Digital analytics platform Amplitude (NASDAQ: AMPL) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 17.7% year on year to $88.56 million. Guidance for next quarter’s revenue was optimistic at $90 million at the midpoint, 2.3% above analysts’ estimates. Its non-GAAP profit of $0.02 per share was in line with analysts’ consensus estimates.
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Amplitude (AMPL) Q3 CY2025 Highlights:
- Revenue: $88.56 million vs analyst estimates of $86.34 million (17.7% year-on-year growth, 2.6% beat)
- Adjusted EPS: $0.02 vs analyst estimates of $0.01 (in line)
- Adjusted Operating Income: $568,000 vs analyst estimates of $26,820 (0.6% margin, relatively in line)
- Revenue Guidance for Q4 CY2025 is $90 million at the midpoint, above analyst estimates of $87.95 million
- Operating Margin: -29%, down from -26.6% in the same quarter last year
- Free Cash Flow Margin: 3.8%, down from 21.8% in the previous quarter
- Customers: 4,500, up from 4,271 in the previous quarter
- Net Revenue Retention Rate: 102%, up from 99% in the previous quarter
- Annual Recurring Revenue: $347 million vs analyst estimates of $344.6 million (16.4% year-on-year growth, 0.7% beat)
- Market Capitalization: $1.26 billion
"AI is changing how software gets built," said Spenser Skates, CEO and co-founder of Amplitude.
Company Overview
Born from the realization that companies were flying blind when it came to understanding user behavior in their digital products, Amplitude (NASDAQ: AMPL) provides a digital analytics platform that helps businesses understand how people use their digital products to improve user experiences and drive revenue growth.
Revenue Growth
Examining a company’s long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Amplitude grew its sales at an impressive 29% compounded annual growth rate. Its growth beat the average software company and shows its offerings resonate with customers.
Long-term growth is the most important, but within software, a half-decade historical view may miss new innovations or demand cycles. Amplitude’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 10.5% over the last two years was well below its five-year trend. 
This quarter, Amplitude reported year-on-year revenue growth of 17.7%, and its $88.56 million of revenue exceeded Wall Street’s estimates by 2.6%. Company management is currently guiding for a 15.2% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 11.8% over the next 12 months, similar to its two-year rate. While this projection indicates its newer products and services will fuel better top-line performance, it is still below average for the sector.
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Annual Recurring Revenue
While reported revenue for a software company can include low-margin items like implementation fees, annual recurring revenue (ARR) is a sum of the next 12 months of contracted revenue purely from software subscriptions, or the high-margin, predictable revenue streams that make SaaS businesses so valuable.
Amplitude’s ARR came in at $347 million in Q3, and over the last four quarters, its growth slightly lagged the sector as it averaged 13.8% year-on-year increases. This performance mirrored its total sales and suggests that increasing competition is causing challenges in securing longer-term commitments. 
Customer Retention
One of the best parts about the software-as-a-service business model (and a reason why they trade at high valuation multiples) is that customers typically spend more on a company’s products and services over time.
Amplitude’s net revenue retention rate, a key performance metric measuring how much money existing customers from a year ago are spending today, was 101% in Q3. This means Amplitude would’ve grown its revenue by 0.7% even if it didn’t win any new customers over the last 12 months.
Amplitude has an adequate net retention rate, showing us that it generally keeps customers but lags behind the best SaaS businesses, which routinely post net retention rates of 120%+.
Key Takeaways from Amplitude’s Q3 Results
We enjoyed seeing Amplitude materially improve its net revenue retention this quarter. We were also glad its revenue guidance for next quarter exceeded Wall Street’s estimates. On the other hand, its customer growth stalled. Overall, this print had some key positives. The stock traded up 2.7% to $9.90 immediately after reporting.
Should you buy the stock or not? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.
