Unlike most companies that go for a standard IPO process, digitization optimization services provider Amplitude (Nasdaq: AMPL) recently listed on the stock exchange through the direct IPO listing. Its IPO has been received well, and despite the market turbulence, the stock has been rising.
Founded in 2012 by Curtis Liu, Jeffrey Wang, and Spenser Skates, San Francisco-based Amplitude is a product intelligence platform that helps customers with using their customer data to create product experiences for systematic business growth. Its Digital Optimization System serves as the command center for businesses to connect digital products to business outcomes.
The current pandemic has accelerated the need for digital transformation for organizations. The way that these companies are now building digital products is also going through a fundamental change from an earlier focus on being intuition-based to now being data-driven. Today, development teams build their strategy around product data, which connects the attributes of individual end-users with their actual behavior. Product data allows teams to gain insights about end-user actions taken within digital products and design products that drive signup and trial conversion.
Amplitude’s Digital Optimization System combines customer understanding with actionable insights to optimize experiences. It unifies product, marketing, data, and executive teams, providing companies with common visibility to drive business outcomes with agility and confidence. Its Digital Optimization System consists of three key integrated solutions: Amplitude Analytics that provides a product analytics solution; Amplitude Recommend – a no-code personalization solution that helps drive customer engagement by adopting digital products and campaigns to users based on behavior; and Amplitude Experiment – an end-to-end experimentation solution that enables teams to determine and deliver the most impactful product experiences.
Amplitude’s products are used by over 1,200 paying customers globally, ranging from smaller startups to global enterprises. Its customer list includes names like Ford Motor Co, Burger King, and Gap.
Recently, Amplitude announced a product integration and partnership with Snowflake. The partnership will allow Snowflake users to import data into Amplitude and uncover actionable insight into customer behaviors and product experiences. The integration allows teams to break down data silos, enrich sets of data, and unlock real-time self-service insights. It allows customers to use both Snowflake and Amplitude to create data-driven decisions to fuel quicker product innovation and revenue growth.
Amplitude believes that it needs to address a market opportunity of $37 billion for digital optimization, but it faces a slew of competition from both big and small players. Google has been stepping up its effort in the space through Google Analytics. Other niche players include Singular and Mixpanel who are delivering similar products.
Amplitude generates revenue through selling subscriptions to its platform. It reaches customers through direct sales, solution partners, and product-led growth initiatives. It has seen strong revenue growth in the past few years. It reported revenues of $102.5 million in 2020, growing 50% from $68.4 million in 2019. Net loss grew from $33.5 million in 2019 to $24.6 million in 2020.
For the six months ending June 30 this year, it reported revenues growing 57% to $72.4 million. Net losses grew from $16.6 million to $16.5 million in the same period. It recently reported its third-quarter results with revenues growing 72% to $45.5 million. It also reported a net loss per share of $0.05 for the quarter.
For the upcoming quarter, Amplitude forecast revenues of $46-$47 million and net loss per share of $0.08-$0.07. For the fiscal year, it forecast revenues of $163.8-$164.6 million, with a net loss of $0.37-$0.35 per share.
Amplitude went public in September this year. Before going public, it had raised $306.9 million in twelve rounds of funding from investors including GIC, Institutional Venture Partners, Battery Ventures, Sequoia Capital, Sorenson Capital, Benchmark, and Lead Edge Capital. The most recent round was held in January 2021 for $150 million. It had listed on the Nasdaq at $35. It is currently trading at $61.44 with a market capitalization of $6.69 billion. The stock had jumped to $87.98 soon after listing.
Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article.
This segment is a part in the series : IPOs 2021