Shares of Amplitude (NASDAQ: AMPL) experienced a significant downturn this week following the cloud software company’s fourth-quarter earnings report, in which it delivered results that fell short of expectations and offered underwhelming guidance for 2024.
Amplitude, leading the charge in digital product data analytics, equips companies with the tools to enhance their products and maximize returns by understanding how customers interact with their offerings.
As Thursday came to a close, Amplitude stock had declined by 16.2%, as reported by S&P Global Market Intelligence.
Image source: Getty Images.
Amplitude’s Stalling Performance
Amplitude disclosed a 9% rise in revenue for the quarter, amounting to $71.4 million, aligning with estimates. However, investors expressed disappointment as they had anticipated a swifter expansion from a company still striving for profitability under generally acceptable accounting principles (GAAP).
Delving further into its financial records, Amplitude saw a narrowing of its GAAP operating loss from $25.8 million to $21.5 million. Additionally, it reported a surge in free cash flow to $1.5 million, compared to a loss of $5.9 million in the corresponding quarter a year ago.
In an adjusted view, the company posted a per-share profit of $0.04, surpassing the per-share loss of $0.03 in the equivalent quarter of the previous year and also contented estimates by a penny.
Amplitude displayed a 37% upswing in paying customers to 2,723, signaling substantial interest in its services. The company continued enriching its product suite with the launch of Session Replay, a tool that empowers companies to observe user interactions within their app or website.
CEO Spenser Skates emphasized, “Amplitude closed 2023 strong. It was our biggest year ever for product innovation, and we ended Q4 with a record number of new enterprise logo wins.”
Viewing the Horizon: What 2024 Holds for Amplitude
Investors appeared dissatisfied with Amplitude’s outlook for the new year, given the projection of a revenue range between $291.5 million and $294.5 million. This infers a 6% growth at the midpoint, falling short of the consensus of $297.4 million. On the bottom line, the company anticipates adjusted earnings per share of $0.06 to $0.08, in line with the $0.06 reported in 2023 but trailing estimates for $0.12.
The impending three-year contract renewals in the first half of the year present a challenging landscape, originating from the peak of the COVID-19 pandemic when demand for software surged. Subsequently, Amplitude and numerous other tech stocks have encountered struggles, and the company anticipates the departure of some customers during this period.
Notwithstanding, the management envisions a revitalization in the business during the second half of the year, which is anticipated to pave the way for steady growth. A resurgence in revenue expansion could fuel a resurgence in the company’s stock, entailing a virtue of patience for the investors.
Should you invest $1,000 in Amplitude right now?
Before committing to Amplitude, one should contemplate the fact that the Motley Fool Stock Advisor team recently identified what they believe are the 10 best stocks for investors to purchase at present. Strikingly, Amplitude did not make the cut. The 10 stocks that did make the list are forecasted to yield significant returns in the forthcoming years.
Stock Advisor offers investors a straightforward blueprint for success, delivering guidance on portfolio construction, routine updates from analysts, and two fresh stock picks each month. Remarkably, the Stock Advisor service has outperformed the S&P 500 by over threefold since 2002*.
Explore the 10 stocks
*Stock Advisor returns as of February 20, 2024
Jeremy Bowman holds positions in Amplitude. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool maintains a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
