Revenue Trends

Amplitude Inc. has experienced a deceleration in revenue growth over recent years. The company's quarterly revenues and year-over-year (YoY) growth rates are summarized below:

Quarterly Revenue and YoY Growth

Note: Some revenue figures are approximate due to limited data.

The data illustrates a clear trend of declining revenue growth rates, from over 70% YoY growth in 2021 to single-digit growth in 2024.

Customer Trends

Amplitude's customer base has grown over the years, but the growth rate has slowed significantly.

Customer Count and YoY Growth

Note: YoY growth rates for some quarters are not provided.

While the total number of customers has increased, the rate of growth has decreased, indicating a slowdown in acquiring new customers.

Net Revenue Retention (NRR) Trends

Net Revenue Retention indicates the percentage of recurring revenue retained from existing customers, including upsells and downsells.

NRR Over Time

There is a notable decline in NRR, dropping below 100% in 2023, which indicates that churn and downsells are outpacing upsells and expansions.

Performance Analysis

• Declining Revenue Growth: Amplitude's revenue growth has steadily decelerated from over 70% YoY in 2021 to single-digit percentages in 2024. This suggests market saturation, increased competition, or challenges in expanding the customer base.

• Slowing Customer Growth: The rate of customer acquisition has decreased significantly. While the company continues to add new customers, the slowdown indicates potential market challenges or reduced effectiveness in sales strategies.

• Elevated Churn and Declining NRR: The decrease in Net Revenue Retention to below 100% signifies that the company is losing revenue from existing customers due to churn or decreased spend. Elevated churn rates may point to customer dissatisfaction, increased competition, or shifting market needs.

• Profitability and Cash Flow: The company has focused on improving operating margins and has achieved positive free cash flow in certain quarters. However, operating losses have occurred, and operating expenses have increased year-over-year in some periods.

• Macroeconomic Factors: Management has cited challenging macroeconomic conditions, including elevated churn among smaller customers and cautious IT spending. These factors have contributed to the slowdown in growth.

• Strategic Initiatives: Amplitude is investing in product innovation, including acquisitions like Command AI, to enhance its platform. The company is focusing on enterprise customers, improving its go-to-market strategies, and driving platform adoption to reaccelerate growth.

Outlook

• Churn Expected to Remain Elevated: The company anticipates continued high churn levels in the near term, impacting revenue growth and NRR. Optimization of contracts by customers and challenges in customer retention are key concerns.

• Enterprise Focus: Amplitude is targeting larger enterprise clients to drive higher-quality deals and reduce reliance on smaller customers, who have shown higher churn rates.

• Product Expansion and Innovation: The company is expanding its platform offerings, aiming to provide a unified solution that appeals to various stakeholders within organizations, including product, marketing, and experience teams.

• Market Positioning: Despite current challenges, Amplitude believes it is well-positioned to gain market share from point solutions and legacy providers, especially as organizations seek to consolidate their analytics tools.

Conclusion

Amplitude Inc. is experiencing headwinds characterized by slowing revenue growth, declining net revenue retention, and elevated customer churn. The company's strategic initiatives, including product innovation and a focus on enterprise customers, are aimed at addressing these challenges. The effectiveness of these efforts will be critical in determining the company's ability to stabilize and reaccelerate growth in the future.