • Analysts expected $236 million in revenue for the year which would represent 41% YoY growth.
    • Instead, Amplitude is guiding to a midpoint growth rate of 37.5% YoY.

Company Overview

  • Amplitude operates in a new category of software called Digital Optimization.
    • Simply put, Amplitude’s products help its customers (enterprises and startups) track digital product data to better understand consumer behavior on their products.
  • The company’s Digital Optimization System serves as the command center for businesses to connect digital products to business outcomes.
    • Amplitude Analytics: Product analytics solution providing company’s with insights into customer behavior.
    • Amplitude Recommend: A no-code solution to help teams increase customer engagement.
    • Amplitude Experiment: An end-to-end experimentation solution to enable teams to deliver products through A/B tests and controlled feature releases.
  • At the end of Q4, Amplitude had 1,597 paying customers, up 54% YoY.
  • The company went public on September 28, 2021 via direct listing.
    • Amplitude’s reference price was set at $35.00 per share.
    • AMPL closed its first trading day at $54.80 per share.
    • At direct listing, the largest investor Benchmark owned 15% of the company.
  • The company generates revenue through subscriptions to the platform.
    • Pricing is based on the platform functionality required by the customers and the committed event volume.
    • According to the S-1, over 95% of revenue is recurring.

Q4 Earnings Highlights


  • New customer wins include Toyota, Twilio, Wealthfront.
  • Customer expands included Canva, HBO, Notion.
  • FY2022 priorities include:
    • Enterprise adoption and success
    • #1 Digital Optimization product suite
    • Evangelize Digital Optimization

Financials (Three months ended Dec 31)

  • Revenue | $49.4 million, +65% YoY
    • U.S. Revenue | $31.3 million, +66% YoY
    • Intl. Revenue | $18.1 million, +62% YoY
  • Remaining Performance Obligations | $170.1 million, +78% YoY
    • Current RPOs | $137.3 million, +60% YoY
  • GAAP Loss from Operations | $(21.5) million, expanding losses from $(5.1) million in Q4 2020.
  • Free Cash Flow | $(12.2) million

Financials (FY 2021)

  • Revenue | $167.3 million, +63% YoY
  • GAAP Loss from Operations | $(74.1) million, expanding losses from $(24.0) million in 2020.
  • Free Cash Flow | $(34.9) million versus $(12.6) million in 2020.
  • Dollar-based net retention rates
    • 2019: 116%
    • 2020: 119%
    • 2021: 123%


  • Amplitude’s revenue guidance for FY22 between $226 million and $234 million came in below analyst estimates of $236 million.
  • Before the earnings announcement, analysts expected a net loss per share of $(0.44) in line with Amplitude’s FY22 guidance.

Management Commentary

Spenser Skates, CEO + Co-Founder

“2021 was a breakthrough year for Amplitude. Digital products are becoming the central driver for how businesses operate, go to market and generate revenue. Strong execution combined with demand for the Amplitude Digital Optimization System drove our fiscal year 2021 results. We believe we are in the very early stages of a large market opportunity, and we’re excited to help companies realize the business outcomes of digital optimization.”

Valuation + Analysis

  • At $20.14 per share, Amplitude is trading at a $1.9 billion enterprise value.
  • The company is still unprofitable and is expected to be unprofitable for the next few years as it pours resources into growth.
  • Margins also continue to expand.
  • Using analyst estimates for FY22, AMPL is trading at ~11.5x FY22 gross profit.

KR: In the current rate environment, unprofitable growth companies are getting hammered for any missteps. Amplitude fell directly into that category after guiding to lower-than-expected revenue growth in 2022. This worried many investors who expect top-line growth numbers to be hit as they wait for the company’s inflection to profitability. Since Amplitude is pioneering a new category of software (its own words), there is an even more keen eye on growth because of the uncharted territory of the product offering.

Amplitude did show some positive numbers in Q4 including dollar-based net retention expanding to 123%. There could also be tailwinds from companies moving away from third-party data to first-party data due to changes at Apple and Google.

Two of the main competitors to Amplitude are Adobe Experience Cloud and Google Analytics. With recent pullbacks on both stocks, I’d be more inclined to invest my money there at 23x and 13x EBITDA, respectively.

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